Oecd Environmental Strategy: 2004 Review Of Progress

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OECD Environmental Strategy 2004 REVIEW OF PROGRESS

OECD Environmental Strategy

In 2001, OECD Environment Ministers agreed on an ambitious Environmental Strategy for the first decade of the 21st century. The Strategy set out clear directions for environmentally sustainable policies and includes five key objectives: • Maintaining the integrity of ecosystems through the efficient management of natural resources. • Decoupling environmental pressures from economic growth. • Improving information for decision-making: Measuring progress through indicators. • The social and environmental interface: Enhancing the quality of life. • Global environmental interdependence: Improving governance and co-operation.

2004 REVIEW OF PROGRESS

This report assesses the progress that OECD countries have made in implementing these objectives, as well as in applying the 71 national actions they agreed as part of the Environmental Strategy. It highlights the challenges and obstacles that remain if countries are to achieve the objectives by the planned date of 2010.

OECD Environmental Strategy

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2004 REVIEW OF PROGRESS

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ISBN 92-64-10780-0 97 2004 06 1 P

2004

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2004

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OECD Environmental Strategy 2004 Review of Progress

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came into force on 30th September 1961, the Organisation for Economic Co-operation and Development (OECD) shall promote policies designed: – to achieve the highest sustainable economic growth and employment and a rising standard of living in member countries, while maintaining financial stability, and thus to contribute to the development of the world economy; – to contribute to sound economic expansion in member as well as non-member countries in the process of economic development; and – to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in accordance with international obligations. The original member countries of the OECD are Austria, Belgium, Canada, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The following countries became members subsequently through accession at the dates indicated hereafter: Japan (28th April 1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973), Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland (22nd November 1996), Korea (12th December 1996) and the Slovak Republic (14th December 2000). The Commission of the European Communities takes part in the work of the OECD (Article 13 of the OECD Convention).

Publié en français sous le titre : Stratégie de l'environnement de l'OCDE Bilan en 2004

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PREFACE

Preface

O

ECD Environment Ministers agreed in 2001 to an ambitious plan: the OECD Environmental Strategy for the First Decade of the 21st Century. The Strategy was adopted by OECD Environment Ministers when they met on 16 May 2001 and endorsed by OECD Ministers of Finance and Economics when they met with their environment colleagues the next day. Through the OECD Environmental Strategy, OECD countries agreed to undertake 71 national actions to support the environmental pillar of sustainable development in a costeffective and equitable manner. They asked the OECD to support them in this through analytical work and monitoring implementation of the Strategy. When OECD Environment Ministers meet again on 20-21 April 2004, they will hold themselves accountable to the commitments they made in the Strategy and discuss how to strengthen its implementation. This report provides an assessment by the OECD Secretariat of the progress made so far, as background material to support the Ministerial discussions. There is some good news. Key international agreements to protect the marine environment and ensure sustainable fishing have recently entered into force, thanks in part to their ratification by some OECD countries. OECD countries have also made progress in strengthening their regulatory frameworks regarding the environmental and health impacts of living modified organisms (LMOs). Air pollution regulations have been tightened. New market-based policies to mitigate climate change – such as emission trading schemes, carbon taxes, and use of projectbased flexibility mechanisms – are in place or are planned in many OECD countries. But we are far from reaching our goals. Naturally we do not yet see the results in the environment of the new policies that have been adopted. But, in many cases, the obstacles to setting new policies continue to be intractable. Countries can not agree on the science of climate change, let alone the appropriate policies to address it. The largest and most-polluting energy users often still benefit from exemptions to energy taxes, reducing the efficiency and effectiveness of these taxes. Taxes on “dirty” fuels are set too low in most countries, reducing incentives to switch to alternative, cleaner energy sources. While there has been progress in reducing air pollution from transport, we are still far from implementing the more dramatic changes needed to address greenhouse gas emissions as well as congestion in our cities. While there has been some very gradual “greening” of agricultural subsidies, the national action agreed in the Strategy to phase out or reform all environmentally damaging agricultural subsidies by 2010 is clearly not on track. The 2001 OECD Environmental Outlook identified a number of “red light” environmental issues that need to be urgently addressed. I fear that this new assessment of progress made since 2001 shows that only a few of the red lights identified in the Outlook have turned yellow, and none have yet turned to green. The ambitious policies agreed to by countries in the OECD Environmental Strategy are essential to achieving environmental sustainability, but their full

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PREFACE

implementation will require strong political actions. The OECD Secretariat remain committed to supporting our member countries in their efforts to implement the Strategy, including through the use of OECD country environmental performance reviews to provide regular, peer-reviewed assessments of how implementation is proceeding.

Donald Johnston Secretary-General of the OECD

Acknowledgements. This report was produced to support discussions at the Meeting of OECD Environment Ministers (Paris, 20-21 April 2004), on the request of the OECD Environment Policy Committee (EPOC). A draft of the report was reviewed by EPOC and comments on specific sections were provided by its subsidiary bodies, such as the Working Group on Transport and the Working Group on Pesticides. The report was compiled by Helen Mountford and Kenneth Ruffing. A number of staff members of the OECD Environment Directorate contributed to drafting or production of the individual sections, including: Shardul Agrawala, Christian Avérous, Philip Bagnoli, JeanPhilippe Barde, Carla Bertuzzi, Gérard Bonnis, Nils Axel Braathen, Stephen Bygrave, Nadia Caid, Maria Dos Santos, Katherine Kraig-Ernandes, Jan Corfee-Morlot, Jane Ellis, Marie-Line Fontaine, Martha Heitzmann, Frédéric Gagnon-Lebrun, Brendan Gillespie, Henrik Harjula, Marie-Chantal Huet, Nicholas Johnstone, Tom Jones, Peter Kearns, Kumi Kitamori, Myriam Linster-Malaval, Laurence Musset, Ysé Serret, Richard Sigman, Henri Smets, Harald Sorby, Cristina Tebar Less, Adam Troman, Rob Visser, Peter Wiederkehr, and Frédérique Zégel. Experts in other OECD Directorates and associated bodies commented on drafts of the report, including colleagues from the Directorate for Food, Agriculture, and Fisheries; Development Co-operation Directorate; Centre for Tax Policy and Administration; Trade Directorate; the International Energy Agency (IEA); the European Conference of Ministers of Transport (ECMT); and the Nuclear Energy Agency (NEA). Experts from the Secretariat to the UN Framework Convention on Climate Change (UNFCCC) provided comments on the climate-related sections of the report. Colleagues from the Translation Division and the Public Affairs and Communication Directorate enabled the production and publication of the report in English and French. The report is published on the authority of the OECD Secretary-General.

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TABLE OF CONTENTS

Table of contents Executive summary ...............................................................................................................................

7

Introduction .............................................................................................................................................

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Objective 1. Maintaining the integrity of ecosystems through the efficient management of natural resources .......................................................................................................... 1.1. Climate.......................................................................................................................... 1.2. Freshwater.................................................................................................................... 1.3. Biodiversity ..................................................................................................................

17 19 35 49

Objective 2. Decoupling environmental pressures from economic growth................................. 2.1. Agriculture ................................................................................................................... 2.2. Transport...................................................................................................................... 2.3. Energy ...........................................................................................................................

65 67 79 89

Objective 3. Improving information for decision making: measuring progress through indicators ............................................................................................................

99

Objective 4. The social and environmental interface: enhancing the quality of life.................. 111 Objective 5. Global environmental interdependence: improving governance and co-operation ............................................................................................................... 131 Conclusions on further work in OECD ................................................................................................ 147 Acronyms and abbreviations ............................................................................................................... 153

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ISBN 92-64-10780-0 OECD Environmental Strategy: 2004 Review of Progress © OECD 2004

Executive summary

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EXECUTIVE SUMMARY

The OECD Environmental Strategy was adopted by OECD countries in 2001 The OECD Environmental Strategy for the First Decade of the 21st Century was adopted by OECD Environment Ministers on 16 May 2001, and endorsed by the OECD Meeting of Council at Ministerial Level on 17 May 2001. It identifies five inter-linked objectives for enhancing costeffective and operational environmental policies in the context of sustainable development. OECD countries identified the key challenges under these objectives, listed 71 National actions to address these challenges, and asked the OECD to support them by undertaking further work in a range of areas. The main issues highlighted in the Strategy are those identified in the OECD Environmental Outlook of 2001 as the environmental problems that most urgently need to be addressed to move toward the longer-term goal of ensuring environmental sustainability.

Much more ambitious policies will be needed to ensure its full implementation This report provides a review of initial progress in implementing the OECD Environmental Strategy. Overall, it finds that countries have made a good start in a number of areas, but much more ambitious measures will be needed if the Strategy is to be fully implemented by 2010. Current policies are insufficient to adequately protect biodiversity or address climate change, and the decoupling of environmental pressures from economic growth in key sectors is proceeding too slowly. A number of obstacles to environmental policy reform are identified in the report – including political obstacles, such as poor policy integration, and inadequate information – which will need to be faced. Increasingly, OECD Environment Ministers will have to work together with colleagues in other Ministries, colleagues in other countries, and with partners from business and civil society in order to ensure that appropriate environmental policies can be developed and implemented.

Objective 1: maintaining ecosystem integrity Objective 1 of the OECD Environmental Strategy focuses on maintaining the integrity of ecosystems through the efficient management of natural resources. It highlights three priority areas for attention: climate change, freshwater, and biodiversity. Although greenhouse gas (GHG) emissions are still growing in many OECD countries, most have reduced the GHG-intensity of their economic growth. Many have partnered with the private sector and other countries to create synergies in developing tools and new technologies to address climate change. About half of all OECD governments have carbon or energy taxes in place, a similar number have initiated formal voluntary approaches with industry to address climate change, and emission trading schemes are gaining importance.

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Further policies will be needed for OECD countries to meet their existing climate objectives, and to adapt to future climate change Nonetheless, it is clear that additional measures will be needed if the objectives of the UN Framework Convention on Climate Change are to be met, let alone the emission commitments agreed by most OECD countries under the Kyoto Protocol. While emission trading schemes, carbon-related taxes, and project-based flexibility mechanisms are only now starting to be introduced in OECD countries, they will be increasingly important components of future policy mixes to address climate change in order to keep costs to an acceptable level. Given that significant climate change impacts are expected in coming decades, despite current commitments to reduce GHGs, efforts will be needed by OECD countries to integrate adaptation to climate change into both domestic policies and development assistance programmes.

OECD countries have made progress in managing water demand, while also addressing concerns about access to and affordability of water services Most OECD countries have been able to manage their freshwater resources to ensure an adequate supply for human needs, including by expanding the use of water pricing mechanisms to manage demand. They have also given increased attention to social concerns about access to, and affordability of, water services for low income households. A greater challenge is the design and implementation of water management policies that better reflect ecosystem needs for freshwater, as well as human needs. OECD countries are committed to developing integrated water resources management plans by 2005, but will need to allocate substantial resources to ensure their proper implementation. While most countries show sustainable use of water resources at a national level, this may conceal unsustainable use in some regions (e.g. arid or semi-arid regions) and over some periods. The worst polluted water bodies have been cleaned up in OECD countries, and point source discharges to surface water have been significantly reduced, especially from industrial and urban wastewater systems. However, less progress has been made in addressing pollution arising from agricultural run-off and other non-point sources of pollution. The majority of OECD countries do not yet meet the baseline quality standard for inland waters (suitability for fishing and bathing). Moreover, the trend in most OECD countries is towards a worsening of ground water quality, particularly from elevated levels of pesticides and nitrates and, in some countries, from salinisation.

Biodiversity loss outside of protected areas continues, and common resources such as fish stocks are being over-exploited Protected areas established to achieve biodiversity-related goals have reached 14.6% of the total land area for OECD countries, and some progress has been made in creating ecological networks with corridors to connect protected areas. The management of protected areas is in need of considerable improvement, however, and the establishment of more marine OECD ENVIRONMENTAL STRATEGY: 2004 REVIEW OF PROGRESS – ISBN 92-64-10780-0 – © OECD 2004

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protected areas is urgently needed. Not enough is being done to slow habitat loss and fragmentation outside of protected areas or to apply the ecosystem approach to natural resource management, reflecting a lack of integration of biodiversity concerns in sectoral policies (e.g. agriculture, fisheries, forestry, tourism). The percentage of known species that are endangered continues to increase, and indicators of the total numbers of vertebrates in the wild continue to register declines. While a couple of the key international agreements to support sustainable fisheries management entered into force in the last few years, it is too early for their implementation to have slowed the continuing trend towards overexploitation of fish stocks. OECD countries are employing a wider array of policy instruments to provide incentives for the sustainable use and conservation of biodiversity, although total expenditures (public and private) on nature conservation is still limited. The use of market-based instruments (fees, charges, and environmental taxes) to promote sustainable use of biodiversity is increasing, as is the assignment of well-defined property rights, for example the use of individual transferable quotas in fisheries and development rights for wetlands conservation.

Objective 2: decoupling environmental pressures from economic growth Objective 2 of the OECD Environmental Strategy emphasises the need to decouple environmental pressures from economic growth in the context of working towards sustainable consumption and production patterns. It focuses on the priority sectors of agriculture, energy, and transport.

Efforts to phase-out or reform environmentally harmful agricultural subsidies need to be accelerated Some progress has been made in reducing the negative environmental pressures from agriculture, but much more is needed. Land use and soil loss have decreased, long-term reductions in on-farm biodiversity have slowed, and some decreases in greenhouse gas emissions from agriculture have occurred. However, water use in agriculture has risen, and levels of nutrient and pesticide run-off remain high in many countries. Many OECD countries have been addressing environmental impacts of agriculture through increased use of agri-environmental measures and cross-compliance requirements, whereby farmers have to meet environmental conditions to be eligible for support. However, market price support, output payments, and input subsidies – potentially the most environmentally harmful types of support – still account for 80% of total agricultural support. A positive development has been the setting up in all OECD countries of a system of regulatory oversight to address the potential environmental and health impacts of genetically modified organisms.

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Significant reductions have been made in air pollutants from transport, but more ambitious policies will be needed to tackle urban congestion and to achieve air quality standards The environmental and health effects associated with some major air pollutants from transport have been decreasing for some time in OECD countries. Emissions of most pollutants remain high, however, and limit-standards for air quality, and critical levels and loads for acidification, eutrophication, and tropospheric ozone, continue to be exceeded. Progress in noise reduction, the prevention of habitat fragmentation, and reducing run-off from transport is proceeding more slowly, due to continued expansion or road networks and overall transport activity; while carbon dioxide emissions from transport have continued to increase. Regulatory timetables for meeting air quality goals and emission ceilings have been established through 2008 in all OECD regions, based on best available control technology. Many countries have been reforming their systems of transportation taxes and charges to better target environmental externalities and congestion and to foster shifts to less environmentally harmful transport modes; some have introduced or extended tram and light rail systems, and increased the capacity of inter-city passenger rail, to encourage greater use of public transport. Only a few countries have introduced targeted policies to reduce the trend towards urban sprawl and the related environmental impacts. In terms of reducing environmental risks from maritime transport, an action plan to combat substandard shipping was agreed by OECD countries in 2001; and in Europe an accelerated timetable to phase-out single-hulled vessels in the transport of fuel oil was agreed in 2003. Until this plan is fully operational, however, marine pollution from oil and hazardous material continues to be a risk. The environmental impacts of rapidly increasing air transport also need to be addressed urgently, with air transport already responsible for about 11% of transport-related energy consumption. Better integration of transport and urban planning, as well as the use of strategic environmental assessments in transport planning, is needed.

Energy efficiency is increasing, but better pricing and faster uptake of new technologies could significantly reduce environmental impacts of energy use The efficiency of industrial, household, and commercial energy use has improved as a result of technical change, encouraged by a combination of price incentives, and regulatory and voluntary approaches addressed to buildings, appliances, and electric motors. However, much of the potential for further energy efficiency improvements remains untapped, including even low or no cost options. For example, standby power consumption, especially from consumer electronics, remains unregulated in most OECD countries. Regarding energy production and transformation, market forces and regulatory reform have fostered fuel substitution from coal to gas in many OECD countries, with resulting environmental benefits. Fiscal policies, feed-in tariff compensation, tradable renewable energy certificates, and other policies have led to rapid growth in the development of OECD ENVIRONMENTAL STRATEGY: 2004 REVIEW OF PROGRESS – ISBN 92-64-10780-0 – © OECD 2004

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EXECUTIVE SUMMARY

renewable energy sources and greater use of combined heat and power, albeit from a low base. These developments have reduced the carbon intensity of energy production and further reduced the emissions of sulphur dioxide, particulate matter, and other air-borne pollutants. In addition, several new research initiatives have recently been launched on the viability and cost-effectiveness of carbon capture and storage. The combination of structural change and improvements in energy efficiency has led to some decoupling of energy use from economic growth. However, further improvements are not likely without substantially more ambitious policies and measures, including better internalisation of environmental costs in energy prices and hence an accelerated development and diffusion of cleaner technologies.

Objective 3: improving information for decision making Objective 3 of the OECD Environmental Strategy highlights the need to improve information for decision making, including through the use of indicators to measure progress. In an effort to promote accountability, many OECD countries produce small sets of summary indicators designed for their communicative value, and some have undertaken environmental outlook exercises. The number of countries carrying out environmental data collection and dissemination work has increased, as has its thematic scope. Successes include the regular compilation of air emission inventories and the establishment of operational pollutant release and transfer registers (PRTRs) in about half of all OECD countries. Efficient web-based technologies are increasingly used for environmental information reporting and exchange. Impact assessments, cost-effectiveness studies and cost-benefit analysis are also becoming more prevalent. Agreements have been reached to extend the methodology of OECD environmental performance reviews to some non-OECD countries in the near future.

Better collection and dissemination of environmental information are contributing to increased transparency and accountability in policy making However, high quality, policy-relevant data and sectoral detail remain scarce in important areas such as biodiversity, economic aspects of environmental performance, and risks related to toxic contamination. The timeliness of data, as well as their comparability among countries and over time, still need considerable improvement. Also, many countries find it increasingly difficult to respond to expanding demands for environmental information, while maintaining continuity in core data activities.

Objective 4: addressing the social-environmental interface Objective 4 of the OECD Environmental Strategy highlights the need to address the social and environmental interface. OECD countries have continued to make progress in this area, for example though work on a Globally Harmonised System for Classification and Labelling of Chemicals, testing and assessment of endocrine disrupters, development and revision of test guidelines for chemicals, and preventing hazards from major accidents. OECD

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countries have accelerated the processes for testing and assessment of high production volume chemicals. The Rotterdam Convention on Prior Informed Consent (PIC) for chemicals trade entered into force in February 2004, and the Stockholm Convention on Persistent Organic Pollutants (POPs) will come into force in May 2004, and. A few countries have introduced measures to limit the exposure to hazardous chemicals and air pollution of particularly vulnerable groups.

OECD countries are working to address environmental and health risks related to the production and use of chemicals A few OECD countries have used some of the proceeds from environmentally related taxes to reduce labour costs, although the employment effects of this “double dividend” approach need to be assessed. Most OECD countries have used a range of measures including tariff adjustments, direct income support, and service vouchers to ensure access to and affordability of water, energy, and waste disposal services for low income households, while maintaining incentives for environmental improvements. Most OECD countries have made progress with regard to information, participation, access to justice in environmental matters, and environmental education. However, access to environmental information has been uneven when held by ministries other than environment or by semipublic bodies.

Objective 5: improving international environmental governance and co-operation Objective 5 of the OECD Environmental Strategy emphasises the need to improve governance and co-operation in light of global environmental interdependence. International environmental governance has been strengthened by the entry into force of a number of multilateral environmental agreements (MEAs). OECD countries have ratified an even larger number of environmental conventions, not all of them yet in force. They have also supported measures to strengthen the control or review mechanisms of several existing conventions, and to improve co-operation among the secretariats of MEAs. Economic agreements also increasingly include environmental elements – for example, regional and bilateral investment and trade agreements, and the 2001 Declaration of WTO Ministers (the Doha Development Agenda). Little progress has been made, however, in ratifying a number of international agreements on liability for environmental damage.

Resource mobilisation is insufficient to meet internationally agreed environmental goals, such as those on access to water and sanitation Member countries of the OECD Development Assistance Committee (DAC) have made available some USD 50-55 billion per year in the form of official development assistance (ODA) since 1998, with about USD 5-6 billion provided to environmentally related activities. DAC members are also working to mainstream responses to environmental concerns, such as climate change, into their core development assistance activities. Despite increases in foreign direct investment, resource mobilisation is currently

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insufficient to meet internationally agreed goals such as the Johannesburg commitment on access to drinking water and sanitation. OECD countries agreed in 2003 on common approaches for incorporating environmental considerations in the provision of export credits. Several OECD countries have since strengthened environmental impacts assessment requirements for projects benefiting from credit guarantees, and taken other steps to ensure transparency in integrating environmental objectives into project planning and financing decisions. They have also promoted implementation of the OECD guidelines for multinational enterprises, including their environmental components. The practice of implementing environmental management systems and issuing environmental reports has grown within the business sector of OECD countries, although few businesses engage in systematic environmental cost accounting or associated reporting, and even fewer make use of third-party certification of their reports.

Further work at the OECD: OECD will continue to support country implementation of the OECD Environmental Strategy Progress has been made in implementing most of the National actions listed in the OECD Environmental Strategy, but further measures will be needed if all are to be achieved by 2010. A number of obstacles to policy reform remain, including the need to better integrate environmental concerns in economic and sectoral policies, to address the fear of a loss of competitiveness or of social impacts, to improve scientific understanding, and to collect reliable and comparable environmental information. The OECD will continue to support member countries in implementing the OECD Environmental Strategy through analytical work on how to overcome these obstacles, and by monitoring country progress through environmental indicators and country environmental performance reviews.

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INTRODCUTION

Introduction

T

his report provides an initial review of the current implementation of the OECD Environmental Strategy for the First Decade of the 21st Century. The OECD Environmental Strategy was adopted in 2001, with the intention that it should be implemented by 2010. The progress by OECD countries in implementing the 71 national actions agreed to in the OECD Environmental Strategy is presented in this report, with both the successes and the remaining challenges highlighted.

Background The OECD Environmental Strategy for the First Decade of the 21st Century was adopted by OECD Environment Ministers on 16 May 2001, and endorsed by the OECD Meeting of Council at Ministerial level on 17 May 2001. Its purpose is to provide clear directions for environmentally sustainable policies in OECD countries, and to guide the future work of the OECD in the field of environment. The 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).

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Objective 2: De-coupling environmental pressures from economic growth (with a special focus on agriculture, transport, and energy).

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Objective 3: Improving information for decision making: Measuring progress through indicators.

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Objective 4: The social and environmental interface: Enhancing the quality of life.

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Objective 5: Global environmental interdependence: Improving governance and co-operation.

OECD countries identified the key challenges they face under these objectives, agreed 71 national actions they would take to address these challenges, and asked the OECD to support them by undertaking further work in a range of areas. The main issues addressed in the OECD Environmental Strategy are those that most urgently need to be addressed in OECD countries, as identified in the OECD Environmental Outlook of 2001. The Outlook is an economy-based outlook to 2020 of the main environmental pressures and developments, produced to support the identification of the key issues to be addressed in the OECD Environmental Strategy. The Outlook also contains analysis of the impacts of specific policies of the type reflected in the National actions countries agreed to undertake in the Strategy. The National actions identify specific environmental policies or actions OECD countries agreed to take in order to contribute to the achievement of environmental sustainability. In designing environmental policies, the

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INTRODUCTION

OECD Environmental Strategy identified four specific criteria necessary to ensure environmental sustainability: ●

Regeneration: Renewable resources shall be used efficiently and their use shall not be permitted to exceed their long-term rates of natural regeneration.

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Substitutability: Non-renewable resources shall be used efficiently and their use limited to levels which can be offset by substitution by renewable resources or other forms of capital.

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Assimilation: Releases of hazardous or polluting substances to the environment shall not exceed its assimilative capacity; concentrations shall be kept below established critical levels necessary for the protection of human health and the environment. When assimilative capacity is effectively zero (e.g. for hazardous substances that are persistent and/or bio-accumulative), effectively a zero release of such substances is required to avoid their accumulation in the environment.

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Avoiding Irreversibility: Irreversible adverse effects of human activities on ecosystems and on biogeochemical and hydrological cycles shall be avoided. The natural processes capable of maintaining or restoring the integrity of ecosystems should be safeguarded from adverse impacts of human activities. The differing levels of resilience and carrying capacity of ecosystems must be considered in order to conserve their populations of threatened, endangered and critical species.

Purpose of the report Ministers agreed in the Strategy [paragraph 2] that: The Strategy should be implemented before 2010. The OECD Environmental Performance Reviews and the environmental indicators programme will be used for the monitoring of progress. Future meetings of the OECD Environment Policy Committee (EPOC) at ministerial level will review the progress achieved in implementing the Strategy. The first opportunity for OECD Environment Ministers to review their progress in implementing the OECD Environmental Strategy will be when they meet in Paris on 2021 April 2004. This report provides the background information to support those discussions. It is expected that this will be the first of periodic reviews of implementation of the OECD Environmental Strategy by Ministers. As this review takes place only three years after the adoption of the OECD Environmental Strategy, the indications of progress achieved for most areas covered are only very preliminary. Furthermore, data and indicators to measure the achievements made are often lacking. As such, this first report on implementation is intended to provide a general overview and baseline against which future reviews can measure the progress made. It is also an opportunity to identify some of the specific challenges or obstacles to implementation of the OECD Environmental Strategy that are already apparent. Some of these include political obstacles, such as inadequate co-ordination with other parts of government and other countries, or opposition to environmental policy reforms. In other cases, the obstacles reflect gaps in the data available to monitor implementation. Finally, this report suggests a future process for implementing, and reviewing implementation of, the OECD Environmental Strategy.

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ISBN 92-64-10780-0 OECD Environmental Strategy: 2004 Review of Progress © OECD 2004

Chapter 1

OBJECTIVE 1 Maintaining the integrity of ecosystems through the efficient management of natural resources

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OBJECTIVE 1: MAINTAINING THE INTEGRITY OF ECOSYSTEMS THROUGH THE EFFICIENT MANAGEMENT OF NATURAL RESOURCES

1.1. Climate Overview of progress in addressing the main challenges The OECD Environmental Strategy identifies three main challenges facing OECD countries in tackling climate change: A. Significantly reduce global greenhouse gas emissions, with developed countries taking the lead, and protect and enhance greenhouse gas sinks and reservoirs in order to stabilise concentrations in the atmosphere over the long term at a level that would prevent dangerous anthropogenic interference with the climate system. B. Meet all obligations under the UNFCCC and work through international processes to take forward its objectives; for a large majority of OECD countries this means seeking entry into force of the Kyoto Protocol by 2002, with timely ratification processes, and with the broadest possible support of the international community. C. Further develop new technologies, market approaches and other innovative solutions to address climate change, in particular with a view to combining actions for energy savings, and efficient and low greenhouse gas-emitting technologies.

Although greenhouse gas (GHG) emissions are still growing in many OECD countries, they have grown more slowly in OECD countries as a group than they have worldwide. OECD countries’ contributions to the greenhouse effect, and rates of progress towards stabilisation, vary significantly. Carbon dioxide (CO2) emissions from energy use continue to grow, particularly in the OECD Asia-Pacific region and in North America. This can partly be attributed to energy production and consumption patterns and trends, often combined with low energy prices. In OECD Europe, by contrast, CO2 emissions from energy use have fallen since 1990, however this is largely due to economic restructuring in the early 1990s rather than the result of mitigation actions alone. Despite continued increases in absolute emission levels, most OECD countries have reduced the GHG-intensity of their economic growth. In particular, decoupling of CO2 emissions from GDP growth has resulted from economic changes; restructuring of energy supply, complemented by improvements in energy efficiency in production processes; and climate change related policies. Reductions in GHG emissions in the industrial, agricultural, and waste sectors have been an ancillary benefit of policies to tackle other environmental concerns in these sectors. In many countries, scale effects have outweighed the benefits of such improvements, so that the overall level of GHG emissions has been increasing since 1990. About half of OECD countries have implemented carbon or energy taxes, and a similar number have formal government initiated voluntary approaches with industry to address

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climate change. A few countries have earmarked some of the revenues from these taxes for climate-related programmes, in order to increase their acceptability and environmental effectiveness. About one-third of OECD countries have implemented domestic emissions trading schemes or have announced firm plans to do so. A few countries have also introduced economic incentives to encourage CO 2 sequestration through land use management, afforestation, and reforestation activities. All but three OECD countries (Australia, Turkey, and the United States) have now ratified the Kyoto Protocol to the UN Framework Convention on Climate Change, many depositing their instruments of ratification in the last couple of years. As of early 2004, however, the Protocol had not yet entered into force because of insufficient ratification. Nonetheless, for those countries that have ratified the Kyoto Protocol, it is clear that additional measures will be needed if the agreed emission commitments are to be met. To keep costs to an acceptable level, the use of emission trading schemes, carbon-related taxes, and the project-based flexibility mechanisms (i.e. the Clean Development Mechanism and Joint Implementation) allowed under the Protocol will become an increasingly important part of the policy mix used to achieve Kyoto commitments. Even in those countries that intend to remain outside of the Protocol, such instruments are expected to play a role in the policy mixes designed to deliver emission reductions. Many OECD countries have partnered with the private sector to begin to develop a range of new technologies to address climate change. These include renewable energy sources, especially wind, cleaner fossil fuel electricity generation, and carbon capture and storage in the energy sector, gas/electric hybrids and hydrogen fuel cells in the transportation sector, and energy efficient products and technology in buildings and construction, and in processing industries. Some counties have also entered into bilateral and other multilateral agreements outside of the Climate Convention to create synergies in developing tools to mitigate climate change. Given that significant climate change impacts are expected in coming decades, despite current commitments to reduce GHGs, efforts will be needed by OECD countries to integrate adaptation to climate change into both domestic policies and development assistance programmes.

Implementation of the national actions National action 1. Fully implement national commitments, such as emission limitation and reduction targets, including those established under the UNFCCC.

The United Nations Framework Convention on Climate Change (UNFCCC) contains a non-binding target for Annex I countries1 to return their national CO2 emissions to 1990 values by 2000. This target was met by only a small set of countries (mainly European countries and countries in transition), where large reductions resulted from economic change or restructuring of the energy sector. In addition, most OECD countries (see Table 1.1.1) have ratified the Kyoto Protocol to the UNFCCC, and thus accepted greenhouse gas (GHG) reduction commitments for the period leading up to 2008-2012. Nearly half of OECD countries have, for the time being, emission levels below the 2008-2012 Kyoto cap.

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Table 1.1.1. Greenhouse gas emissions in OECD countries GHG emissions1

Kyoto target3 4 1990 1990 -2008/12 1990-2001 106 tonnes % change % change CO2 eq.

Emission intensities,1 2001 Per unit of GDP2

Australia

Per capita

.. OECD ..

..

Australia Austria Belgium Canada Czech Republic Denmark Finland France Germany Greece Hungary Iceland Ireland Italy Japan Korea Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovak Republic Spain Sweden Switzerland Turkey United Kingdom United States

0.5 kg CO2-eq./USD2

0.0

Austria

78

10.0

–13

Belgium

141

6.7

–7.5

Canada

608

18.5

–6

Czech Republic

192

–22.9

–8

69

0.3

–21

Finland

77

4.7

0

France

568

0.0

0

Germany

1 214

–18.0

–21

Greece

105

26.1

25

Hungary

102

–22.7

–6

Iceland

3

–4.1

10

Ireland

53

31.5

13 –6.5

Italy

OECD ..

509

7.2

Japan

1 187

9.5

–6

Korea

289

..

n.a.

Luxembourg

..

13

–55.0

–28

Mexico

389

..

n.a.

Netherlands

210

4.6

–6

New Zealand

62

17.2

0

Norway

52

8.1

1

Poland

564

–32.2

–6

Portugal

61

36.4

27

Slovak Republic

72

–30.6

–8 15

Spain

288

33.1

Sweden

73

–3.1

4

Switzerland

53

0.7

–8

Turkey

OECD6 1.0

21.0

Denmark

..

United Kingdom

0

5 10 15 20 tonnes CO2-eq./capita

25

85

430

United States OECD6

..

..

n.a.

744

–11.7

–12.5

6 140

13.0

n.a.5

13 668

5.6

n.a.

. . not available. n.a. not applicable. 1. The sum of all six “Kyoto gases” expressed in CO2 equivalents. Data refer to domestic emissions, i.e. emitted within the national territory, and exclude CO2 emissions and removals from land-use change and forestry. They do not account for international transactions to purchase emission reduction units or certified emission reductions through the international market. 2. GDP at 1995 prices and purchasing power parities. 3. It should be noted that targets for the commitment period 2008/12 can be achieved by i) domestic policies and measures and/or ii) the use of international transactions and flexible mechanisms of the Kyoto Protocol that affect emissions outside the national territory. Kyoto targets for EU member states refer to the EU burden sharing agreement, not to original targets in the Protocol. 4. Depending on the country commitment, the base year reference may differ from 1990 GHG emissions, e.g. base year is 19851987 for Hungary and 1988 for Poland. 5. Australia and the United States have signed, but not ratified the Kyoto Protocol. Australia has announced that it remains committed to its Kyoto target, while the United States has set a target based on emissions intensity per unit GDP. 6. OECD total is the total for Annex I countries, and therefore does not include Korea, Mexico and Turkey. Source: UNFCCC, OECD.

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These mainly include transition economies and countries with commitments that allow GHG emissions growth above their 1990 levels. The majority of OECD countries have begun elaborating national climate action plans and putting in place policies for achieving related national targets.

National action 2. Expand research and assessments on the rate, timing and impacts of climate change; on technologies to respond to it; and on possible response policies; and continue to support the work of the IPCC.

OECD countries have continued to make significant investments in research and assessments on the rate, timing and impacts of climate change. There has been an increased emphasis on the assessment of regional and local impacts, as well as on adaptation policies and technologies. Several OECD countries have recently stepped up their research activities on the rate, timing, and impacts of climate change. A few OECD countries have also supported impact assessments in developing countries. However, the comprehensiveness of climate research varies greatly across the OECD. Some countries now have in place climate-focussed national research plans or long-term strategies in different areas of climate change research. This is the case of Australia, Belgium, Canada, Japan, Netherlands, Norway, the United Kingdom, and the United States. Other OECD countries – for example, Hungary – have incorporated a climate change component into broader environmental or energy research programmes, or conduct climate research on an ad hoc basis (UNFCCC, 2003a). Most OECD countries are undertaking atmospheric, oceanographic, terrestrial and spatial observations, as well as retrospective studies, to identify historical climate trends. However, data quality as well as the continuity and quality control of observations are problematic. The short-term nature of many scientific projects, especially in oceanographic and terrestrial observations, is a major cause of disruptions in data series. This contributes to the uncertainties in predicting climate change and its impacts. To address this problem, some OECD countries are working, together with developing country partners, to establish more widespread and reliable climate observations systems. Data exchange is improving among OECD countries and contributes to strengthening research efforts. For instance, it is common for OECD countries to collaborate in bi- and multilateral research projects and co-operative modelling initiatives. Access to information and transparency are critical to improving public consensus on how to address climate change and its causes. However, financial and technical constraints impede the exchange of data in some countries. These call for enhanced technical assistance and capacity building efforts, as well as fostering the non-commercial use of data. In the fields of climate modelling and impacts research, there is now greater use of transient (as opposed to equilibrium) climate model scenarios, and increased emphasis on downscaling techniques to better assess climate impacts at finer spatial scales. Socioeconomic analyses are less common. Several OECD countries have greatly improved their understanding of projected climate changes and their impacts on their economy as a whole as well as on specific sectors and regions. Comprehensive scenarios of future climate change and national impacts are being prepared by a number of OECD countries.

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Moreover, Canada, Finland, and the United Kingdom are developing indicators to monitor the impacts of climate change on their economy (UNFCCC, 2003a). In the face of uncertainties related to the climate science and projections of national impacts, governmental responses to climate change in terms of adaptation have been limited. OECD countries have concentrated their efforts on developing and assessing various technological and policy options, measures, and strategies for adaptation. The comprehensiveness of these assessments varies greatly across the OECD; many countries did not report on such activities to the UNFCCC. Nevertheless, about a dozen OECD countries have initiated work on identifying strategic adaptation priorities for the next decades. Some OECD countries – including Canada, Switzerland, the United Kingdom, and the United States – have taken initiatives in recent years to address this need by encouraging and facilitating the dissemination of research findings on climate change impacts, vulnerability and adaptation scenarios to the general public and decision-makers. Further, recognising that adaptation responses need to be integrated into decision making in other domains, a few OECD countries are putting in place mechanisms to enhance co-operation between national policy-makers and decision-makers at regional and local levels in the planning of adaptation strategies. For instance, Canada, Switzerland, the United Kingdom, and the United States have conducted impact studies in partnership with numerous stakeholders (UNFCCC, 2003a). The enhanced participation of stakeholders is also aimed at making research activities increasingly responsive to the needs of decision-makers and communities. OECD countries also assist non-member countries in adaptation activities. The majority of support has been offered in the areas of capacity building and coastal zone management.

Figure 1.1.1. Financial contributions to the IPCC since its inception OECD

Non-OECD

Organisations

Total

Million CHF 12 10 8 6 4 2 0 1988-1989

1990-1991

1992-1993

1994-1995

1996-1997

1998-1999

2000-2001

2002-2003

Source: Developed from IPCC data.

