Policy Tools That Support Transition Into a Green Economy

This briefing by the International Institute for Sustainable Development outlines policy tools for transitioning to a green economy, focusing on financing mechanisms. It uses Costa Rica's Payments for Ecosystem Services (PES) as a case study to illustrate how direct financial support, funded by taxes and international agreements, can reduce deforestation and create green jobs, while discussing the challenges of securing public funding in Manitoba.

• Financing for a green economy transition involves direct financial injections such as grants, concessional loans, and public-private partnerships. In Canada, these typically use public funding to leverage private sector investment. While this approach can bridge commercial financing gaps and drive domestic innovation, the primary challenge is the scarcity of government funding due to existing budget obligations.
• Costa Rica implemented a Payments for Ecosystem Services (PES) program, administered by the National Forestry Financing Fund (FONAFIFO), which pays landowners to conserve, rehabilitate, or regenerate forests. The program recognizes four types of environmental services: greenhouse gas emission reductions, water protection, biodiversity protection, and ecosystem protection.
• The funding for Costa Rica's PES program is derived from a mix of national and international sources. National funding comes primarily from a 3.5 per cent fuel tax and 25 per cent of water tax revenue. International funding is provided through bilateral and multilateral agreements, including support from the World Bank and the governments of Germany and Norway.
• Costa Rica's PES and the parallel PSA Solidario program—the latter focusing on the carbon market for small-scale farmers—have led to decreased deforestation, restored degraded land, and the creation of jobs. Between 1997 and 2012, the national PES program protected 934 million hectares of forest, and by mid-2012, 68 million hectares were reforested, regenerated, or conserved.

APA

International Institute for Sustainable Development (2013). Policy Tools That Support Transition Into a Green Economy. https://www.iisd.org/system/files/publications/policy-tools-transition-green-economy-financing.pdf

Chicago

International Institute for Sustainable Development. Policy Tools That Support Transition Into a Green Economy. 2013. https://www.iisd.org/system/files/publications/policy-tools-transition-green-economy-financing.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Policy Tools That Support Transition Into a Green Economy |date=September 2013 |url=https://www.iisd.org/system/files/publications/policy-tools-transition-green-economy-financing.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2013policy, author = {{International Institute for Sustainable Development}}, title = {{Policy Tools That Support Transition Into a Green Economy}}, institution = {International Institute for Sustainable Development}, year = {2013}, month = sep, url = {https://www.iisd.org/system/files/publications/policy-tools-transition-green-economy-financing.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }