Economic growth should not mean an accompanying increase in the pace of environmental degradation over the next decade, OECD ministers agreed at their annual meeting in May. But for this strategy to succeed, governments must be able to measure the effect of actions aimed at decoupling environmental pressures from economic growth. Removing lead from petrol is not enough: we need to be able to demonstrate that the link has been broken between increased vehicle use and increased emissions. Without such decoupling, sustainable development cannot happen. Governments have asked the OECD to develop indicators of sustainable development – economic, environmental and social – including indicators for environmental decoupling.
The OECD has carried out work on indicators for many years, including in its reviews of environmental policy in OECD and some non-OECD countries. Giving more emphasis in these reviews to the pace of decoupling will be an important part of the Environment Strategy from now on, perhaps along the lines shown in the recent review of Germany (see box). Decoupling indicators will be needed for both pollution (e.g., air, water and waste) and natural resource use (e.g., climate change, water, eco-system protection and biological diversity). The choice and the presentation of such indicators will have to be guided by their relevance to policy and by the extent of decoupling required.
Decoupling is strong when economic growth leads to at least no increase in environmental degradation. This is rather rare but has been seen in OECD countries in the case of emissions of several local air pollutants, ozone-depleting CFCs and lead emissions from petrol. Weak decoupling is more common; most OECD countries have realised some level of decoupling of environmental degradation from economic growth for energy, water and resource use in recent decades, though environmental degradation continues. In energy, for instance, total final energy use in OECD countries grew 17% between 1980 and 1998, but the energy intensity (the ratio of total primary energy supply to GDP) of economic activity fell by 16% over the same period. Unfortunately, not even weak decoupling is yet evident for some indirect sources of environmental pressure, like municipal waste generation and transport use, in particular cars, in most OECD countries.
While strong decoupling is clearly desirable in some cases, such as in toxic pollution, weak decoupling would be sufficient for natural resource use. Environmental science can help determine the “correct” level of environmental pressures, for example, by determining the maximum level of a certain pollutant that a water system can assimilate.
But setting the actual limits is a policy question. After all, in taking account of the costs and benefits to society of achieving a certain amount of decoupling, it may not always be possible to determine scientifically the “right” level of decoupling. The use of a renewable natural resource, whether water or a plant or animal species, should not exceed its regenerative capacity. Establishing the right level of use beyond that will usually involve “getting the prices right” and allowing the market to determine how much use will be made at the established price.
This means making users pay the full costs for their use of the resource, for example, by removing environmentally harmful subsidies and ensuring that firms “internalise” all of their environmental costs. Changes in consumption patterns, which may be encouraged by instruments such as eco-labelling or direct consumer pressure, often with the help of NGOs, can also slow the relative growth in demand for particularly pollution-intensive or resource-intensive goods and services. Voluntary business initiatives such as including some environmental impacts in company reporting can also help. Several organisations, such as Global Reporting Initiative, are working on ways to achieve this (see article by Robert Massie, Observer No. 226-227).
The aim of good indicators for sustainable development clearly has to be to simplify policy decisions and to ensure that reductions in one pressure are not offset by increases in another. An aggregate indicator for the overall extent of decoupling of environmental pressures from economic growth would of course be useful, but finding the right one may be a long way off. Many existing measurement systems have serious drawbacks. The “ecological footprint” approach, for instance, which uses the land needed to support the activities of a country’s people as a measure of the total pressure on the earth, may help to show whether decoupling is occurring, but not its pace. Nor does it take into account the effects of pollution, surely one of the most serious environmental problems. Another candidate, total material use, which measures the total material required per unit of GDP, suffers from the same weaknesses.
Aggregate measures may emerge in the future, but for now, indicators covering a “cluster” of environmental pressures seem more feasible. Impacts on human health measured in terms of healthy years lost because of pollution, combined with data on the health effects of specific levels of individual pollutants, could be used to produce a weighted index of local air pollution for instance. Cluster indices would make the information much more accessible, comprehensible and useful.
Whatever the approach, the right level of decoupling will be hard to calculate, whether for pollution or for natural resource use. Indeed, developing a set of policy-relevant indicators of decoupling that meet the expectations of governments and citizens, and that can be agreed on for use in the OECD’s economic, social and environmental reviews, will clearly be a major challenge over the months to come.
• Towards Sustainable Development: Environmental Indicators, OECD, 2001.
• OECD Environmental Data Compendium, 1999.
• Key Environmental Indicators, OECD, 2001.
• OECD Environmental Outlook, 2001.
• Waller-Hunter, J., “The environment: from words to action”, in OECD Observer No. 226/227, Summer 2001.
• Massie, R., “Reporting on sustainability”, in OECD Observer, No. 226/227, Summer 2001.
©OECD Observer No 228, September 2001