OECD countries have been the principal providers of technical expertise as well as financial support to the Inter-governmental Panel on Climate Change (IPCC) since the panel was created in 1988 in order support countries and the UNFCCC by assessing

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information relevant to the understanding of the scientific basis of risk of human-induced climate change. OECD financial contributions to the IPCC almost doubled during the preparation of the Third Assessment Report between 1996-2001, before a slight decline during 2001-2003 when no major IPCC assessment activity was underway (Figure 1.1.1). In 2002-2003 OECD countries contributed 87% of the IPCC funding. OECD countries have also hosted the Technical Support Units of all three IPCC Working Groups, and have provided a significant portion of the scientific inputs into the IPCC reports. OECD countries have also increasingly contributed to facilitating the participation of developing country experts in the IPCC assessments. Both the scientific and financial contributions of OECD countries to the IPCC are expected to increase significantly in 2004 with the launch of the Fourth Assessment cycle.

National action 3. Create incentives for emission reductions through technological and social innovation, giving priority inter alia to market-based instruments such as subsidy removal and green tax reform, tradable emission permits or quotas, international offset projects, as well as sector policies, including well targeted voluntary agreements and more rigorous regulatory enforcement.

OECD countries have developed an extensive array of policy instruments to reduce greenhouse gas (GHG) emissions, including energy taxes, emissions trading and international offset projects, and voluntary approaches (VAs).2 Many OECD countries are using a mix of policies to address GHG emissions, rather than relying on a single instrument (see Table 1.1.2). The challenge is to ensure the policies used in policy mixes to address climate change are coherent and complementary. Some examples of the use of complementary policies are the Norwegian tax and planned trading schemes (which each target a different group of economic sectors), and the planned phase-out of the energy tax in Denmark for sectors covered by the domestic emission trading scheme (DET). Taxes on energy for environmental purposes are in place in many OECD countries. A few European countries have also introduced “carbon taxes”, or carbon/energy taxes, although the tax rates used do not always reflect the carbon content of the fuels taxed (OECD, 2002). While economic efficiency arguments support the use of taxes on fossil fuels, concerns about the acceptability of additional taxes to the public and industry have made many OECD governments reluctant to apply carbon or energy taxes. All OECD countries that have implemented carbon or energy taxes have provided exemptions or reductions in the taxes to the most affected economic sectors, and in particular energy-intensive industries, in order to alleviate concerns about the impact of the taxes on economic competitiveness (see Table 1.1.3). The prevalence of such tax exemptions or reductions to energy-intensive industries is likely to significantly reduce the environmental effectiveness of the taxes, even where the taxes are combined with environmental agreements. In order to secure greater environmental effects, some countries have begun to adjust their energy tax rates upward. For example, Sweden and the Netherlands increased their energy tax rates in 2001 and 2003 respectively, after they had been lowered in the 1990s in response to industry concerns. Since 2001, domestic emission trading schemes (DETs) have gained considerable momentum in OECD countries. Although some governments designed DETs as a response to international developments on emissions trading in the Kyoto Protocol, a number of

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Table 1.1.2. Selected climate policy instruments either implemented or planned in OECD countries Government-initiated Carbon/energy voluntary taxes approaches (as of late 2002) (as of late 2002)

Emissions trading schemes (as of late 2003) Domestic

Involvement in international offset projects (CDM or JI) (as of late 2003)

EU

Investor

❍

●1

Australia

●

Austria

●

❍

●

Belgium

●

❍

●

Canada

●

❍

Czech Republic

❍

❍

●

Denmark

●

●

●

❍

●

●

●

Finland France

●

Germany

●

Host

●

● ●

●

Greece

●

Hungary

●

❍ ❍

Iceland Ireland

❍

●

Italy

●

●

Japan

●

●

Korea

●

Luxembourg

● ● ❍

● ●

❍

●

●

●

●

●

●

Mexico Netherlands

●

New Zealand

●

❍ ●

Norway

●

❍ ●

Poland ●

Portugal

●

Slovak Republic

●

Spain

●

Sweden

●

●

Switzerland

●

❍

United Kingdom

●

●

United States

●

●

❍

● ❍

● ❍ ● ● ●

Turkey ●

●

❍

●1

● Implemented measures/investing in or hosting CDM or JI projects. ❍ Planned measures/planning to invest in or host CDM or JI projects. 1. At state level only. Source: Updated from OECD/IEA (2003), OECD/IEA (2002), UNFCCC (2003a), and IEA (2003a).

these schemes are set to proceed whether or not the Kyoto Protocol enters into force (IEA/ EPRI /IETA/IDDRI, 2003). To date, GHG trading schemes are already in operation in Denmark and the United Kingdom, and are being planned or considered in Canada, Japan, Korea, Norway, and Switzerland (Table 1.1.4). Most of these schemes are expected to begin within the next two years. In October 2003, a European Union Directive [2003/87/EC] entered into force, providing for the establishment of a Community-wide GHG emissions trading scheme by 2005. The Kyoto Protocol features two project-based flexibility mechanisms – Joint Implementation (JI) and the Clean Development Mechanism (CDM) – which provide additional options to lower the cost of achieving GHG reductions by investing abroad. Several OECD countries are now exploring CDM and JI investment opportunities, and

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Table 1.1.3. Energy/CO2 taxes in industry in selected OECD countries Status

Tax applied to:

Is industry exempted?

Austria

Updated 2000

Energy

Partially – tax paid on electricity consumption by manufacturing industry subject to upper limits (absolute payments and in terms of value added).

Belgium

Planned

Energy

Planned.

Denmark

Updated 1996

CO2

Yes, if signed agreement on energy efficiency.

Finland

Updated 1998

Energy/CO2

Yes, for energy sources not used as fuels. For fuels, an exemption of 85% of the portion of tax exceeding 3.7% of value added.

France

Suspended

Energy/CO2

Yes

Germany

Implemented 1999

“Eco-tax”

Yes, 40% discount on fuel and electricity component for manufacturing industries, agriculture and forestry, further exemptions for energy-intensive industry.

Italy

Implemented 1998, suspended in 1999

CO2

No, but tax applies to fossil fuel combustion only (i.e. fossil fuels not used as energy sources are exempt).

Energy (“regulatory energy tax”)

No, there is however a ceiling on the amount of energy on which tax must be paid: 10 million kWh and 1 million m3 of natural gas (except when it is used to generate electricity).

CO2

Yes, process industries are exempted. However, alternative policy instruments for these industries are likely to be introduced from 2005.

CO2

Yes, 65% refunds are given for energy sources used as non-fuel inputs to manufacturing industries. Upper limit on payments.

Netherlands

Implemented 1996

Norway

Updated 1999

Sweden

Updated 2001

Switzerland

Planned for 2004

CO2

Yes, if have made and kept to agreements on CO2 emissions.

United Kingdom

Implemented 2001

Energy

Yes, 80% discount for industries who have taken on an emission reduction or energy efficiency target.

Source: Adapted and updated from OECD/IEA (2003).

programmes to encourage and guide the private sector in CDM and JI activities are already underway in a number of countries. The use of these international (project-based) mechanisms is being supported by a number of OECD countries through the creation of new carbon funds, investments in multilateral funds such as the World Bank’s Prototype Carbon Fund, or direct bilateral agreements with CDM host countries. These projects are still in the planning or early implementation stages. Some OECD countries planning to host JI projects are progressively establishing institutional structures necessary to support such projects, for example by setting up JI committees or focal points (OECD/IEA/IETA, 2002). OECD governments have set up voluntary approaches (VAs) – negotiated environmental agreements or voluntary programmes sponsored by governments – to address economic actors’ GHG emissions. Such approaches are increasing in number, especially in the OECD Pacific countries. Although VAs most often cover industrial CO2 emissions or energy consumption, a handful of countries have implemented VAs to address industrial process emissions or hydrofluorocarbon (HFC) emissions from refrigeration equipment (UNFCCC, 2003a). VAs can be low-cost policy instruments for governments that provide more flexibility to industries than regulatory measures. In addition, VAs can raise public awareness and stimulate action, while also playing a role in improving the capacity of industry to identify, monitor, manage and report GHG emissions. Due to the varying stringency of their targets, and their generally non-binding nature, however, the effectiveness of VAs in achieving environmental benefits beyond what might occur without the instruments has been questioned (OECD, 2003; IEA, 2003b). A Danish VA

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Table 1.1.4. Emissions trading schemes in OECD countries Coverage Canada

All GHG from large industrial emitters including thermal electricity, oil and gas, mining, pulp and paper, chemicals, iron and steel, smelting and refining, cement, lime, and glass.

Initial Permit Allocation

Interface with other instruments

Government initially committed to free allocation determined through sector specific covenants with regulatory or financial backstop.

Possible integration of previous voluntary domestic credit based systems. Development of an offsets system, involving initially forestry and agriculture, and possibly landfill gas, is underway. Links to other trading schemes envisaged.

Start-up pre-2008 possible. Denmark

CO2 from electricity production. Started in 2001.

Grandfathering.

A CO2 tax covers sectors not covered by trading scheme.

European Union

Initially CO2 only, potentially all GHGs after 2008. Covering more than 10 000 sites, emitting about 46% of EU’s CO2. Sectors include electricity and heat, iron and steel, refining, glass, and building material, and pulp and paper. Start-up in 2005.

During 2005-2007, largely free allocation by member states following a common criteria. Up to 5 % auctioning allowed during 2005-2007. Up to 10% auctioning allowed for 2008-2012.

Inclusion of project-based mechanisms under discussion. Possibility to link with other domestic trading schemes.

Japan

To be determined. Trial trading with participants from chemical, oil refinery, car manufacturing, semiconductor, and food industry in 2002.

To be determined.

To be determined.

Korea

Registry to be established by 2004 targeting GHG emissions from the manufacturing industry. There are plans to adopt a CO2 emissions trading system at a later stage.

To be determined.

To be determined.

Norway

To be determined. Start-up in 2005.

Grandfathering 2005-2007; to be determined for 2008 onwards.

In parallel with carbon tax from 2005, eventually to replace it after 2008.

Switzerland

Large emitters, companies and energy intensive producers can exempt themselves from the CO2 law by adopting absolute CO2 limits, with possibility to trade. Pilot phase 2005-2007.

Based on negotiated agreements. Free allocation.

Tax on fossil fuels will be imposed from 2004 if agreements insufficient. Interested in links to EU emission trading scheme.

United Kingdom

On voluntary basis for any firms that commit to binding targets, with the choice of CO2 only or all Kyoto gases. Launched in April 2002, the scheme will operate until the end of 2006.

Free allocation. Direct participants bid for reduction commitments in an auction for incentive monies.

Firms that negotiate Climate Change Agreements qualify for 80% discount on UK Climate Change Levy and eligibility for baseline and credit trading. This is integrated into cap-and-trading by the direct participants.

Source: Updated from OECD/IEA (2003).

scheme on energy efficiency has attempted to address this question by requiring industries to undertake all efficiency-improving projects fulfilling a common profitability criterion. The Energy Star programme of the United States Environmental Protection Agency requires partners to make all investments that exceed a particular return on investment. Many OECD countries are now experimenting with framing VAs in a wider policy framework. For instance, many governments have combined VAs with benchmarking efforts, dissemination of information on best practices and improved technologies, and government support for energy audits (UNFCCC, 2003a). Other countries exert pressure on industry by setting clearly defined, legally-binding targets, and include sanctions or regulatory options in case of non-compliance (OECD, 2003). This is the case in Switzerland, where, in the event that VAs do not deliver the expected reductions, a tax on fossil fuels will be introduced.

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France has also recently put in place a VA framework that includes a fine for non-complying companies. The most effective VAs may be such hybrid schemes, including both mandatory and voluntary elements.

National action 4. Develop and implement effective policies designed to reduce greenhouse gas emissions, including from the production and use of energy in electricity generation, greenhouse gas emission intensive sectors of the economy, transport, and agriculture.

This section addresses non-energy related GHG emissions from industry (i.e. process emissions) and from agriculture.3 Industry generates significant levels of all greenhouse gases (GHGs), except methane (CH4), through its production processes, and the use and disposal of products. Industrial-process emissions accounted for about 2% of GHG emissions in OECD countries in 2000. Some progress has been achieved in recent years in reducing non-energy industrial emissions, with emissions decreasing across OECD countries by 1% between 1990 and 2000, although this masks wide variations between gases and sectors (UNFCCC, 2003b). Across the OECD, nitrous oxide (N2O) emissions from industrial processes were almost halved between 1990 and 2000, perfluorocarbons (PFCs) declined in many countries, while no clear trend can be identified for sulphur hexafluoride (SF6) emissions. In contrast, there has been the sharp increase in HFC emissions since the mid-1990s, driven by their use in refrigeration equipment as a substitute for ozonedepleting substances phased-out under the Montreal Protocol (UNFCCC, 2003a). This is of particular concern as HFCs have much higher warming potentials than CO2. Many OECD countries have initiated policies and programmes to tackle non-energy emissions in GHG-intensive sectors. As emissions in these sectors are mostly driven by private actors, consultation with industry has been an important element of policy processes. Voluntary approaches (VAs) have been used more frequently by OECD governments in this sector than any other types of policy. Some countries also plan to address process-related emissions through proposed domestic emissions trading schemes (DETs) – such as Canada, Japan, and Norway – while the current DET in the United Kingdom addresses all GHGs from emission-intensive sectors (see Table 1.1.4). However, the EU emissions trading scheme initially only includes CO2 emissions. Fluorinated gases emitted during industrial production are addressed in many OECD countries through VAs, for example to reduce PFCs in the aluminium industry. Other examples of policies used in some OECD countries to address fluorinated gases include requirements to install abatement technologies, requirements to phase-out the gases in specific applications, or – as is the case in a few OECD countries – regulations on waste containing HFCs and PFCs. However, policies targeting fluorinated gases remain at the planning stage in many countries. Policies addressing process-related N2O emissions are relevant in those OECD countries where ammonia, nitric acid or adipic acid are produced. A handful of OECD countries used VAs with industry to foster reductions of N2O emissions, and France has been taxing N2O industrial emissions since 2000. Countries with policies in place have seen significant emission reductions in industrial N2O emissions (UNFCCC, 2003a; OECD/IEA, 2003). For example, the United Kingdom estimated N 2O emission reductions of 95% in adipic production between 1990 and 2000, and of 27% in nitric production.

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Non-energy related GHG emissions from agriculture comprise emissions of CH4 (largely related to livestock production, particularly of ruminant animals) and N 2O (primarily from agricultural soil management and manure management).4 GHG emissions from agriculture accounted for about 8% of OECD total GHG emissions in 2000. Across OECD countries, CH4 emissions from agriculture have been reduced by 13% between 1990 and 2000, while N2O emissions increased by 6% over the same period (UNFCCC, 2003b). National N2O emission trends varied greatly across OECD countries, increasing in countries that have expanded their crop production and dropping in countries reducing fertiliser use (OECD, 2001). OECD countries have primarily addressed GHG emissions from agriculture indirectly through policies designed to achieve other environmental objectives. For example, a number of countries have implemented regulations to encourage better animal manure management in order to reduce odour, nutrient losses and protect water supplies, but these policies also result in ancillary CH4 emission reductions (OECD, 1998). Policies and programmes to promote organic farming and environmentally friendly agriculture are common in OECD countries, and have proved effective to various degrees in reducing N2O and CH4 emissions. Other policies in place in OECD countries that have helped to reduce GHG emissions in the agriculture sector include policies to manage livestock and crop production, manure and fertiliser treatment and use, energy use and CO2 sequestration. A wide range of instruments are used, including standards and requirements, environmental subsidies, and public information. Environmental taxes are fairly exceptional in this sector, but are used in a few OECD countries with respect to nitrogen or nutrient inputs or emissions.5 A number of climate policies are also emerging to directly address agricultural and other non-energy GHG emissions. A Canadian proposal to include agriculture in an offset system under its proposed DET is an innovative initiative. Some OECD countries also fund research activities with respect to GHG emissions from agriculture, mainly focussing on reducing excessive application of nitrogen fertilisers and improving fodder management to reduce livestock CH4 emissions. In addition, the climate change action plan in the United States includes a set of programmes that are specifically designed to address GHG emissions from agriculture.

National action 5. Protect and enhance greenhouse gas sinks and reservoirs, taking into account other environmental concerns, such as biodiversity conservation.

Land use, land use change and forestry (LULUCF) activities such as afforestation and reforestation can play a role in tackling climate change in the short-, medium- and longterm by protecting, creating and/or enhancing CO2 sinks. CO2 capture and storage, which consists of the capture, treatment, transportation and injection of CO2 into a suitable storage environment, such as depleted oil and gas reservoirs, is at an early stage of development, but also offers the opportunity of storing CO2. The economics of, and issues associated with, CO2 sequestration through forestry activities are very different from those relating to CO2 capture and then geological storage. Although at the global level terrestrial ecosystems currently act as a CO2 sink, there is still significant potential globally to increase CO 2 uptake both from forestry and

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agricultural LULUCF activities in the OECD and through complementary climate policies (Houghton, 2002; EC, 2001). In most OECD countries, the LULUCF sector constituted a net sink throughout 1990-2000. Offsets totalled more than 30% and 39% of total 2000 GHG emissions in New Zealand and Sweden respectively (UNFCCC, 2003b). In contrast, LULUCF has been a net source of CO2 emissions for most years over the last decade in Australia, Greece, Mexico, and the United Kingdom. Between 1990 and 2000, CO2 net removal from sinks decreased significantly in OECD countries overall, although it did increase in selected countries (e.g. Norway and the Czech Republic) (UNFCCC, 2003b). In most OECD countries, CO2 sequestration has been an ancillary benefit of policies undertaken for other reasons – such as policies relating to national forest programmes, land-use management in agriculture, biodiversity conservation, and rural development. However, those countries with larger CO2 uptake potentials are now weighing climaterelated benefits progressively more in their forestry and agricultural policy reform processes. Some policies have been implemented specifically to promote CO 2 sequestration in relevant sectors, primarily focussed on encouraging afforestation and reforestation activities, or on increasing the demand for bioenergy and wood-based products (OECD, forthcoming 2004). Examples of such policies include a Dutch payment discount on the electricity production tax to reward afforestation projects, a Belgian financial compensation for converting agricultural land to forest, and sustainable forest management certification schemes in place in Finland and Sweden (UNFCCC, 2003a). To encourage the use of wood crops for electricity and heat generation, several OECD countries have set up grants and tax relief incentive measures. To date, very few countries have implemented policies aimed at increasing CO 2 sequestration in soils. A few examples include the Canadian programme to encourage no-tillage regimes and the conversion of arable lands to pasture; modifications to the United States Farm Bill which allow agriculture, conservation, and land set-aside programmes to reward credit for enhanced sequestration in soils and vegetation; and the Japanese programme promoting the use of green manure crops. Some OECD countries are increasingly engaging in research activities aimed at measuring agricultural soil organic carbon content and at setting up monitoring systems, although the commercial viability of soil sequestration remains unclear (OECD, 2003). Additional innovative initiatives to promote sinks are being considered in two OECD countries. Canada is discussing the inclusion of LULUCF activities that sequester CO2 in a proposed offset system as part of its planned domestic emissions trading system. New Zealand is designing a system that would enable carbon accumulated in eligible forest sinks to be verified and traded. CO2 capture and storage is increasingly regarded as an opportunity to offset CO2 emissions. The technical feasibility of CO 2 capture and storage has already been demonstrated; its commercial, large-scale feasibility however still has to be established, and attendant legal and environmental concerns addressed. Several national and international research and development programmes on CO2 capture and storage have been initiated in recent years, and projects to capture and store CO2 underground are currently underway or planned in a number of OECD countries, including Australia, Canada, Norway, and the United States.

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Further work in the OECD Assist countries to implement domestic policy responses to climate change, including adaptation measures, and contribute to increased institutional capacity for policy design and implementation that takes the multiple environmental benefits of policies (ancillary effects) into account.

Through the Annex I Expert Group, the OECD and the International Energy Agency (IEA) are assessing progress in the design and implementation of mitigation policies in OECD countries and countries with economies in transition. In 2003, a final report was issued on industry mitigation policies, following a Workshop on this topic. In addition, a Global Forum on Sustainable Development focused on experience with the use of emission trading to mitigate GHG in the OECD and beyond. Work on the benefits of climate policies has been underway since 2000. OECD held a major conference on some of the issues relating to improving the information for policy makers of the benefits of climate policies in December 2002, as followup to work in 2000 and 2001 on ancillary benefits of climate change. ●

Inputs to the Workshop on Benefits of Climate Policy: Improving Information for Policy Makers (12-13 December 2002) and Summary Report [ENV/EPOC/GSP(2003)3/FINAL] of the Workshop available at www.oecd.org/env/cc.

●

OECD/IEA (2003), Policies to Reduce Greenhouse Gas Emissions in Industry – Successful Approaches and Lessons Learned: Workshop Report [COM/ENV/EPOC/IEA/SLT(2003)2].

●

Ellis, J. (2003), Evaluating Experience with Electricity Generating GHG Mitigation Projects [COM/ ENV/EPOC/IEA/SLT(2003)8].

●

Philibert, C. (2003), Technology Innovation, Development and Diffusion [COM/ENV/EPOC/IEA/ SLT(2003)4]

●

Blyth, W. (2003), Green Investment Schemes and Emission Trading: Options and Issues [COM/ ENV/EPOC/IEA/SLT(2003)9].

●

OECD (2003), Voluntary Approaches in Environmental Policies: Environmental Effectiveness, Economic Efficiency and Usage in Policy Mixes.

●

OECD (2003), Environmentally Sustainable Buildings: Challenges and Opportunities.

●

IEA (2001), Things that Go Blip in the Night: Standby Power and How to Limit it.

●

IEA (2003), Cool Appliances: Policy Strategies for Energy Efficient Homes.

●

OECD (2003), “Soil Organic Carbon and Agriculture: Developing Indicators for Policy Analyses”[available at: www.oecd.org/agr/env/indicators.htm].

●

IEA (2003), Energy to 2050: Scenarios for a Sustainable Future. Facilitate dialogue and support analysis among OECD and non-OECD partners on the economic, environmental, developmental and social connections between sustainability and climate change (mitigation and adaptation) strategies, including on synergies in the implementation of the various global conventions.

The OECD Environment Policy Committee (EPOC) and the Development Assistance Committee (DAC) have been working together since late 2001 on a project exploring

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synergies and trade-offs in mainstreaming climate changes responses into development assistance, projects, and plans. As part of this project, six country case studies have been conducted, focussing on the links between climate change, natural resource management, and economic development in developing countries. The OECD will host a Global Forum on Sustainable Development Conference in late 2004 on Development and Climate Change, with participation by experts from both OECD and developing countries. The DAC has been undertaking work in the last few years on the targeting of development assistance aid to the objectives of the Rio Conventions, including the UNFCCC. ●

Development and climate change case studies: ❖ OECD (2003), “Nepal: Focus on Water Resources and Hydropower” [COM/ENV/EPOC/ DCD/DAC(2003)1/FINAL]. ❖ OECD (2003), “Bangladesh: Focus on Coastal Flooding and the Sundarbans” [COM/ENV/ EPOC/DCD/DAC(2003)3/FINAL]. ❖ OECD (2003), “Fiji: Focus on Coastal Mangroves” [COM/ENV/EPOC/DCD/DAC(2003)4/ FINAL]. ❖ OECD (2003), “Tanzania: Focus on Mount Kilimanjaro” [COM/ENV/EPOC/DCD/ DAC(2003)5/FINAL].

●

OECD (2002), “Aid Activities Targeting the Objectives of the Rio Conventions, 1998-2000”, in Creditor Reporting System Statistics, Volume 2002/1.

●

OECD (2002), DAC Guidelines on Integrating the “Rio Conventions” in Development Co-Operation.

Assess policies needed to provide incentives to achieve long-term stabilisation of greenhouse gas concentrations.

The OECD and the IEA are assessing long-term policy options that would lead to stablisation of GHG concentrations, through both the Annex I Expert Group programme and the core work in each organisation. Relevant activities cover assessment of the benefits of climate policies, as mentioned above, as well as policy incentives to encourage a shift to low-emission technology pathways.

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●

“Benefits of Climate Policy: Improving Information for Policy Makers: Workshop Summary Report” [ENV/EPOC/GSP(2003)3/FINAL]; report and working papers available at: www.oecd.org/env/cc.

●

OECD (forthcoming 2004), Biomass and Agriculture: Renewable Energy and Material Markets.

●

Philibert, C., J. Pershing, J. Corfee Morlot, S. Willems (2003), “Evolution of Mitigation Commitments: Some Key Issues”, [COM/ENV/EPOC/IEA/SLT(2003)3].

●

IEA (2002), Beyond Kyoto: Energy Dynamics and Climate Stabilisation.

●

IEA (forthcoming 2004), From Oil Crisis to Climate Challenge: Understanding CO2 Emission Trends in IEA Countries.

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IEA (2003), World Energy Outlook.

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Further analyse specific implementation options, including the options contained in the Kyoto Protocol and market-based mechanisms, against the specific criteria of maximising environmental effectiveness and economic efficiency, and considering distributive effects, and other equity implications.

As part of the OECD Global Forum on Sustainable Development, a conference was held in 2003 on greenhouse gas emission trading and project-based mechanisms and their use in OECD countries and elsewhere. ●

OECD (forthcoming 2004), Greenhouse Gas Emissions Trading and Project-Based Mechanisms in OECD and Non-OECD Countries.

●

OECD/IEA/IETA (2002), National Systems for Flexible Mechanisms: Implementation Issues in Countries with Economies in Transition, Workshop Report, May 2002. Promote the exchange of information on climate policy measures.

The OECD Environmental Performance Reviews include a review of the performance of individual OECD countries in meeting their national and international objectives related to climate change. In addition, the OECD and the IEA maintain up-to-date policy databases, providing a comprehensive record of climate and climate-related policy measures. Also, through the Annex I Expert Group, an on-going activity is to assess and exchange information on “good practices” in the implementation of sector-level climate policies. ●

OECD/EEA Environmentally Related Taxes Database [www.oecd.org/env/tax-database].

●

IEA Renewable Energy Policy Database [http://library.iea.org/renewables/index.asp].

●

IEA Dealing with Climate Change: Policies and Measures On-line Database [www.iea.org/ envissu/pamsdb/index.html].

●

OECD/IEA (2003), “Policies to Reduce Greenhouse Gas Emissions in Industry – Successful Approaches and Lessons Learned: Workshop report” [COM/ENV/EPOC/IEA/SLT(2003)2]. Contribute to the development of tools to evaluate progress.

The framework used to assess the climate policy performance of OECD countries in the EPRs has been reviewed and revised to better reflect performance in meeting the climate-related National actions and Objectives outlined in the OECD Environmental Strategy. The IEA also reviews the changes in national climate strategies using country inputs in the IEA database Dealing with Climate Change.

Notes 1. The countries listed in Annex I to the UNFCCC include most OECD countries and some countries with economies in transition. 2. See also the National actions under the “Energy” section of Objective 2 for more information. In this section, only Voluntary Approaches which involve governments (i.e. those agreed between industry and governments) are considered. 3. Policies addressing energy related emissions are discussed in the “Energy” section under Objective 2, and policies addressing transport are covered in the section on “Transport” under

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Objective 2. National action 3 of the “Climate” section provides further information on various policies in place in OECD countries to address GHG emissions. 4. CO2 is emitted from fuel combustion in agriculture and it is sequestered through agricultural activities. See also National action 5 of the “Climate” section as well as National action 2 under the “Energy” section of Objective 2. 5. See also National action 1 of the “Agriculture” section of Objective 2.

References EC (2001), “The carbon sink: Absorption capacity of the European terrestrial biosphere”, Edited by D. Schulze, A.J. Dolman, P. Jarvis, R. Valentini, P. Smith, P. Ciais, J. Grace, S. Linder and C. Brüning, Directorate-General for Research: Energy, Environment and Sustainable Development, report EUR 19883. Houghton, R.A. (2002), “Magnitude, distribution and causes of terrestrial carbon sinks and some implications for policy”, Climate Policy, 2, pp. 71-88. IEA (2003a), Dealing with Climate Change: Policies and Measures On-line Database, IEA, Paris. IEA (2003b), Energy Policies of IEA countries: 2003 Review, IEA, Paris. IEA/EPRI/IETA/IDDRI (2003), Third Annual Workshop on Greenhouse Gas Emission Trading, 23-24 September 2003, Paris. OECD (2002), “Agricultural Practices that Reduce Greenhouse Gas Emissions” [COM/ENV/EPOC/AGR/ CA(98)149/FINAL], OECD, Paris. OECD (2001a), Environmental Indicators for Agriculture Volume 3: Methods and Results, OECD, Paris. OECD (2002), Implementing Environmental Fiscal Reform: Income Distribution and Sectoral Competitiveness Issues, Proceedings of a Conference held in Berlin, Germany, 27 June 2002. OECD (2003), Voluntary Approaches in Environmental Policies: Effectiveness, Efficiency and Usage in Policy Mixes, OECD, Paris. OECD (forthcoming 2004), Biomass and Agriculture: Renewable Energy and Material Markets, OECD, Paris. OECD/IEA (2002), Dealing with Climate Change: Policies and Measures in IEA Member Countries, OECD, Paris. OECD/IEA (2003), “Policies to Reduce Greenhouse Gas Emissions in Industry – Successful Approaches and Lessons Learned: Workshop Report” [COM/ENV/EPOC/IEA/SLT(2003)2], OECD, Paris. OECD/IEA/IETA (2002), National Systems for Flexible Mechanisms: Implementation Issues in Countries with Economies in Transition: Workshop Report, May 2002, Paris. UNFCCC (2003a), “National Communications from Parties Included in Annex 1 to the Convention: Compilation and Synthesis of Third National Communications. Addendum: Policies and Measures” [FCCC/SBI/2003\7/add.2], UNFCCC, Bonn. UNFCCC (2003b), On-line searchable database of GHG inventory data.[http://ghg.unfccc.int/].

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1.2. Freshwater Overview of progress in addressing the main challenges The OECD Environmental Strategy identifies two main challenges facing OECD countries in the management of freshwater resources: A. Manage the use of freshwater resources and associated watersheds so as to maintain adequate supply of freshwater of suitable quality for human use and to support aquatic and other ecosystems. B. Protect, restore and prevent deterioration of all bodies of surface water and groundwater to ensure the achievement of water quality objectives in OECD countries.

OECD countries have been managing their abstractions of freshwater resources for a number of years to ensure an adequate supply for human needs, including through the extensive use of water pricing mechanisms to manage water demand. Increasingly, there is a move towards the use of volumetric pricing tariffs in order to reflect the marginal costs of water use and to provide incentives for efficient water use. While charges for water services to households and industry are approaching levels appropriate for full cost recovery for these services, OECD countries have had less success in reducing the often large subsidies to agricultural irrigation water. One of the main challenges facing OECD countries in managing demand for water is to adequately address social concerns regarding access to and affordability of water services. Measures have been introduced in most countries to address these concerns, and are becoming more effective as governments learn from their own and others’ experiences. OECD countries are increasingly implementing water management policies that reflect ecosystem demands for freshwater, as well as human demands. Thus, a number of countries are experimenting with ecosystem-based or river basin management approaches. OECD countries are committed to developing integrated water resources management (IWRM) plans by 2005, but their full implementation will require considerable investments. Many are starting to apply minimum flow requirements to specific water bodies, ensuring sufficient water remains to support the local ecology. OECD countries have made great progress in cleaning up the worst polluted water bodies in recent decades, and in significantly reducing point source discharges to surface waters, such as those from industrial and urban municipal systems. Less progress has been made in addressing non-point sources of pollution, such as agricultural run-off of nutrients and pesticides, diffuse pollution from traffic, deposition of heavy metals and persistent organic pollutants, and soil erosion from earthworks. While a number of OECD countries have recently started to implement policies to address agricultural pollution of

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waterways, it remains a serious problem in most countries. Overall, most OECD countries do not yet meet the baseline quality standard for inland waters (i.e. suitability for fishing and swimming). Most OECD countries have found it very difficult to protect groundwater resources, and available information indicates that in many places the trend is towards a worsening of groundwater quality. Of particular concern are elevated levels of pesticides and nitrates. Groundwater salinisation is also a problem in many countries, due to over-abstraction and low recharge rates.

Implementation of the national actions National action 1. Ensure access for all to safe drinking water and adequate sanitation.

OECD countries have greatly improved access by their populations to water supply and sanitation over the last decade, but some gaps – such as access by rural populations – remain to be filled.1 All but a few OECD countries have connected 100% of their populations to safe water supplies, whether public or private (Table 1.2.1). In general, the drinking water supplied to the main urban centres is bacteriologically safe, but countries do face some new challenges in providing safe public water supplies. Concern about the greater vulnerability of children, the elderly, and those with weakened immune systems to infection by viruses and parasites, which are often highly resistant to the usual chlorine disinfection techniques, is creating a demand for more advanced microbiological purification. Other concerns are arising with respect to the increasing need to treat water for nitrates and pesticides from agricultural run-off, levels of lead in water supplies in older

Table 1.2.1. Access to safe drinking water Access to safe drinking water1

Population connected to public water supply2

Access to safe drinking water1 (%)

Population connected to public water supply2

(%)

Year

(% )

Australia

100

2001

98

Korea

100

2001

88

Austria

100

1997

87

Luxembourg

100

1997

99

Belgium

100

1997

98

Mexico

Canada

100

1999

92

Netherlands

Czech Republic Denmark

Year

(%)

87

2001

89

100

2002

100

86

2002

90

New Zealand

100

..

..

100

2001

95

Norway

100

2002

90 81

Finland

100

1997

87

Poland

89

1999

France

100

1998

99

Portugal

100

1998

85

Germany

100

2001

99

Slovak Republic

100

2002

84

Greece

>90

100

1996

86

Spain

100

1996

Hungary

97

2000

98

Sweden

100

1997

86

Iceland

100

2002

95

Switzerland

100

1995

100

Turkey

Ireland

100

1996

80

83

1998

55

Italy

100

1999

100

UK

100

1996

99

Japan

100

2001

97

USA

100

..

..

1. WHO data. May conceal water quality problems. 2. Piped water inside the dwelling. Source: WHO; OECD.

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buildings with lead water pipes, the effect of disinfectants and disinfection by-products on finished drinking water, and the effect of increased chlorination. The share of the population connected to secondary and tertiary wastewater treatment systems, on the other hand, still needs to be increased in a number of OECD countries. Currently, approximately 65% of the population in OECD countries is connected to public wastewater treatment plants, and many of the rest use private sewage treatment (Figure 1.2.1). Achieving 100% coverage through public systems is neither technically nor economically desirable, nor is it environmentally necessary. In many OECD countries, the proportionof the population connected to a community sewerage and sewage treatment system is approaching its economic maximum. Several countries have done well in providing small treatment systems for isolated settlements. Improvement is still needed in terms of the level of sewage treatment; for some countries this will involve increasing introduction of secondary or tertiary treatment, and for most it will mean ensuring nutrient removal in sensitive areas.

Figure 1.2.1. Sewerage and sewage treatment connection rates, latest year available % 100

National population Not connected to a sewerage network

partial data available

90 80

Connected to a sewerage network without treatment

70 60

Connected to a sewerage network

50 Connected to: – primary treatment only

40 30 20

– secondary and/or tertiary no data treatment available

10 0

NLD DEU LUX AUT FIN KOR CAN POL HUN IRL TUR CHE GBR DNK SWE CZE JPN NOR BEL PRT GRC ISL

Connected to a sewage treatment plant

SVK USA ESP FRA MEX NZL ITA AUS

Source: OECD.

National action 2. Achieve agreed water quality targets and adopt additional targets necessary to ensure the ecological value of in-situ water resources and the ecological functions they provide.

Despite major efforts over the past two decades to reduce end-of-pipe discharges, a number of OECD countries cannot yet claim to satisfactorily meet the baseline quality standard for inland waters (e.g. suitability for fishing and swimming) (OECD, 2003a). While dissolved oxygen content in larger rivers is satisfactory most of the year, and bacterial contamination have been greatly reduced, for other parameters there have not been improvements. Nitrate concentrations appear to have stabilised locally, probably as a result of nitrogen removal from sewage effluents and less over-fertilisation in agriculture, but in many rivers this trend is not apparent. Pollution caused by urban stormwater run off in urban areas remains a challenge, and receiving water quality objectives in densely populated areas are often not met as a result.

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Most OECD countries have found it very difficult to protect groundwater quality. Available information suggests that in many places the trend is towards a worsening of groundwater quality. Elevated nitrate and pesticide levels are recorded in many agricultural areas, with quality standards exceeded regularly where agriculture is particularly intensive. Recent progress in shifting towards the use of pesticides that are less hazardous and persistent should contribute to a reduced impact of pesticide run-off on water bodies.2 Problems related to groundwater salinisation also exist, due to over-abstraction and low recharge rates. In estuaries and coastal areas, there has been an increase in diffuse pollution loads (e.g. from agriculture, traffic, erosion from earthworks, or deposition of heavy metals and persistent organic pollutants). The quality of coastal waters in many countries is still affected by outflows of pollutants from rivers, estuaries and coastal wastewater outfalls. Except in the case of the North Sea and Baltic Sea, clear objectives have generally not been established in OECD countries for reducing pollutant discharges in seawater (OECD, 2003a). To better protect aquatic ecosystems, there is a trend away from a uniform national approach to water management towards “place-based” approaches, reflecting consideration of the ecological value of the in-situ resources and the ecological functions they provide.

National action 3. Apply the ecosystem approach to the management of freshwater resources and associated watersheds, based on integrated river basin management.

Most OECD countries have been moving toward a more integrated approach to water management, often reflecting integrated river basin management principles or an ecosystem approach. 3 They are putting more emphasis on the biological quality of receiving waters and on the objectives set for their use at particular locations, with improved definition of ambient biological water standards commonly a first step. Such approaches often reflect a move toward water quantity and quality management at watershed or river basin level, greater consideration of interactions between urban and rural activities and water quality, and greater recognition of the need for rivers and lakes (and their beds and banks) to support aquatic life, as well as to meet human health and recreation criteria. Some OECD countries have long established river basin agencies, and many are now creating them. Other countries, while not making the river basin approach a fundamental institutional feature, are improving integration by creating ad hoc entities for protection of specific water bodies, with representation by all stakeholders. Some countries have set up so-called “river contracts” in which central and local governments, private enterprise and non-governmental organisations (NGOs) commit themselves to a set of co-ordinated actions to clean up parts or all of a river by an agreed date. This is not easy, however, as modern water management needs to take account of ecological, economic and social functions throughout an entire basin, often cutting across traditional jurisdictional boundaries. As a result, practice has not always been in accordance with the spirit of the legislation adopted. In some OECD countries, institutional capacity at sub-national level (both in terms of expertise and revenue-raising capability) has been insufficient to allow adequate implementation of integrated water management policies.

