crucial for poverty reduction. Other research, such as the study of Hallegate et al. (2011), has focused on this issue, and its implications (and opportunities) for policy are well summarized (World Bank 2012). As discussed above, under certain assumptions, green growth that appropriately values environmental capital will increase the overall (appropriately valued) output, potentially allowing any losers from this new growth path to be compensated. However, this does not mean that this compensation will occur; as a result, it does not follow that the poor gain from this move to green growth. In other words, we _only_ focus on the distributional costs and benefits of green growth, with an emphasis on current poverty. Because green growth is framed in a growth context, the appropriate counterfactual to consider is how a green growth path would _change_ the relationship between growth and poverty reduction. As argued previously, this must include a consideration of the spatial, sectoral, and dynamic consequences of greening growth.

To do so, we must make ‘green growth’ more specific by articulating a number of possible families of policies that could have spatial, sectoral, and dynamic consequences. We consider green growth to consist of three types of (linked) policies. First, it relates to policies that aim to change the _prices or shadow prices_ of environmental capital to internalize the externalities and other market failures that are inherent in the use and management of environmental capital. Key examples would be fuel prices, products with high intensity of fossil fuels (such as inorganic fertilizer), or water charges. Because correct pricing, including via taxation and subsidies, may not always be feasible, it could also involve other non-price interventions to affect production processes, typically via _regulation_ , such as the nature of technology allowed in production processes. Examples include environmental controls on vehicles or manufacturing technologies linked to the use of water or air.

A second set of policies considered are interventions that focus directly on _investments_ in low carbon or otherwise less environmentally damaging production processes. The main instruments considered are public investments and financing deals to encourage private investment or other forms of joint ventures between the public and private sector. Examples include the location and nature of transport or water infrastructure.

A third set of green growth policies might be considered, in principle, a subset of the other two, but this set of policies often is considered separately, particularly in the context of _climate change adaptation efforts_ and _climate-resilient investments_ . Examples include efforts to make growth more resilient to factors such as sea-level changes or increased risks in production linked to extreme weather events. This class includes infrastructure investment to reduce the impact of sea-level rises, urban planning in flood plains, or the development of lower-risk crops for (increasingly) drought prone areas. We do not consider policies that are generally good for growth but make growth more resilient in the face of climate or other environmental change and extreme events. Examples are human capital investments, flexible market access including by the poor, appropriate macroeconomic policies, and the development of better savings and insurance mechanisms (DFID 2010; World Bank 2010b).

Although we do not yet have high-quality empirical evaluations of well-defined examples of ‘green growth’ in action, we can think conceptually through its consequences and offer suggestive evidence. In principle, there are several channels through which green growth could favor the poor. For example, it could ensure that the negative costs on the poor’s livelihoods are properly internalized by producers, such as halting unmanaged commercial deforestation or the pollution of water and air, which has serious health and sanitation consequences. This is likely to have positive consequences for the poor’s 10