Four red lights

©Philippe Lorenson/Reuters

Among the environmental threats we face today, four require urgent policy action: climate change; biodiversity loss; water scarcity; and health impacts of pollution. Here are some key messages that are closely scrutinised in the 2008 OECD Environment Outlook.


The evidence of climate change is everywhere, disturbing the earth’s physical, ecological and socio-economic spheres. Yet by stabilising atmospheric concentrations we could limit long-term global mean temperature increases to 2-3oC, rather than the 4-6oC projected in the OECD’s “business-as-usual” baseline.

This would be manageable if market instruments such as environmentally friendly taxes and emissions trading were used to put a “price” on carbon, complemented with appropriate standards, promotion of eco-innovation and sector-specific approaches.

The OECD Environmental Outlook finds that ambitious action to tackle climate change would be both affordable and achievable with such policies if all major emitters (countries and sectors) participated, if action was comprehensive and if we started now. Then, global emissions could be cut by an ambitious 40% or so by 2050 compared to 2000 levels, at an average loss of only 0.1 percentage points of GDP per year to 2050.

Determined leadership should be mobilised to implement ambitious policies in OECD countries, and in non-OECD countries, further progress should be encouraged using investment, technology transfer and development co-operation. Now is the time to make sure all new energy infrastructure and buildings are climate-friendly, particularly in rapidly expanding emerging economies. Mechanisms for sharing the cost burden with poorer countries unable to afford emissions reductions must be hammered out in international arenas.

Policy responses

  • Start today to reduce global greenhouse gas emissions.
  • To keep the cost of action low, create the conditions needed to involve all the big emitting countries in mitigation action under a post-2012 framework, i.e., when the current Kyoto agreement expires.
  • Devise measures to put a global “price” on carbon, to stimulate research, development and deployment of climate friendly technologies and clean energy systems, and provide incentives to alter consumer and business behaviours.

  • Strengthen national frameworks and strategies for better co-ordination and adaptation of climate change mitigation in areas like energy, transport, waste, land use and agriculture.
  • Expand government capacity at all levels to work more effectively with nongovernmental actors (including businesses) on both mitigation and adaptation.

What would inaction bring? An increase of over 50% of global emissions by 2050 compared with 2005, meaning higher temperatures, more volatile weather patterns, rising sea levels, and threats to human security and the economy.


An estimated 3.9 billion people (almost half of the world’s population) are expected to be living in areas with high water stress by 2030, a billion more than today, mostly in non-OECD countries. More than 5 billion people (67% of the world population) are expected to be without a connection to public sewerage in 2030, leading to increased pollution of water bodies.

Nitrogen from farms and factories inland will spoil coastal waters.

A fifth of the world’s land area will be exposed to erosion risk from water by 2030, up by more than a third, undermining crop production.

Many OECD countries have reduced water use in both absolute and per capita terms, indicating that good policies can succeed, as water use can be decoupled from economic and population growth.

In poor countries, much more global effort will be needed to meet the Millennium Development Goal (MDG) of halving the world’s population without access to water and sanitation by 2015. Some $10-30 billion per year in additional financing would help reach this MDG, a pale sum compared with the estimated $380 billion per year spent by OECD governments on subsidies to agriculture, which is by far the biggest user (75% of the total) and polluter of water.

Policy responses

  • Establish frameworks to secure sustainable financing for developing countries to build and operate water supply and wastewater treatment infrastructure and for OECD countries to upgrade theirs.
  • Tackle nutrient pollution of water from the likes of agriculture, atmospheric deposition and urban sewage, in both OECD and non-OECD countries.
  • Make agriculture pay closer to the full environmental cost for water use; rein in harmful subsidies and provide incentives for efficient water use, including take-up of technologies such as drip irrigation.
  • Strengthen management of water resources on a river-basin level, and work with jurisdictions towards optimising pricing, improving supply and solving transboundary pollution issues.

What would inaction bring?

When it comes to freshwater access, the benefits of policy intervention generally 3 4 outweigh the costs by a wide margin. The health and productivity costs of not connecting more people to clean water supply and adequate sanitation would outstrip the estimated $10-30 billion per year needed to achieving the water MDG.