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In some cases, an integrated river basin management approach is being applied even to transboundary water resources.4 National action 4. Develop and apply legal frameworks supported by appropriate policy instruments to ensure the sustainable use of freshwater resources, including measures to enhance their efficient use.

As mentioned under National action 3 of the “Water” section, many OECD countries have been moving towards development of a more integrated approach to water management, often reflecting a river basin management or ecosystem approach. For example, the European Union Water Framework Directive [2000/60/EC] provides a comprehensive, river basin management approach to prevent and reduce pollution, promote sustainable water use, protect the aquatic environment, improve the status of aquatic ecosystems and mitigate the effects of floods and droughts in European countries. As agreed in paragraph 26 of the Johannesburg Plan of Implementation agreed at the 2002 World Summit on Sustainable Development (WSSD), all countries are committed to the development of integrated water resources management (IWRM) and water efficiency plans by 2005. IWRM aims to maximise water use efficiency and equity in the allocation of water across different social and economic groups, while protecting the water resources base and associated ecosystems. Significant progress has been made in many countries in terms of the legislation and institutions required to achieve such integrated water management. However, the implementation of IWRM systems in OECD countries will require considerable investment programmes,with clear targets and a schedule of expenses to protect aquatic ecosystems, protect against floods, improve river quality, and complete construction of adequate water infrastructure. In terms of the policy instruments used by OECD governments, some form of water pricing, combined in some cases with abstraction charges and/or tradable permits, are used to manage water demand, while a combination of technology-based, nationally uniform effluent limits and receiving water standards have been used in most OECD countries to clean up end-of-pipe discharges. There has been a marked trend in many countries toward water pricing tariff structures and levels that are more reflective of the marginal costs of water use, and thus provide stronger incentives for efficient water use.5 Similarly, as effluent is treated to a progressively higher level, marginal clean-up costs per pollution unit are rising and nationally uniform effluent limits are becoming increasingly inefficient (in that the assimilative capacity of receiving waters is not the same everywhere). Thus, while such command-and-control instruments have proven effective in reducing point discharges to date, many OECD countries are now looking to a new approach combining a wider mix of instruments to ensure an economically efficient and environmentally effective policy approach. Other policy instruments in use or planned in some countries to manage water demand and pollution discharges include use of information or awareness raising campaigns regarding water use efficiency, Pollutant Release and Transfer Registers (PRTRs), and voluntary agreements. For example, the establishment in Korea of a comprehensive programme to manage household water demand, support installation of water-saving devices, and enforce water pricing tariffs has led to a reduction in municipal water demand by 450 million tonnes in 2002 compared with 1999 demand.

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There has been a general trend in many OECD countries away from the government as the “provider” of water services, and toward the government as the “regulator” of these services (see Table 1.2.2). In many cases this has meant increasing autonomy of water utilities, and in some countries this has been accompanied by privatisation of water service systems. Most countries moving in this direction have opted for the private-public partnership or “concession” model instead, whereby the private sector participates in managing some services, but the public sector retains ownership of the system. While in many cases such a move has led to more efficient and cost-effective provision of water services, in some countries the effectiveness of the regulatory function of governments has been questioned, in particular with respect to ensuring affordable access by vulnerable populations to water services and sufficient investment in the necessary infrastructure and purification systems.

Table 1.2.2. Institutional arrangements for water services provision in OECD countries Public Supply

Ownership1 Management Economic regulator

Environmental regulator

Australia

Regional/municipal

Both

Both

Regional/independent

Provincial government

Austria

Inter-municipal/municipal

Public

Public

Municipal

Central government

Belgium

Inter-municipal

Both

Both

Federal government (prices) Regional

Canada

Regional

Public

Public

Provincial government

Provincial government

Czech Republic

Municipal

Private

Both

Central government

Central government

Denmark

Municipal

Public

Public

Municipal

Central/municipal

Finland

Municipal

Public

Public

Municipal

Central government

France

Municipal

Public

Both

Municipal

Central government

Germany

Inter-municipal/municipal/regional

Both

Both

Municipal/regional

Regional

Greece

Municipal

Public

Public

Central government

Central government

Hungary

Municipal

Public

Both

Central government

Central/independent

Iceland

Municipal

n.a.

n.a.

n.a.

Central government

Ireland

Regional

Public

Public

Regional

Central government

Italy

Municipal

Public

Public2

Central/regional

Central/regional

Japan

Municipal

Public

Public2

Central government

Central government

Korea

National/regional

Public

Public

Central/regional

Central government

Luxembourg

Municipal

Public

Public

Municipal

n.a.

Mexico

Municipal

Public

Both

Central government

n.a.

Netherlands

Municipal

Public

Both

Central/regional

Central/regional

New Zealand

Municipal/regional

Public

Both

Central government

Central government

Norway

Municipal

Both

Both

Central government

Central/regional/municipal

Poland

Municipal

Public

Public

Municipal

Municipal

Portugal

Municipal/regional

Public

Both

Central government

Central government

Slovak Republic

Inter-municipal/municipal

Both

Both

Central government

Central government

Spain

Municipal

Public

Both

Central government

Central/independent

Sweden

Municipal

Public

Public

Municipal

Regional

Switzerland

Municipal

Public

Public

Central government

n.a.

Turkey

Municipal

Public

Public

Central government

Central/regional

United Kingdom (England and Wales)

Regional

Private

Private

Independent

Independent

United Kingdom (Scotland)

Inter-municipal/municipal/regional

Public

Public

Regional

Regional

United States

Municipal

Both

Both

Independent

Independent

n.a. not available 1. “Both” means public and private ownership structures co-exist. 2. Private management exists but is marginal. Source: Adapted from OECD (1999).

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National action 5. Establish policies aimed at recovering the full costs of water services provision and the external costs associated with water use, and provide incentives to use water resources efficiently (demand side management), taking the social impacts of such policies into account.

There is growing acceptance in most OECD countries of the need for full cost recovery in the provision of household, industrial and agricultural water services. Many are working towards application of the Polluter Pays and User Pays Principles. Most use a range of economic instruments to provide incentives for efficient water use, including introducing or increasing water prices or charges and making them more reflective of the marginal costs of water use, reducing or abolishing subsidies to water use, introducing abstraction or pollution charges, and even using tradable abstraction or pollution permits. Service fees for municipally supplied water services are in place in almost all OECD countries. In about one-third of countries, they now cover the full operational and maintenance cost of operating water facilities and may include all or part of capital costs. While increasingly municipal water users (both households and small businesses) pay water prices that closely reflect the economic costs (investment, operation and maintenance) of water services provision, cross-subsidies between different user groups are common. Few municipal water prices reflect the environmental costs of water use. Irrigation in agriculture receives the largest subsidies to water use in OECD countries, and in a number of countries it is provided for free. While the water quality needed for irrigation use is less than that required for potable water, the infrastructure and operating costs of irrigation systems are often quite substantial. Despite this, evidence indicates that OECD households and industries may pay as much as 100 times as much as agricultural users (Figure 1.2.2).

Figure 1.2.2. Comparison of agricultural, industrial and household water prices in selected OECD countries (late 1990s or early 2000s) Agriculture

Industry

Households

US$/m3 3.5 3.0 2.5 2.0 1.5 1.0 0.5

St at es

om

d ite Un

ite d

Ki

ng d

Tu rk ey Un

Sp ain

bl ic Re pu

nd s Sl

ov ak

th

er la

ga l Ne

Po rtu

ry ng a Hu

ee ce Gr

ce Fr an

a na d Ca

a st ri Au

Au st

ra

lia

0

Data on industrial water prices were not available for Australia, Austria, and Greece. Source: Adapted from OECD (2001).

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The structure of water pricing tariffs vary considerably amongst OECD countries, but there is a trend away from fixed charges (e.g. based on dwelling size or number of occupants) and toward two-part tariffs which include both a small fixed component (to reflect fixed costs such as connection or metering costs) and a volumetric component to reflect the levels of water consumed. The structure of wastewater charging systems tends to closely follow that of household water supply systems in most OECD countries, and so is based on the water used rather than the wastewater produced. By charging consumers based on the actual volume of water used, volumetric pricing systems provide incentives for efficient water use. The metering of water consumption is a prerequisite for the application of volumetric charging systems. About two-thirds of OECD countries already meter more than 90% of single-family houses. In apartment blocks, where the majority of OECD populations live, metering of water use in individual apartments is less common or even non-existent in a number of countries. Within volumetric charging systems, the trend is away from decreasing-block tariffs and towards increasing-block ones, in which the charge increases with each additional unit of water used or wastewater treated, further strengthening incentives for efficient water use. Some countries have also been experimenting with “peak pricing” arrangements, especially seasonal pricing, in order to better manage demand. Direct abstractions from the environment represent roughly 75% of total water consumption by industry in OECD countries. Many OECD countries have implemented resource charges for direct pollution and/or withdrawal by industry and, to a lesser extent, agriculture users. Abstraction charges for ground and/or surface waters are in use in about half of all OECD countries. They are usually based on the maximum withdrawal rate permitted by an abstraction licence or on the actual volume withdrawn. In some countries they are based on the source (ground or surface) or the availability of water in place or time (i.e. seasonal). In most cases, abstraction charges were created to raise revenue for administration and management costs, so that their level is generally low. Pollution charges for discharging effluent to natural waters now exist in more than a dozen OECD countries. They can be based on volume only or also on the effluent’s pollution content. In some countries unit rates vary with the capacity of the receiving environment to assimilate the effluent; in others they vary with the size of the enterprise and the type of activity. Pollution charges are often quite high, and as a result there is a trend towards increased inhouse water recycling or water treatment in large industries. Municipal water prices have continued to increase in OECD countries, but the rate of increase has been slowing. During the first half of the 1990s, municipal water prices rose on average by about 3.7% annually, but this slowed to just under a 2% increase per year by the late 1990s and early 2000s (OECD, 2003b). This may in part reflect public opposition faced by many municipalities in raising water charges. Consumers’ willingness to pay is likely to become an increasing concern, as more countries move towards full cost internalisation and as water-related expenditures continue to rise to meet higher drinking water standards and to cover replacement of pipe networks and upgrading of sewage treatment systems. In order to address social concerns about affordability of and access to water services, most OECD countries have introduced some combination of measures to make water more affordable to the population at large and to selected groups of people (e.g. large families, pensioners, poor people) (Table 1.2.3). These measures include reducing the VAT or waste water tax, use of progressive social tariffs, providing targeted assistance for water to poor

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Table 1.2.3. Measures to make drinking water more affordable Reduced Large VAT2 subsidies1

Reduced Progressive WWT3 tariff4

Australia

Yes

Social tariff5

Targeted No disassistance6 connection7

Free block8

Yes

Canada

Yes

Czech Republic

Yes

Yes

Yes

Yes

Yes

Yes

Yes Yes Yes Yes

Yes

Germany

Yes

Greece

Yes

Hungary

Yes

Yes/No12 Yes

Yes

Yes Yes

Yes

Yes

Yes

Yes

Yes

Iceland

Yes

Ireland

Yes

Italy

Yes

Japan

Yes Yes Yes

Yes

Yes

Yes

Yes

Yes

Slovak Republic

Yes

Spain

Yes Yes

Turkey

Yes

United States

Yes Yes Yes

Yes

Yes

Yes

Yes Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes Yes Yes Yes

Sweden Switzerland

Yes

Yes Yes

Yes

Yes

Yes Yes

Norway Yes

Yes

Yes/No12

Yes

New Zealand

Portugal

Yes

Yes

Yes

Poland

Yes

Yes Yes

Yes

Luxembourg Yes

Yes

Yes Yes

Netherlands

Yes

Yes

Korea Yes

Yes Yes

Yes

France

United Kingdom

Yes Yes

Denmark

Yes Yes

Yes

Finland

Income support11 Yes

Yes

Belgium

No fixed fee10

Yes

Austria

Mexico

Unmetered9

Yes

Yes

Yes

Yes

Yes

Yes Yes

Yes Yes

Yes/No12

Yes

Yes

Yes

Yes

Yes Yes

1. Subsidies for water supply and/or sanitation over 30% of service cost. 2. VAT on water below normal rate. 3. Reduced waste water tax or other water charges for the poor. 4. Progressive water tariff in general use. 5. Social water tariff (reduced price for certain groups of users). 6. Targeted assistance, i.e. grants or forgiveness of arrears for water provided to poor people. 7. No disconnection of water supply of poor people with arrears for water or for municipal tax. 8. Provision of a first block at zero price for poor people or all people. 9. Provision of water to individual dwellings is unmetered in most cases (flat rate tariff for households). 10. Only proportional fee. 11. Income support for poor people. 12. Used, but not in most cases. Source: Adapted from Academy of Water (2002).

people (e.g. free initial amount, grants, forgiveness of arrears), avoiding water disconnection and abolishing annual fixed fees (OECD, 2003c). National action 6. Significantly reduce water network leakage.

Water losses in municipal networks are estimated to average around 30% in most OECD countries, often exceeding the economically optimum level – estimated to be on average between 10 and 20%, depending on the nature of individual systems. A number of OECD ENVIRONMENTAL STRATEGY: 2004 REVIEW OF PROGRESS – ISBN 92-64-10780-0 – © OECD 2004

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OECD countries have been replacing or upgrading old water services pipe networks, and in this context have been able to sometimes significantly reduce water network leakage, to as little as 10-12% in some countries. For many others, water network leakage remains a problem. Reducing such leakage, as well as encouraging greater water conservation efforts by both industrial and municipal users, could lead to a stabilisation or even decline in total water demand. While significant investments are needed to reduce water network leakage, reducing leakage in some cases could lead to the avoidance or postponement of expensive infrastructure investments to expand water supply systems, including environmentally intrusive measures such as the construction of dams and reservoirs. National action 7. Develop appropriate strategies to manage watersheds ecologically to prevent extreme flood and drought risk.

Most OECD countries face some seasonal or local water quantity problems, such as seasonal droughts, shrinking groundwater reserves, or falling groundwater tables. A number are threatened by major floods or droughts, with severe economic and social impacts. There is a risk that climate change will exacerbate such extreme weather events. Flood damage has been significant in some OECD countries in recent years, and in some regions has been accompanied by economic losses of up to a few per cent of GDP. While intense rainfall is a natural occurrence, the magnitude and velocity of the ensuing large water flows are affected by human actions, as is the vulnerability of human settlements to flooding and erosion. Natural flooding has been exacerbated in many cases by fragmentation of responsibilities and lack of integration of policies relating to flood protection, land use planning, and flood damage compensation. Even where coherent policies are in place, land use and building height restrictions in flood plains are not always respected, and compensation payments may even permit property owners to return to the pre-flood status quo that led to the damage in the first place. Some countries which have experienced major flooding recently – such as those around the Rhine basin, in Central Europe, and Korea – have implemented catastrophe plans to take preventative actions against future events where possible, and to ensure better management of the catastrophes where avoidance is not possible. There is an increasing incidence of local and regional droughts and water crises, particularly in regions where water stress is already relatively high. While water stress levels are low or moderate in most OECD countries, several have extensive arid or semiarid regions in which local water stress is high and severe droughts are common. In many of these regions, strong water demand management policies – such as high municipal water prices and limits on total water abstraction – are being used to manage demand, but often these are not sufficient and available water resources continue to be depleted.

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National action 8. Ensure co-operation for the environmentally sound management and efficient use of transboundary water resources to reduce flood risks and to minimise potential conflicts from the use or pollution of transboundary water resources.

OECD countries have made considerable progress in recent years in resolving issues relating to transboundary waters. Bilateral, regional or multilateral agreements have now been reached for most such waters, and more effective new agreements have replaced earlier ones. Countries have implemented the OECD Recommendations on Principles Concerning Transfrontier Pollution [C(76)55] and on Water Management Policies and Instruments [C(78)44] adopted in the mid-1970s. Multilateral conventions have been adopted and are being implemented, such as the 1992 UN/ECE Helsinki Convention, which set general rules for transfrontier waters in Europe. Numerous bilateral or multilateral plans and strategies are in place (e.g. for the Great Lakes, Lake Geneva, the Rhine, the Danube). Some international agreements include emergency preparedness plans and flood prevention plans. Several large basins – such as the Rhine and Danube – are now managed in the framework of international agreements, with a basin committee and a permanent secretariat. A decision of the International Court of Justice concerning the waters of the Danube at the Hungary/Slovakia border has brought official recognition of Principle 21 of Stockholm6 as a principle of customary law in matters of both damage and use of water resources. However, the issue of equitable apportionment of waters between riparian states of a given river is still not settled. Measures to avoid international disputes over water use arising from water diversion, such as prior information and notification, have been used where a river’s regime has been changed (e.g. the Euphrates river) or where bilateral agreements have been negotiated between countries (such as for the Scheldt, Meuse, Danube, Oder, and Rhine rivers, and for Portuguese-Spanish river basins). In the case of transboundary water pollution, common standards have been agreed in a number of cases to avoid disputes, such as within the European Union, or integrated river basin management systems have been introduced. Quantified discharge/emission reduction targets for a large number of pollutants have been set for various rivers and for inputs to the North Sea and Baltic Sea. As a result of such measures, monitoring of some of the most contaminated transboundary waters in OECD countries shows declining pollution levels. In some cases, in order to reflect principles of common but differentiated responsibilities, there have been financial transfers between countries to overcome differences in environmental protection priorities, for example along the US/Mexico border and with wastewater discharges to the Baltic Sea. National action 9. Provide support for capacity building and technology transfer to assist developing countries in managing and developing their freshwater resources in a sustainable manner, and in ensuring safe drinking water and adequate sanitation.

A significant portion of development assistance from OECD countries supports developing countries in the sustainable management of their freshwater resources. Support to water supply and sanitation through DAC country bilateral aid and multilateral aid amounts to a total of about USD 3 billion a year, with an additional USD 1-1.5 billion a

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year provided in the form of non-concessional lending (OECD, 2003d). Total bilateral aid to the sector has been declining since the mid-1990s, in part reflecting cuts in ODA in general, but also reflecting a decline in the share of aid to the water sector in total sector-allocable ODA. Over the 1990s, aid to the water sector declined from about 11% to about 9% of total sector-allocable bilateral aid and from 7% to 6% of multilateral outflows (Table 1.2.4).

Table 1.2.4. Water supply and sanitation aid commitments by DAC donor (1996-2001, annual average and share in total sector-allocable aid1) USD million 1996-1998 Japan

% of total aid 1999-2001

1996-1998

1999-2001

1 442

999

14

14

Germany

435

318

19

11

United States

186

252

6

4

United Kingdom2

116

165

8

7

France

259

148

13

13

Netherlands

103

75

8

7

Denmark

103

73

15

13

Spain

23

60

4

8

Austria

34

46

17

18

Australia

23

40

3

6

Sweden

43

35

6

6

Norway

16

32

4

5

Italy

35

29

14

9 6

Switzerland

25

25

7

Canada

23

22

4

4

Belgium

12

13

4

4

Finland

18

12

11

8

Luxembourg

2

8

4

13

Ireland

6

7

7

7

Portugal

0

5

1

3

New Zealand

1

1

2

2

2 906

2 368

11

9

Total DAC Multilateral aid Total bilateral and multilateral aid

575

730

7

6

3 482

3 098

10

8

1. About 60-75% of DAC members’ bilateral ODA is sector allocable. Contributions not susceptible to allocation by sector (e.g. structural adjustment, balance-of-payments support, actions relating to debt, emergency assistance, internal transactions in the donor country) are excluded from these numbers in order to better reflect the sectoral focus of donors’ programmes. 2. A DFID study shows that since 1999 actual expenditure for water supply and sanitation is about double the levels reflected here. Approximately half of the UK water expenditure takes place within multisector projects. Source: OECD, DAC CRS.

Through the UN Millennium Declaration, all member states of the UN agreed in 2000 to the objective of halving the proportion of people in the world who do not have access to safe drinking water by 2015. In Johannesburg, the World Summit for Sustainable Development in 2002 adopted the same objective as well as the objective of halving the proportion of people who do not have access to basic sanitation. It is estimated that achieving these goals would require additional financing of USD 10-49 billion per year, on top of current investments to the sector of about USD 30 billion (World Panel on Financing Water Infrastructure, 2003). ODA represents a relatively small fraction of current investment in water supply and sanitation in developing countries, and it is likely that

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strengthening other forms of financing as well as bilateral and multilateral aid will be important if these targets are to be met, including raising revenues internally through water charging and general taxation, better management of public expenditures on water, private sector investment, etc.

Further work in the OECD Provide information and analysis related to transboundary water resources and security threats from water scarcity or pollution.

No recent work of relevance. Compare the performance of water management systems of OECD countries and the achievement of water management objectives, and disseminate lessons learned accordingly.

OECD Environmental Performance Reviews usually contain a chapter on the management of water resources in the country reviewed. A report on the progress and challenges in water management faced by OECD countries, which summarised the information provided in these water chapters, was published in early 2003. A report drawing together lessons learned in OECD and selected non-member countries on specific water management issues – including regarding water pricing, public-private partnerships for water management, technological solutions for improving drinking water quality, and aid to the water supply sector – was produced in 2003. Both these reports, and other OECD work related to water management, were widely disseminated at the 2003 Third World Water Forum (Japan, March 2003). ●

OECD (2003), Environmental Performance Reviews: Water.

●

OECD (2003), Improving Water Management: Recent OECD Experience. Analyse social issues regarding access to freshwater resources, and the design of water management policies and cost recovery systems.

A report exploring the links between social issues and the provision of water supply and sanitation services in OECD countries was released in early 2003. It focussed on addressing concerns regarding affordability of water services, the potential role of the private sector, and issues relating to access to water services. A report summarising work with selected non-OECD countries on sources of financing for water infrastructure was also released in 2003. ●

OECD (2003), Social Issues in the Provision and Pricing of Water Services.

●

OECD (2003), Financing Strategies for Water and Environmental Infrastructure. Compare practices and disseminate lessons learned regarding the design and use of domestic transferable permit schemes for water use and pollution.

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As part of a larger study on the design and use of domestic tradeable permit schemes, a case study was published in on the use of domestic tradeable permits in water management. ●

Kraemer, A., Interwies, E. and Kampa, E., (2002), “Tradeable Permits in Water Resource Protection and Management: A Review of Experiences and Lessons Learned”, in OECD, Implementing Domestic Tradeable Permits: Recent Developments and Future Challenges.

Notes 1. OECD countries are also contributing to international efforts to support access to safe drinking water and adequate sanitation in developing countries, as described under National action 9 of the “Water” section. 2. See also National action 6 under the “Agriculture” section of Objective 2. 3. See also National action 4 of the “Water” section. 4. See also National action 8 of the “Water” section. 5. See also National action 5 of the “Water” section. 6. Principle 21 of Stockholm, identical to Principle 2 of the 1992 Rio Declaration on Environment and Development, specifies that “States have the sovereign right to exploit their own resources pursuant to their own environmental and developmental policies, and have the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other States.”

References Academy of Water (2003), Solidarity for Drinking Water. OECD (1999), The Price of Water: Trends in OECD Countries, OECD, Paris. OECD (2001), Environmental Indicators for Agriculture, Volume 3: Methods and Results, OECD, Paris. OECD (2003a), Environmental Performance Reviews: Water, OECD, Paris. OECD (2003b), Improving Water Management: Recent OECD Experiences, OECD, Paris. OECD (2003c), Social Issues in the Provision and Pricing of Water Services, OECD, Paris. OECD (2003d), “Aid Activities in the Water Sector, 1997-2002”, DAC Creditor Reporting System, Vol. 2003/1. World Panel on Financing Water Infrastructure (2003), “Financing Water for All”, March 2003.

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1.3. Biodiversity Overview of progress in addressing the main challenges The OECD Environmental Strategy identifies two main challenges facing OECD countries in the management of biodiversity resources: A. Maintain, restore and enhance the diversity of landscapes, ecosystems, species and genetic material. B. Significantly reduce threats to ecosystems and their species from habitat loss and fragmentation, changes in land use patterns, pollution, introduction of invasive species, and overexploitation or extinction of wild species, etc.

The main instrument actively used in OECD countries to achieve biodiversity-related goals is the development of protected areas. Such areashave reached 14.6% of the total land area for OECD countries as a whole, and progress has been made in creating ecological networks with corridors to connect the protected areas. Progress in creating marine protected areas has been uneven, however, with existing areas remaining far from adequate. Effective management of protected areas often suffers from lack of management plans and adequate staff. Public and private expenditures on nature conservation remain low, when compared, for example, with expenditure on pollution abatement and control. Little overall progress is being made to slow habitat loss and fragmentation outside of protected areas or to apply an ecosystem approach to natural resource management. The percentage of known species that are endangered continues to increase, and indicators of the total biomass of vertebrates in the wild continue to register declines. Pollution emissions to air and water continue to exert harmful pressures on biodiversity and habitats. Expansion of human settlements, especially in coastal areas, continues to degrade coastal ecosystems. Biodiversity concerns are yet to be well integrated into sectoral policies, although, initiatives to use agricultural policy to achieve biodiversity goals have begun, and there are some examples of reconciling transportation planning with wildlife ecology. OECD countries have begun to deploy a wide array of tools to provide incentives for the sustainable use and conservation of biodiversity by private agents. These include fees, charges, and environmental taxes; standard setting; and assignment of welldefined property rights, including in the form of individual transferable quotas (fisheries) and transferable development rights (wetland conservation). In many cases, market opportunities have arisen from consumer preferences which have led to private sector initiatives to create biodiversity/environment-friendly products. These include

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eco-labelling or certification schemes, such as those for organic agriculture and sustainably harvested forest or marine products. A couple of major international instruments for sustainable fisheries management have recently entered into force. Moreover, many OECD countries have been reducing the fishing capacity of their fleets, mainly through vessel and license buy-back programmes, but also through a host of other measures, mainly of a regulatory nature to reduce fishing effort. Despite these efforts, the trend towards over-exploitation of fish stocks continues. A global target, endorsed in 2002 at the World Summit on Sustainable Development, aims to significantly reduce the rate of loss of biodiversity by 2010 at the global, regional, and national levels. Achieving this objective, however, will require significant financial and technical resources.

Implementation of the national actions National action 1. Integrate biodiversity concerns into physical planning activities, and economic, sectoral and fiscal policies where relevant.

Insufficient information is available across OECD countries to adequately review this National action. National action 2. Enhance the use of economic instruments to provide incentives for the sustainable use and conservation of biodiversity, including through the development of carefully designed markets for biodiversity services.

The use of economic instruments by OECD countries to provide incentives for the sustainable use and conservation of biodiversity allows biodiversity-related objectives to be met with minimum disruption to economic development. Market creation holds the potential to bring biodiversity-friendly goods and services into the market in a manner that enhances, rather than harms, biodiversity. The wide array of tools that OECD countries have begun to use include economic instruments (Box 1.3.1), standards setting, assignment of well-defined property rights, conservation easements and land set asides, payments for endangered species, and biodiversity or environmental funds. The use of eco-labelling or certification schemes has become widespread. Organisations such as the Forest Stewardship Council, Marine Stewardship Council, various organic agriculture labels, among others, provide information that enables consumers to choose to purchase products or services – often at a premium – that are produced in a manner that is less damaging to the environment. Many OECD countries now have a range of eco-labelling schemes in use in their countries, including ones that are international in scope. Independent verification of eco-labelling claims by government agencies or a reputable third-party is increasingly important to consumers. Pressure on natural resources that contribute to biodiversity is often caused by a lack of property rights – making it in each individual’s self-interest to, for example, over-fish. To solve such problems countries such as the Unites States, New Zealand, Iceland, and others, have introduced instruments such as individual transferable quotas (ITQs) for fishing. Instruments that create and assign property rights in other biodiversity contexts include

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Box 1.3.1. Economic instruments are part of the fiscal measures that OECD governments have been using to encourage biodiversity friendly activities. Some examples are: ●

Charges or non-compliance fees to forestry activities to ensure harvesting is undertaken at sustainable levels.

●

Liability fees for the rehabilitation or maintenance of ecologically-sensitive lands.

●

The application of fishing and hunting license fees.

●

The use of levies for the abstraction of groundwater.

●

Charges for: ❖ the use of sensitive lands; ❖ the hunting or fishing of threatened species; ❖ tourism in natural parks.

transferable development rights which have been used, for example, for wetlands by creating credits that allow development to occur in one area, compensated by the re-establishment of wetlands in another area (Gardner, 2003). Examples of schemes that create markets through the clear assignment of some key property rights are illustrated in Table 1.3.1, which indicates their characteristics such as tradability and the provision for offsets (the ability to take offsetting activity implies that the loss of biodiversity in one area is compensated by gains in another).

Table 1.3.1. Examples of market-creation schemes for biodiversity No offsets

Offsets

Non-tradable

BushTender (Australia) Conservation Reserve Program (United States)

South Creek Bubble Licensing Scheme (Australia)

Tradable

Hunter River Salinity Trading Scheme (Australia) Regional Clean Air Incentives Market (United States)

Wetland banking (United States) Native vegetation offsets proposal (Australia) Carbon sequestration credits

Source: Murtough et al. (2002).

The use of real estate markets to purchase resource or other rights for land – but with explicit agreement not to exercise those rights – has become a popular tool. In many OECD countries there are groups that purchase (or are given) partial rights to lands that are then removed from development considerations. In other cases, private groups are participating in public auctions of logging rights and successfully acquiring those rights. The forest is then left uncut. Internationally this is also happening in many countries, from South America to Africa and Asia (Hardner and Rice, 2002). The payment of “bounties” for rare or endangered species involves payments to individuals or firms to provide and maintain mating pairs of the species. Such programmes have been used in the United States, for example, for wolves where landowners are paid for the mating pairs of wolves on their property, as well as for red-cockaded woodpeckers.

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Dedicated funds for the conservation and sustainable use of biodiversity tap into a growing pool of global savings. Funds such as the Zurich-based Sustainable Asset Management (SAM) Group of Sustainability Funds have considerable investments in biodiversity-related businesses. Others such as the EcoEnterprises Fund of the US-based Nature Conservancy leverage public money and NGOs to fund biodiversity-related investments that have a good probability of success. National action 3. Support and strengthen nature conservation at national and local levels, including preserving and restoring habitats, and conserving or enhancing the diversity of cultivated plants and livestock.

The number and size of protected areas has grown significantly since 1990 in almost all OECD countries, reaching 14.6% of the total land area for OECD as a whole. Actual protection levels and related trends are difficult to evaluate, as protected areas change over time – new areas are designated, boundaries are revised and some sites may be destroyed or changed by pressures from economic development or natural processes. Progress has been made towards creating ecological networks, with corridors to connect protected areas, for example within the framework of the EU’s Natura 2000 scheme. One issue which has arisen is to what extent and how landowners should be compensated for restrictions on use of their land. In most OECD countries, policies and measures are used to encourage the restoration of degraded habitats. For example, Japan enacted a Law in 2003 that stipulates basic concepts and procedures regarding restoration of damaged ecosystems such as wetlands, tidal flats, and rural landscapes. The number of threatened species has continuously increased, in part reflecting better monitoring and scientific progress. More worrying is that the proportion of threatened species to known species has remained very high, including for mammals. There are still conflicts between hunting legislation and wildlife (particularly bird) protection. The extent of protected marine ecosystems has remained very limited, despite the increasing pressures from tourism, fishing, and marine pollution from various sources. This is despite international commitments to take measures to protect the maritime area against the adverse effects of human activities (e.g. under Annex 5 of the OSPAR Convention). However, supporting nature conservation, as measured by public and private expenditure, has remained a low priority, both in absolute terms and compared with pollution abatement and control expenditure.Management effectiveness of protected areas needs to be improved in most OECD countries – many protected areas either have a low conservation status (as measured by IUCN categories), no management plans, or not enough management staff. Local participation (environmental NGOs, foundations, etc.) in management activities has remained scarce, except in a few countries. Little effort has been made towards enhancing the (biological) diversity of cultivated plants and livestock, i.e. through providing support to cultivation of wild crop relatives. Most attention has focused on improving the genetic diversity of cultivated plants and livestock, including through increasing reliance on Genetically Modified Organisms.

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National action 4. Ensure biosafety at the national and international level, including preventing the introduction of invasive species and diseases, and assessing the implications of biotechnologies (e.g. GMOs).

Biological “invasions” occur through a variety of means. The cost of suppressing those invasions that are successful can be considerable for governments seeking to avert the economic damages they can cause. At an international level, the problem of invasive alien species is dealt with through a patchwork of multilateral agreements. The Convention on Biological Diversity (CBD) has been involved since its inception, via Article 8(h)1 and the adoption at the 6th Conference of Parties (April 2002, the Hague, the Netherlands) of Guiding Principles for the implementation of Article 8(h) on alien species that threaten ecosystems, habitats, or species. The Ramsar Convention, the International Plant Protection Convention, and others also have IAS as an important component of their work. Furthermore, several international organisations, such as the Food and Agriculture Organisation (FAO), the International Maritime Organisation (IMO), the World Health Organisation (WHO) have been instituting specific measures to combat invasions. The Global Invasive Species Programme (GISP) is a partnership network of governments, intergovernmental organisations, non-governmental organisations, and private sector organisations, which is raising awareness and capacity to address the issue. The CBD has embraced the GISP as the international thematic focal point of invasive alien species, and relies heavily on the GISP to assist Parties and other bodies to implement CBD Decisions. At the national level, several OECD countries have specific programmes in place to respond to the threat of invasive species. In the United States, for example, a National Invasive Species Council is required to produce a National Management Plan for Invasive species every two years. The Council provides national leadership and oversight on invasive species, and works to ensure that Federal agency activities are co-ordinated and effective. In Japan, the National Strategy on Biodiversity includes several counter-measures to combat the impacts of invasive species. It emphasises the importance of a three-level approach: prevention; early detection, and eradication and control (as stated in the Guiding Principle of the Convention on Biological Diversity). It also encourages specific management projects – such as those targeted at mongoose – and the improvement of pet management. In Australia, where considerable damage to the continent’s ecology has already been done by invasive species, a number of specific strategies are being developed and implemented. For example, the National Weeds Strategy provides a strategic framework for activities to reduce the detrimental impact of nationally significant weeds on the sustainability of productive capacity and natural ecosystems. With regards to exotic marine pests, Australia has legislated requirements for the management of ships’ ballast water and has a national emergency response mechanism to combat introductions of the most damaging pests. In terms of biosafety in relation to products of modern biotechnology2, all OECD countries have a system of regulatory oversight in place for assessing the safety of releases of genetically engineered organisms to the environment. In the majority of cases, these systems have been in place for a number of years, and for well over a decade in many countries. At the same time, many countries have approved field trials, mainly of transgenic crop plants. A number have also approved the commercial use of such crops and have accumulated experience in risk/safety assessment of uses of transgenic crops in OECD ENVIRONMENTAL STRATEGY: 2004 REVIEW OF PROGRESS – ISBN 92-64-10780-0 – © OECD 2004

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the environment. Most countries continue to make changes and improvements to their regulatory systems in light of this experience and other developments, such as new types of applications. In parallel with this, many OECD countries (and the European Commission) have continued to sponsor large research programmes designed to address risk and safety assessment questions related to the release of transgenic organisms to the environment. The results of this research have been used to inform and improve the practice of risk/ safety assessment. Similarly, a large number of countries have undertaken national studies on the implications of biotechnology. In response to rising public interest in the safety of genetically engineered crops and foods, many OECD countries have made concrete attempts to engage a range of non-governmental organisations on this topic, recognising the valuable contribution civil society can make in this area. Overall, OECD countries have shown a practical commitment to a proactive and scientifically-based approach to the risk/ safety assessment of environmental applications of genetically engineered organisms. National approaches to biosafety have been enhanced by successful multilateral activities aimed at developing a common approach to both the principles and practice of risk/safety assessment. Much of this common understanding was developed through work at the OECD where biosafety projects have been in place since around 1985. Currently, the Cartagena Protocol on Biosafety has become a key international instrument dealing with “living modified organisms” (LMOs). The objective of the Protocol is to protect biological diversity from the potential risks posed by LMOs resulting from modern biotechnology. It has established an advance informed agreement (AIA) procedure for ensuring that countries are provided with the information necessary to make informed decisions before agreeing to the import of such organisms into their territory. The Protocol has also established a Biosafety Clearing-House to facilitate the exchange of information on LMOs and to assist countries in the implementation of the Protocol. The Protocol entered into force on 11 September 2003. As of late 2003, there were 73 Parties to the Protocol, including 16 OECD countries and the European Commission. Although a number of OECD countries have not yet ratified the protocol (and some may not ratify in the near future), they have made efforts to assist in its implementation, especially by contributing to the success of the Pilot Phase of the Biosafety Clearing House, which is an important component of the Protocol. At the same time, donors have made capacity building efforts, especially through UNEP-GEF, in order to assist developing countries to establish and implement national biosafety frameworks. Despite these positive achievements, and the large degree of similarity among OECD countries in terms of risk/safety assessment, there remain major differences among countries on the topic of the safety of genetically engineered crops/foods. Most of these differences appear to be focused around “risk management” issues. In other words, the measures which are taken once an application has been the subject of a risk/safety assessment and has been approved for release to the environment. These measures include, amongst other things, the monitoring and detection of transgenic material following release, labelling of products, and measures designed to avoid the development of further resistance to pest resistant crops.

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National action 5. Promote awareness raising related to biodiversity, including through the collection and dissemination of information, stakeholder involvement in biodiversity management, and the development of scientific and technical capacity.

