It is true that OECD countries have made significant progress in tackling many important environmental problems over the past 20-30 years. They have virtually eliminated their emissions of ozone-depleting chlorofluorocarbons (CFCs) and of lead from gasoline, and have substantially increased the efficiency of their use of natural resources and energy.
But if you ask “have they done enough? Are they on track for achieving environmental sustainability?” the answer is unfortunately “no”. Emissions of carbon dioxide (CO2) in OECD countries, far from falling in line with the 1997 Kyoto international agreement on climate change, are in fact expected to increase by a third by 2020 if no major new policies are put in place, largely due to increased transport and energy use.
Urban air quality is also expected to worsen, with accompanying impacts on human health. Continued losses in biodiversity and natural habitats are expected, along with growing pollution of groundwater reserves by nutrients and toxic chemicals.
Current consumption and production patterns in OECD countries directly affect resources and ecosystems both in OECD and in non-OECD countries. For example, while most OECD countries have managed to stabilise or even increase their total forest coverage, deforestation continues at alarming rates in developing countries, often driven at least in part by demand for wood products from OECD consumers.
Over-fishing of the world’s oceans is another major environmental concern – with three-quarters of the world’s fisheries fully fished, over-fished or recovering. OECD countries are home to less than 20% of the world’s population, but are responsible for approximately half of global greenhouse gas emissions. They are vital in any effort to slow down or reverse environmental damage, even if most of the environmental damage that will result from changing climate systems falls in non-OECD countries.
What can we do to reduce these pressures on the environment? The challenge is to maintain the integrity of the systems that support life on earth and to de-couple environmental degradation from economic development. If that challenge is not met, the risk of collapsing ecosystems will become imminent.
In an effort to address the problem, the OECD has prepared an Environmental Outlook that examines recent trends and develops future projections to 2020 for the main environmental facing OECD countries are now drawing up an Environmental Strategy based on these conclusions, which lays down concrete national actions to help tackle the most pressing problems they face. The Strategy will be presented to OECD environment ministers for adoption at a meeting in Paris on May 16, 2001.
The Environmental Strategy identifies key criteria for environmental sustainability and outlines the actions needed to reverse unsustainable trends in ecosystem degradation, focusing on biodiversity, the climate system and freshwater resources. To ensure that the regenerative and assimilative capacity of ecosystems is maintained, to avoid irreversible effects such as species loss, and to avoid economic problems related to the lack of renewable resources, the strategy calls on OECD countries to promise action to protect these resources. This includes integrating these concerns into physical planning activities, to avoid habitat loss and fragmentation from land use changes, as well as the development of markets to ensure the sustainable use of natural resources. OECD countries are also asked to support non-member countries in the protection of global biodiversity.
This includes developing fair and equitable arrangements for sharing any benefits from the use of genetic resources, and developing capacity and transferring technologies to support ecosystem conservation. OECD countries can also support more sustainable use of resources in other countries through their consumption choices, for example through reducing demand for tropical timber products.
At the political level, what is most urgently needed is to stabilise concentrations of greenhouse gases in the atmosphere at an acceptable level. In order to achieve the emission reductions necessary, OECD countries will need to change their energy consumption and transport patterns.
They will also have to reduce the carbon-intensity of the energy they do use, and change agricultural and land use practices to enhance so-called carbon sinks, such as forests, that can absorb carbon gases from the atmosphere. In short, the objective has to be to de-couple pressures on the environment from continued economic growth, to de-carbonise the economy and to significantly increase resource and energy productivity.
How to achieve all of this is the question. Appropriate incentives can be created, particularly through technological innovation such as the development of hydrogen fuel cells, through market-based instruments such as carbon taxes, and through the removal of subsidies to energy use or production and strong regulatory frameworks.
The OECD Environmental Outlook shows that applying a value added tax on fuel use (increasing by between 1.2 and 2 percentage points per year) and removing all energy subsidies could reduce carbon dioxide emissions by 2020 to 25% lower for OECD countries and 11% lower worldwide than would otherwise be the case under a business-as-usual scenario. There would also be impressive reductions in air pollution from energy and transport.
The Environmental Strategy also addresses the need to reduce agricultural run-off of nutrients and chemicals, one of the main sources of groundwater degradation, and to de-couple other pressures on the environment from increased agricultural production. Again, key policy instruments would be the removal of environmentally damaging agricultural subsidies and applying a tax on chemical use in the agriculture sector.
The Outlook has shown that removing all subsidies in OECD economies, applying the fuel tax mentioned above, and introducing a tax on all chemicals use, rising at the rate of 2 percentage points per year, would result in significant environmental gains. In addition to the benefits from reduced carbon dioxide and air pollution emissions, nitrogen loading to waterways would be 30% lower in 2020 than under business-as-usual. With this policy package, the economic costs of achieving the environmental benefits were estimated to be very low, resulting in less than a 1% lower level of GDP for OECD regions overall in 2020 than under business-as-usual.
Implementing such policies is not easy, however. Massive protests in several OECD countries last year in reaction to increases in petrol prices were a stark reminder of this fact. Such concerns tend to block the adoption of cost-effective environmental policies or lead to exemptions for the most-polluting or energy-intensive industries. The OECD/EC Database of Environmentally Related Taxes already lists hundreds of environmental tax reductions or exemptions in OECD countries such as exemptions from fuel taxes for energy-intensive industries.
There is a fear in the business world that environmental policies will reduce the competitiveness of the sectors affected (e.g., energy intensive industries, agriculture, fisheries). Moreover, there is some concern that policies that raise petrol or water prices to discourage overuse may place an unfair burden on low-income households or farmers. Both barriers can be overcome. In general, increased analysis of the situation and increased international co-operation to ensure a level playing field across countries would help resolve the first one. The answer to concerns over placing too high or “unfair” burdens on low-income households is to establish policies that address the social concerns directly, such as increased income support, without encouraging environmentally damaging activities.
Most of the actions recommended in the Environmental Strategy are to be undertaken at national or local level. But the strategy also recognises the role of international co-operation in achieving changes such as reform of environmentally damaging subsidy and tax practices and in ensuring appropriate governance of global and regional resources. OECD countries have a special responsibility for addressing many global environmental problems not only as they are often the main contributors to the problems, but also because they have the resources available to tackle them.
• OECD, Environmental Outlook, Paris, 2001.
• OECD, Policies to Enhance Sustainable Development, Paris, 2001.
©OECD Observer No 226/227, Summer 2001