BIODIVERSITY Compared with pollution or climate change, public opinion has been slow to see biodiversity as a hot, front-burner problem. But awareness of the destruction of our interdependent ecosystems has grown. As tireless Harvard campaigner EO Wilson once put it, “we need healthy, natural ecosystems with the biodiversity in them, as independently operating units, for holding and cleaning water in watersheds, soil renewal, and even the manufacture of the very air we breathe. In addition, we need them[…] to slow down the accumulation of greenhouse gases.”*

Some 12 million hectares of tropical rainforests is chopped away every year, with an area the size of Switzerland lost in south-east Asia alone, according to the 2001 OECD Environmental Outlook.

Expanding agriculture continues to steamroll over species and habitats, with another 10% of land area worldwide likely to be converted to farmland by 2030 as demand for food and biofuels rises (see Databank, page 44). Climate change will also put further pressure on biodiversity.

About 12% of the world’s land area is protected, but despite this, the diversity in particular biomes is uneven. Marine protected areas are under-represented.

Policy responses

  • Expand market-based approaches to reflect the true value of biodiversity in economic activities.
  • Expand the biomes covered by some level of protection to cover the widest possible range of biodiversity.
  • Better integrate biodiversity considerations in infrastructure decisions and policies for agriculture, fisheries, forestry and other natural resources.
  • Enhance programmes to combat the spread of invasive alien species.
  • Help support the conservation and sustainable use of biodiversity “hotspots” in developing countries.
  • Ensure that trade liberalisation does not harm biodiversity in countries expecting to expand output.

What would inaction bring?

Severe biodiversity loss would continue, as measured by human interference in particular ecosystems, or “biomes”, particularly affecting Asia and Africa. This means further damage to essential ecosystem services, such as carbon sequestration in forests to water purification in soil, or the provision of genetic material. Several sectors would be hit: the pharmaceutical industry, as many lucrative drugs are sourced from ecosystems; fisheries–Canadian authorities have paid billions of dollars to compensate fishermen for collapsed cod stocks; farming, as in France, where a shortage of bees has affected crop pollination.

*American Chemical Society (2000), “Biodiversity at the Crossroads”, interview with E.O. Wilson, in Environmental Science and Technology.


In 2000, exposure to airborne particulate matter (PM10) led to 9.6 million years of life lost worldwide. This carries a cost in terms of GDP, not least in rapidly expanding emerging markets. Air pollution is a major killer everywhere, particularly in urban areas, including in OECD countries, where many still fall short of WHO guidelines. Most legislation fails to address the specific characteristics of children and other vulnerable people. Apart from cancers, and respiratory and cardiovascular diseases, skin, throat and eye irritations linked to air and water pollution are widespread, even in developed world cities.

Energy, road transport and industry are the main sources of these air pollutants. Climate change mitigation policies could help curb some of them too: OECD analysis points to 20-30% reductions in sulphur oxides and up to 40% reductions in nitrogen oxides under the most ambitious climate change policies examined.

In OECD countries, the health impacts of water-related diseases is low except for Korea, Mexico and Turkey, where water supply and sanitation coverage need improvement.

The rapid globalisation and growth in chemicals production outside the OECD are cause for growing environmental health concern, particularly with regard to chemical safety management. OECD countries are assessing the safety of nanotechnology materials for human health and the environment (see chemicals, page 17).

Policy responses

  • Support environmental policies as a key to reduce health costs from environmental degradation.
  • Design efficient environmental policies, such as those which target several air pollutants together or which improve water quality and waste treatment at low cost.
  • Strengthen OECD air quality policies to further reduce emissions.
  • Increase financing through both development aid and direct investment, to help developing countries achieve agreed goals on access to water and sanitation.

What would inaction bring?

No new policies would drive up economic costs from harmful environmental pollutants in terms of damage to health, life-years lost and premature death. Between 2000 and 2030, premature deaths caused by ground-level ozone would be expected to quadruple (per million inhabitants) worldwide and those linked to PM10 would double.


OECD (2008), OECD Environmental Outlook to 2030, Paris.
OECD (2007), “Pollution: Health costs of inaction” in OECD Observer No 263, October l OECD (2001), OECD Environmental Outlook, Paris.

Economic data


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