Appropriate information gathering and dissemination not only have the potential to improve enforcement of biodiversity policy through capacity building, but also may improve instrument design. One example of information gathering is the use of economic valuation techniques in biodiversity management as a means of determining conservation priorities and setting economic instruments so that they can correct the full value of externalities. Many national environmental reviews of proposed projects include elements of valuation in the initial stages of information collection. Adequate biodiversity-related information is still scarce. From a taxonomic perspective, estimates of the total number of species on Earth range between 5 million and 100 million. Of these, little more than 1.5 million have been formally described and named in a taxonomic sense. Moreover, the geographic and ecological coverage of the taxonomic knowledge is very uneven globally – for example, two thirds of the known species are insects. Many OECD countries have put in place national initiatives to promote the dissemination of scientific information and to enhance scientific capacity. The UK Darwin Initiative, for example, has funded Project Biomap in Columbia (among others). USAID has funded the Southern African Botanical Diversity Network (SABONET) and its efforts in collection and dissemination of information. The European Environment Information and Observation Network (EIONET) provides support for the Global Biodiversity Information Facility. Many other examples exist of funding of small-scale data collection activities by OECD countries (UNEP, 2002a). Many of the national actions in scientific capacity building are occurring within the context of the Global Taxonomy Initiative (GTI). The GTI arose from a need identified by the CBD to develop worldwide expertise in finding and cataloguing species and endorsed an initiative to increase the number of taxonomists. Implementation of the GTI is currently at the stage of completing regional workshops to determine the needs of individual countries in carrying out taxonomic research for prioritisation purposes. In terms of scientific endeavours to understand the basis of biodiversity, the Millennium Ecosystem Assessment (MA) is the most ambitious undertaking thus far. It is an international work programme designed to meet the needs of decision-makers and the public for scientific information concerning the consequences of ecosystem change for human well-being and options for responding to those changes. The MA was launched by the United Nations in June 2001, and is intended to help to meet the assessment needs of the CBD, the Convention to Combat Desertification, the Ramsar Convention on Wetlands, and the Convention on Migratory Species, as well as needs of other users in the private sector and civil society. The MA synthesises information from the scientific literature, datasets, and scientific models, and makes use of the knowledge in the private sector, amongst practioners, as well as local communities and indigenous peoples. Stakeholder involvement in biodiversity management can be key to successful outcomes, and is increasingly common in OECD countries. In Austria, the National Park Neusiedler See-Seewinkel (considered in the category of Natural monument or Natural

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landmark by IUCN) is held up as an example of successful engagement of stakeholders. Prior to establishment of the park, landowners as well as other stakeholders used the land for agriculture, hunting, fishing, the reed industry and tourism. They were offered compensations for ceding lands for the new park. Similarly in Mexico, establishment of the Calakmul Biosphere Reserve was initially met with resistance but then became part of a programme of training local people to carry out sustainable silvicultural practices, to re-forest, and to manage their own forest industries within a multiple-use strategy that includes both timber and non-timber forest products. Finally, in the United States a “partnership park” concept that is run by the National Park Service works to engage stakeholders in a constructive manner. It includes areas such as the Mississippi National River and Recreation Area – which follows 72 miles of the Mississippi River, and is almost all land that is privately held. Initial concerns by local groups of loosing economically important activities were addressed by co-ordinating federal, state, and local programmes.

National action 6. Promote on the global level the fair and equitable sharing of the benefits arising from the use of genetic resources, particularly through access to genetic resources and the transfer of relevant technologies.

Access to and the sharing of benefit from the use of genetic resources is one of the three central objectives of the Convention on Biological Diversity (CBD). Also prominent are subsequent provisions to encourage the equitable sharing of the benefits arising from the utilisation of knowledge, innovations and practices of indigenous and local communities. Many channels exist for achieving a sharing of benefits – including assistance with capacity building, direct payments, technology transfer, etc. Helping to encourage the sharing of benefits is the concept of Prior Informed Consent, which ensures that access is given in a “minimum regrets” capacity. At the Conference of the Parties to the CBD’s sixth meeting (The Hague, April 2002), the Parties adopted the Bonn Guidelines to facilitate and promote common approaches to implementation of access and benefit sharing.3 Some countries have also begun to act to establish domestic laws and regulations concerning access and benefit sharing (UNEP, 2002b). At the regional level, four instruments have been developed to provide a legal framework for the implementation of access and benefit-sharing arrangements. In decision 391, the Andean Pact countries adopted, in July 1996 a legally binding framework for access to genetic resources and benefit-sharing. Legal frameworks are also being developed in Central America and by the Association of South-East Asian Nations (ASEAN). Finally, in Africa, the African Model Law was developed by the Organisation of African Unity. The Conference of the FAO adopted the International Treaty on Plant Genetic Resources for Food and Agriculture in November 2001. This legally binding treaty covers all plant genetic resources for food and agriculture, with the objective of “the conservation and sustainable use of plant genetic resources for food and agriculture and the fair and equitable sharing of benefits derived from their use, in harmony with Convention on Biological Diversity, for sustainable agriculture and food security”. A voluntary International Code of Conduct was adopted by the FAO Conference in 1993, and provides a framework for Governments in the development of national regulations or the formulation of bilateral agreements for the collection of germplasm.

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An international network of ex situ collections of plant genetic resources under the auspices of the FAO comprises most of the collections held by the International Centres for Agricultural Research, according to an agreement signed between each of the Centres and FAO in 1994. The agreement sets out policies by which genetic resources are held and transferred. Principles and Common Policy Guidelines on Access to Genetic Resources and Benefit-sharing for Participating Institutions is a project that involved 28 botanic gardens and herbaria from 21 countries in the development of a common approach on access and benefit sharing and includes: Principles on Access to Genetic Resources and Benefitsharing for Participating Institutions; Common Policy Guidelines; and an explanatory text. CABI, an intergovernmental organisation, addresses the receipt and supply of microbial strains and the sharing of benefits arising from their use, in conformity with national and international law, in its policy on access to ex situ genetic resources. It has also developed a model material transfer agreement and a position statement on patenting, intellectual property rights and ownership issues under the Convention on Biological Diversity. National action 7. Assist developing countries in reducing threats to ecosystems, species and genetic resources, especially in forest ecosystems, through capacity building and technology transfer.

Countries endorsed at the World Summit on Sustainable Development (Johannesburg, 2002) a global target to aim to significantly reduce the current rate of loss of biodiversity by 2010 at the global, regional, and national levels. Achieving this target will require additional resources, including assistance to developing countries through capacity building and technology transfer.

Box 1.3.2. Aid targeting the objectives of the Rio Conventions: 1998-2000 Developed countries that have signed the three Rio Conventions (the UN Framework Convention on Climate Change, the Convention to Combat Desertification, and the Convention on Biological Diversity) have committed themselves to assist developing countries in the implementation of these Conventions, and to report on the measures they have undertaken toward this aim, including the provision of financial resources. This reporting takes place through so-called “national communications” describing individual donors’ policies and programmes. However, lack of standardisation in the reporting makes it difficult to aggregate data or compare them across countries. The Convention Secretariats have requested the OECD Development Assistance Committee (DAC) to examine whether the relevant financial data could be obtained through donors’ regular reporting to the Creditor Reporting System (CRS). In response, the DAC organised a special data collection on aid flows in 1998-2000. The data cover bilateral and multilateral official development assistance (ODA) commitments targeting the objectives of the Rio Conventions in 1998-2000. Despite some data limitations, the study can be considered quite comprehensive, providing the best estimates of aid that DAC members allocate in support of the Rio Conventions. Data for only three years (as currently exists) are not sufficient to establish trends in aid flows in support of the Conventions; five years of data are required for that. However, the DAC Working Party on Statistics has yet to make a decision as to whether to continue this data collection.

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Data available for the late-1990s indicate substantial activities by member countries of the OECD Development Assistance Committee (DAC)4 to support biodiversity protection. Between 1998 and 2000, DAC members reported 5 439 individual biodiversity-related aid activities, with commitments amounting to USD 3 billion over the three years. All donors reported activities in general environmental protection, and most donors also in forestry, water supply, agriculture, and fishing (Figure 1.3.1). OECD countries have also been working to ensure fair and equitable sharing of the benefits arising out of the use of genetic resources from biodiversity, as described in National action 6 of the “Biodiversity” section. This work can help to leverage additional financing for developing countries for conservation and sustainable use of ecosystems where there is bio-prospecting for genetic resources. Of concern is an apparent trend of diminishing total commitments that has been emerging over the 1998-2000 period. In 1998, DAC members bilaterally committed USD 1 092 million to biodiversity, while in 2000 they committed USD 866 million (see Table 1.3.2). In addition to the bilateral aid activities marked in the DAC reporting system as being specifically supportive of implementation of the Convention on Biological Diversity, an additional 2 814 activities (with commitments amounting to USD 2.2 billion) relating to combating desertification and an additional 5 124 activities (with USD 8.1 billion committed) for climate change were noted over the 1998-2000 period.5 Both of these categories also showed declining trends over the 1998-2000 period. Multilateral commitments to environmental efforts through the Global Environment Facility (GEF),6 however, increased over the period, with a total amount committed of USD 1 365 million over 1998-2000.

Figure 1.3.1. Biodiversity-related aid commitments by sector (million USD, 1998-2000 average)

Other, USD 80

Water supply, USD 218

Rural development, USD 33

Agriculture, USD 121

General environmental protection, USD 344 Forestry, USD 152

Fishing, USD 47

Source: OECD (2002).

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Table 1.3.2. Biodiversity-related aid commitments by DAC donor (1998-2000) 1998

2000

Million USD

Million USD

Annual Average 1998-2000 Million USD

% of total bilateral ODA

Number of marked activities

Germany

250.9

266.0

275.6

9.0%

71

Japan

163.7

143.6

144.1

1.4%

644

Netherlands

203.1

103.9

146.9

6.9%

236

United States

65.9

86.8

84.2

1.0%

155

Norway

76.0

80.9

91.2

10.3%

231

Australia

8.4

26.0

21.3

2.7%

30

Spain

5.3

25.9

14.5

1.4%

86

29.2

23.8

24.9

12.1%

33

Finland Belgium

20.7

23.4

19.5

3.9%

161

Sweden

52.1

16.8

38.3

3.9%

32

Denmark

36.1

15.4

29.8

4.5%

11

France

102.0

11.9

44.7

1.7%

36

Canada

26.9

11.7

15.3

1.4%

12

United Kingdom

22.0

10.9

23.9

0.7%

25

Switzerland

26.6

8.9

15.9

2.4%

20

1.1

4.7

2.2

4.9%

11

Ireland Austria

1.8

4.1

2.0

0.5%

10

New Zealand

0.8

0.6

0.8

0.8%

8

Portugal

0.0

0.0

0.0

0.0%

0

1 092.4

865.5

995.1

2.7%

1 813

Total Source: OECD (2002).

National action 8. Singly and through implementing regional and international agreements, eliminate overfishing by 2010.

An estimated 28% of major marine fish stocks or species groups are currently overexploited, depleted, or recovering from depletion, 47% are fully exploited, and 25% are under exploited or moderately exploited. (FAO, 2002). In recent years, as fishing pressure continues to increase, the number of fully exploited stocks has remained relatively stable, while the number of overexploited, depleting and recovering fishery stocks has increased slightly. For many of the resources fished by OECD countries, total annual catches for many fish species have stabilised at levels significantly lower than those achieved during periods of maximum catch, indicating full or over exploitation of these resources. Of additional concern is increased fishing pressure on some deep water resources, which often host slow-growing and long-living fish particularly vulnerable to depletion, and the prevalence of illegal, unreported, and unregulated (IUU) fishing. At the international level, various regional or international agreements and arrangements have been adopted that provide a legal and institutional framework for responsible fisheries, including the UN Convention of the Law of the Sea (UNCLOS) and the FAO Code of Conduct for Responsible Fisheries. As part of the FAO Code of Conduct, various Agreements have been developed, as well as voluntary International Plans of Action (IPOAs), most notably an IPOA for the Management of Fishing Capacity (1998) and one to Prevent, Deter, and Eliminate Illegal, Unreported and Unregulated Fishing (2001). A number of important international or regional agreements that aim to support sustainable fisheries

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have entered into force recently (Table 1.3.3). although others have not yet received sufficient ratification to do so. At the national level, OECD countries have been working towards more sustainable fisheries, including through reductions in overcapacity in the fishing fleets, and the development of better monitoring and enforcement tools for management of their

Table 1.3.3. Status of major international instruments for sustainable fisheries management (as of late 2003)

OECD member country or entity

Australia

UN convention on the Law of the Sea

Agreement to promote compliance with International Conservation and Management Measures by Fishing Vessels on the High Seas

Agreement on the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks

Entered into force: November 1994

Entered into force: April 2003

Entered into force: December 2001

Ratified

Acceptance1

5.10.94

—

Signed 4.12.95

Ratified 23.12.99

Austria

14.07.95

6.08.962

27.06.96

19.12.03

Belgium

13.11.98

6.08.962

3.10.96

19.12.03

Canada

07.11.03

Czech Republic

21.06.96

Denmark

— 1.04.983

EC

20.05.94 —

4.12.95

3.08.996

—

—

6.08.962

27.06.96

19.12.03 19.12.03

6.08.96

27.06.96

Finland

21.06.96

6.08.962

27.06.96

19.12.03

France

11.04.96

6.08.962

4.12.96

19.12.03

Germany

14.10.944

6.08.962

28.08.96

19.12.03

Greece

21.07.95

6.08.962

27.06.96

19.12.03

Hungary

05.02.02

—

—

—

Iceland

21.06.85

—

4.12.95

14.02.97

Ireland

21.06.96

6.08.962

27.06.96

19.12.03

Italy

13.01.95

6.08.962

27.06.96

19.12.03

Japan

20.06.96

Luxembourg

05.10.00

Mexico

18.03.83

Netherlands

28.06.96

20.06.00 6.08.962 11.03.99 6.08.962

19.11.96

—

27.06.96

19.12.03

—

—

28.06.96

19.12.03

New Zealand

19.07.96

—

4.12.95

18.04.01

Norway

24.06.96

28.12.94

4.12.95

30.12.966

Poland

13.11.98

—

—

—

27.06.96

19.12.03 —

Portugal Korea Slovak Republic

3.11.97

6.08.962

29.01.96

24.04.03

26.11.96

8.05.96

—

—

—

3.12.96

19.12.03 19.12.03

Spain

15.01.97

Sweden

6.08.962

25.06.96

25.10.94

27.06.96

Switzerland5

—

—

—

—

Turkey

—

—

—

—

27.06.96

10.12.01

4.12.95

21.08.966

25.07.974

UK USA 1. 2. 3. 4. 5. 6.

—

6.08.962 19.12.95

Instrument of Acceptance sent to the UN Food and Agricultural Organisation. Instrument of Acceptance submitted to the FAO by the European Community on behalf of the member State. Date of formal confirmation. Date of accession to UNCLOS. Non-member State of the United Nations. Declaration.

Source: OECD.

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200-mile exclusive economic zones. In terms of addressing over-capacity in the industry, for the OECD countries for which data is available, it is estimated that the number of fishing vessels decreased by 11% between 1989 and 1999, while the Gross Tonnage associated with this fleet decreased by 16% (OECD, 2001). Vessel and license buy-back programmes are the favoured approach for reducing capacity in OECD countries, and in 1997 an estimated USD 350 million (representing 6% of total government financial transfers to the fishing industry) was spent on decommissioning vessels and licence retirement. Other instruments used in OECD countries to manage fisheries capacity include input controls (e.g. license limitation, gear and vessel restrictions), output controls (e.g. individual quotas, total allowable catch limits), and technical measures (e.g. seasonal and area closures, size and sex selectivity). Despite efforts by OECD countries and others, over-fishing continues to deplete fish stocks worldwide. The necessary institutional capacity and political will to assure sustainable management of fisheries is lacking in a number of countries. In particular the political process used to set quota allocations have often resulted in total allowable catch levels far above those recommended by scientific evidence as the maximum sustainable yield. The result has been significant overfishing of a number of stocks. As further ratification of international agreements progresses at a slow pace, regional and national initiatives are gaining importance. Some priorities for the near future include the development of further initiatives to tackle illegal, unreported and unregulated fishing on the high seas; agreed guidelines, standards, and objectives for a global eco-labelling plan to enable consumers to support sustainable fisheries; and better management of the environmental impacts of aquaculture as its growth increasingly substitutes catch from ocean fish stocks.

Further work in the OECD Further develop and improve biodiversity indicators, including pressure and state indicators, by 2003.

Various biodiversity related data and indicators are collected regularly at the OECD, including pressure indicators (e.g. agri-environmental indicators, water resources use, forest and fish resources demand) and state indicators (e.g. water quality, forest coverage, threatened species, protected areas). In support of monitoring National action 7, the OECD Development Assistance Committee continues to provide data on environment-oriented aid activities, including bilateral and multilateral aid specifically targeted to support the aims of the CBD. ●

OECD (forthcoming 2004), OECD Environmental Data Compendium.

●

OECD (2002), “Aid Activities Targeting the Objectives of the Rio Conventions, 1998-2000”, in Creditor Reporting System Statistics, Volume 2002/1. Develop and promote methods of economic valuation of biological diversity and ecosystem services, and encourage the use of these methods in the design of efficient biodiversity policies.

A handbook on biodiversity valuation techniques was published in 2001, accompanied by A compendium of selected case studies on the use of valuation techniques.

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●

OECD (2001), Valuation of Biodiversity Benefits: Selected Studies.

●

OECD (2002), Handbook of Biodiversity Valuation: A Guide for Policy Makers. Analyse the distributive issues related to access to and the use of natural resources.

A study of one of the key distributive issues related to biodiversity conservation – access to genetic resources and the sharing of the benefits arising from their use – was released in late 2003. It applies an economic framework to the identification of some of the underlying social issues relating to access and benefit sharing. A report examining broader distributive issues in biodiversity will be released in 2004. ●

OECD (2003), “Economic Issues in Access and Benefit Sharing: A Framework for Analysis” [ENV/EPOC/GSP/BIO(2001)2/FINAL].

●

OECD (forthcoming 2004), Distributive Issues Related to Biodiversity. Identify opportunities for the sustainable use of natural resources through economic incentives, including the creation of markets for biodiversity products and services.

A joint OECD and World Bank workshop was held in January 2001 on market creation for biodiversity products and services to help promote their sustainable use. An analytical report, providing a conceptual framework to help users in the identification and use of such markets was published in 2003. A study about government subsidies that negatively impact on biodiversity, so-called “perverse incentives”, and how these can be addressed was released in later 2003. Publication of a handbook with practical guidance of how to harness markets for biodiversity is foreseen for 2004. ●

Selected case studies and papers are available at www.oecd.org/env from the OECD/World Bank Institute International Workshop on Market Creation for Biodiversity Products and Services, held in Paris on 25-26 January 2001.

●

OECD (2003), Harnessing Markets for Biodiversity: Towards Conservation and Sustainable Use.

●

OECD (2003), “Perverse Incentives in Biodiversity Loss” [ENV/EPOC/GSP/BIO(2003)2/FINAL].

●

OECD (forthcoming 2004), Handbook of Market Creation for Biodiversity.

Notes 1. Article 8 (h) in the CBD: “Each Contracting Party shall, as far as possible and as appropriate: (h) Prevent the introduction of, control or eradicate those alien species which threaten ecosystems, habitats or species.” 2. Different countries have different preferences for terms which describe products of modern biotechnology. In many documents, the term genetically engineered organisms is used. For practical purposes, this is equivalent to the term genetically modified organisms (GMO), living modified organisms (LMO) or transgenic organisms. 3. The Bonn Guidelines on Access to Genetic Resources and Fair and Equitable Sharing of the Benefits Arising out of their Utilization – COP VI Decision 24. 4. Not all OECD countries are members of the DAC. Czech Republic, Hungary, Iceland, Korea, Mexico, Poland, Slovak Republic, and Turkey are OECD member countries, but not DAC members. 5. There may be some overlap in the figures, as some bilateral aid activities have been reported as targeting more than one of the Conventions. 6. The GEF helps developing countries fund projects and programmes that protect the global environment, including projects related to biodiversity.

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References FAO (2002), The State of the World Fisheries and Aquaculture, FAO, Rome. Gardner, R.C. (2003), “Rehabilitating Nature: A Comparative Review of Legal Mechanisms that Encourage Wetland Restoration Efforts”, Catholic University Law Review, Vol. 52, No. 3, pp. 573-620. Hardner, J. and R. Rice (2002), “Rethinking Green Consumerism”, Scientific American, May. Murtough, G., Aretino, B., and A. Matysek (2002), “Creating Markets for Ecosystem Services”, Productivity Commission Staff Research Papers, AusInfo, Canberra. OECD (2001), Review of Fisheries in OECD Countries: Policies and Summary Statistics, OECD, Paris. OECD (2002), “Aid Activities Targeting the Objectives of the Rio Conventions, 1998-2000”, in DAC Creditor Reporting System, Volume 2002/1. UNEP (2002a), “Assessment of the Information Contained in the Second National Reports Concerning Cross-cutting Issues Under the Convention”, document UNEP/CBD/COP/6/INF/10, available at www.biodiv.org/doc/meetings/cop/cop-06/information/cop-06-inf-10-en.pdf. UNEP (2002b), “Report of the open-ended expert workshop on capacity-building for access to genetic resources and benefit-sharing”, UNEP/CBD/ABS/EW-CB/1/3, Montreal, 16 December 2002.

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ISBN 92-64-10780-0 OECD Environmental Strategy: 2004 Review of Progress © OECD 2004

Chapter 2

OBJECTIVE 2 Decoupling environmental pressures from economic growth

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2.1. Agriculture Overview of progress in addressing the main challenges The OECD Environmental Strategy identifies two main challenges facing OECD countries in ensuring environmental sustainability in the agriculture sector: A. Progressively decrease the negative environmental effects and increase the positive effects of agricultural production so that ecosystem functions can be maintained or restored, while ensuring sufficient and safe agricultural production to provide food security for the world’s population. B. Extend the application of technologies and management practices that can improve environmental performance, while ensuring that new technologies, for example genetically modified organisms (GMOs), do not entail unacceptable environmental or health risks.

Some progress has been made in reducing the negative environmental pressures of agriculture, but much more needs to be done. Land use and soil loss have decreased, but water use has increased; nutrientsurpluses have decreased in many countries, beginning to reduce pressure on water quality; environmental risks of pesticide use have been reduced, but remain high; long-term decreases in on-farm biodiversity have slowed; and some reductions in greenhouse gas emissions have occurred. In many OECD countries, agricultural support has increasingly been linked to agrienvironmental measures (e.g. organic production, land set-aside) and to cross-compliance (i.e. requiring that farmers meet environmental conditions to be eligible for support). This is reflected in 2003 regulations of the European Union Common Agricultural Policy reform and in the 2002 United States Farm Bill. However, market price support, output payments, and input subsidies – potentially the most environmentally harmful types of support – still account for nearly 80% of total support. Environmental damage associated with monoculture, intensification, and use of environmentally sensitive land – practices that are encouraged by support measures linked to production of specific agricultural commodities – continue. Direct regulation of some pollutants (pesticides and other agro-chemicals) has also played a major role in improving environmental performance. Internalisation of environmental costs through economic instruments such as taxes, charges, and tradable permits is not yet widespread, but has begun to reduce agro-chemical use (fertilisers, pesticides) and agricultural emissions (livestock effluents). Regarding the potential environmental and health impacts of genetically modified organisms (GMOs), all OECD countries have in place a system of regulatory oversight; many have approved field trials, mainly of transgenic crop plants; and some have approved their

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commercial use leading to the accumulation of further experience in the risk/safety assessment of uses of transgenic crops in the environment. The entry into force of the Cartagena Protocol on Biosafety in 2003, with its Biosafety Clearing-House, is an important step in helping OECD and non-OECD countries alike to establish or further strengthen national biosafety frameworks.

Implementation of the national actions National action 1. Promote the internalisation of environmental externalities in agriculture, make the transition towards full cost resource pricing, including environmental and social costs, and encourage the implementation of market-based and other policy instruments to enhance the provision of environmental benefits and reduce environmental damage from agriculture.

Agriculture has a major impact on the environment in OECD countries. It accounts for 40% of total OECD land use, and 45% of water use. By far, the most commonly used tools in OECD countries to limit environmental damage from agriculture are regulatory requirements. Increasingly important, however, is the use of subsidies to reduce pollution and pay for various environmental “goods” from farmers. The least commonly used tool for agri-environmental policy is negative incentives (e.g. levies or taxes), which act to ensure that farmers face the full costs of environmentally damaging activities (i.e. to internalise the externalities associated with agricultural production). The reform or removal of existing environmentally harmful subsidies to agriculture can also help to internalise negative environmental externalities.1 The regulation of pollutants and processes from agriculture is common in most OECD countries. These include requirements relating to the availability of certain products to farmers (for example, through the registration of pesticides and other agrochemicals), farm practices (for example, the setting of limits on the spreading of manure and stocking limits), and the application of mandatory procedures (for example, planning or consent processes relating to land use, water extraction and the construction of livestock facilities). Regulatory requirements are also common to protect specific valuable wildlife and habitats, and to protect agriculture and the environment from damage from invasive alien species and new organisms (OECD, 2003a). Over the past two decades, national actions have been oriented toward more regulation and binding constraints, but not always uniformly so. In European Union countries, directives such as the Nitrate Directive [91/676/EEC], the Drinking Water Directive [98/83/EC], and others, require countries to meet targets which are often implemented through specific obligations, such as how to dispose of animal wastes. In many countries and regions, such policies are implemented as the central government setting standards which are then administered as regulatory requirements (OECD, 2003b). A general trend in agricultural reform has been to move away from payments based on the outputs produced, or inputs used, by farmers and to make payments that are crosscompliant with environmental targets (Porter, 2003). The EU, the United States, Norway and Switzerland have all made agri-environmental payments an important part of their agricultural policies. Even when the payments are not specifically agri-environmental, reforms that untie support payments from production will relieve environmental pressures by reducing over-production. This has been particularly true of recent reforms in

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the EU’s Common Agricultural Policies, which has led to approximately 25% of payments being untied from production. Some new approaches to reversing environmental impacts of agriculture include payments to farmers that directly target environmental outcomes. In Europe, the United States, and Australia, schemes exist to pay for well-specified environmental outcomes from farmers (e.g. through Natura 2000, Conservation Reserve Program, and BushTender, respectively). One difficulty with using subsidies to achieve a reduction in negative externalities is that they may have undesirable consequences. That is, while they reduce the externality, they may also expand the size of the market by making it more profitable – thereby requiring the subsidy to be even bigger than would initially seem necessary. Subsidies also run counter to the general view that polluters should bear primary responsibility for pollution abatement costs (i.e. the Polluter Pays Principle). The use of measures to increase the cost of environmentally damaging inputs and outputs of agriculture (i.e. to internalise externalities) is not common in OECD countries given the strong desire by most governments to assist rural communities. Some exceptions to this include: the Netherlands, Belgium, and Denmark which have imposed a levy on estimated losses of nutrients over a certain limit; Belgium, Denmark, Finland, Norway, and Sweden where taxes are applied to pesticides; France where a tax is applied to nitrous oxide emissions (including from agriculture); and parts of the United States and in Sweden where taxes on fertilisers are used (OECD, 2003). Tradable rights have had some limited use in OECD agricultural policies. For example, the Netherlands have used tradable rights for some elements of the volume of manure that is produced on farms, while the United States has used wetlands banking, and Australia has used tradable water extraction rights to achieve agri-environmental goals. Water-use charges are not very comprehensive for agriculture. While tradable water “rights” exist in some countries (e.g. Australia, some parts of the United States), subsidies to agricultural water use, and in particular for irrigation, remain high and application of the principle of full-cost recovery is largely non-existent.

National action 2. Promote a broader adoption of sustainable farming systems and environmentally sound farm management practices, including organic farming, by the majority of agricultural producers, paying special attention to ecologically vulnerable areas.

Most OECD countries provide payments of some form for conversion or continuation of organic farming, although payment levels and eligibility conditions vary between countries. In the EU, conversion payments have helped encourage the rapid expansion of organic-based land use (Figure 2.1.1). Cross-compliance measures which tie minimum environmental standards to agricultural support programmes, are in use in a number of OECD countries.2 Many OECD countries have also been working to improve the knowledge base that underpins environmental issues in agriculture. This has mainly taken the form of increased spending on agri-environmental research, often undertaken in co-operation with private sector interests. A number of OECD countries have been developing agrienvironmental indicators, with the aim of increasing the information available to policymakers. Greater emphasis is also being placed by governments on communicating OECD ENVIRONMENTAL STRATEGY: 2004 REVIEW OF PROGRESS – ISBN 92-64-10780-0 – © OECD 2004

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information to farmers on environmental issues through technical assistance. At the same time, attention is being directed to providing consumers with information on the environmental attributes of products, enabling them to choose to discriminate in favour of the ones that are less environmentally damaging. This has led to a range of eco-labelling standards and certification processes in OECD countries.

Figure 2.1.1. Organic and in-conversion land area in the EU (1985-2001) Luxembourg

Belgium

Greece

Netherlands

Austria

Sweden

France

Spain

Ireland Germany

Portugal

Finland

United Kingdom

Denmark Italy

Million hectares 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001 (est.)

Source: Foster and Lampkin (2000).

National action 3. Integrate biodiversity and ecosystem concerns into agricultural policies and practices.

Recent trends in OECD agriculture policies show some successes in integrating biodiversity and ecosystem concerns, but also highlight the challenges that remain: ●

land use for agriculture and soil loss have decreased, but water use has increased;

●

nutrient surpluses have decreased in many countries, easing pressure on water quality; but pockets of high concentrations remain;

●

risk associated with pesticide use has reduced;

●

long-term decreases in biodiversity from agriculture appears to have slowed; and

●

some reductions in greenhouse gas emissions have occurred.

Some countries have implemented major programmes to help achieve the integration of biodiversity concerns in agricultural policies, with some considerable success. For example, with the additional resources allocated to the United States’ Conservation

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Reserve Program through the 2002 Farm Bill, it will cover some 39.2 million acres of farmland where specific biodiversity targets are achieved. The European Union Common Agricultural Policy (CAP) reforms of 2003 explicitly linked, for the first time, agricultural subsidies to EU standards in areas such as the environment. In addition to achieving specific objectives, farmers are required to maintain their land in good agricultural and environmental condition. EU member states are required to inspect sample farms each year on a systematic basis to ensure that standards are met. The role of agriculture in providing certain ecosystem services is also being increasingly recognised across OECD countries. Agricultural soil organic carbon supports key ecosystem functions in maintaining the productive capacity of agro-ecosystems and also plays a pivotal role in the global carbon cycle, atmospheric carbon dioxide concentrations and climate change (OECD, 2003c). Agriculture can also play a key role in helping to control flooding, off-farm sediment flows, groundwater recharge, and support other ecosystem functions. Governments in many OECD counties provide support to organic agriculture (see National action 2 of the “Agriculture” section), and its practice often includes limiting the use of chemical fertilisers, pesticides and fungicides that are hazardous and persistent.For biodiversity, the effects of such restrictions are seen in higher abundance of arthropods (insects such as spiders, mites, centipedes, millipedes, etc.) in organic agriculture systems compared with other production systems (Bartram and Perkins, 2003). Most OECD countries are also using a combination of agri-environmental incentives and standards to make other systems of agriculture more environmentally friendly as well. A question many face concerns the relative cost of obtaining environmental outcomes with traditional agriculture versus organic. The information needed for countries to integrate agriculture, biodiversity, and environmental issues into policies is still under development, but considerable progress has been made. Use of the Natural Capital Index in the Netherlands, a habitat indicator in Canada, land ecosystem function indicators in Japan and Korea, and Indicators of Sustainable Agriculture used in Australia all illustrate progress in developing links between indicators of biodiversity and policies for agriculture. National action 4. Phase out or reform those agricultural policies and subsidies that have environmentally damaging effects before 2010 and according to an agreed timetable.

Whilst agricultural practices, inappropriate regulations, and non-internalisation of environmental costs contribute amongst other things to the harmful environmental impacts of agriculture, it is generally recognised that the significant level of productionlinked agricultural subsidies in OECD (and non-OECD) countries is a major cause of these impacts. Subsidies to agriculture in OECD countries amounted to USD 318 billion in 2002, representing 1.2% of OECD GDP (OECD, 2003a). In general, other things being equal, the more a support policy provides an incentive to increase production of specific agricultural commodities – the greater is the incentive for monoculture production, intensification (greater yields), or use of environmentally sensitive land – and so the higher is the pressure on the environment. During the 1990s, many OECD countries began to take steps to reduce and restructure their support policies in an effort to reduce over-production and trade distortions, and to

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encourage more environmentally sound use of land, soil, and water. The pace of these developments has been modest, and subsidies remain high in many OECD countries and for some commodities. The share of market price support, output payments and input subsidies, which are potentially the most environmentally harmful types of support, has decreased marginally since the mid-1980s, but they still account for nearly 80% of total (Figure 2.1.2). This share varies across countries, and is highest in the countries with the highest levels of support. In general, since the endorsement of the OECD Environmental Strategy in 2001, no significant progress in reducing support has occurred, but there has been mixed experiences in shifting to less environmentally damaging policies. Over the last decade or so, growing attention has been given to mitigating the environmental impacts of agriculture, and cross-compliance conditions have been introduced in a number of OECD countries. Cross-compliance establishes an environmental conditionality for the payment of agricultural support measures. For example, the support recipient must implement certain environmental protection measures. Environmental cross-compliance measures are well established in the United Kingdom, the United-States, and Norway, and have been implemented more recently in Korea, Switzerland, and some other EU member States. After 2005, all EU member States are expected to use crosscompliance of one form or another. Agri-environmental measures have also developed in OECD countries, but their use is still limited and they are sometimes overlapping and complex. Specific payments to address environmental concerns in agriculture currently represent only about 3-4% of the OECD agricultural producer support. Since agri-environmental measures in many OECD countries are at a relatively early stage in their development, it is difficult to assess the extent to which they have provided environmental services or counteracted the negative environmental impacts of agricultural support and agricultural practices in general. Some studies point to evidence of environmental improvements generated by these programmes – for example, they have been variously credited in Europe and the United States with reducing

Figure 2.1.2. Composition of Producer Support Estimate (PSE) (1986-2002) Others

% 100

Payments based on input use

Payments based on input constraints

Payments based on historical entitlements

Payments based on area planted/animal numbers

Payments based on output

Market price support

90 80 70 60 50 40 Market price support 30 20 10 0 1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

01 2002p

Source: OECD, PSE/CSE database (2003).

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soil erosion, limiting pressures from input use, constraining water pollution and overgrazing, and contributing to maintaining valued cultural landscapes and habitats (Baldock et al., 2002). However, as agri-environmental measures and production-linked measures pull in opposite directions, this reveals a lack of policy coherence and implies that the cost of environmental improvement in agriculture is higher than would otherwise be the case. OECD has elaborated and regularly updates an extensive data set on agricultural subsidies. In the context of horizontal work on sustainable development, OECD has developed a “checklist” approach designed to identify those subsidies that can cause environmental harm (see Box 2.1.1). Further work is needed to analyse data and develop methodologies to assess the environmental effects of subsidies in general.

Box 2.1.1. The OECD “checklist” for environmentally damaging subsidies Quantifying the environmental impact of a subsidy is difficult, as all production and consumption activities potentially have an impact on the environment. A subsidy will be harmful to the environment if it leads to higher levels of waste and emissions or depletion of natural resources than would be the case in its absence. The environmental impact of a subsidy thus depends on a range of factors, including on how the support is provided; the nature of the markets for intermediate and finished products; the availability of technologies, products, or services causing less environmental stress; the tax systems, regulatory, and institutional framework; and on the biophysical features of the environment. The OECD has recently developed a “checklist” that could help to identify subsidies whose removal would benefit the environment. It classifies the various support measures according to the transfers generated and the method of implementation (market price support, support for inputs, direct income support). The “checklist” can be used to rank subsidies according to their degree of harmfulness to the environment. It is being tested on a number of sectors – including agriculture – to explore issues and challenges involved in its implementation. Further developmental and empirical work is envisaged Source: OECD (forthcoming 2004).

National action 5. Set time-bound targets to increase the efficiency of water use and irrigation systems in areas experiencing moderate or high water stress.

There is insufficient information available to assess progress across OECD countries in implementing this National action. National action 6. Set time-bound targets to reduce nitrate leaching and run-off of nutrient loads from agriculture into water, lower the risk of soil erosion and reduce health and environmental risks from the use of pesticides.

