The OECD Environmental Strategy: Are we on track?

The OECD Environmental Strategy is in its third year. Governments cannot afford to let up on their commitments.
Director, OECD Environment Directorate

Sticking to deadlines and keeping promises has never been easy for anyone, let alone politicians, for reasons we all understand. But there are some pressing matters that require urgent firm action, not because we have made promises or undertaken commitments, but because there may not be too many second chances to get them right. Some environmental challenges are of this type.

Our economies and incomes have grown at an unprecedented pace, but in too many cases to the detriment of our natural capital. We have made progress towards several environmental goals, to be sure, such as managing demand for water and decoupling the release of air pollutants like sulphur dioxide, carbon monoxide and ozone-depleting CFCs from economic growth. But much more progress is needed. Ecosystems continue to be degraded, persistent and toxic chemicals are widespread in the environment, many fish stocks are declining, and greenhouse gas emissions – particularly from road transport and energy use – continue to grow.

In sum, the basic question still is: how can we continue to grow and overcome global poverty, while doing relatively less damage to the environment that sustains us and all our activities?

Headline summits have come and gone and some of these have helped deal with some of the issues. To make solid progress we need a road map, which is why in 2001 OECD governments adopted the OECD Environmental Strategy for the First Decade of the 21st Century (see below). We are only three years into the 10-year time frame set out in the Strategy, but it is already clear that, in a number of crucial areas, we are “not yet on track” for implementation by 2010. This is a pity now, but could become a cause of major regret in the future if irreversible damage is done to our ecosystems, our climate or our health.

To avoid reaching that point, we must act now. The Strategy highlights the key challenges under five general objectives, and lists 71 rather concrete national measures for action. The overall aim is to move closer to the goal of ensuring environmental sustainability in a cost-effective and socially equitable way. The Strategy made sense and won the endorsement of OECD environment ministers when they met on 16 May 2001 and of ministers of finance and economics the very next day.

While OECD governments are accountable to the commitments they made in the Strategy, they know that they cannot fully achieve them by themselves. This is the global world we live in. Environment ministers from ten non-OECD countries – Argentina, Brazil, Chile, China, India, Israel, Kazakhstan, Russia, Slovenia and South Africa – have been invited to join discussions at the OECD environment ministerial meeting in April 2004, to reflect on common global environmental problems, such as climate change and loss of our biodiversity. It is important to bear in mind that we cannot expect developing countries to come on board international environmental agreements unless the prosperous OECD countries are willing and able to follow through with their own commitments.

Beyond governments, it is also important to work co-operatively with business, labour and non-government organisations. For the first time ever at the OECD, we have asked representatives of these groups to participate in the ministerial meeting too. Indeed, when it comes to environmental issues, we are all members of civil society in many respects: we all contribute to some of the environmental problems, we all suffer from poor practices and benefit from progress.

Are OECD countries making progress? To use a traffic light image we have coined, in 2001 OECD identified a number of “red light” environmental issues that had to be urgently addressed (see OECD Environmental Outlook 2001). Since then, only a few of those dangerous red lights have turned to a less urgent “yellow”, and none has turned to a safe “green”. It is increasingly clear that major political or economic obstacles are blocking the path to reform.

Take the example of climate change and energy. Many OECD countries have implemented or are developing new policies to mitigate greenhouse gas (GHG) emissions at least cost. Emission trading schemes are in place in a number of OECD countries, and planned in others. Carbon or energy taxes are used in 12 countries, and a number are starting to develop project-based flexibility mechanisms, which allow countries to invest in GHG emission reductions abroad and count these reductions to help them achieve their domestic targets. All that sounds promising.

But implementing these policies is harder. The largest and most polluting energy users still often benefit from energy tax exemptions, reducing the economic efficiency of these taxes as well as their environmental effectiveness. Taxes on “dirty” fuels are set too low in most countries, giving little incentive to switch to alternative, cleaner energy sources or to develop new technologies.

