Unsustainable risks

OECD Observer

Sustainable development is a fundamental global challenge and the risks from inaction are immense. But there are encouraging signs. 

An economic commentator in a British newspaper once wrote that things have become so bad, you simply have to be an optimist. How appropriate this view may appear now as attempts to give new momentum to the sustainable development train get under way in Johannesburg.

For one thing, some progress has been made in the 10 years since the 1992 Earth Summit, particularly in OECD countries. They have managed to lift their economic growth potential and social conditions while reducing certain environmental pressures. They have virtually eliminated emissions of lead from petrol and of ozone depleting CFCs, and have increased forest area. Surface water cleanliness has greatly improved too, while water use per head is falling.

This progress is encouraging since the OECD area has such a large effect on the Earth’s environment. The trouble is that so much of the world’s natural resource base continues to be overexploited or damaged, including the atmosphere, groundwater, fish stocks and crop-yielding soils. And the biodiversity on which humans depend for food and many medicines is being destroyed. Meanwhile, developing countries that aim for sustainable development find themselves held back by difficult market and technological conditions, as well as by debilitating poverty and rampant diseases.

Can anything be done? Of course. Only a profound pessimist would say otherwise; the large, seemingly intractable, global problems the world faces, like climate change, ozone depletion, deforestation, energy and food security, and health, are surmountable. The developed economies of the OECD may be held responsible for much of the mess, but nor are developing countries innocent. Everyone accepts that the solutions have to come from everyone together.

Still, the real burden of initiative lies with our leaders; that is the role of power and indeed of summits. Again, as the contributions from ministers in this OECD Observer suggest, a real international political commitment is evolving to achieve sustainable development based on its economic, social and environmental dimensions. It may be too early to talk about a perfectly holistic approach to government decision-making, but sustainable development considerations are gaining influence on policies of all types, from farm reform to international trade.

Whatever pillars are propped under the sustainable development banner, most people accept that the ultimate risk of continuing the present game without change is total loss. This does not mean halting growth, far from it. Sustainable development is about using the Earth’s resources intelligently and responsibly, hence the need for balance between the different pillars.

Politics is the art of the possible and progress depends largely on OECD countries leading by example in curbing their sizeable environmental toll on the planet. But they cannot truly expect the developing world even to be able to follow suit unless, apart from doing their utmost to help poor countries overcome debilitating poverty and disease, they also give far more access to their wealthy markets, modern technology and know-how. Without these, it is difficult to see how sustainable development could begin to take hold.

The OECD area’s 30 member countries account for about 80% of world GDP and consume about 60% of world energy supplies. Historically, they have been responsible for most of the build-up of greenhouse gases and still account for over half of world carbon dioxide emissions. CO2 emissions are expected to rise by 33% in ownership of motorised vehicles, for instance, developed countries will remain well in the lead for years to come. It is the environmental impact of questions such as this that sets the World Summit on Sustainable Development apart from, say, the Monterrey meeting on Financing for Development in March 2002.

Transport is just one area where ways to decouple activity from the environment must be found, and the guidelines on Environmentally Sustainable Transport may be a start.

Buildings are another major problem. They too use energy, often very inefficiently, and emit massive pollution too. Factories, offices, houses: all are guilty. Galloping urbanisation will worsen matters. Regulation and market innovation are beginning to improve matters, but progress could be quicker.

Then there is the rising volume of municipal waste, from used-car mountains and stacks of old tyres, to old building materials and, despite the promise of dematerialisation through technology, toxic computers. Maybe new technology and recycling will help, but it is hard to see how the pile can be fought down without tougher government rules and changes in material behaviour, particularly consumption.

The likelihood is that sustainable development solutions will come from governments and markets working together. A case in point is the steep reduction in emissions of two dangerous pollutants, nitrogen oxide and sulphur dioxide, that OECD countries have managed since 1990. Regulations helped by requiring coal-fired power plants to reduce emissions; economic considerations played their part in causing many households and power plants to switch from coal and oil to easier fuels like natural gas and to buy only cars fitted with OECD countries by 2020 and to double in developing countries. Energy demand is expected to shift towards countries like China and India, but when it comes to catalytic converters. None of this could have happened if the technology had not been available, of course, nor without public awareness and pressure. Rules, markets, technology and education combined to produce these results. They can do so again. Who knows, maybe the next economic boom will be driven by energy and environment applications, rather than information technologies, with political action helping to get the process rolling.

The OECD has advanced a number of instruments to spur sustainable development. Environmentally related taxes, for instance, can encourage producers and consumers to take the full environmental or social costs of goods into account, whether fuel, water, or plastic bags. This has proved successful in many OECD countries, particularly when combined with innovative techniques. In Denmark, for example, the tonnes of cadmium batteries turned in for safe disposal tripled in the 12 months following the introduction of a tax-rebate scheme on the batteries in 1996. In Brisbane, Australia, water demand fell by 20% in the two years following the adoption of volume based water charges in 1995-1996.

However, exemptions to environmental taxes can be significant, and are sometimes granted to the most polluting industries. And there is some resistance to them, partly out of fear of losing competitiveness, jobs or income, and also a lack of conviction that the taxes are all genuinely aimed at sustainable development and not simply lining government coffers. Policies are needed to address these concerns.

Taxes are not the only market-based instrument governments can try; tradeable permits are another and have been used with some success to reduce greenhouse gas emissions (see article page 38).

One area governments must encourage is research. Science and technology have the potential to deliver many breakthoughs, like alternative fuels, or medical properties of new plant discoveries, not to mention breeding crop strains that better resist disease. More funding of basic research may be required in some cases, removing market barriers that limit the development and dissemination of new technologies in others.

Fighting poverty

Of course, none of these innovations will mean much to people whose first concern is to survive from day to day. Millions of people suffer chronic hunger, and diseases like HIV/AIDS and malaria are destroying the very foundations of society in several countries.

OECD countries account for some 95% of official development assistance (ODA) worldwide and have no choice but to help turn this catastrophe around. That means technology transfers to improve farmland, for instance. ODA has to be made more effective and brought to a level that can help poorer countries develop the human capacities, institutions, and governance they need to take advantage of globalisation, rather than being left behind. Although most OECD countries currently fall well short of the longstanding UN target of devoting 0.7% of their gross national income (GNI) to development assistance, the new readiness to increase aid efforts expressed at the UN Conference on Financing Development in Monterrey in March 2002, has to be built upon.

Bringing down trade barriers would help. OECD countries account for three-quarters of world trade, yet many of their markets remain highly protected from poor country exports. The gain to developing countries from unrestricted access to OECD country markets for textiles and clothing, other manufactured goods, and agricultural products could total US$43 billion per year. OECD and non-OECD countries have to work together to change this and other trade distortions, including possible environmental ones, through the Doha Development Agenda under the World Trade Organization (WTO).

An important task of the OECD is to develop performance indicators of sustainable development and it plans to incorporate them into its regular country economic surveys from 2004. The results may tell us that prospects for our planet are not as hopeless as some would have it. In fact, as the evidence shows, if we can identify the problems, we will find ways to resolve them; what we will always need is concerted action to put plans into action.

R.J.C./S.K.

References

• OECD (2002), Working Together Towards Sustainable Development: The OECD Experience, available at www.oecd.org/sustainabledevelopment. 

• Rees-Mogg, W., “It’s so bad you simply have to be an optimist”, The Times, 24 September 2001.

©OECD Observer No. 233, August 2002 




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