Run-off from the application of fertilisers in agriculture and animal effluent from livestock account for as much as 40% of nitrogen and 30% of phosphate emissions to surface waters in some OECD countries, contributing significantly to problems of eutrophication (the depletion of oxygen in water). Some OECD countries provide payments to farmers who restrict the use of fertilisers or for better manure management in order to OECD ENVIRONMENTAL STRATEGY: 2004 REVIEW OF PROGRESS – ISBN 92-64-10780-0 – © OECD 2004

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reduce run-off. Others apply a levy on nutrient losses (e.g. in the Netherlands) or a tax on estimated in-farm generation of nutrients over set levels (e.g. in Belgium and Denmark) (OECD, 2003b). More commonly, taxes are applied to the sale of inputs to agriculture, for example taxes on the sale of commercial fertilisers which are now applied in a few OECD countries, including Sweden and some states in the United States. The Netherlands also applies a system of tradable manure production quotas, to assist in the management of nutrient pollution. Finally, most OECD countries have regulations in place to control discharge of nutrients to waterbodies, for example through manure management requirements. Progress in pesticide risk reduction has been made across OECD countries since 2001. A shift is continuing toward pesticides that are less hazardous and persistent than the last generation of pesticides, and are more precise in acting against the target pest (and thus have less impact on non-target organisms). Much of the progress is the result of policies adopted in the 1990s, when “pesticide risk reduction” became an important goal for OECD countries. At that time, virtually all OECD countries took steps to strengthen existing pesticide registration and re-registration programmes, and to implement new programmes aimed at encouraging farmers to adopt more ecological pest-control methods. Since 2001, a number of countries have adopted further pesticide risk reduction measures, and some have identified ways to use existing measures more effectively. Many OECD countries adopted comprehensive national programmes to reduce pesticide risks in the 1990s, and several new or updated programmes have been established. One example is the European Commission’s Strategy for a Sustainable Use of Pesticides, adopted in 2002, which will engage all EU countries in a set of measures to reduce the risks and use of pesticides. Canada also adopted a new Pest Control Products Act in 2002, which will strengthen safeguards against risks and will allow Canadians access to more information and new opportunities to provide input into decisions. All OECD countries have been working steadily since the early 1990s to re-register “old” pesticides and, to the extent possible, replace more hazardous and persistent products with new “safer” pesticides. The re-registration activities have been quite active over the last few years. For instance, during this period, the EC has taken decisions to remove 450 active substances from the market, representing a 50% decrease compared to the number of substances that were available in 1993. In addition, within the past few years a number of countries have worked to encourage the registration of safer pesticides through the use of incentives (e.g. expedited reviews for pesticides which meet “reducedrisk” pesticides criteria). Over half of the new pesticides registered in 2002 and 2003 in the US were classified as either biopesticides, which generally pose less risk, or as conventional “reduced-risk” pesticides. Promoting Integrated Pest Management (IPM) as an alternative to chemical-intensive farming (e.g. through the use of biological pesticides) has been a goal across OECD countries since the 1990s, and most countries now have well-established programmes to achieve that goal. During the last couple of years, some governments have established partnerships with technicians, farmers and other stakeholders to set up demonstration fields and training courses for IPM-related activities. All OECD countries have programmes to protect wildlife and water sources from pesticide contamination. Since 2001, a number of countries have taken specific actions to identify impacts on the environment, and

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reduce such impacts (or prevent them from occurring). In many cases, governments have either restricted the use of pesticides in sensitive areas, or required the use of buffer zones. An important change seen across OECD countries in recent years is the initiation of programmes to collect statistics on pesticide sales or use. A decade ago only a few countries had such programmes; today, many are starting them. Such data, while important for the development of environmental indicators, is unfortunately lacking in many countries.

Further Work in the OECD Further develop and use the core set of OECD agri-environmental indicators, and provide information on the adoption of sustainable agricultural management practices by 2003.

A core set of agri-environmental indicators for OECD countries was agreed by the Joint Working Party on Agriculture and Environment and released in 2001. An updated version of the indicators, reflecting more recent data and development in the indicators, will be published in 2004. A major report inventorying agri-environmental policy measures in use in OECD countries is under production, with publication foreseen for 2004.An expert meeting on “Soil Erosion and Soil Biodiversity Indicators” was held in Rome, Italy on 25-28 March 2003. ●

OECD (2001), Environmental Indicators for Agriculture: Volume 3 Methods and Results.

●

OECD (2003), Agriculture and Biodiversity: Developing Indicators for Policy Analysis (Proceedings of an Expert Meeting held in Zurich, Switzerland, 5-8 November 2001).

●

OECD (forthcoming 2004), Agri-Environmental Indicators.

●

OECD (forthcoming 2004), Inventory of Policy Measures Addressing Environmental Issues in Agriculture. Analyse the impacts of agricultural and related policies on specific environmental problems, such as water quality and scarcity, and greenhouse gas emissions, and provide recommendations on policy reform to ensure environmental sustainability.

The Committee on Agriculture produces an annual report on agricultural policies in OECD countries, often including information on some of the environmental impacts of such policies. An expert meeting on agriculture and water quality was held in Korea in 2003. ●

OECD (annual), Agricultural Policies in OECD Countries: Monitoring and Evaluation. Review the environmental, economic and social effects of sustainable agriculture, including organic agriculture, and assess the policies and market approaches to sustainable farming.

An “OECD Workshop in Organic Agriculture” was held in Washington DC, USA on 23-26 September 2002 and one an “Expert Meeting on Farm Management” is planned for early 2004 in New Zealand.

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●

OECD (2003), Organic Agriculture: Sustainability, Markets and Policy. Provide an inventory of policies related to environmental performance in agriculture, monitor and evaluate effects of agricultural policies and subsidies and suggest alternative policies and approaches to improve environmental performance.

Forthcoming in 2004 will be two major reports, one summarising the main developments in agri-environmental policy measures in recent years, and one providing an inventory by country of the policy measures used to address environmental issues in agriculture. As part of a horizontal project on overcoming obstacles to reform of environmentally harmful subsidies, work has also been undertaken on evaluating the effects of agricultural subsidies on the environment. ●

OECD (forthcoming 2004), Reforming Environmentally Harmful Subsidies: Challenges and Opportunities.

●

OECD (forthcoming 2004), Agri-Environmental Policy Measures: Overview of Developments.

●

OECD (forthcoming 2004), Inventory of Policy Measures Addressing Environmental Issues in Agriculture. Promote international harmonisation of regulatory oversight in biotechnology and with respect to novel foods and feeds, in particular regarding safety assessments.

The Joint Meeting of the Chemicals Committee and the Working Party on Chemicals, Pesticides and Biotechnology continues to promote the international harmonisation of regulatory oversight in biotechnology. Thus far, the Joint Meeting has released 20 consensus documents related to environmental safety and 7 related to food/ feed safety. It has published a number of additional documents on related issues. Monitor the extent to which the risks of GMOs are assessed in member countries.

The Joint Meeting continues to monitor the extent to which products of modern biotechnology are the subject of safety assessment in OECD countries. OECD has also provided an open forum for discussion of issues related to the safety of GM foods, and has held three major international conferences with participants from governments, the scientific community, and civil society. ●

OECD Conference on the Scientific and Health Aspects of GM Foods (Edinburgh, Scotland, January 2000).

●

OECD Conference on New Biotechnology Food and Crops: Science Safety and Society (Bangkok, Thailand, July 2001).

●

OECD Conference on LMOs and the Environment (Raleigh/ Durham, USA, November 2002).

Notes 1. See also National action 4 of the “Agriculture” section. 2. See also National action 4 of the “Agriculture” section.

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References Baldock, D.J. Dwyer and J.M. Sumpsi Vinas (2002), “Environmental Integration and the CAP: A Report to the European Commission”, DG Agriculture. Bartram, H. and A. Perkins (2003), “The Biodiversity Benefits of Organic Farming”, in Organic Agriculture: Sustainability, Markets and Policy, OECD, Paris, pp. 77-94. Dabbert, S. (2003), “Organic Farming and Sustainability: Environmental Aspects”, in Organic Agriculture: Sustainability, Markets and Policy, OECD, Paris, pp. 51-64. Foster, C. and N. Lampkin (2000), “Organic and In-Conversion Land Area, Holdings, Livestock and Crop Production in Europe” in Organic Farming in Europe: Economics and Policy series, October 2000 [www.organic.aber.ac.uk]. OECD (2003a) Agricultural Policies in OECD Countries: Monitoring and Evaluation, OECD, Paris. OECD (2003b) Agri-Environmental Policy Measures: Overview of Developments, OECD, Paris. OECD (2003c), “Soil Organic Carbon and Agriculture: Developing Indicators for Policy Analyses”, available on the OECD website at: www.oecd.org/agr/env/indicators.htm. OECD (forthcoming 2004), Reforming Environmentally Harmful Subsidies: Challenges and Opportunities, OECD, Paris. Porter, G. (2003), “Subsidies and the Environment: An Overview of the State of Knowledge”, Environmentally Harmful Subsidies: Policy Issues and Challenges, OECD, Paris, pp. 31-100.

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2.2. Transport Overview of progress in addressing the main challenges The OECD Environmental Strategy identifies two main challenges facing OECD countries in ensuring environmental sustainability of the transport sector: A. Significantly reduce the environmental and health effects of transport, particularly regarding air pollution and climate change, by ensuring that efficiency gains from technological developments and demand side management achieve lasting environmental quality improvements. B. Avoid exceeding air quality and noise standards, critical levels and loads for acidification, eutrophication and tropospheric ozone, prevent habitat fragmentation and minimise transport-related land use, run-off and waste, and reduce risks associated with maritime transport of hazardous substances.

The environmental and health effects of air pollution from transport emissions in OECD countries have been decreasing for several years, and are expected to continue to do so as vehicles incorporating advanced technologies increase their share of the vehicle fleet and as cleaner fuels are put on the market. Emissions of most pollutants remain high, however, and limit-standards for air quality, and critical levels and loads for acidification, eutrophication, and tropospheric ozone, continue to be exceeded. Progress in noise reduction, the prevention of habitat fragmentation, and reducing run-off from transport is proceeding even more slowly, due to continued expansion of road networks and overall transport activity. CO 2 emissions from transport have continued to rise, as volume increases in demand have persistently outweighed improvements in fuel efficiency. A number of OECD countries have started using electric buses for public transport, and the commercial introduction of hybrid fossil fuel/electric passenger vehicles is beginning in some countries. However, the widespread use of alternative-fuel vehicles, including those with reduced or zero carbon emissions, is unlikely before the end of the decade. Regarding the policy mix in use, regulatory timetables for meeting air quality goals and emission ceilings in most OECD countries have been established through 2008. These have been supplemented with the early introduction of low sulphur fuels, by the use of differentiated taxes in some countries, and voluntary agreements in others. A number of countries have been reforming their system of transportation taxes and charges to better target environmental and economic externalities (e.g. distance-related, vehicle weight, and emission-related charge systems for trucks, congestion charging, and differentiated fuel taxation). Efforts to shift demand toward greater use of public transport include greater emphasis on tram and light rail systems in some cities in OECD countries, and efforts to increase the capacity of inter-city passenger rail in a few areas. Use of strategic environmental

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assessments for the development of major transport infrastructure is still in its infancy, with only a few examples of changes in project design to address environmental concerns. Regarding the maritime transport of hazardous substances, OECD countries developed an action plan to combat substandard shipping in 2001. Until this plan is fully operational, however, marine pollution from oil and hazardous material continues to be a risk. In 2003, the European Commission implemented an accelerated timetable to phase-out singlehulled vessels in the transport of fuel oil and implemented more stringent port-side inspection and regulatory procedures.

Implementation of the national actions National action 1. Work towards an effective and full internalisation of environmental costs of transportation through the use of effective instruments such as taxation, charges, reform of environmentally harmful subsidies and other incentive-based approaches.

Increasing transport activity continues to cause adverse impacts on environment, human health and the economy, despite considerable progress in OECD countries in reducing some traditional air pollutants from transport. Major environmental and social impacts include greenhouse gas emissions, local air pollution, noise, congestion and above all accident damages. Across European countries (EU plus Norway and Switzerland) external costs from transport were estimated at 8 % of GDP in 1995 (Infras/IWW, 2000). The marginal external costs vary considerably between and within transport modes. They also depend heavily on the type of vehicle, the fuel used, and on the specific traffic situation. In OECD countries, road transport is responsible for most of the transport sector’s impact on human health and the environment. It accounts for over 80% of all transport-related energy consumption, for most of the accidents and the majority of air pollutant emissions, noise and habitat degradation (Figure 2.2.1). Maritime transport, although generally associated with lower environmental impacts, continuously raises concern due to oil pollution from major accidents and drain of residual fuels from reservoirs. More recently, there has been a growing concern over global environmental impacts from air traffic, which has been increasing particularly rapidly, in particular for tourism and leisure trips. Air transport currently represents about 11% of transport-related energy consumption. All OECD countries leverage some charges and taxes on road transport (e.g. fuel taxes, vehicle registration fees, road tolls), and many have taken steps over recent years to improve the efficiency of these charges and taxes (ECMT, 2003). Many are introducing innovative new instruments as well, such as congestion charging or road user charges that vary according to environmentally related criteria, such as vehicle size or weight. At the same time, traditional instruments such as parking charges and fares for public transport, could be used more effectively in most OECD countries. An example of an innovative charging system is the distance-related, vehicle weight and emission-related charge system introduced in Switzerland for trucks. One year into implementation, the effects of the Swiss heavy vehicle fee (HVF) system indicate that it is a success. The kilometres travelled by heavy goods traffic on the roads have decreased by 3% (in comparison with increases of around 6% in preceding years) and there has been increased renewals of the vehicle fleet. It has also provided revenue for financing important investments into railroads. Austria, Germany, Liechtenstein, and the United

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Figure 2.2.1. External costs of transport in Europe1 (2000) Accidents Nature and landscape

Air pollution Upstream processes

Noise Urban efects

Climate change

Billion euro per year 350 300 250 200 150 100 50 0

Cars 1.

Motorbikes

Buses

Light trucks

Heavy trucks

European Union member States, Norway, and Switzerland.

Source: INFRAS (2004).

Kingdom plan to implement a similar charge, and several others are expected to follow. Satellite tracking and automatic vehicle recognition systems have the potential to make further improvements to transport charging systems. Another example is a fuel tax levied in Germany on producers of fuel and oil products, where the tax rates are differentiated by fuel type and, as of late 2001, by sulphur content. The environmentally oriented tax element (“Ökosteuer”, eco-tax) was introduced in 1999. The aim was to increase fuel taxation over a period of six years by USD 0.03 per year. The eco-tax is not only applied to fuels but to energy-use in general, thus it is also levied on electricity, etc. In 2000, revenues from the fuel tax in the transport sector amounted to about DM 64 billion (USD 28 billion). The fuel tax is the third most important tax, and represents about 7% of the national budget. The implementation of the eco-tax provided incentives to switch to more fuel-efficient driving patterns in the short-term – and to the purchase of more fuel-efficient cars in the medium- to long-term. New instruments to cope with congestion in urban areas have also been considered in many cities, and have recently been implemented in London in the United Kingdom and Stockholm in Sweden. In London, a cordon charge or “congestion charge” to regulate traffic in the city centre was introduced in 2003. The introduction of the charge – a GBP 5 daily charge, applied to most vehicles entering the Inner Ring Road charging zone – has significantly reduced the levels of congestion. Journey times to or across the charging zone have reduced by 13%, and journey time reliability has improved by an average of 30%. Most of the decrease in car use has reflected a switch to use of bus transport, with an extra 15 000 bus seats provided. In terms of revenues from the charge, some GBP 68 million is expected for the year 2003/2004.

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National action 2. Support the further development and implementation of existing international conventions and other commitments on transport, environment and health.

The transboundary nature of many of the environment and health impacts of transport requires stronger international co-operation and greater integration of sectoral policies. An integrated approach to transport related problems was initiated by the UN/ECE Regional Conference on Transport and the Environment in Vienna 1997, and was further expanded by the WHO London Conference on Environment and Health in 1999, which added the health dimension to the work on transport and environment. The second Highlevel Meeting on Transport, Environment and Health (Geneva, 5 July 2002) adopted a PanEurope Program on Transport, Environment and Health (THE PEP). At the meeting, UNECE and WHO/Euro member states called upon the Contracting Parties to existing international agreements and legal instruments related to transport, environment, and health to further enhance implementation of those instruments and to further develop them with a view to achieving transport sustainable for the environment and health. THE PEP consolidates and focuses UNECE and WHO/Europe activities on three key priority areas: integration of environmental and health aspects into transport policy, demand side management and modal shift, and urban transport. The UNECE Convention on Long-Range Transboundary Air Pollution has been successful in the reduction of air emissions in the region through a combination of scientific research and co-operation, integrated assessment modelling, and the development of emission reduction strategies on regional air pollution and its effects. Forty-eight countries and the European Community are Parties to the Convention. The Convention has set up a process for negotiating concrete measures to control specific pollutants through legally binding protocols. Since 1984, eight protocols have been adopted, five of which have entered into force. Those in force call for the reduction of emissions and transboundary fluxes of sulphur dioxide (SO2), nitrogen oxides (NOx) and volatile organic compounds (VOCs). The three recent protocols not yet in force call for control of emissions of heavy metals and persistent organic pollutants (POPs) and of ammonia. Besides ongoing co-operation under the Convention, several Parties are engaged in other multilateral or bilateral programmes for air pollution abatement within the UNECE region. OECD countries have made progress within the UNECE Convention on Long-range Transboundary Air Pollution and the implementation of its protocols, in particular regarding heavy metals, sulphur, NOx, VOC, and persistent organic pollutants.

National action 3. Develop and use cost-effective demand side management tools and land use planning to reduce the need for travel, encourage transport usage that minimises its negative environmental effects, such as risks from maritime transport of hazardous substances, including through a better balance in the modal split.

Many of the main drivers of transport demand are not directly subject to transport policy control: they include technical and scientific development; economic growth and rising incomes; demographic and social trends including ageing and household size; lifestyle patterns and individual preferences on housing, work and other activities; pressures of competition in regulated and unregulated markets; and logistical organisation of

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production and distribution. They are also affected by policy objectives in various areas of Government activity, including taxation, and the spatial arrangement of health, education and other services. Transport policy which ignores these wider concerns is likely to be ineffective. As such, transport ministries need to work closely together with other ministries – such as finance, economics, environment, social policy, and development. Furthermore, a wide variety of policies and measures are necessary – economic instruments, but also psychological, marketing, educational and cultural influences. Theoretical and empirical evidence show that relative and absolute levels of transport prices have a significant influence on choice and patterns of traffic, as well as the volume, pattern, timing, location, vehicle design, fleet, utilisation, or other characteristics of demand. Spatial planning and regulation also have a strong influence on the volume and structure of travel. This is particularly the case where policy instruments are used in combination and when sustained for long enough to enable people and firms to adjust their behaviours. International co-operation and national policies in OECD countries to address environmental risks from maritime transport of hazardous substances have been stepped up in recent years, following a series of major oil spill accidents.*

National action 4. Encourage the uptake of clean technologies for vehicles and fuels through targeted incentives.

OECD countries have been promoting and facilitating the introduction of clean technologies for motor vehicles, and improving conventional technologies and clean fuels (very low sulphur fuel; sulphur free fuels; and alternative fuels such as natural gas, LPG, biodiesel, and hybrid and electric urban vehicles). Longer-term initiatives include the development of hybrid (fossil fuel/electric) vehicles and various fuel cell applications for passenger cars and urban buses. Progress and national policies in this area are driven by the requirement of meeting air quality goals and emission ceilings. Regulatory timetables have been agreed in Australia, Europe, Japan, and the United States up to the year 2008. Following these decisions, new standards on fuel quality as well as decisions on the introduction of very low sulphur (50ppm) and “sulphur-free” (lower than 10ppm) fuels have been put in place to encourage the uptake of filter technology for diesel vehicles and advanced catalysts, as well as to reduce emissions from the existing vehicle fleet. The introduction of low sulphur and sulphur-free fuels has been promoted in OECD countries by a combination of regulatory measures and voluntary agreements with the petroleum industry, and they are already in use in several countries. Differentiated taxes have been used to foster the introduction of these fuels, for example in Australia, Sweden, and the United Kingdom, or they have been supplied on a voluntary basis by some petroleum companies, as in Germany. OECD has assessed the projected global impacts of existing emission control programmes (OECD, forthcoming 2004). The study finds that, despite important increases in motor vehicle stock and kilometres travelled, implementation of existing emission control

* See National action 5 of the first section of Objective 4 and National action 1 of Objective 5 for more information.

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programmes will lead to a sharp decrease in emissions of all major air pollutants (VOC, NOX, CO, and PM) from motor vehicle use in OECD countries, by about 70-90% compared with current levels. When emissions are analysed by vehicle type, some priority targets for action in OECD countries become clear. Heavy trucks, in particular stand out as major emitters of particulates and NOX, greatly exceeding other vehicle types on a per-kilometre basis, as well as total amounts emitted. CO2 emissions from road transport will continue to increase in all countries for the foreseeable future. This growth will probably be decoupled slightly from GDP growth in OECD countries. Given current high levels of fuel consumption, however, without new, stringent measures directed at reducing carbon emissions from transport, it will continue to be substantial, of the order of a 24% growth between 2000 and 2030. Initiatives have been taken in most OECD countries to support technologies that aim at significantly reducing (or even eliminating) CO2 emissions from road transport, and also improving air quality in cities considerably. The transition to a hydrogen-based transport system might be facilitated by technologies that use current infrastructures for fossil fuels, but enable the use of other alternative fuels like electricity. For urban areas, electric and hybrid fossil fuel/electric vehicles have received increased attention, and users benefit from incentives like tax credits, free parking or using bus lanes. The timetable for the introduction of fuel cell passenger cars has been postponed to after 2010. Several manufacturers have prototypes developed that are being tested under real-time conditions, and many OECD cities have started demonstration projects with hydrogen fuel cell buses for public transport. Regarding urban transport technology, there is a renaissance of tram and light rail systems in some European and North American cities, in order to improve the environmental performance of public transport. These low-floor trains have significantly lower noise levels, less vibration, but higher speeds and capacity. New technologies for passenger rail with double stack trains for the urban and extra-urban traffic have also been introduced. National action 5. Better assess the strategic environmental impacts of transport inducing infrastructure investment projects, policies, plans and programmes.

Requirements for strategic environmental assessments for transport related infrastructure developments have only recently been adopted in OECD countries, and their implementation is too recent to make any conclusive assessment of progress thus far. Examples of some successful impact assessments do exist in OECD countries, including with respect to the construction of airports (e.g. for London Heathrow and Nagoya Airports) and for ports and high speed railway lines (e.g. TGV in France, Shinkansen in Japan, ICE in Germany). National action 6. Contribute to the long-term environmental sustainability of the transport sector by setting targets to meet environmental quality objectives, in particular WHO air quality and noise guidelines.

Specific environmental quality targets have only been set in a few OECD countries at the local level in order to comply with agreed air quality standards. A number of OECD

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countries – such as Austria, Italy, Sweden, and Finland – have used legislation, fiscal incentives, or voluntary agreements to lower benzene levels and sulphur levels in diesel and/or petrol. Finland is also promoting higher levels of oxygen in petrol to reduce levels of hydrocarbons and carbon monoxide. Austria has recently concluded a voluntary agreement with industry on the reduction of evaporative emissions. Germany introduced the lower sulphur level of 0.05% by weight in October 1995. Germany, Finland, and Sweden are promoting biomass energy use through action programmes. At European level, the pioneering EU Environmental Noise Directive [2002/49/EC] was recently issued and is to be implemented at local level in all EU member States in the course of the next few years. Against this background, one focus of the EU SMILE (Sustainable Mobility for Local Environment) project has been to develop guidelines for noise abatement measures with respect to road traffic noise in local authorities, by identifying planning principles which have been developed in the context of this particular work package. In this way, the guidelines will serve to point out existing potential for noise abatement measures in fields for which local authorities are responsible and in which they can therefore easily take action. National action 7. Develop and implement multi-modal strategies based on the Environmentally Sustainable Transport (EST) guidelines, emphasising policy integration among sectors.

Multi-modal strategies target all modes of transport (motorised and non-motorised), and aim at achieving a more balanced modal split among the different modes for passenger and freight transport. Comprehensive multi-modal strategies have not yet been implemented, but are being developed in a number of countries as part of overall transport policy and the integration of environmental objectives in sectoral policies, for example as part of the Cardiff Process in the European Union. The OECD Guidelines Towards Environmentally Sustainable Transport, endorsed by OECD Environment Ministers in 2001, reflect a transport vision that includes a better modal split (see Box 2.2.1). While comprehensive multi-modal strategies have not yet been implemented, many OECD countries have applied policies to influence modal split by targeted investment and financial and fiscal incentives. At the local level, there has been promising initiatives taken by many OECD cities to foster intermodality, mainly for passenger transport (e.g. through improving rail-air links and rail-road links), but also for freight (e.g. through combined transport and urban freight delivery by light rail). In addition to local and national initiatives, major companies have also been encouraged to review the mobility demand of their employees, with the aim of proposing alternatives that can reduce costs both for the employer (by providing less free parking) and for the employees (when they get a cash-out on parking or a subsidy for public transport). Regarding freight transport, the focus in many OECD countries is to maintain or increase the current modal share for rail freight, in order to relieve congestion and reduce environmental pressures from road freight. Combined transport (rolling road, container transport by rail) has been promoted in many countries, including for north-south transport across the Alps (Switzerland, Austria, and most recently France). Multi-modal freight platforms have been introduced in a number of port areas and large cities to facilitate freight deliveries, optimise logistics and reduce handling of goods movements.

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Box 2.2.1. OECD Guidelines towards environmentally sustainable transport Guideline 1. Develop a long-term vision of a desirable transport future that is sustainable for environment and health and provides the benefits of mobility and access. Guideline 2. Assess long-term transport trends, considering all aspects of transport, their health and environmental impacts, and the economic and social implications of continuing with “business as usual”. Guideline 3. Define health and environmental quality objectives based on health and environmental criteria, standards, and sustainability requirements. Guideline 4. Set quantified, sector-specific targets derived from the environmental and health quality objectives, and set target dates and milestones. Guideline 5. Identify strategies to achieve EST and combinations of measures to ensure technological enhancement and changes in transport activity. Guideline 6. Assess the social and economic implications of the vision, and ensure they are consistent with social and economic sustainability. Guideline 7. Construct packages of measures and instruments for reaching the milestones and targets of EST. Highlight “win-win” strategies incorporating, in particular, technology policy, infrastructure investment, pricing, transport demand and traffic management, improvement of public transport, and encouragement of walking and cycling; capture synergies (e.g., those contributing to improved road safety) and avoid counteracting effects among instruments. Guideline 8. Develop an implementation plan that involves the well-phased application of packages of instruments capable of achieving EST taking into account local, regional, and national circumstances. Set a clear timetable and assign responsibilities for implementation. Assess whether proposed policies, plans, and programmes contribute to or counteract EST in transport and associated sectors using tools such as Strategic Environmental Assessment (SEA). Guideline 9. Set provisions for monitoring implementation and for public reporting on the EST strategy; use consistent, well-defined sustainable transport indicators to communicate the results; ensure follow-up action to adapt the strategy according to inputs received and new scientific evidence. Guideline 10. Build broad support and co-operation for implementing EST; involve concerned parties, ensure their active support and commitment, and enable broad public participation; raise public awareness and provide education programmes. Ensure that all actions are consistent with global responsibility for sustainable development. Source: OECD (2001).

Further work in the OECD Further develop the OECD work on Environmentally Sustainable Transport (EST), including: ●

the development of regional implementation strategies by 2006; and

●

the development of policies to counter the environmental impacts of high growth rates in aviation and road transport by 2006.

Further work on EST has been continuing under the Working Group on Transport. In terms of regional strategy development, a conference was held in Nagoya, Japan on

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23-25 March 2003 on “Environmentally Sustainable Transport in the Asian Region” and an “EST Goes East” project has been started in co-operation with UNEP, which promotes pilot projects for investment and partnership opportunities for sustainable transport. A regional workshop on the implementation of the EST Guidelines in Central and Easter Europe is planned for 2004. ●

OECD (2004), Decoupling Economic Growth and Transport Impacts.

●

OECD (forthcoming 2004), Proceedings of the Conference on Environmentally Sustainable Transport in the Asian Region.

●

OECD (forthcoming 2004), Clean Transport: Reducing Motor Vehicle Emissions through 2030.

●

OECD (2002), EST goes East: External Costs of Transport.

●

OECD (2002), Policy Instruments for Achieving Environmentally Sustainable Transport.

●

OECD (2002), Report on the International Conference on Environmentally Sustainable Transport: Is Rail on Track?

●

OECD (2001), Environmentally Sustainable Transport: Concepts and Strategies.

●

OECD (2001), Environmentally Sustainable Transport: Futures, Strategies and Best Practices (Proceedings of the Vienna Conference). Analyse strategies for the application of economic instruments, including emissions trading, levies and taxes, that promote environmentally sound aviation and maritime transport, taking into account work in other international organisations.

The OECD Maritime Committee has examined the unfair advantage benefiting substandard ship-owners who fail to comply with international environmental regulations regarding their ships. This work highlights the cost savings and ensuing competitive advantage that such ship-owners gain over their law-abiding counterparts. ●

OECD (2003), Ownership and Control of Ships.

●

OECD (2003), Cost Savings Stemming from non compliance with International Environmental Regulations in the Maritime Sector.

●

OECD (2001), Report on the Competitive Advantages Obtained by Some Ship owners as a Result of Non Observance of Applicable International Rules and Standards.

●

OECD (2001), The Cost to Users of Substandard Shipping.

●

OECD (2001), Action Plan to Combat Substandard Shipping. Analyse policies and actions for integrating environmental objectives in territorial, regional and land use policies and their impacts on transport supply and demand.

On the request of transport ministers, ECMT undertook a review of the implementation of urban travel transport policies over the period 1998-2001. The summary report and a series of published reports including a survey of urban travel trends and policy developments in cities across the ECMT and OECD regions, and in-depth reviews on implementing urban sustainable travel policies in the Netherlands and Hungary, can be found at www.oecd.org/CEM. ●

ECMT (2003), ECMT Resolution on Assessment and Decision Making for Integrated Transport and Environment Policy.

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●

ECMT (2003), Implementing Sustainable Urban Travel Policies: National Reviews. Analyse barriers to market penetration by environmentally friendly technologies and develop approaches on how to overcome this.

Some work has been carried out in the IEA and OECD relating to the development and uptake of new energy and climate friendly technologies, with some reference to transportrelated technologies. ●

IEA (2003), Implementing Agreement Highlights. Analyse the scope for policies to mitigate the negative environmental impacts from leisure and tourism travel.

A case study on the environmental impacts of leisure and tourism travel, and policies that can be used to reduce these impacts, was produced in 2001 as part of a project on sustainable consumption. ●

OECD (2001), “Household Tourism Travel: Environmental Impacts and Policy Responses” [ENV/EPOC/WPNEP(2001)114/FINAL].

References INFRAS (2004), External Costs of Transport in 2000, International Union of Railways (UIC), Paris. OECD (2001), OECD Guidelines Towards Environmentally Sustainable Transport, OECD, Paris. OECD (forthcoming 2004), Clean Transport: Reducing Motor Vehicle Emissions through 2030, OECD, Paris.

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2.3. Energy Overview of progress in addressing the main challenges The OECD Environmental Strategy identifies one main challenge facing OECD countries in ensuring environmental sustainability of the energy sector: A. Redesign and modify energy supply and use systems so as to reduce the negative environmental effects of energy production and use, in particular the emission of greenhouse gases and other air pollutants.

Industry related CO2 emissions from energy use have decreased for OECD countries as a whole, driven by changes in energy prices, fuel switching in energy generation, and structural changes which have reduced the share of energy-intensive industry in OECD economies. Energy use in the residential sector has steadily increased over the past decade, highlighting the important role to be played by energy efficiency policies and measures. Existing policy instruments in use include combinations of regulations and voluntary approaches aimed at improving energy efficiency in buildings, particularly as regards new construction, and in electrical appliance use. However, much of the potential for further energy efficiency improvements remains untapped, including low or no cost options. For example, standby power consumption from consumer electronics, the fastest growing use of household and office electricity, remains unregulated in most OECD countries. Policies implemented in OECD countries to address the negative environmental effects of energy production and use have involved changes in electricity production, household, and commercial consumption, and transport. Regarding energy production and transformation, a combination of market forces and changes in regulation have fostered fuel-switching from coal to gas in many OECD countries. Fiscal policies, feed-in tariff compensations, tradable renewable energy certificates, and other policies have encouraged the deployment of renewable energy sources where growth has accelerated to the doubledigit level, albeit from a low base. A few countries have deployed similar policies to promote combined heat and power. These measures have reduced emissions of carbon dioxide, sulphur dioxide, particulate matter, and other air-borne pollutants from power generation. Ancillary health and other environmental benefits accompany many of the policies aiming to reduce CO2 emissions from the energy sector. In addition, several new research initiatives have recently been launched on the viability and cost-effectiveness of carbon capture and storage, as well as on ways to reduce its cost. At least one pilot project has been initiated to generate electricity from fossil fuels with no carbon emissions. Combined with aggressive development of renewable energy sources, such as biomass, environmentally sound carbon capture and storage could open the way to low-emission or no-emission energy pathways.

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The combination of structural change and energy efficiency have led to some decoupling of energy use from economic growth, notwithstanding continued high growth in the transport sector. Growth of CO2 emissions has also slowed in recent years, aided by the small but perceptible increase in less CO2-intensive fossil fuels, renewables, and nuclear power in some countries, but major progress will require substantially more ambitious policies and measures.

Implementation of the national actions National action 1. Remove environmentally damaging subsidies and tax provisions in the energy sector and internalise externalities associated with energy use and production.

Information on the type and amount of subsidies provided to the energy sector in OECD countries is scarce. Subsidies to coal production – possibly the most environmentally damaging subsidies in the sector – are the only ones that are estimated on a regular and comparable basis across OECD countries. As can be seen from Table 2.3.1, almost all OECD countries providing subsidies to coal production have substantially reduced these subsidies in recent years, and a number of them have set specific timetables for phasingout these subsidies. Canada recently closed its last government-supported coal mine, and France is on track to end coal production (and associated subsidies) by 2005.

Table 2.3.1. Coal subsidies in selected OECD countries Producer Subsidy Equivalent (million USD)

Producer Subsidy Equivalent per tonne (USD/tce)

1995

2000

1995

2000 115.40

Germany

8 502

3 924

156.15

Spain

1 110

730

92.97

70.32

Japan

884

376

179.36

134.29

Turkey

267

369

141.95

220.95

France

117

307

14.95

97.15

United Kingdom

203

89

4.35

3.25

11 083

5 795

Total Source: IEA (2001a).

Although coal production is expected to continue to be subsidised in Turkey, the Czech Republic and Norway, the future European Union subsidies are of particular concern due to the scale of production involved (IEA, 2003a). EU production subsidies are set to continue, justified in part by a need to continue support for social and regional adjustment reasons. Even uneconomic collieries will be kept open, to “maintain a minimum coal-producing capability and to retain professional qualifications and technical expertise”. Aid to production will be replaced by aid to “safeguard resources”. However, analysis has shown that, while state aid has been successful in dealing with social problems and in evening out short-term market movements in some situations, it has not been successful in providing a long-term economic future for the greater part of the industry (IEA, 2003a). All OECD countries levy taxes on energy production or use.1 However, a large number of tax provisions (i.e. exemptions or reductions in tax rates) are in place, often to energyintensive industries, that significantly reduce the effectiveness of the tax in internalising energy-related externalities.2 A recent example is a tax on coal that was introduced in

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Japan as of 1 October 2003. The tax rate on coal will increase gradually, from approximately JPY 230 per tonne at present to JPY 460 and JPY 700 per tonne as from 1 April 2005 and 1 April 2007 respectively. Coal for special purposes – for steel, cement, and coke production – is exempted until 31 March 2005. In Germany, an ecological tax reform has combined increases in (transport and nontransport) energy taxes since 1999 with reductions in social security contributions.3 It too contains several tax provisions benefiting specific economic sectors, in particular the energy-intensive ones. Several modifications to these provisions took effect in early 2003, tending on average to increase the taxation of energy-intensive firms. The general reduction in the tax “normal” rates benefiting industry, agriculture and forestry was lowered from 80% to 40%. Furthermore, instead of a 100% exemption for any energy taxes due in excess of 1.2 times what a given firm has obtained in social security payment reduction, a 95% rate reduction is now given. In practice this means that energy-intensive firms now face energy tax rates that on the margin are equal to 3% of the normal tax rate, as opposed to 0% previously. Several other countries also have energy tax provisions in place. In the United Kingdom, a Climate Change Levy came into effect in 2001, and includes, for example, taxation of business use of coal, natural gas, and electricity. Energy-intensive sectors could obtain an 80% rate reduction by entering into “Climate Change Agreements”.4 In 2002, this tax raised about EUR 1.2 billion in revenue from industry, “recycled” through reductions in social security contributions. The household sector is completely exempted from this levy. In Sweden, taxes on heating fuels and electricity have been increased since 2001 as part of an approximately EUR 1 billion tax switch from labour taxes to environmental taxes. However, these changes have primarily affected households and services, while industry remains largely exempted. Hungary will introduce a new tax on business usage of electricity and natural gas as from early 2003, while the Netherlands is preparing to increase its “Regulatory energy tax” from 2005, raising some EUR 450 million annually in revenue, that will be fully recycled. These taxes largely exempt energyintensive industries. National action 2. Accelerate cost-effective reductions in net emissions of carbon dioxide from energy production and use, including through the extensive use of tradable permits.

A range of policies are in place in OECD countries to reduce CO2 emissions from energy production, transmission, and use.5 Since the signing of the Kyoto Protocol in 1998, OECD countries have implemented an increasing number of policies targeting greenhouse gas emissions. Whilst absolute CO2 emissions kept rising, the CO2 emission intensity of GDP improved over the 1990s for the OECD as a whole. However, improvements in the CO2 emission intensity of OECD economies in recent years have taken place at a slower rate than over the 1973-1990 period, indicating that recent energy efficiency and climate policies have not succeeded in sustaining the decoupling that resulted from the oil price shocks of 1973 and 1978-1979 and related energy efficiency policy reforms in the 1980s. Several OECD governments have implemented environmental regulations governing electricity production, mainly to foster the use of renewable energy sources and to improve the energy efficiency of electricity production. Some OECD countries, such as the Czech Republic and Greece, have also strengthened policies to encourage fuel-switching from

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coal to gas. A number of OECD countries have adopted policies to foster the deployment of combined heat and power systems (CHPs), often closely tied to policies promoting use of renewable energy. For example, CHP projects in Belgium can generate green certificates which are primarily geared to develop the renewable energy market. Fuel combustion in industry was responsible for 15% of OECD total energy-related CO2 emissions in 2001 (IEA, 2003b). Energy-related CO2 emissions from industry decreased by 4% from 1990 to 2001. These trends were largely driven by changes in energy prices, levels of industrial output, fuel switching in energy generation, and structural changes. Emissions from the residential sector represented 8% of the total energy-related emissions in OECD countries in 2001.6 The 2001 emission level from the residential sector represents an increase of 3% compared with 1990 levels. Various driving forces – including changes in income levels and lifestyles – have pushed demand for energy upward in most countries, offsetting energy savings that have been realised in recent years (OECD, 2003). For example, the reduced cost of electric appliances has drastically increased the demand for electricity, as has a trend toward larger dwellings and fewer persons per dwelling. These higher electricity demands may have contributed to a decline in CO2 intensity in countries relying largely on nuclear or hydropower for their electricity generation, but increased CO 2 intensity in countries relying on fossil fuels. National action 3. Work towards significantly increasing the share of renewable energy in total primary energy supply.

