Bridging Costa Rica's green growth gap: how to support further transformation toward a green economy

Research reports and studies
November 2015
Ilmi Granoff; Monica Araya; Philipp Ulbrich; Sam Pickard; Caroline Haywood

Costa Rica’s track record on economic, social and environmental issues is second to none. It has strong comparative advantages, from its skilled and educated population to its political stability, and from its robust economy to its abundant natural resources. It has weathered numerous financial and economic storms and remains competitive on the global stage. Therefore, Costa Rica is regarded by many as an economic and environmental success story, with an admirable record of ‘green growth’—economic growth that minimizes pollution and uses and manages resources efficiently. Yet Costa Rica is also a victim of its own success: its leadership in some areas may have blinded it to its green growth gaps. As Costa Rica approaches a crossroads in its economic and environmental journey, its choices could provide the model for others to follow.

This report looks at concrete results of green growth in Costa Rica, rather than listing policies and projects. It examines the root causes of under-performance, the synergies between the country’s economy and environment and prospects for future progress in both domains.

ODI’s analysis highlights the deep structural challenges to the organisation of Costa’s Rica’s economy. We also, however, suggest some ‘quick wins’ that will propel Costa Rica towards long-term approaches to better align its economic and environmental performance. These include four primary recommendations:

  • Sustainably close the infrastructure gap, (feasibility studies, stakeholder mapping/political-economy analysis of the transport sector and institutional changes among relevant ministries)
  • Improve resilience, (in terms of economic vulnerability, diversity of the energy mix toward non-hydro renewables, and the forecasting of climate impacts)
  • Plan green industrial policy, (better incorporation of the Chamber of Industry’s sophisticated green industrial policy proposal into national planning: including measures to support transformation into an innovation-based economy, green private sector development and workforce skills development for green jobs)
  • Reduce the fiscal deficit, (targeted taxation and fiscal policy reforms, and possibly green fiscal tools, and even by changing the national conversation about public budgets and public services