On September 21, 2021, Stepan Zemtsov, senior researcher at the Gaidar Institute’s Innovation Economics Department, took part in the 9th International Conference on Sustainable Development (ICSD 2021) “Developing the Clean Energy Transition: Innovation, Case-Studies, and Applications Towards an Inclusive and Sustainable Planet”.

Within the framework of the working session “Localizing Agenda 2030 at the Regional Level”, Stepan Zemtsov gave a presentation titled “Ecological Efficiency and Sustainable Regional Development in Russia”, which focused on the innovative approach to measuring economic growth in the regions, through the application of a DEA model.

Over the last two decades, when energy prices were on the rise or remained relatively high, Russia was implementing an extensive growth model based on raw materials, which implied exploitation of natural resources only in a few regions. In this connection, was the development sustainable across all the regions?

The report suggests an approach to comparative assessment of the environmental efficiency of regional economies, which is defined as the ratio of production of non-primary goods and services to the costs of resources (labor, capital, raw materials) and environmental costs. At the same time, this is a method of assessing relative productivity with due regard for the principles of sustainable development, and thus an indicator of the quality of economic growth.

The sustainable development model applied in the study implies a per capita GRP growth combined with environmental efficiency. The environmental efficiency of an average Russian region has been increasing since 2003 (with the exception of crisis periods), following an increase in the share of the services sector and elimination of inefficient “dirty” industries.

According to the results of econometric calculations, environmental efficiency was increasing faster in densely populated regions that demonstrated a high input of knowledge-intensive services (KIS), investment attractiveness, and intensive technology renewal (the cities of Moscow, St. Petersburg, and Sverdlovsk, Tomsk, Belgorod, Kaliningrad and other regions), as well as in several agricultural centers. Meanwhile, environmental efficiency was on the decline in the majority of northern and Siberian regions specializing in primary industries. There still exists an immense potential for improving environmental efficiency. However, for most of the regions, growth was accompanied by qualitative transformations of their economies, and more than half of the twenty-year period was spent in conditions that corresponded to an applied sustainable development model.

In many respects, these successes were achieved thanks to the system of inter-budget transfers, which ensured a proper distribution of part of the oil rent among the regions. Environmental efficiency could be further boosted through increased investment in the non-resource sector, improved energy efficiency, and reduced motorization. These changes can be accelerated in the context of the emerging crisis caused by the pandemic and falling oil prices.

The study results are available here.

You may be also interested in the following publication:

Zemtsov S., Barinova V., Kidyaeva V., Lanshina T. Ecological Efficiency and Sustainable Regional Development in Russia during the 20 Years of Resource-Based Growth // Economic Policy. 2020. Vol. 15. No. 2. P. 18-47.