Over the past decade, most OECD countries have enhanced their support for renewable energy in an attempt to trigger a transition toward more sustainable energy production and use. Liberalised energy markets foster competition and thereby render market entry for renewables more challenging. To address this challenge, OECD governments are increasingly trying to have a fuller range of costs associated with nonrenewable energy carriers, as well as the benefits of renewable energy, reflected in energy prices. Renewable energy supply grew by 15% in IEA countries7 between 1990 and 2001, reflecting recent policy initiatives (IEA, 2003c). Nevertheless, over the same period, the shareof renewable energy in total primary energy supply (TPES) remained relatively stable, at under 6%. The 15% growth in renewable energy supply masks great disparity in the deployment of various renewables. For instance, while the solid biomass, hydropower, and geothermal segments have experienced very limited growth since 1990, energy production from wind, solar, and liquid biomass have increased significantly (with annual growth rates of 22%, 27%, and 84% respectively) (IEA, 2003c). In the electricity sector, although there remains significant untapped potential, hydropower capacity has now reached a market plateau in most OECD countries. This may account in part for the significantly lower growth rate of electricity production from renewables as compared to total electricity production since 1990 (0.8% compared to 2.1%) (IEA, 2003c). Europe is the only OECD region that has seen its share of renewable electricity supply increase since 1990. The slowdown in renewable electricity production, and the challenges to replace fossil fuel by renewables in the energy sector as a whole, both imply the need for enhanced policy efforts.

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Most OECD countries have set (or are in the process of setting) targets for the share of future electricity to be generated from renewable energy, providing a more stable policy environment and clearer guidance to stakeholders. In some OECD countries, meeting these targets is mandatory, but in the majority it is voluntary. Grants, preferential loans, or special funds available to electricity suppliers, corporations and consumers are an important part of the policy mix aimed at facilitating market entry for renewable energy technologies in OECD countries. Existing grants and loans programmes have been geared mostly towards small-scale technologies, which have generally higher costs and face access barriers to mainstream markets. A fiscal instrument used is carbon or energy taxes, coupled with tax exemptions, credits or reductions for renewable energy. Most OECD countries have applied tax exemptions, credits or reductions for corporate and personal investments in renewable energy equipment. Feed-in tariff compensations are a more recent fiscal instrument in use in several OECD countries. These compensate for high transmission and distribution tariffs faced by small renewable electricity producers by fixing favourable feed-in tariffs for them for a set period of time. Unlike public grants, tax exemptions and credits, feed-in tariff compensations do not reward investments directly, but energy production instead, thereby providing incentives to electricity producers to maximise the efficiency of their production. In some countries (such as France and Germany), policies on feed-in tariffs are becoming increasingly sophisticated, with incentives being either reduced over time to reflect reductions in cost of technologies learning, or banded to reflect differences in available resources and other variables (IEA, 2002a). Countries that have implemented stable, long-term feed-in tariffs have been those that boast the highest renewable energy deployment rates. Tradable renewable energy certificates (TRECs) are gaining attention as an innovative market-based tool to provide incentives for electricity producers to invest in renewables while, in principle, enabling governments to better control the financial costs of stimulating renewable energy markets. To facilitate TRECs, many OECD countries have set targets for electricity production from renewables. TREC schemes have been or are being implemented, either at the national or sub-national level, in a third of OECD countries, and are under consideration in a few others. The effectiveness of TREC schemes depends greatly on the robustness of the certification scheme as well as on the type and stringency of compliance penalties which must be sufficiently high to encourage investments in renewable energy. OECD countries also support research and development (R&D) for renewable energy technologies, Between 1990 and 1999, R&D budgets for renewable energy technologies rose by 1.9% per annum, whilst total R&D energy budgets decreased by an average of 1.7% per annum in IEA countries (see Figure 2.3.1). National and international research work in new fields has also been initiated, such as in hydrogen technologies and linkages between basic science and future energy technologies (IEA, 2003d). Whilst these trends may suggest a long-term shift away from fossil fuels and nuclear energy and towards renewables in energy R&D, gross investments in renewable energy R&D remain low. The current low private and public levels of energy R&D and its predominantly shorter-term focus appear inconsistent with the magnitude of the climate change challenge (IEA, 2003d).

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Figure 2.3.1. Government energy R&D budgets in IEA countries by technology area (1973-2001) Conservation

Fossil fuels

Renewable energy

Nuclear fusion

Power and storage

Other

Nuclear fission

USD million at 2001 prices and exchange rates 16 000 14 000 12 000 10 000 8 000 6 000 4 000 2 000 0 1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

Source: IEA (2003d).

National action 4. More effectively use technologies to increase the efficiency of energy production and use.

Energy efficiency initiatives are increasingly proving to be technically feasible and cost-effective, thus exhibiting a great potential for energy savings and greenhouse gas emission reductions.8 For example, the United Kingdom’s 2003 White Paper assumes that energy efficiency can achieve about half of the GHG reduction target it set itself for 2020 (IEA, 2003d). Almost all OECD countries have in place policies and programmes to influence behaviour and investment patterns of energy producers and users. Policy instruments in use range from cross-sectoral market-based instruments (e.g. energy taxes) to regulatory standards targeting specific energy end-use sectors (e.g. mandatory performance standards for buildings and appliances) to voluntary programmes. The rationale for using these instruments is the recognition of widespread market failures in the uptake of new technologies, such as lack of information or high initial capital costs of new technologies. While many energy efficient technologies appear to be cost-effective, these market failures, along with hard to predict decision-making patterns of firms and households, impede investments in these technologies (IEA, 2001b). Despite arguably quite ambitious policy efforts to address market failures, OECD countries have not yet been successful in reversing growing energy consumption trends. Many OECD countries expect to benefit from emission reduction potentials offered by advanced fossil fuel technologies improving the efficiency of old power and heat producing plants. Technological innovation in that field is promoted through research funding in some countries, but mostly through emissions trading, fiscal instruments and voluntary

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approaches. For example, Australia is pursuing voluntary legally binding agreements with operators to specifically encourage efficiency improvements in existing power generating facilities. Two OECD countries are exploring ways to set up trading schemes of energy efficiency certificates for the power sector (IEA, 2002b). In 2001, Italy established such a scheme with an ambitious scope; it set quantitative reduction targets of 0.2 Mtoe by 2002, and 2.9 Mtoe in 2006 for all major electricity and gas utilities. In the United Kingdom, trading of carbon savings between utilities began in 2002, and advances are being made to turn the current scheme into a certificates-based scheme. Energy efficiency measures are often difficult to implement, and take time to be effective. This is due to various factors, notably the complexity of construction and design of buildings, and of manufacturing of goods, the slow turnover in building and appliance stocks, the volatility of demand, and the large number of actors to target (IEA, 2003d; OECD, 2002). In order to enhance energy efficiency of building shells and designs – i.e. to reduce energy consumption for heating, cooling and lighting – OECD governments have focussed policies primarily on new construction. Mandatory minimum energy performance standards for new buildings are widespread in OECD countries, and have proved effective in saving energy. However, for their effectiveness to last, standards need to be regularly updated to create recurring incentives to upgrade technologies and innovate. Most OECD countries are in their first or second round of updating such standards. Many have also introduced or increased direct financial incentives to improve the energy efficiency of buildings, such as investment grants, low-cost loans or preferential tax treatment. Nine OECD countries have in place subsidy and tax exemption programmes for new energy efficient buildings, while six offer premium loan schemes (OECD, 2003). Compared to those aimed at new buildings, government interventions to enhance the energy efficiency of existing buildings remain modest, although they have been increasing slightly in recent years. Information tools, such as mandatory or voluntary labelling schemes applied to both new and existing buildings, are increasingly used in OECD countries. Six European countries have in place mandatory labelling schemes, and seven other OECD countries have established voluntary schemes (OECD, 2003). A recent initiative is the EU Directive on the “Energy Performance of Buildings” [2002/91/EC] which requires all EU countries to establish building energy rating schemes by 2006 for new buildings and existing buildings undergoing major refurbishment. Energy audit programmes – assessments of energy consumption and identification of potential measures to be taken to improve energy efficiency – exist in five OECD countries for existing building stock. OECD countries have over a decade of experience with electric appliance energy efficiency policies. Information labels, minimum energy performance standards and voluntary approaches are the most widely deployed instruments, although there is great variation in coverage, stringency, design and degree of implementation of these policies across the OECD. Most OECD countries have used labels to inform consumers about the energy use of appliances, such as through the United States’ Energy Star and the Japanese TopRunner standards. Many countries have also implemented minimum energy performance standards. A slow move towards stricter and broader standards can be observed in many OECD countries, for example Australia, Japan, and the United States (UNFCCC, 2003). Several OECD countries have negotiated voluntary approaches with manufacturers to increase the energy efficiency of appliances. Eight countries have recently put in place regulations addressing standby power or “leaking electricity”, which is a growing source of power use (Meier, 2003). A recent assessment concludes that energy OECD ENVIRONMENTAL STRATEGY: 2004 REVIEW OF PROGRESS – ISBN 92-64-10780-0 – © OECD 2004

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efficiency policies have proved reliable and cost-effective in reducing energy consumption and GHG emissions from appliances, beyond levels that would have occurred in the absence of these policies (IEA, 2003e).

Further work in the OECD Assess policies to accelerate the deployment of energy efficient technologies in OECD countries, in particular policies that remove barriers to the introduction of “low carbon” energy supply and use systems.

Work in the OECD on policies to promote sustainable consumption patterns and sustainable buildings contains assessments on policies in use in OECD countries to promote energy efficiency. The IEA has also undertaken considerable work recently relating to the uptake of energy efficient technologies, as well as on more efficient use of existing energy-consuming devices (e.g. relating to standby power in computers). ●

OECD (2001), Towards Sustainable Household Consumption? Trends and Policies in OECD Countries.

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OECD (2002), Decision Making and Environmental Policy Design for Consumer Durables.

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OECD (2003), Environmentally Sustainable Buildings: Challenges and Opportunities.

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IEA (2001), Things that Go Blip in the Night: Standby Power and How to Limit it.

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IEA (2002), Energy Efficiency Certificate Trading: Outcomes of Workshop, held in Milan, Italy, 17 April 2002.

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IEA (2003), Cool Appliances: Policy Strategies for Energy Efficient Homes. Assess policies to provide incentives for increasing the share of renewables in fuel mixes and the reduction of energy related pollution, waste and effects on biodiversity.

The IEA annually publishes a review of the share of renewables in the energy balance of both OECD and non-OECD countries, and has a broad programme to assess policies to stimulate energy technology innovation, development and diffusion, which includes renewables. ●

IEA (2003), Renewables Information.

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IEA (2003), Creating Markets for Energy Technologies.

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IEA (2003), Renewables for Power Generation. Work with member countries to analyse environmental effects of changes in the fuel mix and to assess possibilities to increase the share of renewables in the fuel mix.

Various review processes in the OECD and IEA (including the IEA Energy Policy and Programme review process and the OECD Environmental Performance Reviews) examine the impacts of country energy policies on the environment, and provide recommendations for improved policies. Continue to assess progress in energy subsidy and green tax reform in member countries.

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The OECD/EEA Database on Environmentally Related Taxes, essential for assessing progress in green tax reforms in OECD countries, will continues to be updated regularly and as of 2003 is complemented by a Database of other instruments used in environmental policies. The IEA maintains a database on Dealing with Climate Change, covering a number of climate-related policies used in IEA countries, including taxes, and regularly reviews energy policy developments in IEA countries. ●

OECD/EEA Database on Environmentally Related Taxes. [www.oecd.org/env/tax database].

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OECD/EEA Database on Instruments Used in Environmental Policy.

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IEA Database on Dealing with Climate Change [www.iea.org/envissu/pamsdb/index.html].

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IEA(2003), Energy Policies of IEA Countries 2003.

Notes 1. See also National action 3 of the “Climate” section of Objective 1. For more information on specific taxes in OECD countries, see the OECD/EEA Database on Environmentally Related Taxes [www.oecd.org/env/tax-databse/]. 2. A complicating factor when discussing such provisions is the lack of a unique “yardstick” for comparisons. For example, while an exemption in fossil fuel taxes for fuels used for electricity generation or for industrial purposes clearly could be counted as an environmentally damaging tax provision, it is perhaps less clear whether the non-existence of taxation on any energy products other that transport fuels should be counted as such a provision. 3. See also Table 1.1.3 of National action 3 of the “Climate” section of Objective 1. 4. It is questionable whether these agreements gave firms any additional incentive to reduce their emissions compared to what they were already doing through the United Kingdom carbon emission trading scheme. However, more than 1 000 sites have lost their 80% rate reduction under the Climate Change Levy for a 3 year period because they have not fulfilled intermediate targets of the agreements. 5. See also National actions 1, 3, and 4 under the “Climate” section of Objective 1, and National action 1 under the “Transport” section 2 of Objective 2. 6. This excludes emissions from electricity production. 7. Four OECD countries are not members of the IEA: Iceland, Mexico, Poland, and Slovakia. 8. See also National actions 3 and 4 under the “Climate” section of Objective 1, and National action 4 of the “Transport” section and National action 3 of the “Energy” section of Objective 2.

References IEA (2001a), Energy Policies in IEA Countries: 2001, IEA, Paris. IEA (2001b), Things that Go Blip in the Night: Standby Power and How to Limit it, IEA, Paris. IEA (2002a), Energy Policies of IEA countries – 2002 Review, IEA, Paris. IEA (2002b), Energy Efficiency Certificate Trading: Outcomes of Workshop, held in Milan, Italy, 17 April 2002, IEA, Paris. IEA (2003a), Coal Information, IEA, Paris. IEA (2003b), IEA On-Line Data Services, IEA, Paris. IEA (2003c), Renewables Information, IEA, Paris. IEA (2003d), Energy Policies of IEA countries – 2003 Review, IEA, Paris. IEA (2003e), Cool Appliances: Policy Strategies for Energy Efficient Homes, IEA, Paris.

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Meier, A. (2003), “Energy Efficiency Policies: A Global Perspective”, Plenary Speech at the Conference on Energy Efficient Domestic Appliances and Lighting in Turing, Italy, 1-3 October 2003. OECD (2002), Decision-Making and Environmental Policy Design for Consumer Durables, OECD, Paris. OECD (2003), Environmentally Sustainable Buildings: Challenges and Opportunities, OECD, Paris. UNFCCC (2003), National Communications from Parties Included in Annex 1 to the Convention: Compilation and Synthesis of Third National Communications. Addendum: Policies and Measures, UNFCCC, Bonn [FCCC/ SBI/2003\7/add.2].

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ISBN 92-64-10780-0 OECD Environmental Strategy: 2004 Review of Progress © OECD 2004

Chapter 3

OBJECTIVE 3 Improving information for decision making: measuring progress through indicators

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Overview of progress in addressing the main challenges The OECD Environmental Strategy identifies two main challenges facing OECD countries in improving information for environmental decision making: A. Use environmental indicators and related targets to measure progress in achieving environmental sustainability and in implementing this Strategy. B. Support national policies in stimulating greater accountability, with respect to their national objectives and international commitments (global and regional).

OECD countries have three decades of experience in environmental information and reporting, and pioneered the development and harmonisation of environmental indicators at the international level in the 1990s. In recent years, progress has continued in the use of indicators to measure progress in achieving environmental sustainability and related national objectives. Many countries have also identified small sets of summary or “key” indicators intended to address the information needs of senior policy-makers, legislators and the general public. A few countries have linked indicators to modelling and forecasting exercises to examine alternative policies and strategies in a medium and long-term context. At the same time, the number of OECD countries carrying out basic data collection and dissemination work has increased, as has the thematic scope of the data produced. Major successes include, for example, the regular compilation of air emission inventories, and the increasing number of OECD countries (14 to date) that have established operational pollutant release and transfer registers (PRTR). The use of efficient web-based technologies for reporting and exchange of environmental information is increasing rapidly, often utilising large-scale environmental information networks or portals. However, providing the right information for the right purpose remains a challenge in all OECD countries. Public authorities often have to cope with stable or declining funding, and find it increasingly difficult to keep pace with new and expanding demands for environmental information while maintaining continuity and regularity in core data activities. Good quality and policy relevant information remains scarce in areas such as biodiversity, economic aspects of environmental performance, risks related to toxic contamination, and sectoral breakdown of environmental data. Timeliness of the data published has not improved; and comparability among countries and over time is still an issue. This limits the effective use of many environmental indicators in public debate. Other tools that promote accountability with respect to national environmental objectives, such as impact assessments, cost-effectiveness studies, and cost-benefit analyses are also becoming more prevalent in OECD countries. However, systematic and independent evaluations of these studies remain relatively rare.

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Country environmental performance reviews carried out by the OECD provide peerreviewed and comparative analysis of environmental performance in OECD countries. As such, they have contributed to strengthen public accountability for both national environmental objectives and international commitments. In some regions, such as through the UN ECE Environment for Europe process, OECD has supported the use of environmental performance reviews for non-OECD countries in the region. The OECD programme has already reviewed environmental performance in Russia, and will cover Chile in the near future.

Implementation of the national actions National action 1. Collect scientifically valid and comparable data and further develop and use indicators and targets to measure environmental progress at the national level.

During the 1990s and the early years of the present decade, OECD countries made continued progress in upgrading environmental information systems and in improving environmental data production and dissemination. Today, the development, collection and publication of environmental data and indicators are widespread among OECD countries. Efforts in fundamental or applied research concerning the environment and its components have led to improvements in the understanding of environmental issues. They have also drawn the attention of decision makers and the public to new or changing environmental issues, concerning, for instance, cross-media developments, new pollutants, and multiple exposure to pollutants. New environmental information has become available, and the quality and comparability of many environmental data has improved. Experience shows continued improvements in the number of OECD countries carrying out data collection and dissemination work, the thematic scope of the data produced, the availability of data at sub-national level, the body of knowledge about data definitions and limits, and international harmonisation of the data. Progress has been most significant in areas that were traditionally well covered and that are linked to international conventions or agreements (e.g. air emission inventories). Some progress has also been achieved in data and indicators on natural resources, material flows, waste management, and environmental protection expenditure and revenues, but these efforts have not yet shown full results. Environmental information has become more responsive to policy needs and public information. A wide variety of environmental indicators is used in some form of planning, clarifying policy objectives and priorities, budgeting, assessing performance, and communicating with the public. Progress has also been made in moving environmental reporting in the direction of measurement of environmental performance, and in linking environmental indicators directly to policy objectives and targets. More recently, efforts have been increasing towards identifying small sets of summary indicators that provide key signals for high-level policy makers, legislators and the general public. Despite these achievements and continued progress, great variability remains across OECD countries in both the quality and relevance of environmental data and indicators, and their influence on the public debate. Inefficiencies still arise due to redundancies in the supply of environmental information. Not all data that are produced are actually used in environmental reporting, and not all data are relevant for decision making, research

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purposes or public information. At the same time, policy relevant information is still insufficiently developed or missing in a number of important areas, and improvements in the quality of environmental data seems to have slowed, thus limiting their effective use in decision making, performance assessment, and public information. Information remains scarce in areas such as biodiversity, the economic dimension of environmental performance (environmental expenditure and revenues, environmental damage, employment and trade considerations, economic and fiscal instruments, costs and benefits of environmental policies), environmental risks related to industrial activities or natural disasters, toxic contamination, and environment related health issues. Sectoral breakdowns of environmental data are scarcely sufficient to monitor decoupling of environmental pressures from economic growth, and efforts to link environmental indicators directly to economic policy making are still in an early stage of development. Little coherent information is available about the territorial dimension of environmental performance or about sub-national disparities. Timeliness of the data published has generally not improved. Environmental data still lag behind economic data, limiting their use in policy performance evaluation and public information. Progress in improving the historical coverage of data and establishing trends over longer periods remains limited, and information to keep track of the effects of early policy measures, and to provide a baseline against which progress can be measured, is not always available. This limits the analysis of trends and the data’s use in performance evaluation and outlook studies. Furthermore, international harmonisation and comparability among countries is still an issue, and data reported to international organisations often continue to refer to national definitions. This limits the effective integration of national data into international work.

National action 2. Implement the 1998 OECD Council Recommendation on Environmental Information.

The OECD Council Recommendation of Environmental Information advocates the provision of high quality and policy relevant environmental information, including appropriate access to it, and expects OECD countries as well as the OECD itself to strengthen their efforts in this field. It covers: ●

the production and dissemination of environmental information by public authorities, including indicators to measure environmental performance, and other mechanisms to inform the public and decision makers about environmental and sustainable development conditions and issues;

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the quality and relevance for environmental policy of data and information systems;

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the right of access to environmental information held by public authorities, and the establishment of educational and other measures to inform the public of its rights and to help it effectively use environmental information; and

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environmental reporting by enterprises, and the right of access by the public to nonconfidential information on compliance by enterprises.

The recommendation encourages the different authorities to co-operate in this endeavour, and to establish effective environmental information systems. Implementation of the Recommendation is reviewed under this National action, with some elements

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discussed in more detail under the other National actions of this section and under National action 1 of Objective 3. Over the past fifteen years, OECD countries have made progress on access to and provision of environmental information. In many countries, environmental information and reporting are recognised as fundamental policy tools that complement other tools such as economic or regulatory instruments. The principles of right of access to information and right of appeal for the public have been embodied in many administrative procedures, in national legislation and in international acts. Provision of environmental information as well as electronic access to it is often done on a routine basis. Today, a majority of OECD countries publish, more or less regularly, basic information on the environment (state of the environment and other reports, statistical compendia, indicators). Reporting is also increasingly done at the sub-national level. A considerable amount of new environmental information has become available, and the quality and comparability of environmental data has improved. In a number of countries, work to produce environmental information that is more responsive to policy needs and public information is under way.1 This is reflected in the number and types of reporting products, communication media and dissemination tools used by countries, and is often accompanied by a renewed focus on environmental information systems and strategies. The use of web-based technologies for reporting and exchange of environmental information through the Internet has been increasing rapidly in OECD countries, often using large scale-environmental information networks and portals. However, great variability remains across countries in the quality and coverage of reporting activities, their visibility at national and international level, the level of integration of different information sources, and the effectiveness of the reporting processes throughout the information chain. Public authorities often go through a process where the objectives or questions to be addressed by environmental information have changed. They must cope with i) expanding demands and requests for environmental information, and in some cases, uncertainties about policy demands; ii) the need for increased co-operation and co-ordination both within and among countries; and iii) stable or declining funding. Providing the right information for the right purpose and ensuring that environmental information systems keep pace with changing demands, while maintaining continuity and regularity in core activities, remains a challenge in all OECD countries. Expanded efforts are needed to establish an environmental information level playing field among countries and to raise the profile of environmental information issues in the national and international policy debates. This requires specific national actions, but also joint collaborative efforts in the OECD context and through other international fora. Further efforts are also needed to apply integrated approaches to environmental information, set-up environmental information and communication strategies adapted to wider audiences, and increase the influence of their environmental reports at the national and international level. This implies better exploitation of synergies, the use of a mix of reporting and dissemination tools, and greater involvement of other stakeholders. Better use could be made of new technologies and electronic communication tools to facilitate the transmission of and access to large amounts of information and to move towards a more interactive way of reporting. Government efforts could also benefit from regular reporting to the Parliament, more systematic reporting at sub-national levels, and the production of simple and timely environmental information, such as key indicators.

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Efforts to adapt and upgrade environmental information systems need to be pursued and reinforced, supported by regular reviews to detect possible gaps and inefficiencies. Such reviews should be carried out regularly in all OECD countries, cover the whole information chain and all relevant administrative levels, and take into account both national and international demands. They should address concerns such as how to make individual components of the information system more cost-effective (i.e. how to reduce the costs) and how to make them more effective overall (i.e. how to maximise the benefits). National action 3. Perform integrated analysis of future environmental problems at the national level, including the development of scenarios, outlooks and projections, and support efforts to develop such analysis at the regional or global level (such as those in the OECD Environmental Outlook).

Interest in forward looking and integrated approaches to environmental reporting and assessments has increased at both the national and international level. This has been driven primarily by concern about global environmental issues and their long term implications, such as climate change, and by the need for longer term approaches to environmental policies and strategies. Several OECD countries have adapted their environmental monitoring and reporting activities to these changing policy needs, and make use of modelling and forecasting to simulate the consequences of some policy options over the long term and develop alternative strategies. Progress is also being made in applying Strategic Environmental Assessments to policy plans and strategies.2 The scope of these initiatives varies greatly among countries: in some cases, they are linked to the establishment of environmental or sustainable development strategies and to the publication of environmental outlooks and action plans, in others they are linked to the development of thematic plans or strategies (e.g. climate change) or to sectoral policy plans (e.g. agriculture, transport). Much of the ongoing effort is focussed on energy, transport, air pollution and climate change. Overall, forward looking and integrated approaches to environmental assessments are still in an early stage of development. In a number of countries, their application is limited by budget constraints and by the related lack of effective analyses of trends, as well as by short-term economic and political horizons. National action 4. Make use of environmental impact and cost-benefit assessments as inputs to the decision making process.

In addition to being an effective input into decision-making, systematic policy evaluation also encourages transparency and accountability within public administration, and is an important element of performance management. Both ex ante evaluations (i.e. of the potential effects of the policy, analysed before it is implemented) and ex post evaluations (i.e. of the actual effects of the policy, analysed after it is implemented) of environmental policies are essential tools for improving the design and implementation of such policies. A formal system of policy evaluation can ensure efficient policy design, implementation and reform. Recognising this, a number of OECD country governments have recently reformed their policy evaluation systems.

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For instance, the European Union has recently introduced a new Directive [2003/35/EC] to encourage public participation in environmental impact assessments. In addition, in an effort to develop more coherent and comprehensive policy evaluations, the European Commission is encouraging the use of “Integrated Impact Assessment” procedures, which bring together many of the previous “partial” policy assessments (e.g. business impact assessments, environmental assessments, trade impact assessments). It is also recommended that ex post evaluations be undertaken not more than six years after the introduction of a policy or programme (Commission of the European Union, 2002). Nonetheless, full cost-benefit analyses (or even cost-effectiveness studies) of European environmental policies are relatively rare, not least because valuation of environmental benefits remains rare. Recent work in the context of the BeTa (Benefits Table) and CAFÉ (Clean Air for Europe) projects reflects the increased importance attached to undertaking cost-benefit analyses. Moreover, a number of countries within the EU and elsewhere in Europe have recently commissioned cost-benefit analyses. These include a study on the costs and benefits of alternative treatments of PVC in Denmark (Kristensen, 2003), and a comprehensive analysis of the cost associated with the introduction of carbon taxes was undertaken in Norway (Bruvoll and Larsen, 2002). In the United States, there is a long history of Presidential Executive Orders mandating the assessment of the costs and benefits of new regulations, and analyses in the environmental sphere have been particularly prominent (see Hahn et al., 2000). This trend is reflected in the regulatory structure, thus, for example, Amendments to the Safe Drinking Water Act have strengthened the requirement for an assessment of costs and benefits when introducing new regulations. In addition, the Office of Management and Budget is charged with reporting to Congress annually on the costs and benefits of Federal regulations. Indeed, ex post evaluations of the US Acid Rain Program constitute perhaps the single most comprehensive assessment of an existing environmental policy anywhere in the OECD, although these do not take the form of full cost-benefit analyses. Furthermore, a three-year pilot programme was introduced in 1999 (the “Truth in Regulation Act”), under which the Government Accounting Office was mandated to undertake independent assessments of environmental and other regulatory measures when requested. As part of the restructuring of national administrative organs undertaken in 2001, Japan introduced the Government Policy Evaluation Act (2001). In an effort to increase transparency and accountability, each administrative organization is required to conduct policy evaluations. Under Article 7 of the Act, ex post evaluations are foreseen every five to ten years. Similar developments are occurring elsewhere in the OECD. In general, impact assessments, cost-effectiveness studies and even fully-fledged cost-benefit analyses of environmental policies and programmes are becoming more prevalent in OECD countries. In order to ensure that these are of high quality, a number of countries have issued guidelines for environmental policy evaluation, including Denmark, France, Norway, Australia, Canada, the United Kingdom, and the United States. However, systematic and independent evaluations (particularly ex post evaluations) remain relatively rare. They should be further encouraged and, more importantly, integrated more fully with the entire policy design implementation and reform process, as a means to ensure “good governance”. However, there are significant barriers including financial costs, reluctance

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on the part of some officials to submit policies to evaluation, and a lack of public acceptance (OECD, 2003). National action 5. Improve the dissemination of documents, reports and publications prepared by the OECD.

The Public Affairs and Communication Directorate of the OECD, supported by financial contributions to the Organisation from OECD countries, promotes the wide dissemination of the reports and messages of the Organisation. In addition, OECD countries have acknowledged their own responsibility in directly disseminating the work of the Organisation within their countries, to ensure its use in the development and implementation of sound policies. The role of member country governments in disseminating OECD products has been raised in the OECD Committee on Public Affairs and Communication, as well as in some of the sectoral Committees. For example, delegates to the OECD Environment Policy Committee (EPOC) discussed in November 2002 a communications strategy for OECD environment work. They agreed to strengthen their own efforts to promote OECD products and messages, including by providing relevant information or links to OECD work on government Internet sites and by circulating OECD reports to government colleagues. Despite this, as of late 2003, less than one-third of OECD Environment Ministry or Environment Agency Internet sites linked to the OECD site. National action 6. Implement Pollutant Release and Transfer Register systems (PRTRs).

Most OECD countries put in place pollutant release and transfer registers (PRTRs) to ensure the availability of scientifically valid and comparable data to support decision making and inform the public. A PRTR is an environmental database or inventory of potentially harmful chemicals and/or pollutants released to air, water and soil, and transferred off-site for treatment. According to the OECD Council Recommendation on Pollutant Release and Transfer Registers3, the core elements of a PRTR system are: i) a listing of chemicals, groups of chemicals and other relevant pollutants that are released to the environment or transferred off-site; ii) integrated multi-media reporting of releases and transfers (to air, water and land); iii) reporting by source, covering point sources and nonpoint sources, where appropriate; iv) periodic reporting (preferably annually); and v) making data available to the public. A PRTR brings together in one place information about what pollutants are being released, how much, and by whom. Releases from non-point sources, although contributing a large share to any industrialised country’s pollution burden, are so far included in only a limited number of PRTR systems. These non-point or diffuse sources include area sources (e.g. residential wood combustion, dry cleaners), mobile sources (e.g. automobiles, aircrafts, trains), biogenic sources (e.g. vegetation and microbial activity), and geogenic sources (e.g. soil erosion and volcanoes). The OECD Council Recommendation provided a catalyst for the development of PRTRs across the OECD countries and elsewhere. When the Council Recommendation was adopted in February 1996, only two OECD countries (the United States and Canada) had PRTR systems in operation that confirmed to the guiding principles of the Recommendation. Currently, 14 OECD countries have an operational PRTR in place (Table 3.1.1). Many more countries, within the OECD and beyond, have taken concrete steps towards the establishment of a

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Diffuse sources included

Report cycle

Public Dissemination of full (raw) data

Public Dissemination of aggregated data sets

Pilot Study undertaken

Consultation with affected and interested parties

Site specific reporting

Response November 2003

Reporting of Transfer as waste or specific chemical

Mandatory

Reporting of public facilities

Mandatory or voluntary system

A, W, L

Transfers offsite included

n.a.

Number of listed chemicals

1998

Environmental media covered

First year of data collection Australia Austria1

90

No

Yes

Yes

Annual

Yes

Yes

Yes

Yes

Yes

Yes

n.a.

Belgium Fl. (Air)

1993

Air

Mandatory2

63

n.a.

No

Yes

Annual

No

Yes

Yes

Yes

Yes

Yes

n.a.

Belgium Fl. (Water)

1993

Water

Mandatory

162

n.a.

No

No3

Annual

No

Yes

No

No

Yes

Yes

n.a. Waste

Belgium Fl. (Waste)

1992

Waste

Mandatory

n.a.

Yes

Yes

No

Annual

No

Yes

No

No

Yes

Yes

Belgium Wal. (EPER)

2001

A, W

Voluntary

50

W

Yes

No

Annual

Yes

Yes

Yes

Yes

Yes

Yes

n.a.

Belgium Wal. (Waste)

1995

Waste

Voluntary

50

n.a.

Yes

No

n.a.

No

Yes

Yes

Yes

Yes

Yes

Waste

Canada

1993

A, W, L

Mandatory

323

Yes

Yes

Yes

Annual

Yes

Yes

Yes

Yes

Yes

Yes

Spec. chem.

Czech Republic

2004

A, W, L

Mandatory

72

Yes

Yes

No

Annual

Yes

Yes

Yes

Yes

Yes

Yes

Spec. chem.

Denmark

1996

A, W, L

Mandatory

ARS

Yes

Yes

No

Annual

Yes

Yes

Yes

Yes

Yes

Yes

Waste

Finland

1988

A, W, L

Mandatory

n.a.

No

Yes

No

Annual

No

Yes

Yes

In progress

Yes

Yes

n.a.

Hungary

2001

A,W

Mandatory

50

No

No

No

Annual

Yes

Yes

Yes

Yes

Yes

Yes

n.a.

Ireland

1995

A, W, L

Mandatory

Per list4

Yes

Yes

No

Annual

Yes

Yes

No

Yes

Yes

Italy

1995

Land

Mandatory

Yes

Yes

No

Annual

Yes

Yes

Yes

Yes

Yes

Japan

2001

A, W, L

Mandatory

354

Yes

Yes

Yes

Annual

No5

Yes

Yes

Yes

Yes

Yes

Spec. chem.

Korea

1999

A, W, L

Mandatory

80

Yes

Yes

Yes

Annual

Yes

Yes

Yes

Yes

Yes

Mexico

1997

A, W, L

Both

191

Yes

Yes

No

Annual

No

Yes

Yes

Yes

Yes

Netherlands

19766

A, W, L

Mandatory

180

Yes

Yes

Yes

Annual

Yes

Yes

Yes

Yes

Yes

Norway

1992

A, W, L

Mandatory

ARS

Yes

Yes

Yes

Annual

No7

Yes

No

No

Yes

Slovak Republic

1998

A, W

Both

200

Yes

Yes

No

Annual

Yes

Yes

Yes

Yes

Yes

Sweden

2002

A, W, L, P

Mandatory

70

Yes

Yes

No

Annual

Yes

Partly

Yes

Yes

Yes

Yes

Spec. chem.

n.a.

A, W, L

n.a.

50

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

Yes

Yes

n.a.

Yes

n.a.

United Kingdom

19918

A, W, L

Mandatory

170

Yes

Yes

Yes

Annual

Yes

Yes

No

Yes

Yes

Yes

n.a.

United States

1987

A, W, L

Mandatory

654

Yes

Yes

No

Annual

Yes

Yes

No

Yes

Yes

Yes

Spec. chem.

Switzerland

Notes: The chart is based on surveys of June 1999 and November 2003. Operating systems as of November 2003 are highlighted in grey. A, W, L, P = Air, Water, Land, Products. 4. Available through Republic of Ireland EPA, P.O. Box 300, Johnstown Castle Estate, Co. ARS = All Relevant Substances. Wexford, Ireland. n.a. Not available or not answered. 5. To be provided when requested. 1. No PRTR or plans to develop a PRTR at this time. 6. 1999 for new system. 2. Started in 1980 as voluntary; since 1993 it is mandatory. 7. In 2000, data will be available on Internet. 3. Waste Register. 8. 1998 for new system.

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Table 3.1.1. Status of PRTR Systems in OECD countries (late 2003)

OBJECTIVE 3: IMPROVING INFORMATION FOR DECISION MAKING: MEASURING PROGRESS THROUGH INDICATORS

PRTR. The most recent driving force was the 2003 adoption of the PRTR Protocol under the Aarhus Convention. 4 In the next few years, all European Union member States will implement a full scale PRTR system under the Protocol.

Further work in the OECD Further develop the work on indicators, in particular through the revision of the core set of environmental indicators, headline indicators and indicators for policy integration, including the social and environmental interface, the development of targets and early warning indicators, and contribute to and support the OECD-wide effort on sustainable development indicators.

The Working Group on Environmental Information and Outlooks continues to undertake and expand work on environmental indicators. New and upcoming work has focussed on decoupling indicators. ●

OECD (2001), Key Environmental Indicators.

●

OECD (2001), OECD Environmental Indicators: Towards Sustainable Development.

●

OECD (forthcoming 2004), OECD Environmental Data Compendium.

●

OECD (2002), “Indicators to Measure Decoupling of Environmental Pressure from Economic Growth” [SG/SD(2002)1/FINAL]. Support the development and use of environmental indicators through ensuring environmental data availability and quality, and related environmental information systems, and contribute to the further streamlining of data collection among international organisations.

Work in the Working Group on Environmental Information and Outlooks (WGEIO) continues to assist OECD member and partner countries in enhancing the policy relevance and cost-effectiveness of their environmental information systems throughout the information chain, including through an annual Round Table on Environmental Information. Special action has been taken to overcome remaining data deficiencies. An OECD initiative on environmental data quality was launched in 2001, and in 2002 a special session on environmental data quality was organised. Continue and further the development of environmental outlooks.

