The transition to a cleaner economy could unlock substantial economic opportunities, as industries that generate lower levels of PM2.5 pollution per unit of output tend to create considerably more jobs and attract higher levels of investment, according to a recent World Bank report.
The report noted that decoupling economic growth from environmental degradation remains one of the biggest challenges for economies, as environmental conditions play a critical role in shaping both employment and productivity.
It highlighted that natural resource assets, including fertile soils, healthy fisheries, and forests, provide the foundation for millions of livelihoods across agriculture, fisheries, and tourism. "Globally, 3.2 billion people rely on food systems and primary production for their livelihoods, making agriculture the world's largest employment sector," the report stated.
According to the World Bank, sectors that produce less PM2.5 pollution for every unit of output also generate significantly more employment and investment. Forestry, for instance, creates an average of more than 38 jobs for every USD 1 million invested.
The report identified three primary forces driving environmental change—scale, composition, and efficiency. As economies grow, the scale effect leads to greater resource consumption and higher pollution levels because production and consumption both increase. Meanwhile, composition effects arise when economies shift toward industries that are either more or less resource-intensive, influencing environmental outcomes positively or negatively.
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The efficiency effect, on the other hand, stems from improvements in technology and production methods that reduce the environmental footprint of each unit of output, helping to offset some of the negative impacts associated with economic expansion. "For land, air, and water resources, efficiency is the main factor offsetting the scale effect," the report observed.
The report also pointed to major inefficiencies in resource use, noting that more than 50 per cent of nitrogen fertiliser applied globally never reaches crops. Similarly, only 36 per cent of primary energy is converted into useful work or heat, with 37 per cent lost before delivery and another 27 per cent wasted at the point of use.
It further highlighted that "globally, about 30 per cent of supply, or half the Ganges River's flow, is non-revenue water, lost to leaks, theft, and metering errors." These inefficiencies not only waste valuable resources but also reduce economic returns. The report warned that pollution, depletion of natural resources, floods, and droughts pose serious risks to employment by weakening human capital and economic resilience.
"The shift toward a cleaner economy can create new economic opportunities. Investing in renewable energy, sustainable agriculture, and circular economy sectors often generates more employment per dollar invested than investing in more polluting sectors," the report said.
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