(1) In the context of short-term stimulus, what is the degree of complementarity between short-term macroeconomic goals (increased effective demand and employment), and longerterm environmental and natural resource benefits? Win-win opportunities likely depend on strong complementarities. On the other hand, there may be tradeoffs between investments that give greater economic “kick” and those that set in motion greater environmental benefits over the longer term.

(2) Similarly, what is the degree of complementarity between investments that most enhance prospects for long-term growth, and those that lead to greater long-term environmental benefits? Here, a new investment or an extension of a near-term stimulus investment is more attractive when complementarities are stronger.

(3) In combining points 1 and 2, one may ask, what are prospects for realizing “triplebenefits” – short-term stimulus, longer-term growth, in addition to lasting environmental and natural resource benefits – when considering alternative expenditure plans? Alternatively, there may be fewer cases with significant overlap between green stimulus (maximum expansionary policy impacts with environmental co-benefits) on the one hand, and longerterm investment with green co-benefits on the other. One example would be short-term green investments which are not economically sustainable over the longer term, so that the environmental gains are more ephemeral or the investments require costly ongoing subsidization. Another example would be green stimulus measures that have weaker impacts on short-term output or employment than alternatives – though then one also needs to consider if the alternatives would tend to lock in less green trends for long-term growth.

# **4. Structure of Green Items in Recently Developed Stimulus Packages**

We next consider in somewhat more detail some of the stimulus packages that have been proposed by key countries. These focus primarily on direct stimulus.

Table 4.1 indicates the scope and types of green stimulus as part of larger stimulus packages. Overall, out of an identified proposed stimulus spending of US$2.8 trillion, about US$435 billion (about 15 percent) has been classified as “green.” Much of the proposed “green” spending is in high-income countries, along with China and South Korea. China has the largest overall “green” package; and South Korea’s shows the largest “green” share of any proposed package.

Note that much of the proposed “green” spending (more than two-thirds of the total; and for China almost 100 percent) is for heavy infrastructure including rail, power grids, and water and sanitation.<sup>9</sup> This highlights the issue of how to define “greenness” of different expenditure components. For example, in reducing carbon emissions, rail investments may have substantial positive impact, but mainly in the longer run; grid investments support rapidly growing electricity consumption and may increase emissions, depending on the extent to which the investments also improve the efficiency of transmission (reduce line losses). On the other hand, for increasing the population’s access to a sustainable water resource base and

> 9 OECD (2009) contains a similar table but with different classifications of items. The “green” parts of stimulus for countries such as China and Korea are here drastically lower than in Table 4.1. The reason is a much more restrictive definition of green, which in particular excludes infrastructure investment that is not directed explicitly at the environment.

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