Work has continued at a slow pace in the Working Party on Global and Structural Policies to strengthen the modelling framework used in the 2001 OECD Environmental Outlook. Work will soon begin to prepare for a new OECD Environmental Outlook. This new Outlook will have greater emphasis on analysis of the effects of different policy packages, will provide further country disaggregation, and will address some new and emerging issues. Continue the second cycle of the OECD Environmental Performance Reviews, including its sustainability dimension and its extension beyond OECD countries.

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By the end of 2004, fifteen OECD countries will have been reviewed in the second cycle of OECD Environmental Performance Reviews (EPRs). OECD is actively working with UN regional economic commissions on the extension of the OECD EPR system to non-OECD countries. The UN Economic Commission for Europe (UNECE) already undertakes EPRs for non-OECD European countries using the OECD model, and UN Economic Commission for Latin America and the Caribbean (UNECLAC) will participate in an OECD EPR of Chile to take place in 2004-2005. An EPR of China is planned for 2005. ●

2001: OECD Environmental Performance Reviews of Germany, Iceland, Portugal, and Norway.

●

2002: OECD Environmental Performance Reviews of Slovak Republic, Japan, Italy, and the United Kingdom.

●

2003: OECD Environmental Performance Reviews of Netherlands, Poland, Mexico, and Austria.

●

2004: OECD Environmental Performance Reviews of Canada, Spain, and Sweden. Further develop methods for environmental accounting in the context of the System of National Accounts.

New work is starting at the end of 2003 on material flows analysis and the use of material flows accounts. This work was requested of OECD by the G8 Heads of State and Government when they met in Evian, France in June 2003. As a first stage, the work is expected to include development of a OECD Council Recommendation on Material Flows Analysis and a scoping paper on its use in OECD countries. Further develop and regularly update OECD databases on environmentally related taxes and other economic instruments.

The OECD/EEA Database on Environmentally Related Taxes continues to be updated on an annual basis, and is accessible through the OECD Internet site. In 2003, an OECD/EEA database on economic instruments and voluntary approaches used in environmental policy and natural resources management was completed, and includes information on tradeable permit systems, deposit-refund systems, voluntary approaches, and environmentallymotivated subsidies. In 2004, the two databases will be confined, for ease of access to relevant information on a full range of instruments used for environmental management. ●

OECD/EEA Database on Environmentally Related Taxes [www.oecd.org/env/ tax-database].

●

OECD/EEA Database on Instruments Used in Environmental Policy [www.oecd.org/env]. Support countries in the implementation of Pollution Release and Transfer Register systems (PRTRs).

The final volume of a resource compendium of Pollutant Release and Transfer Register (PRTR) release estimate techniques is in the process of being finalised. It provides OECD countries with basic information resource on estimation techniques typically used to quantify releases from point and diffuse sources and from transfers for a PRTR. An Internet-based resource centre for Release Estimation Techniques is under development.

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●

OECD (2000), “PRTR Implementation: Member Country Progress” [ENV/EPOC(2000)8/ FINAL].

●

OECD (2002), “Resource Compendium of PRTR Release Estimation Techniques, Part 1: Summary of Point Source Techniques” [ENV/JM/MONO(2002)20].

●

OECD (2003), “Resource Compendium of PRTR Release Estimation Techniques, Part 2: Summary of Diffuse Source Techniques” [ENV/JM/MONO(2003)14].

●

OECD (forthcoming 2004), “Resource Compendium of PRTR Release Estimation Techniques, Part 3: Transfers”.

Notes 1. See also National action 1 of this Objective. 2. See also National action 4 of this Objective. 3. Council decision [C(96)41/FINAL], as amended by [C (2003) 87]. 4. Aarhus Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters. The PRTR Protocol of the Aarhus Convetnion was formally adopted and signed at the Fifth Ministerial Conference, “Environment for Europe”, in Kiev, Ukraine, on 21 May 2003 by 36 countries and the European Community.

References Bruvoll, A. and B.M. Larsen (2002), “Greenhouse Gas Emissions in Norway: Do Carbon Taxes Work?” Statistics Norway, Research Department, Discussion Paper No. 337. European Commission (2002), “Communication from the Commission on Impact Assessment”, [Brussels.5.6.2002 COM(2002)276]. Hahn, R.W. et al. (2000), “Empirical Analysis: Assessing Regulatory Impact Analysis – The Failure of Agencies to Comply with Executive Order 12866” in Harvard Journal of Law and Public Policy 859. Kristensen, N.B. (2003), “PVC in Denmark – Costs and Benefits of Alternative Treatments”, Paper Presented at OECD Workshop on the Economics of Waste, 14-15 October 2003 [ENV/EPOC/ WGWPR(2003)13]. OECD (2003), “Ex Post Evaluation of Tradable Permit Systems” [EPOC/WPNEP(2003)6].

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ISBN 92-64-10780-0 OECD Environmental Strategy: 2004 Review of Progress © OECD 2004

Chapter 4

OBJECTIVE 4 The social and environmental interface: enhancing the quality of life

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Overview of progress in addressing the main challenges The OECD Environmental Strategy identifies one main challenge facing OECD countries in enhancing the quality of life through addressing the social and environmental interface A. Address the various links between environmental and social conditions and trends, and the social impacts of environmental policies, in order to enhance human health, environmental equity, employment, access to information, public participation in decision-making, access to justice in environmental matters and environmental education, thus contributing to enhancing the quality of life.

As regards environmental issues related to health and safety, some progress has been made in taking into account the cumulative and combined effects of some chemicals (especially pesticides) in the setting of regulatory standards, notably for water quality. Regarding the effects on health from chemical releases to the environment more generally, progress has been made on harmonising classification and labelling, on endocrine disrupters testing and assessment, in testing and assessment of high production volume chemicals, and on the development and revision of test guidelines for chemicals. A number of steps have been taken nationally and through international co-operation to prevent hazards from major accidents. OECD countries are working together with others on a number of international initiatives, including a Globally Harmonised System for Classification and Labelling of Chemicals, and a Strategic Approach to International Chemicals Management. The Rotterdam Convention on Prior Informed Consent (PIC), which requires the prior permission of importing countries for the receipt of banned or severely restricted chemicals, entered into force in February 2004. The Stockholm Convention on Persistent Organic Pollutants (POPs), which identifies persistent chemicals whose use is to be phasedout or limited, will come into force in May 2004. Measures to limit exposure to hazardous chemicals and air pollution of sensitive groups – such as children, pregnant women, the elderly, and the ill – have been introduced in a few countries. These include targeted chemical assessment programmes, or phaseouts of specific chemicals from certain products. Others have included safety factors in setting standards that are judged to be sufficiently high to address this issue by taking into account differences in the physical characteristics and behaviour of these sensitive groups. A few OECD countries have sought to integrate environmental and employment objectives by using some of the proceeds from environmentally related taxes to reduce taxes on labour or reduce pension insurance contributions, although the employment effects of this “double dividend” approach need to be assessed. At the same time, environmental expenditures are responsible for a significant source of employment, in some OECD countries amounting to as much as 3% of total employment.

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Most OECD countries have measures in place to ensure access to and affordability of environmentally related services such as water, energy, and waste disposal. These include a range of measures, including tariff adjustments, direct income support, and service vouchers. With regard to information, participation, and access to justice in environmental matters, and environmental education, there has been considerable progress in recent years. Most OECD countries are under a legal obligation to provide environmental information on request. Many OECD countries have taken a pro-active approach to encourage citizens to make use of this enhanced access. Access is, however, somewhat uneven when the environmental information is held by ministries other than the environment ministry or by semi-public bodies. Regarding public participation in policy development, the participation of stakeholders has improved in most OECD countries, with public hearings on major projects or policy initiatives common. Similar arrangements are increasingly common in international organisations. All OECD countries have integrated environmental education into formal education, but there is further scope for integration of environmental issues into mainstream school curricula.

Implementation of the national actions With regard to environmental issues related to health and safety (risks): National action 1. Reduce risks from human-made chemicals in the environment (paying particular attention to their cumulative and combined effects).

The models currently in use for assessing risks of chemicals in most OECD countries consider all routes of potential exposure to a specific chemical (air, water, food, or by skin contact), but they do not consider cumulative and combined (synergetic or antagonist) effects of exposure to several chemicals. In many countries, research and monitoring are ongoing or encouraged on cumulative and combined effects, often linked with research on the effects of sensitive groups, such as children. Taking into account cumulative and combined effects of several pesticides is a requirement in only few OECD countries. In the United States, for example, the Food Quality Protection Act (1996) requires that the Environmental Protection Agency considers exposure to all pesticides and other chemicals that act by a common mechanism of toxicity when deriving tolerances for pesticides use on crop, as part of cumulative risk assessment. For drinking water, the European Union has set a value of 0.5 µg/l for “total pesticides” in its 1998 Directive on the Quality of Water Intended for Human Consumption [98/83/EC], rather than using case by case cumulative risk assessments. National action 2. Take specific measures to limit the exposure to hazardous chemicals and air pollution, including from indoor air pollution, of particularly sensitive groups in the population, such as children.

Measures to limit exposure to hazardous chemicals (and air pollution) are in place in all OECD countries to protect workers, consumers or the general population. In general, it is assumed that safety factors are sufficient to take into account specificity of sensitive groups such as children, pregnant women, the elderly or sick people. For children, safety factors are expected to include their smaller size, ongoing development, and higher exposure due to relatively higher inhaled air volume, “hand to mouth” activity, and crawling on soil. OECD ENVIRONMENTAL STRATEGY: 2004 REVIEW OF PROGRESS – ISBN 92-64-10780-0 – © OECD 2004

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A few countries have taken comprehensive decisions to examine effects on children. For example, the United States adopted in 1997 an Executive Order for the “protection of Children from Environmental Health Risks and Safety Risks”. They also supported a Voluntary Children’s Chemicals Evaluation Program in 2000, which includes 20 chemicals. Actions focused on protecting children from specific chemicals have been taken by many OECD countries. For example, a ban on two brominated flame retardants will enter into force in the European Union by 15 August 2004, due to concerns regarding environment and infant exposure via breast milk, while a further use restriction of arsenic compounds for wood treatment will enter into force by 30 June 2004, in particular to reduce children exposure from playground equipment. After renewed provisional bans, the European Commission is also proposing to permanently ban the use of certain phthalates in PVC toys and childcare articles intended to be placed in the mouths of children under three years of age. Norway adopted a strategy on children and chemicals in 2002, and has banned use of arsenic in impregnated wood and the use of phthalates in products intended for small children. Since 2001, research and monitoring are encouraged or ongoing in many OECD countries to increase knowledge of the impacts of contaminants on particularly sensitive groups. Some countries now recognize the need for additional margins of safety; for example, an infant and children specific margin of safety (ten times greater than otherwise applicable) is included in the new Canadian Pest Control Products Act that will enter into force in 2004. Although endocrine disrupting chemicals may have impacts on the population in general, intrauterine and postnatal development of infants is recognised as especially vulnerable (e.g. in terms of malformation of the reproductive system and developmental delays). Many countries are involved in international programmes on endocrine disrupters, as well as having research programmes and national or international strategies on endocrine disrupters.1 All rely on development and validation of tests, ongoing in the OECD. Recommendations on Children and Chemical Safety have been adopted at the Intergovernmental Forum on Chemical Safety at its Fourth Session (1-7 November, 2003). Governments agreed that they should, when setting acceptable levels of criteria related to chemicals, take into consideration the potential enhanced exposure and/ or vulnerabilities of children. National action 3. Reduce potential effects on human health from environmental and ecosystem changes, including those resulting from natural and man-made disasters and climate change.

Progress has been made in recent years in OECD countries in reducing deleterious effects on human health resulting of chemical releases into the environment. In 2003, the United Nations adopted a Globally Harmonised System of Classification and Labelling of Chemicals (GHS) which describes the classification criteria and the hazard communication elements (labelling and safety data sheets) by type of hazard (health, environmental, and physical hazards). It is anticipated that, when implemented, the GHS will enhance the protection of human health and the environment by providing an internationally comprehensible system for hazard communication. At the international level, co-operation on the prevention of oil spills has been progressing in response to recent major disasters.2 Within the European Union, the Seveso II Directive to prevent major accident hazards was endorsed by the Council and the European

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Parliament in September 2003. Annex I – Part 1 of the new Directive, which applies to the presence of dangerous substances in an establishment, has been amended to include seven additional carcinogens. In France, a new law on risk prevention and control encompasses both natural and industrial risk prevention and remediation. It strengthens the importance of prevention and reduction of risk at source, which improves safety, including health aspects related to accidents. National action 4. Phase-out the use of slowly degradable and bio-accumulative toxic chemicals in products, especially those that are carcinogenic, mutagenic or have effects on reproduction.

Most OECD countries have measures in place to identify chemicals which are persistent, bioaccumulative and/or toxic, especially those that are carcinogenic, mutagenic and toxic for reproduction. Due to the lack of available information on most of the chemicals, structure/ activity relationships are developed to facilitate a rapid identification of the chemicals of concern. Phase-out of these chemicals has recently become one of the most important objectives of chemical policies in many OECD countries. Canada is committed to the systematic examination of each of the approximately 23 000 substances on the Domestic Substance List. The Environmental Protection Act (CEPA, 1999) requires that the List be categorised by September 2006 to determine which substances on it have the greatest potential for human exposure in Canada, or are persistent, or are bioaccumulative and inherently toxic to humans or non-human organisms. Categorised substances are then to be subject to a screening-level risk assessment and may afterwards be placed on the Priority Substance List for in-depth risk assessment or on the Toxic Substance List for risk management. The draft legislation for the proposed European Commission REACH (Registration, Evaluation and Authorisation of CHemicals) system provides for authorisation of substances of very high concern. Substances of very high concern are defined as substances that are known or presumed to be carcinogens, mutagens or toxic for reproduction and substances that are persistent, bioaccumulative, and toxic or very persistent and very bioaccumulative. Substances demonstrated to be of equivalent concern, such as endocrine disrupters, are considered as well as substances of very high concern. The Stockholm Convention on Persistent Organic Pollutants (POPs) deals with chemicals that are persistent, become widely distributed geographically, accumulate in the fatty tissue of living organisms, and are toxic to humans and wildlife. The Stockholm Convention has recently been ratified by the 50th country, and so will enter into force on 17 May 2004. While the convention provides for measures to control an initial list of 12 chemicals (these are generally already phased-out in most OECD countries), a POPs Review Committee will consider additional candidates for the POPs list on a regular basis. The UNECE Aarhus Protocol on POPs entered into force on 23 October 2003. It includes 16 POPs (the 12 substances from the Stockholm Convention, plus four others) and “candidate” chemicals for inclusion in the Protocol have already been identified by a subsidiary body. Many countries have recently banned short chain chlorinated paraffins and pentabromodiphenyl ether (PentaBDE), which are persistent, bioaccumulative, and toxic chemicals. Due to their persistency and bioaccumlative properties, such chemicals are often present in the human body and passed on to children during pregnancy and breast-feeding.

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OECD has conducted a study on the hazard assessment of perfluorooctyl sulfonate (PFOS) and its salts, about which several countries have expressed concern. Most of their production is voluntarily phased-out by producers in OECD countries, and a few countries have taken or are considering taking measures to control these chemicals. Due to their persistency and bioaccumulative properties, such chemicals are often present in the human body and passed on to children during pregnancy and breast-feeding.3 National action 5. Limit pollution in marine environments by continuously reducing discharges, emissions and losses of hazardous substances and taking action to minimise the risks of industrial accidents and marine pollution.

The pressure of human activities on coastal zones is increasing with growth in coastal populations, tourism and aquaculture activities. OECD countries are working to protect the environment while maintaining economic activities in coastal areas. Integrated coastal zone management plans are being developed in a number of countries based on an ecosystem approach to safeguarding the marine environment, and guidelines are being set for better control of anthropogenic polluting activities. The European Union adopted a strategy for integrated coastal zone management. All OECD countries co-operate in worldwide activities aimed at the protection of the marine environment. Coordination of activities at the UN level for the protection of the marine environment from land based activities is ensured through the Global programme of action created as a follow up to the Washington Declaration (1995). In addition, co-operation in regional seas such as the Baltic and the North Seas, continue to aim at vastly reducing inputs of nutrients and hazardous substances from human activities by 2020. Greater co-ordination of activities in the regional seas around Europe have resulted from implementation of European Union directives and regulations by a growing number of European countries. Co-operation on a bilateral basis and at a multilateral level has also improved in North America and East Asia. As a result of new investment in pollution control occurring in all OECD countries, there has been a continuous decline in emission of pollutants from land based sources, mainly from industrial sources and municipal wastewater. Stimulated by regional agreements, large reductions in emissions of pollutants to the Baltic and North Sea have been achieved, although control of nitrates remains problematic. Combating pollution of the marine environment from land-based sources will require greater efforts in areas where eutrophication is occurring and where pollution is significant (hot spots, untreated wastewater, etc.). Significant investments in pollution control will be required in a number of countries which have not yet taken necessary measures to reduce marine pollution by nitrates and hazardous substances. Improvements are also being made concerning port reception facilities for ship generated wastes and cargo residues. User charges are collected, and increasingly this is organised so as to create an economic disincentive for illegal dumping. The Mediterranean Sea, the Baltic, and the North West European Waters (including the North Sea) have been declared as special zones under Annex I of the Marpol Convention, and as such releases of hydrocarbons by ships and offshore installations are forbidden. Similarly the dumping of garbage and litter is prohibited in the Baltic Sea, the North Sea, the Mediterranean Sea, and the Wider Caribbean Sea (Annex V of Marpol). OECD countries are also increasingly making aerial surveillance of their 200 mile coastal economic exclusion zones so as to avoid illegal dumping operations as well as releases of hydrocarbons. Co-operation

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among countries with contingent marine territories has improved, although the 1996 Protocol on dumping has not yet been ratified by many OECD countries, and has thus not yet entered into force. Offshore oil and gas exploitation affects mostly those OECD countries bordering the North Sea and those located in North America. In the North Sea, internationally agreed rules were adopted in the framework of the OSPAR Convention, and the impact of such activity has been progressively reduced. The magnitude of oils spills and flaring has been reduced and limits on the maximum concentration of hydrocarbons in effluents have been met. However, as a result of aging of the fields, the volume of produced water has increased. Decommissioning and disposal of disused offshore installation is now subject to stricter rules, and reclamation of steel structures is generally mandatory. As a result of the maritime accidents involving the Erika (1999) and the Prestige (2002), greater attention is being paid to avoiding pollution from oil spills due to maritime activities, to increasing sanctions for illegal releases of hydrocarbons, and to providing compensation more in line with the huge damage that can arise in such cases.4 Rules applicable to the shipping industry are being strengthened in order to avoid unsafe ships and to better control unreliable operators. The International Maritime Organization (IMO) is working to improve oil spill prevention, and to increase the safety of the shipping fleet and the level of compensation. In addition, European countries are now taking measures similar to those introduced in the United States after the Exxon Valdez disaster. A European Maritime Safety Agency was created, old ships and single hull ships are being phased-out, and most countries’ harbours are now closed to single hull ships carrying heavy oil. Although there are still maritime OECD countries which have not ratified the 1990 International Convention on Oil Pollution Preparedness, Response and Co-operation (OPPRC), significant improvements in oil spill preparedness has occurred in all OECD countries. More equipment is available to combat oil spills, more tug boats are available on call, and better inter-ministerial co-ordination is ensured. Bilateral and multilateral coordination has been strengthened. However, each new disaster shows that there are still weaknesses that need to be corrected within coastal states and at the level of the shipping industry. In particular, the issue of harbour refuge is not yet fully resolved. Most OECD countries are parties to regional agreements on port state control. The effectiveness of this system has been increased by better training of inspectors and increasing the number of inspections and co-operation between inspectorates. Under several regional Memoranda of Understanding (e.g. Paris MOU, Tokyo MOU), OECD countries have increased the proportion of inspection of foreign ships. With regard to environmental issues relating to urbanisation and spatial development: National action 1. Limit the adverse environmental effects of urban sprawl, increased transport, noise and urban air pollution, especially from emissions of small particulate matter and nitrogen oxides.

Most OECD countries are facing continued trends in urbanisation and faster growth in consumption of land around urban areas (urban sprawl), and the related adverse environmental impacts continue. Only a few countries have put in place targeted policies to counter these trends. Where such policies have been introduced, they tend to focus on providing attractive living spaces in the inner city areas, with increasingly mixed-use OECD ENVIRONMENTAL STRATEGY: 2004 REVIEW OF PROGRESS – ISBN 92-64-10780-0 – © OECD 2004

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structures. Traffic congestion is viewed by most citizens as one of the most critical problems in cities and towns, although many OECD cities are strengthening their policies to manage traffic and increase the capacity, speed, and reliability of public transport to reduce the level of congestion. A few countries have introduced environmental guidelines for transport or strategies for environmentally sustainable urban transport. Land use laws often require development to take into account environmental effects caused by urban planning. Efforts to tackle transport noise in OECD countries continue to focus constructing noise protection walls along major traffic arteries in urban areas. Thus, the problem is shifting from roads to highways and areas surrounding airports. Reducing noise still remains a priority for future attention in most OECD countries. Regarding transport related air pollution, few countries have enacted specific policies developed for urban areas other than those already adopted at national level in terms of standards and the timetables to control emissions of particulate matter (PM) and nitrogen oxides (NOx) from motor vehicles, and to provide clean alternative fuels (e.g. natural gas for urban buses) and very low sulphur diesel fuel to reduce PM emissions. A recent example of a specific urban policy is the Seoul Metropolitan Air Quality Improvement Special Act, established in Korea in 2003 with the Aim of cutting total pollutant emissions by 40-70% by 2012. It is expected that levels of some air pollutants should improve over the next decade, but there will continue to be exceedences of air quality standards in urban areas in OECD countries during smog episodes in summer and winter. Alert and information procedures are put in place in many OECD countries to address these situations, for example by reducing average speed and allowing for free parking when high NOx pollution levels are reached. The air quality effects of such shortterm measures have been rather limited, however, especially regarding reductions of photochemical smog. National action 2. Increase efficiency of energy, water and material use in growing urban areas through integrated spatial and environmental planning.

Insufficient information is available across OECD countries to adequately review this National action. National action 3. Promote urban and rural liveability and revitalisation, and address environmental implications of changing lifestyles, for example in areas exposed to intensive outdoor recreation and tourism activities (coastal zones, protected areas, etc.).

Insufficient information is available across OECD countries to adequately review this National action. With regard to environmental issues related to equity and employment: National action 1. Ensure equitable access to natural resources and environmental services.

Except in some specific areas, information on issues relating to, or policies to address, equitable access to natural resources and environmental services is scarce. The few studies

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available on access to public green areas (e.g. in the Netherlands and the United Kingdom) indicate disparities among households according to their income. Distributional issues regarding the provision of environmental services such as water, energy, and waste services. To ensure access to and affordability of these services, most OECD countries have a range of policies in place. Some of these are directly targeted at specific disadvantaged groups (e.g. low-income households), others are more general measures that might be of particular benefit to these groups, albeit incidentally. To meet equity objectives in the case of access to environmental services, tariff-related measures have been adopted in a number of OECD countries, such as increasing-block tariffs or capped tariffs for water supply (see also National action 5 of the “Freshwater” section of Objective 1). Other options include demand-side management programmes, such as financial support for home insulation targeted at deprived households, or measures for water conservation specially directed at disadvantaged groups. In addition, support measures like direct income assistance (e.g. services vouchers), or payment assistance in the form of re-phasing and easier payment, special loan facilities, and arrears forgiveness are applied. Some examples of specific measures in place to address equitable access to environmental services include the “Warm Front” scheme in the United Kingdom and recent reform of the electricity supply system in Italy. In the United Kingdom, the Warm Front scheme launched in 2000 provides financial support to low-income households for home insulation and heating improvements. The government has allocated over GBP 600 million to the scheme up to 2004 (OECD/IEA, 2003a). In Italy, the electricity reform which entered into force in 2003 provides a special tariff to low-consumption households. In addition, to address geographical disparities, some tax rates are slightly lower in the southern region (e.g. new excise rates for natural gas) (OECD/IEA, 2003b). National action 2. Monitor and reduce disparities in exposure to environmental threats (across households, social groups and communities).

Few OECD countries have seriously examined disparities in exposure to environmental threats, let alone established policies to address such disparities. Some have started to address distributional issues when evaluating particular environmental policies or projects, such s through the use of Environmental Impact Assessments that explicitly allow for consideration of social distributional effects. For example, a new integrated framework for impact assessment in the European Union [COM(2002)276] explicitly identifies distributional issues as something to consider for each policy proposal. This extended impact assessment is to be performed for major proposals from 2004 onwards. Similarly, guidance documents are in use in the United States for incorporating environmental justice considerations into developing environmental impact statements (EIS) or environmental assessments (EA) issued by the Environmental Protection Agency. Other evaluation tools that explicitly address distributional concerns include Social Impact Assessments, where impacts can be appraised according to socio-economic indicators like household income level. In addition, some methods focussing on economic evaluation, such as cost-benefit analysis5, allow for the incorporation of distributional concerns by assigning weights to the various gains and losses for the different socioeconomic groups. This approach is for instance suggested in the new edition of the United

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Kingdom Treasury Green Book (HM Treasury, 2003) which formalises central government advice for policy appraisal. Distributional incidence may also be factored in, at the development stage of a policy, by allowing for participatory procedures in the decision process. To reduce disparities in the exposure of disadvantaged groups to environmental hazards, mitigation options include the adoption of spatial restrictions on the siting of sources of pollution and waste, as well as the involvement of the community in permitting decisions. Compensation measures may also be used, such as targeted technical and financial assistance to specific groups, for example to support the installation of double glazing against noise in low-income dwellings. National action 3. Address actual and potential effects of environmental policies on employment and income distribution.

Evidence indicates that environmentally related activities have become a nonnegligible source of employment in a number of OECD countries. Existing data show that direct employment in the environmental goods and services sector alone amounts to a minimum of between 0.4% and 3.0% of total labour force in OECD countries. Government initiatives to integrate environmental and employment objectives are mainly based on macroeconomic instruments, such as using environmental expenditures for increased public spending, or implementing environmentally-related taxes that also serve employment objectives. The latter is one of the objectives of the ecological tax reform introduced in Germany in 1999.6 It imposes gradually increasing taxes on energy and electricity, with the majority of the tax revenues generated used to offset reductions in pension insurance contributions. Other European countries have also used increases in environmental taxes to reduce taxes on labour, with the aim of achieving a so-called “double dividend” of both environmental and employment benefits, including the Netherlands and Sweden. However, systematic evaluations of the actual effects of these taxes after their implementation are needed. Local and regional initiatives aiming at integrating environment and employment objectives have become more common in OECD countries over recent years. These socalled “bottom-up approaches” range from small, local associations or networks of enterprises to large multi-sector partnerships involving different stakeholders. Examples include the San Pedro Basin programme initiated in Mexico in 2001 to preserve local employment, a multi-partner Balton project started in 2000 in Hungary to preserve natural resources, and a Plan for an Environmentally Sustainable Toronto set up in Canada in 2000 between local authorities, environmental agencies, the private sector, schools, and universities. Many such approaches are implemented in the European Union. Governments are increasingly aware of the need to provide measures to alleviate short-term impacts on employment in specific sectors or regions affected by environmental policies. Without such measures, opposition to such reforms on the part of affected workers continues to hamper implementation of environmental policies. This is the case, for example, in efforts to address environmentally harmful subsidies to agriculture, coal production, and the fishing industry. The distributional impacts of some environmental policies have been found to be regressive, i.e. its burden falls disproportionately on lower-income groups. Economic

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instruments (such as environmental taxes) are often highlighted as having a weak regressive impact. But this may be due to their greater “visibility”, as alternative policies – such as direct regulation – can also have distributional impacts. Distributive effects can arise through direct or indirect income effects, behavioural effects (e.g. households may react in different ways to the policy instrument), effects on related markets such as the real estate and labour markets, and through the channelling of public finance (e.g. through the recycling of revenues). Some OECD countries are starting to assess the distributional impacts of planned environmental policies. 7 The possible income distribution concerns arising from environmental policies were, for example, assessed for the implementation of the Dutch energy tax and the Danish tax scheme on electricity taxation. In the United Kingdom, following an initial consultation in 2002 on the potential for using additional economic instruments to improve household energy efficiency, the Government consulted further in 2003 on the likely impacts and effectiveness of the identified measures, with distributional concerns a key issue in the choice of instruments. National action 4. Assess and address the social implications of environmental policies, in particular the removal of environmentally harmful subsidies.

Insufficient information is available across OECD countries to adequately review this National action. With regard to information, participation, access to justice in environmental matters and environmental education: National action 1. Promote awareness and environmental education as preconditions for identifying, accepting and successfully implementing environmental policies.

Environmental education provides a basis for enhanced public awareness about environmental problems and possible solutions.8 It also serves as the foundation for the fully informed and active participation of individuals in the protection of the environment and the sustainable use of natural resources. Environmental education is recognised by all OECD countries as an important policy tool for changing citizens’ attitudes, behaviour and consumption patterns, as a complement to regulatory and economic instruments. All OECD countries have integrated environmental education into formal education. In primary and lower secondary schools, environmental education is included as part of the compulsory curriculum, but is not necessarily taught as a separate subject. It is either taught as an interdisciplinary theme, or embedded into traditional subjects (e.g. geography, sciences, history). Upper secondary schools and universities often include specialist options such as earth and environmental sciences, environmental engineering, environmental law and politics, and environmental and consumer education. In Norway, courses on environmental education are now obligatory at teachers’ training colleges, and a 40-hour in-service training course is offered to all Norwegian teachers. Numerous OECD countries (including Austria, Canada, Germany, Ireland, Japan, and Korea) have experimented with “green” or “ecological” schools programmes. These schools are considered holistic ecological learning-places, raising environmental awareness of students OECD ENVIRONMENTAL STRATEGY: 2004 REVIEW OF PROGRESS – ISBN 92-64-10780-0 – © OECD 2004

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through enhanced environmental performance of school buildings and comprehensive systems for water/energy/paper conservation, as well as special curricula.

National action 2. Take measures to ensure and facilitate access to information, public participation in decision-making and access to justice in environmental matters, for citizens as well as for non-governmental organisations, following for example the approach taken in the Aarhus Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters.

The OECD Council Recommendation of Environmental Information advocates the provision of high quality and policy relevant environmental information, including appropriate access to it, and expects OECD countries as well as the OECD itself to strengthen their efforts in this field. It covers: ●

the production and dissemination of environmental information by public authorities, including indicators to measure environmental performance, and other mechanisms to inform the public and decision makers about environmental and sustainable development conditions and issues;

●

the quality and relevance for environmental policy of data and information systems;

●

the right of access to environmental information held by public authorities, and the establishment of educational and other measures to inform the public of its rights and to help it effectively use environmental information; and

●

environmental reporting by enterprises, and the right of access by the public to nonconfidential information on compliance by enterprises.

The recommendation encourages the different authorities to co-operate in this endeavour, and to establish effective environmental information systems. Implementation of the Recommendation is reviewed under this National action, with some elements discussed in more detail under the other National actions of this section and under National action 1 of Objective 3. During the 1990s and early years of the present decade, OECD countries made substantial progress in adopting and implementing a series of laws to enable the public to obtain environmental information. Nearly all OECD countries are under a legal obligation to provide environmental information on request, and without requiring justification, as a result of domestic legislation and/or international legal acts. The degree of public participation in environment-related decision making has also increased. 9 Public consultation has developed considerably, and now takes place in almost all OECD countries. In a growing number of countries, it is used to improve the formulation of new policies, laws, and regulations. Environment Ministries are active in providing answers to specific requests for information from citizens and non-governmental organisations (NGOs). Many Environment Ministries have issued brochures describing how to obtain environmental information, and opened internet sites which provide answers to many requests. They have issued reports and set up files and databases of detailed environmental information, which can be accessed by the public, NGOs, and the press. Steps are being taken to provide location specific data and information of direct relevance for citizens. In the area of

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accident prevention and preparedness, for example, public authorities and enterprises are co-operating to better inform citizens of the risk of and measures to take in case of an emergency. In a few cases, countries have opened centres for public information on the environment, containing catalogues, a library, data files, and resource personnel. A few centres have prepared brochures, films, and videos to increase understanding of environmental issues and how to reduce pressures on the environment. In many OECD countries, demands for environmental information increasingly stem from outside the environment community. This is reflected in the diversity of reporting products and of related publications and dissemination tools that range from general outputs to thematic reports and brochures and to environmental outlooks and action plans. Compact, user-friendly products are gaining popularity, and in countries with a federal or decentralised structure, environmental reports are increasingly produced at subnational level. At the same time, the use of electronic products and of modern information and communication technologies has considerably increased. Most countries publish state of the environment reports on CD-ROM, Internet, and on paper. However, in a few countries, the public still has difficulties in accessing environmental information available within administrations. While information held by Environment Ministries is generally easy to obtain, accessing environmentally related information in the hands of other Ministries is often more difficult. When semi-public bodies hold environmental information, the difficulties can be greater, because some do not consider themselves to be bound by the legal acts pertaining to public authorities. Difficulties also arise because environmental information is often scattered in various ministries and local offices, and the public often does not have a clear overview of all information sources. Striking a balance between the right to know of the public and the right to protect industrial and commercial secrecy remains difficult when legislation is not sufficiently specific; in some cases courts have had to intervene to protect overriding public interest. In most countries, non-judicial procedures are available to resolve cases, such as administrative appeal boards and mediators. However, whether judicial or not, these procedures are timeconsuming and often costly. More could be done in most countries to raise citizens’ awareness of their information rights and their ability to exercise these rights, and to help the users of environmental information to identify the most appropriate information sources for their purposes. Many of the difficulties encountered could be overcome with the use of innovative, wellorganised, and user-friendly information and dissemination tools. The regular publication of national state of the environment reports and environmental data compendia accompanied with easily accessible summaries can help in this respect. At the same time, environmental information centres should be set-up in each country in order to rapidly answer requests from the general public, and a facilitator established to create links between relevant public authorities.

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National action 3. Ensure that non-governmental organisations and other stakeholders have the opportunity to take a more active role in national and international environmental policy development (including relevant OECD bodies).

OECD countries have given heightened importance to the involvement of stakeholders in the various stages of environmental policy development. Access to information has improved in most OECD countries.10 Participation of stakeholders has also improved, with most countries requiring public hearings before decisions are taken regarding major projects (e.g. through an Environmental Impact Assessment process) or policies (e.g. Strategic Environmental Assessments). Stakeholder participation in the planning process often helps to build broader public support for environmental policies, facilitating their implementation. This was the case, for example, in Korea where early co-ordination of conflicting stakeholder interests was used in the process of developing water quality improvement acts for major rivers. Within the framework of national activities to promote sustainable development, many OECD countries have established high-level consultative bodies which, in addition to government representatives, typically include representatives of three types of stakeholders: industry (large and small); trade unions; and citizen-interest groups, such as environmental non-governmental organisations (NGOs), consumer organisations, etc. At the international level, stakeholders have been increasingly active in meetings of international organisations addressing environmental concerns. The accreditation and participation of civil society, including NGOs, in UN conferences and special sessions has evolved significantly in the last 15 years. After a three-year review of relations with civil society, the UN Economic and Social Council adopted a new resolution [1996/31] outlining arrangements for civil society participation. In accordance with Agenda 21, nine major groups of civil society – women, children and youth, indigenous people, non-governmental organisations, local authorities, workers and trade unions, business and industry, scientific and technological communities, and farmers – are invited to participate in multistakeholder dialogues at the annual UN Commission on Sustainable Development (UNCSD) meetings. Their participation has been expanding over the years, and was given new impetus by the Millennium Declaration and the Johannesburg Plan of Implementation. Over 8 000 participants from accredited major groups attended the World Summit on Sustainable Development in 2002, with civil society participating in thematic panels, high-level roundtable discussions, side-events and parallel events. In early 2003, the UN Environment Programme (UNEP) discussed a new strategy for enhancing civil society engagement in UNEP’s programmes and activities. At the OECD, participation by non-governmental organisations and other stakeholders in the work of the OECD Environment Policy Committee (EPOC), its subsidiary bodies, and the work of other Committees that address environmental issues has also been increasing in recent years. By 2001, EPOC was organising regular luncheon consultations between the EPOC Bureau and stakeholders from business, trade unions, and environmental NGOs at the start of each EPOC meeting whenever there were issues on the EPOC agenda stakeholders wished to discuss. EPOC had also agreed to allow access by stakeholders to all official EPOC documents (i.e. all documents that were not classified as “confidential”), and had welcomed their comments in the development of these reports.

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Since 2001, EPOC has expanded their stakeholder consultations both in timing and participation – moving from a luncheon discussion to a half day session, and from a consultation with the Bureau to one with the extended Bureau (i.e. including the Bureau and any other delegates interested in participating). Furthermore, EPOC has started to welcome full stakeholder participation in its High Level Special Sessions to discuss specific environmental challenges, starting with a High Level Special Session on Transport held in November 2003. Some of EPOC’s subsidiary bodies, as well as the Chemicals Committee and its subsidiary bodies, welcome stakeholder participation throughout their meetings. Other OECD bodies that address environmental issues – such as the Joint Working Party on Trade and Environment, the Ad Hoc Group on Sustainable Development, and the Working Party on Export Credits and Credit Guarantees – also now hold regular consultations with stakeholders on their work. EPOC has invited stakeholders to participate in one of the sessions of the Meeting of OECD Environment Ministers in April 2004, as well as in a Bureau consultation the day before the Meeting and in the working lunch on the first day. This will set a precedent at the OECD, representing the first time stakeholders have actively participated in a formal session of an OECD Ministerial Meeting. National action 4. Provide the conditions to facilitate an enhanced role and active participation of local communities and local governments in environmental policy making and implementation.

