Many local authorities are committed to helping achieve net-zero carbon emissions. Green investments will be needed to achieve these ambitions. Such investments may create employment opportunities and help achieve other local goals such as improving health. For this reason, there is growing interest in using green investments to stimulate more inclusive and sustainable economic growth as part of the recovery from Covid-19.
This paper reviews the evidence on the local economic impacts of three types of green investments – active travel, energy efficiency and natural capital investment. Reflecting our remit as the What Works Centre for Local Economic Growth, we focus on the local economic benefits, primarily employment and health. Investments may also have other benefits, including on the natural environment and public realm, but these are not considered.
Policy lessons for local green investments
- Green investments can have local employment benefits.
- Many of the jobs created are direct as many green investments (e.g. building cycle lanes, planting trees, etc) are relatively labour intensive compared to other infrastructure investments. Some studies find employment is created in supply chains. Local areas can increase the employment benefits of green investment by ensuring residents have the skills to take up the jobs created.
- The evidence available, whilst positive, is less robust than for other local economic growth policies. This is an issue with the evidence base rather than a reflection of the value of green investments.
- The evidence is more compelling on health outcomes. This provides another important channel through which investments may deliver local economic benefits.
- The local benefits of active travel, energy efficiency and natural capital investments vary, reflecting their different objectives and characteristics. This suggests that local areas should focus on carefully assessing which green investments are better for achieving their policy goals.
- The impact on local economies will also vary as a result of the pre-existing endowments of relevant assets. For example, the energy efficiency of housing stock varies across the country. The scope to create jobs or improve health is greater in areas with a high proportion of housing that is energy inefficient.
These lessons are based on a review of the available evidence on local green investments, which follows in the paper and covers:
- Appraising local green investments
- What is green investment?
- Active travel
- Energy efficiency
- Natural capital investment
- Evidence on impacts
- Employment impacts
- Health impacts
- Other impacts
- Evidence from cost-benefit analysis
- Annex I: Scoring method
- Annex II: Summary of the evidence