This chapter explores the experience of governments in using public finance and policies to mobilize investment in green growth. Ideally, policy incentives would deliver green markets but more often than not additional financial incentives are required. Public finance is an important part of government green growth strategies. With the right enabling investment environment, even small amounts of well-designed and targeted public investment in green projects can shift the direction of much larger flows of both private investment and international capital spending (Polycarp et al., 2013). Limited public finance needs to be used efficiently to overcome barriers and to catalyze a major shift of private capital investment (OECD, 2013a).
Public financial intervention for green growth can take several forms and be sourced and managed institutionally in a range of ways. A recent OECD report also points out that factors and options for governments to consider include the design of efficient and prudent policy frameworks and regulations, the creation of effective pooled investment vehicles, and interventions by green investment banks or other public financing institutions (Kaminker et al., 2013). This chapter is structured in four sections to present emerging lessons on how public finance can assist in creating the investment conditions for green growth identified by the OECD:
The national context in which green growth is being considered is exceptionally diverse and for this reason, seven cases were selected that explore approaches across a wide range of national, regional and developmental contexts. Specific factors for case study selection included: demonstration of leadership in financing for green growth, regional distribution, country economic status/income, time-frame of implementation, type of activity and sector, and diversity in national, sub-national and regional approaches.
It would be premature at this early stage to extract homogenous best practices from these case studies that can be broadly applied. The intent is to demonstrate to readers that although integrating green growth into national development paths may be a complex process, several creative options are possible. A further objective is to encourage countries to evaluate their own contexts and determine an appropriate entry point and financing approach to green growth. The case studies highlight the diverse nature of national contexts and show that what is most relevant and effective for one country may not be for another.