Progress at the international level is even slower. The Kyoto Protocol cannot enter into force until more countries ratify it. The prospect of that happening is uncertain, especially as countries cannot agree among themselves on the science of climate change, let alone how to address it. Unfortunately, we are already too late to stop some of the human-induced changes in our climate. This means that policies to reduce greenhouse gas emissions will have to be accompanied by other measures to help us adapt to the effects of climate change, like increased occurrences of extreme weather conditions or sea-level rises.

Pollution is another major challenge. Despite improvements in technology, air quality standards continue to be breached and carbon dioxide emissions from transport are growing as fast as demand for transport rises. Much more ambitious economic and regulatory policies will be needed to reduce the environmental and social impacts of transport growth, particularly road and air transport.

As to stemming the loss of biodiversity, time is not on our side. OECD countries have been working to extend protected areas – these now reach 14.6% of the OECD’s overall land area – but biodiversity loss outside of these zones continues. The percentage of known species that are endangered is increasing, and indicators of the total numbers of vertebrates in the wild continue to register declines. Biodiversity losses like these upset the balance of life on our planet, putting survival at risk, let alone prosperity. More has to be done to integrate biodiversity goals into policies for agriculture, fisheries, tourism and forestry. This is starting to happen, but again, the lights have not switched to green. For instance, a number of key international agreements to protect the marine environment and ensure sustainable fishing have recently entered into force, thanks in part to ratification by some OECD countries, but fish stocks are still declining. And while there is a gradual trend toward the “greening” of OECD agricultural subsidies for instance, by linking them to specific environmental goals, the process remains too slow. The national action governments agreed to in the OECD Strategy of phasing out or reforming all environmentally damaging agricultural subsidies by 2010 is clearly not on track.

Why is so little being done in these areas? What obstacles stand in our way? A lack of adequate and accepted information is one of them. It is not easy to mobilise action when the consequences are long term or uncertain. Some gaps in scientific understanding – on the likely impacts of climate change on the environment and the economy, or of species loss – continue to hamper agreement on appropriate policies. Further improvements in the collection and dissemination of environmental information in OECD countries and our partners beyond will contribute to the development of more effective environmental policies, as well as ensuring increased transparency and accountability in the policy-making process.

Another obstacle is concern about possible effects of environmental policies on income distribution or competitiveness, and a concern that some social groups, like farmers, coal miners or fishers, will suffer from measures more than others. Yet it is possible to address these concerns and still ensure the environmental incentives of particular policies are maintained. For example, water pricing tariffs can be designed so that a user pays more for increasing amounts of water. This provides an incentive for consumers to minimise water use, while still allowing low-income households affordable access to essential water.

The OECD secretariat will, as mandated by our governments, continue to support countries in their efforts to implement the Strategy, through analytical work, peer reviews, information and policy advice. This is important work, but the hard decisions remain with the governments themselves to fully implement these policies and put the Strategy back on track. No one said it would be easy, but on such important environmental matters, we should not be soft on deadlines.

The OECD Environmental Strategy

The OECD Environmental Strategy identifies five inter-linked objectives for enhancing cost effective and operational environmental policies in the context of sustainable development:

  • Objective 1: Maintaining the integrity of ecosystems through the efficient management of natural resources (with a special focus on climate, freshwater, and biodiversity).
  • Objective 2: Decoupling environmental pressures from economic growth (with a special focus on agriculture, transport and energy).
  • Objective 3: Improving information for decision making: Measuring progress through indicators.
  • Objective 4: The social and environmental interface: Enhancing the quality of life.
  • Objective 5: Global environmental interdependence: Improving governance and co-operation.



References

OECD (2004), OECD Environmental Strategy: 2004 Review of Progress, Paris.

OECD (2001), OECD Environmental Strategy for the First Decade of the 21st Century, at: www.oecd.org/env/min

OECD (2001), OECD Environmental Outlook, Paris.

©OECD Observer No. 242, March 2004




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