Local authorities are often responsible for delivering environmental services such as water supply, wastewater collection, and municipal waste management. In OECD countries, such local environmental services represent more than 50% of environmental expenditures. In a few countries, insufficient technical capacity in local governments is still a bottleneck in improving the quality of local environmental management. In order to improve efficiency and achieve economies of scale in the provision of local environmental and other service, a number of OECD countries have been consolidating municipalities in recent years. Increasingly, local governments are devolving the actual delivery of such services to companies (public, private, or mixed financing) and retaining only supervisory functions. This has led to efficiency improvements in the delivery of water services and waste management in some countries. Consumer and community groups are also involved in decision-making processes regarding water and waste services provided in some localities. Overall, however, much remains to be done to achieve efficient and self-financed delivery of local environmental services. All OECD countries today include public participation as part of environmental impact assessments (EIAs) of projects. Prior to that, several OECD countries already had tradition of land use planning and/or ecological permitting, with built-in community participation processes. In such cases, EIAs added an additional layer of public participation. Local Agenda 21 (LA 21) and other similar bottom-up approaches give the implementation of sustainable development an important territorial, institutional, and political dimension. Since the mid to late 1990s, the LA 21 movement has expanded significantly in OECD countries. All OECD countries today have local governments which are engaged in a LA 21 strategy or similar initiative. The number of municipalities which have developed, or are in the process of developing, a LA 21 strategy totals 5 774 municipalities

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Table 4.1.1. Local Agenda 21 initiatives (2001)

Australia

Number

National campaign

176

Yes

Austria

64

Belgium

106

Canada

14

Czech Republic

42

Denmark

216

Yes

Finland

303

Yes

France

69

Germany Greece

2 042 39

Hungary

9

Iceland

37

Yes

Ireland

29

Yes Yes

Italy

429

Japan

110

Yes

Korea

172

Yes

Luxembourg Mexico Netherlands New Zealand

69 2 100 37

Norway

283

Poland

70

Portugal

27

Slovak Republic

30

Spain

359

Sweden

289

Switzerland Turkey United Kingdom USA OECD TOTAL

Yes

Yes

89 50

Yes

425

Yes

87 5 774

Source: ICLEI (2002).

OECD-wide (see Table 4.1.1). About half of OECD countries have launched national campaigns to facilitate LA21 processes, through financial and technical support to local governments (e.g. in public participation, multi-stakeholder groups, and the consideration of social, environmental and economic needs together). Community empowerment, waste reduction, and public awareness have been reported as prominent achievements. National action 5. Strengthen environmental education and learning at all levels, including through community and workplace initiatives.

Environmental education is now available in most OECD countries at all levels of formal schooling.11 Vocational training and workplace retraining programmes also exist in all OECD countries, and are often important in promoting environmental employment. For example, in Portugal, the Institute for Employment and Professional Training and Ministry of Environment signed a protocol establishing a technical and pedagogical council to define professional profiles, training priorities and curricula, focusing on topics such as water supply, and industrial and urban waste water treatment.

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Integration of environmental protection measures into vocational training has also begun to take on importance in some OECD countries. For example, in Germany, a binding agreement was reached between the Federal Government, the Länder, trade unions, and employers ensuring that when training regulations are reviewed or amended, environmental protection is taken into account. National action 6. Promote the availability of comparable information on the environmental consequences of the manufacture and use of products, e.g. by means of labelling.

There is insufficient information available across OECD countries to adequately review this National action.

Further work in the OECD Identify and develop indicators to assess the social and environmental interface. Work has continued to extend indicator coverage to new issues, including the measurement of progress towards sustainable development. This has led to a better coverage of environmentally related social issues in the second cycle of EPRs, and in OECD sets of sectoral environmental indicators (SEI). Recent work has focussed on a set of indicators to integrate environmental and sustainability concerns into tourism policies developed jointly by the WGEIO and the Statistical Working Party of the Tourism Committee. In the context of the Environmental Performance Reviews, systematically review national approaches and policies to analyse and shape the social and environmental interface. Each OECD Environmental Performance Review in the second cycle of reviews, which began in 2000, systematically includes a chapter reviewing country performance in addressing issues in the environmental and social interface. Further develop policies and instruments to identify, prevent and manage risks to human health and the environment posed by chemicals, including pesticides and endocrine disruptors, and products of modern biotechnology. Test Guidelines to identify the effects of chemicals on human health, including endocrine disrupting effects, are continuously developed and validated through the OECD. Work on sustainable chemistry aims to prevent risks, by promoting the development of intrinsically safer chemical structure. The development of risk management policies for chemicals has been supported by recent work on socio-economic analysis. ●

OECD (2002), “Need for Research and Development Programmes in Sustainable Chemistry”, Series on Risk Management, No. 12 [ENV/JM/MONO(2002)12].

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●

OECD (2002), “Technical Guidance Document on the Use of Socio-Economic Analysis in Chemical Risk Management Decision Making”, Series on Risk Management, No. 10 [ENV/ JM/MONO(2002)10]. Further harmonise the risk assessment of chemicals, for example, by developing criteria for identifying inherently unsafe chemicals (e.g. for persistence, bioaccumulation, toxicity), developing new testing and assessment methods, in particular for endocrine disrupters, and expanding the mutual acceptance of data.

Since 2001, work on harmonisation of risk assessments of chemicals has included the publishing of 26 new Test Guidelines and 19 Guidance Documents or Detailed Review Documents concerning assessment methods. A workshop was held on the use of multimodal models for estimating impacts of persistent, bioaccumulating and toxic chemicals, and a Guidance Document on the subject is forthcoming in 2004. Several Test Methods to allow better measurement of parameters relevant for criteria development are under preparation. All OECD countries adhere to the OECD Mutual Acceptance of Data system, one non-member country adheres and three are provisional adherents. ●

OECD (2001), “Report of the OECD/ UNEP Workshop on the Use of Multimedia Models for Estimating Overall Environmental Persistence and Long Range Transport in the Context of PBTS/POPs Assessment”. Workshop held 29-31 October 2001, Ottawa, Canada [ENV/ JM/MONO(2002)15]. Expand the co-operative investigation of priority chemicals.

Since 1991, OECD countries have worked together to share the burden of the investigation of high production volume chemicals. The programme will have produced 1 000 agreed assessments by the end of 2004. The number of assessments agreed each year has increased since 2001, with an average of 70 chemicals assessments finalised per year, as compared with an average of 20 assessments per year in 1993-2000. Analyse policy implications of urban environmental problems and urban sprawl.

Some work was carried out between 1998-2001 by the ECMT in co-operation with the OECD on sustainable urban transport policies. ●

ECMT (2003), Implementing Sustainable Urban Travel Policies: National Reviews. Develop and analyse the effects of policy options to address re-distributive effects (across income categories, sectors or regions) of environmental policies and distributive effects of environmental damage.

The 2003 report exploring social issues in the provision of water supply and sanitation services in OECD countries analysed the re-distributive effects of water pricing policies, and provided recommendations for transition strategies for moving toward more efficient water pricing structures. The 2003 report on economic issues in access and benefit sharing

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applied an economic framework to the identification of some of the underlying social issues, including distributive issues, relating to agreements on access to and the sharing of benefits from the use of biodiversity resources. A report examining the broader distributive issues in biodiversity policies will be released in 2004. ●

OECD (2003), Social Issues in the Provision and Pricing of Water Services.

●

OECD (2003), “Economic Issues in Access and Benefit Sharing: A Framework for Analysis” [ENV/EPOC/GSP/BIO(2001)2/FINAL].

●

OECD (forthcoming 2004), Distributive Issues Related to Biodiversity. Assess the benefits of preventive environmental policies in terms of environmental improvements and public health benefits, and the cost of implementing such policies.

A workshop on “Valuation of Environmental Health Risks for Children” was held in Paris on 11-12 September 2003. It will be followed-up with further work on the issue in 2004, including a report on valuation techniques. Analyse and measure employment effects (across sectors and regions) of environmental policies. A report analysing the economy-wide employment impacts of environmental policies will be released in 2004. Work on the development of policies for integrating measures to address the impacts of climate change policies on employment ●

OECD (forthcoming 2004), Environmental Policy and Employment.

Notes 1. See also National action 4 of this section of Objective 4. 2. See also National action 5 of this section of Objective 4 and National action 1 of Objective 5. 3. See also National action 2 of this section of Objective 4. 4. See also National action 1 of Objective 5. 5. Ssee also National action 4 of Objective 3. 6. See also National action 1 of the “Energy” section of Objective 2. 7. See also National action 2 of this section of Objective 4. 8. See also National action 5 of this section of Objective 4. 9. See also National action 3 of this section of Objective 4. 10. See also National action 2 of this section of Objective 4. 11. See also National action 5 of this section of Objective 4.

References HM Treasury (2003), The Green Book: Appraisal and Evaluation in Central Government, HM Treasury, London.

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ICLEI (International Council for Local Environmental Initiatives) (2002), “Second Local Agenda 21 Survey”, Background Report 15 [DESA/DSD/PCZ/BP15], UN Commission on Sustainable Development, NY. OECD/IEA (2003a), Energy Policies of IEA Countries – United Kingdom, OECD, Paris. OECD/IEA (2003b), Energy Policies of IEA Countries – Italy, OECD, Paris.

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Chapter 5

OBJECTIVE 5 Global environmental interdependence: improving governance and co-operation

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Overview of progress in addressing the main challenges The OECD Environmental Strategy identifies two main challenges facing OECD countries in improving governance and co-operation in the context of global environmental interdependence: A. Ensure coherence within, and strengthen, international environmental governance. B. Improve management of the environmental effects of globalisation, and ensure that environmental aspects are taken into account in international governance related to trade and investment, in particular in the World Trade Organisation (WTO) and international financial institutions.

International environmental governance has been strengthened by the entry into force of a number of important multilateral environmental agreements (MEAs) in recent years. OECD countries have ratified an even larger number of important environmental conventions, not all of them yet in force, and have supported measures to strengthen the control or review mechanisms of several existing conventions. OECD countries have also supported measures to enhance coherence among MEAs. The implementation of MEAs has become more demanding for OECD countries, as the number of such agreements in force has continued to expand. Most OECD countries devote considerable government resources to co-ordinating national implementation measures, and to fulfilling associated reporting requirements. Nonetheless, a number of OECD countries report delays in implementation due to institutional obstacles. Little progress has been made in ratifying a number of international agreements on liability for environmental damage, although four were negotiated and opened for signature between 1989 and 1999. DAC member countries have provided USD 50 to 55 billion per year in the form of official development assistance (ODA) since 1998, with about USD 5-6 billion given to environmentally related projects. A number of donor countries have recently introduced measures to “mainstream” environmental concerns into all major projects funded by ODA. Despite commitments to address drinking water and sanitation needs made through the Johannesburg Plan of Implementation in 2002, resource mobilisation towards this end is still clearly insufficientto meet the internationally agreed goals. Economic agreements also increasingly include environmental elements – for example, regional and bilateral investment and trade agreements, and the 2001 Declaration of WTO Ministers (the Doha Development Agenda). Several OECD countries have started to apply the methodologies developed by the OECD and others to assess the environmental effects of trade, including environmental reviews of on-going trade negotiations.

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OECD countries agreed in late 2003 on a Council Recommendation on Common Approaches on Environment and Officially Supported Export Credits. During its development, a number of OECD countries strengthened environmental impact assessment (EIA) requirements for projects benefiting from credit guarantees, and took other steps to ensure transparency in integrating environmental objectives into project planning and financing decisions. As part of broader initiatives to improve corporate governance, several OECD countries have promoted implementation of the OECD guidelines for multinational enterprises (MNEs), including their environmental component. This has led to a number of “specific instances” of alleged non-compliance, and thus raised awareness of environmental performance as a component of corporate governance. Meanwhile the practice of implementing environmental management systems and issuing environmental reports has taken hold in the enterprise sector of OECD countries, with well over 50% of MNEs canvassed in large surveys reporting such systems to be in place. However, far fewer businesses engage in environmental cost accounting or associated reporting, and fewer still make use of third-party certification.

Implementation of the national actions National action 1. Ratify and implement existing Multilateral Environmental Agreements (MEAs).

A number of important international environmental agreements have entered into force since 1998. These include the 1991 Geneva Protocol on the control of emissions of volatile organic compounds (VOCs), the 1991 Espoo Convention on Environmental Impact Assessment, the 1991 Madrid protocol on environmental protection of the Antarctica, the 1992 Oslo-Paris Convention on the protection of the North East Atlantic marine environment, the 1992 Helsinki Convention on industrial accidents, the 1994 Vienna Convention on nuclear safety, the 1998 Aarhus Convention on access to environmental information and public participation, the 1998 Oslo Protocol on persistent organic pollutants (POPs) and the 2001 Stockholm Convention on POPs, the 1998 Rotterdam Convention on prior informed consent for chemicals trade, and the 1998 Protocol on heavy metals. However, in a few cases the number of ratifications to the agreements is still fairly low. Progress in international environmental law is evidenced with the signature of the 2003 Pollutant Release and Transfer Register (PRTR) Protocol, the 2003 Protocol on Strategic Environmental Assessment, and the European Landscape Convention signed in Florence in 2000. Progress has also been made towards entry in to force of a number of regional environmental agreements affecting OECD countries. Control or review mechanisms on the implementation of a number of existing conventions have recently been strengthened. This is particularly the case in the framework of the 1979 Geneva Convention on long-range transboundary air pollution, the 1987 Montreal Protocol on substances that deplete the ozone layer, the 1992 OSPAR Convention, and the 1992 Helsinki Convention on the Baltic. These reviews have helped to identify areas where further progress is needed, and to set precise targets and deadlines. For a number of other environmental conventions, sufficient ratification for their entry into force have not yet been achieved. This is the case even for some which were adopted over five years ago, such as the 1996 Protocol to the London dumping convention, the 1997 OECD ENVIRONMENTAL STRATEGY: 2004 REVIEW OF PROGRESS – ISBN 92-64-10780-0 – © OECD 2004

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Annex VI to Marpol (Air pollution from ships), the 1997 New York Convention on the nonnavigational uses of international water courses, the 1997 Kyoto protocol on climate change, and Protocols concerning protection of the Mediterranean Sea (1994 Madrid, 1995 Barcelona, 1996 Syracuse, 1996 Izmir). All but three OECD countries have ratified the 1997 Kyoto protocol, while only five have ratified the 1997 New York Convention. Recent experience in the maritime transport field has shown that environmental damage can be very high (Erika, Prestige, etc).1 In 2000, the ceiling for compensation of oil spill damage was increased and in 2003 a Protocol on establishment of a supplementary fund for oil pollution damage was adopted. When ratified, the future compensation level will be more in line with the magnitude of oil spill damage. As a result of accidents in international river basins, in 2003 European countries signed in Kiev a Protocol on civil liability and compensation for damage caused by transboundary effects of industrial accidents on transboundary water. A number of other international agreements on liability for environmental damage have been negotiated and signed in recent years, but are not being ratified. The following conventions have not been ratified by any OECD country: 1989 Geneva Convention on civil liability on for damage caused during carriage of dangerous goods by road, rail and inland navigation; 1992 Lugano Convention on civil liability for damage resulting from activities dangerous to the environment; 1996 London convention on liability and compensation for damage in connection with the carriage of hazardous and noxious substances by sea; and the 1999 Basel protocol on liability and compensation for damage caused by hazardous waste. National action 2. Promote improved coherence among MEAs (and co-operation among their implementing institutions).

Because of the numerous and complex interactions between global environmental problems, multilateral environmental agreements (MEAs) often complement each other. But they do also conflict with one another in certain contexts. Taking advantage of synergies among MEAs, while reducing the conflicting elements, can improve the cost-effectiveness of implementing the agreements. For example, many measures implemented to combat desertification or biodiversity loss can also help in adapting to climate change. In most cases, however, MEAs are negotiated and implemented in relative isolation of each other. Recent OECD work has identified three main avenues for building on the complementarities across MEAs (OECD, 2002a). These consist of: ●

pooling scientific and technical expertise into common integrated information and reporting systems for all MEAs;

●

improving linkages at both the national and international level amongst the international negotiation processes of the various MEAs;

●

increasing co-operation between the secretariats of the environmental conventions, as well as between national focal points of the various MEAs at the national level.

Most OECD countries recognise the need to identify potential synergies among MEAs prior to planning and implementing policies, and to strengthen capacities to exploit these synergies in implementing the agreements. Yet, political and organisational barriers remain to the achievement of such synergies.

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The OECD DAC Guidelines on Integrating the Rio Conventions into Development Co-operation provides guidance to increase coherence between MEAs and development policies in OECD countries’ development co-operation programmes. Generic capacity development – such as for monitoring and reporting environmental impacts – and technology co-operation are key areas where taking advantage of the synergies between MEAs may prove profitable. An on-going OECD project on development and climate change has identified linkages between biodiversity losses and impacts of climate change in coastal areas in Bangladesh and suggests combined policy responses to address these problems (OECD, 2003a). The project has also identifies linkages between adaptation to climate change and forest management good practices in Tanzania, highlighting the synergies between climate, biodiversity and desertification response strategies in this area (OECD, 2003b). OECD countries have supported measures to improve co-operation among the secretariats of the United Nations Framework Convention on Climate Change, the Convention on Biological Diversity, the Convention on International Trade in Wild Species of Flora and Fauna, and the Convention to Combat Desertification. In the field of chemical safety, countries are discussing under the auspices of the UN a possible Strategic Approach to Chemicals Management. One of the issues being discussed is ways to improve the coherence among multilateral environmental agreements relating to chemical safety. National action 3. Implement OECD Council Decisions and Recommendations.

OECD Council Acts in the field of environment are part of a package of OECD accession criteria, and their implementation is scrutinised by the OECD Environment Policy Committee (EPOC) for any country joining the OECD. Recently joined OECD countries were requested at the time of their accession to report back to EPOC and other relevant bodies periodically on their implementation of these Council Acts. In November 2003, EPOC concluded that these countries had made sufficient progress in their implementation (i.e. reflected them in their domestic policies and laws), and thus suspended the reporting requirement. Other OECD countries participated in the process of drawing up the existing Council Acts in the area of environment themselves. Among them are six Council Decisions and eight Council Decision-Recommendations, nine of which are related to chemical safety and the other five to transboundary movements of wastes. There are also 45 Council Recommendations, including ones related to chemical safety (10), energy (5), water management (4), transfrontier pollution (4), waste management (3), information (3), green government (2), coastal management (2), noise (2), environmental impact assessments (2), oil spills (1), trade and investment (1), tourism (1), and urban traffic (1). In addition, there are Council Acts on environmental management “principles” (4), such as the Polluter Pays Principle (PPP), integrated pollution prevention and control (IPPC), and the use of economic instruments. Progress towards implementation of most of these acts is discussed above under the relevant National actions. Significant progress has been made in implementing the OECD Council Recommendation on the Polluter Pays Principle [C(74)223] in the three decades since it was adopted. The PPP and the User Pays Principle (UPP) stipulate that the full cost of pollution and resource use should be reflected in the cost of goods and services. Besides internalisation of externalities within national economies, this contributes to avoiding trade distortions through the subsidisation of polluting activities. While some OECD countries

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have made progress in recent years, the degree of application of the PPP and UPP remains highly uneven across OECD countries. Particular challenges remain concerning their application to agricultural water supply, wastewater treatment, and household waste services, which still do not fully conform to PPP and UPP in most OECD countries. In the European Union, however, the Water Framework Directive [2000/60/EC] requires member States to achieve full cost recovery in water services by 2005. Concerning the greening of governments, OECD countries are moving forward at varying speeds in the implementation of the OECD Council Recommendation on Improving the Environmental Performance of Governments [C(96)39/FINAL]. While a few countries have several years of experience, the majority have only recently begun to integrate environmental considerations into their government operations and decisionmaking processes. Most progress made so far has been in the areas of energy consumption, waste management, fleet management, buildings policy, environmental management systems, and greener government purchasing. The majority of countries have also taken measures to improve internal dialogue and consultation between ministries and agencies to share best practice and promote progress across government. A significant amount of greening activity is taking place at the local and regional government level. Nevertheless, in view of the significant impact of government operations and decision-making on the environment, OECD governments have not yet achieved the full potential for improving their environmental performance. A priority area for further work is the development of country capacity to measure and evaluate their progress in “greening” their operations and decision-making procedures. A newly adopted Council Recommendation on Improving the Environmental Performance of Public Procurement [C(2002)3] builds on the earlier Council Recommendation, and its implementation will be reported to the Council in 2005. A recent development in the field of waste is the new Council Decision adopted in February 2002 [C(2001)107/FINAL], revising the earlier Council Decision concerning the Control of Transboundary Movements of Wastes Destined for Recovery Operations [C(92)39/FINAL].The amendments increase harmonisation with the Basel Convention, and included streamlined control procedures. OECD countries, where applicable through the European Commission, are now in the process of incorporating these amendments into their national regulatory frameworks. National action 4. Continue and improve bilateral and multilateral co-operation with non-member countries, including the transfer of environmentally sound technology and capacity building for environmental management.

OECD countries have recognised that they have a special responsibility for leadership on environmental and sustainable development issues world-wide, historically and because of the weight that they continue to have in the global economy and environment. However, as countries outside the OECD membership – such as China, Russia and India – account for a growing share of world economic growth and environmental pressures, OECD countries increasingly need to strengthen their environmental co-operation with emerging and developing economies in order to meet global environmental and sustainable development objectives. Bilateral environmental co-operation is embedded within broader development co-operation programmes, usually implemented through aid agencies rather than

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environmental ministries. Over the last decade, most OECD countries have decreased their spending on Official Development Assistance (ODA), from 0.33% in 1992 to 0.22% in 2000. However, OECD countries reaffirmed their development commitments at the Millennium Summit, the Monterrey Conference on Financing for Development, Doha and the World Summit on Sustainable Development. Recent commitments made by a number of OECD countries suggest that the decline in overall ODA flows will be reversed. Following these conferences, a set of internationally agreed development targets, some environmentally related, have been prioritised for development co-operation. A slight decrease in donor commitments to environmentally related assistance was seen over the 1996-2001 period, from about USD 6.6 to USD 5.3 billion. There are significant variations in the levels of environmentally related assistance provided to different regions and to different income groups. Far East Asia and Africa benefit from the bulk of environmentally related assistance, although over the 1996-2001 period, Africa and Low Middle-Income countries experienced the most significant decreases in environmentally related aid. Co-operation with Eastern Europe, Caucasus and Central Asia (EECCA) countries has been facilitated within the Environment for Europe process. Since 1996, environmentally related aid to these countries appears to have increased from just under USD 100 million to over USD 200 million. However, this may in part reflect better data collection efforts, rather than an increase in actual assistance. Figure 5.1.1 shows that 80% of environmentally related donor assistance in 2001 was allocated to four sectors: water, agriculture, urban and rural development, and environmental policy. However, it is not just the quantity but also the quality of ODA that

Figure 5.1.1. Environment related donor assistance by sector (2001)

Air 4%

Urban and rural development 13%

Energy 5% Water 33% Environmental policy 10%

5 335 million USD

Agriculture 24%

Land 3% Nature 4% Waste 4%

Notes: Data represent commitments of official development assistance (ODA)/official assistance (OA) to developing countries and countries in transition. Data refer to aid loans and grants and equity investments collected from DAC donors, including EC and some UN agencies. Other official flows and aid from non-DAC donors and other multilateral agencies are excluded. Source: OECD, DAC CRS.

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is important. OECD countries have been working to mainstream environment into development co-operation programmes and institutions. Partnerships are increasingly based on the principle of helping governments and people of developing countries to strengthen their capacities to direct their own development initiatives. The partnership approach emphasises a dynamic private sector, local ownership, and participation by civil society. OECD countries are implementing a wide range of capacity building programmes, in different sectors and in many different countries. Capacity building is needed at all levels of developing countries and emerging economies to ensure that appropriate policies and institutions are in place, and staff are trained to use the tools and techniques needed in modernising societies. An important new priority for some OECD countries is to strengthen the capacity of developing and emerging economies to negotiate and implement multilateral environmental agreements (see Box 5.1.1 for examples in the field of chemicals and biotechnology).

Box 5.1.1. Development co-operation on chemical safety and biotechnology In the field of chemical safety, many countries have started to implement the Convention on Persistent Organic Pollutants (POPs), and OECD countries are working through intergovernmental organisations to build capacity in non-members for dealing with unwanted stockpiles of these chemicals. Furthermore several OECD countries are contributing to a UNITAR/ILO/OECD Partnership to build capacity for the implementation of the Globally Harmonised System for the Classification and Labelling of Chemicals (GHS). OECD countries are also assisting selected non-members in their efforts to set up national infrastructure which will allow them to adhere to the OECD system for Mutual Acceptance of Data, thereby becoming full participants in that part of the OECD work. A current OECD overview of bilateral capacity building activities in the field of chemicals lists 436 projects (OECD, 2003c). In the field of biotechnology, OECD countries work through intergovernmental organisations to help non-members develop and implement infrastructures for biosafety policies in the framework of the Convention on Biological Diversity (CBD). Through the OECD, assistance has been provided in capacity building concerning information collection and storage (for example, through the CBD Biosafety Clearing House) and the performance of safety/risk assessments related to genetically modified organisms.

Introducing more efficient technologies that pollute less and consume less energy and raw materials into developing and emerging economies is essential for achieving internationally agreed environmental objectives. Export credits are an important mechanism for promoting technology transfer, sometimes in environmentally sensitive sectors. Working through the OECD, export credit agencies have developed a set of common approaches on environment and officially supported export credits.2 National action 5. Work with non-member countries to develop effective and equitable burden sharing arrangements for addressing global environmental problems.

The Global Environment Facility (GEF) emerged from the 1992 UN Conference on Environment and Development as the main multilateral financial mechanism for distributing

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funds for the achievement of global environmental goals, reflecting a recognition that developed and developing countries have shared but differentiated responsibilities in achieving these goals. The GEF is the financial mechanism for the Convention on Biological Diversity, the Framework Convention on Climate Change, and for the Stockholm Convention on Persistent Organic Pollutants. It also finances actions to phase-out ozone depleting substances in economies in transition, environmental degradation in international waters, and land degradation. By June 2001, the GEF had funded projects to the value of USD 3 313 million (Table 5.1.1).

Table 5.1.1. Allocations to GEF projects by focal area (as of June 2001) Full-size projects

Medium-sized projects

Total allocations

Focal area # Projects

USD Million

# Projects

USD Million

%

USD Million

Biodiversity

175

1 294.2

75

57.0

41

1 351.2

Climate change

140

1 170.5

29

21.4

36

1 191.9

International waters

53

456.0

7

5.5

14

461.5

Ozone depletion

17

163.8

4

2.9

5

166.7

Multiple focal areas

13

137.6

6

4.5

4

142.1

398

3 222.2

121

91.2

100

3 313.4

Total Source: GEF (2001).

OECD countries are currently working with countries with economies in transition on climate change issues through the Annex I Expert Group, which is jointly supported by the IEA and the OECD Secretariats. This process provides an opportunity for the sharing of country experiences on the implementation of the UNFCCC, including the development of policies and programmes to abate greenhouse gas emissions and to adapt to climate change, as well as monitoring and reporting on actions and emission trends. Recently, the dialogue and shared analysis of the Annex I Expert Group has been opened to include participants from developing countries. A focus of current work is on next steps under the Convention. The participation of developing countries and of countries with economies in transition in the Annex I Expert Group is funded by OECD countries, through extrabudgetary contributions to the OECD. National action 6. Assess environmental effects of trade agreements and policies, making use of the methodologies developed by the OECD and others.

OECD provides practical guidance for countries to develop frameworks to assess environmental effects – both positive and negative – of trade agreements (OECD, 1994). Several OECD countries (including Canada, the Czech Republic, Japan, Norway, the United States, and the European Union) have in recent years started to develop and use methodologies tailored to their national specificities to assess the environmental effects of trade. The state of advancement in building national frameworks for assessing the impacts of trade agreements and policies varies between these countries. While Japan and the Czech Republic are in the process of developing methodologies through studies and pilot projects in specific sectors, Canada, the United States, and the European Union have completed the development of methodologies and are moving towards systematically assessing trade agreements and policies.

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Several technical and procedural issues remain to be addressed. These include difficulty in distinguishing between the effects of trade liberalisation and of economic growth, and lack of environmental data and methodologies to assess certain types of impacts. Procedural issues arise as well, for example with respect to the application of an interdisciplinary approach and the timing and manner of stakeholder consultations. The OECD recently developed a methodology to assess environmental impacts of trade in services, building on the existing 1994 methodology (OECD, 2002b). Canada, the United States, and the European Union are beginning to examine the effects of trade in services in their environmental reviews of trade negotiations. National action 7. Expand opportunities for foreign investments and trade to contribute to environmental policy objectives, and for environmental policies to enhance the conditions for foreign investments and trade (e.g. through common approaches to assess the environmental implications of Export Credit Agency activities).

Trade and investment goals and environmental objectives should, and can, be mutually supportive. A number of measures have been taken in OECD countries to facilitate market access for developing country products, and for reducing trade barriers due to environmental requirements. Such measures include enhanced transparency about environmental requirements affecting imports, technical assistance aimed at capacity building, and closer co-operation with developing country exporters (OECD, 2002c). Another area in which OECD countries have made considerable progress in recent years is in ensuring that projects benefiting from officially supported export credits are subject to environmental reviews and comply with certain environmental standards (OECD, forthcoming 2004). One way for governments to support national exporters competing for exports is to provide official export credits through Export Credit Agencies and Investment Insurance Agencies (ECAs). For many years, ECAs have given little consideration to the environmental impacts of projects for which they provided official support. In 2000, OECD governments initiated discussions of a draftRecommendation on Common Approaches on Environment and Officially Supported Export Credits (the “Common Approaches”). Negotiations ended in November 2001, without final agreement. In 2003, the draft Recommendation was re-discussed, with a view to its enhancement. This time, OECD countries reached agreement on a text and the Recommendation was adopted by the OECD Council in December 2003. Between 2000 and 2002, most ECAs in OECD countries have taken steps to introduce environmental policies which apply to their financing and insurance activities. Today, most ECAs have environmental procedures in place and systematically review the potential environmental impacts of projects which they consider supporting, in line with the OECD Common Approaches. Most ECAs benchmark projects against international standards, such as World Bank standards. An exception is the United States Ex-Im Bank, which requires compliance with its own environmental standards. Another feature of environmental policies of ECAs are provisions for the disclosure of environmental information related to projects, which are balanced against policies regarding business confidentiality. Environmental policies or procedures of some ECAs are also embedded in broader approaches. Japan’s JBIC’s Guidelines, for example, have the objective of “contributing to

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efforts by the international community, particularly developing regions, towards sustainable development, through consideration of the environmental and social aspects in all projects subject to lending or other financial operations”. Environmental considerations are also part of Export Development Canada’s (EDC) more global approach to “Corporate Social Responsibility”. One of the main objectives of environmental policies of ECAs is to ensure that projects benefiting from finance or support are environmentally acceptable. Often, policies refer to a second broad objective, namely to promote the export of national environmental solutions or technologies, for example promoting energy and resource efficiency, cleaner production, and waste minimisation.3 National action 8. Promote implementation of guidelines for enterprises that contribute to ensuring sound environmental management, such as the OECD Guidelines for Multinational Enterprises.

Voluntary initiatives in the area of corporate responsibility have been one of the major trends in international business in recent years. Business surveys show that most large OECD-based multinational enterprises are actively participating in this trend in one way or another. These initiatives generally involve the issuance of codes of corporate conduct, setting forth commitments in areas such as human rights, labour relations, and environmental management. These codes are often backed up by management systems that help firms better respect their internal commitments in their day-to-day operations (OECD, 2001a). Recent international initiatives addressing corporate responsibility include the UN Global Compact, the Global Reporting Initiative, and the OECD Guidelines for Multinational Enterprises. In addition, numerous private and public initiatives at national level have emerged which promote corporate social responsibility in general, and better environmental performance in particular (OECD, 2001b). The OECD Guidelines for Multinational Enterprises were adopted in 1976 and revised in 2000. They are unique in that they are the only multilaterally endorsed and comprehensive code that governments are committed to promoting. The Guidelines have been adopted by all OECD countries, and, as of 2003, seven non-members: Argentina, Brazil, Chile, Estonia, Israel, Lithuania and Slovenia (OECD, 2003d).The Guidelines contain principles and standards for responsible business conduct in areas such as human rights, disclosure of information, anti-corruption, taxation, labour relations, environment, and consumer protection. They aim to promote the positive contributions multinational enterprises can make to economic, environmental and social progress. Moreover, they provide for an implementation mechanism under the responsibility of governments – the National Contact Points (NCPs), which are responsible for encouraging observance of the Guidelines and for ensuring that they are well known and understood by the national business community and other interested parties. The 2004 annual meeting of the NCPs will focus on the Guidelines’ contribution to enhancing the environment, and is likely to give additional impetus to implementation of the environmental components of the guidelines. All OECD countries, as well as adhering non-members, continue to actively promote the Guidelines. Some concrete examples of government efforts include: promoting the

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Guidelines at the World Summit on Sustainable Development (Johannesburg, 2002) in an event led by Germany; incorporating the Guidelines into corporate governance and social responsibility reporting frameworks in Australia; and establishment of the Swedish Partnership for Global Responsibility, based on the Guidelines and the UN Global Compact. Enterprises in OECD have implemented a variety of environmental management systems. Some of the other tools for implementation of environmental management systems in enterprises promoted by governments include environmental management accounting, cleaner production or eco-efficiency, and design for environment. A 2003 survey of the environmental management practices of the 1509 enterprises listed in the FTSE index (All-WorldsDeveloped) showed that enterprises in OECD countries are increasingly putting environmental management systems in place (OECD, 2003e). Among the surveyed companies, 58% publish environmental policy statements. A similar range of companies implement environmental management systems (EMS) – 66% in Europe, 62% in Asia-Pacific, and 41% in North America. Among the types of EMS that exist, ISO 14001 appears to have emerged as the most common standard (Figure 5.1.2). Two-thirds of the companies’ EMS are either ISO certified, or follow other standards that encompass ISO 14001. A large number of companies – 72% – also engage in environmental auditing.

Figure 5.1.2. Main types of environmental management systems used by companies in OECD countries Other tailored EMS

Tailored EMS compatible with ISO 14001

ISO 14001 and EMAS

ISO 14001 alone

Share of enterprises with EMS in place (%) 100 90 80 70 60 50 40 30 20 10

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gd

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Source: OECD/EIRIS (forthcoming 2004).

Environmental reporting seems to be less common than other environmental management practices: 39% of the surveyed companies undertake performance reporting, and one-third of these reports are subject to third party verification. Most companies (91%) publish quantitative data, allowing comparisons of performance within an industry and over time; about two-thirds include comparisons of company environmental performance, relative to previous targets.

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Further work in the OECD Contribute to better analysis of key issues and options for the ratification and implementation of existing Multilateral Environmental Agreements (e.g. regarding improved compliance, dispute settlement and enforcement mechanisms) and explore potential synergies among these agreements.

The assessment of OECD country performance with respect to their international commitments, including the implementation of commitments under existing Multilateral Environmental Agreements, continues as part of the second cycle of Environmental Performance Reviews. Promote and facilitate the implementation of the OECD Guidelines for Multinational Enterprises.

A workshop was held on 19 November 2003 in Johannesburg, South Africa on “Sustainable Development, Environment, and the OECD Guidelines for Multinational Enterprises”. Following this, a publication will be released in 2004 aimed at assisting users in understanding and implementing the environmental aspects of the OECD Guidelines for Multinational Enterprises. Analyse environmental effects of rapid developments in the global economy (e.g. technology change).

Development of a new OECD Environmental Outlook, which amongst other things will provide analysis of and projections for developments in the global economy on the environment, is scheduled to start soon. Ensure that trade, social and environmental policies are mutually supportive and develop better impact assessment methodologies.

The Joint Working Party on Trade and Environment has undertaken considerable work on the coherence between trade and environmental policies, and the assessment of environmental and trade agreements. ●

OECD (2002), The Development Dimension of Trade and Environment: Case Studies on Environmental Requirements and Market Access. Analyse the environmental impacts of activities of international financial institutions, and how environmental objectives could be better incorporated into export credit policies and practices, and into structural adjustment programmes.

Almost all OECD countries agreed to implement on a voluntary basis a draft OECD Recommendation on Common Approaches to Officially Supported Export Credits and the Environment agreed by the Working Party on Export Credits and Credit Guarantees agreed at the end of 2001. A review of the Common Approaches was conducted in 2003 and the text

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strengthened. The result was adopted by the OECD Council as a formal Recommendation and entered into force in December 2003. Further the work on investment principles and the environment.

OECD work on environmental finance aims to assist the Newly Independent States and East Asian countries in ensuring effective financing of environmental public goods, which are corner stones of sustainable development and the eradication of poverty. Much of the work to date has focussed on financing strategies for urban water supply and wastewater infrastructure. Two workshops were held in the Asian region in 2001 and 2002. ●

OECD (2002), “OECD Workshop on Promoting Environmentally Sustainable Development in the Asian Region: Proceedings”, 22-23 November 2001, Singapore [CCNM/ENV(2002)1].

●

OECD (2002), Handbook for Appraisal of Environmental Projects Financed by Public Funds.

●

OECD (2003), Financing Strategies for Water and Environment Infrastructure.

●

OECD (forthcoming 2004), “Financing Urban Water Supply and Sanitation in Asia” (Proceedings of the Second OECD Workshop on Promoting Environmentally Sustainable Development in Asia). Deepen environmental dialogue and co-operation with Russia and China, with countries participating in the Task Force of the Environmental Action Programme for Central and Eastern Europe (EAP) and with selected countries from other regions which can contribute to the resolution of pressing regional and global environmental problems.

OECD’s Centre for Co-operation with Non-Member Countries works closely with countries in Eastern Europe on environmental matters, and continues to provide the role of the Secretariat for the EAP Task Force. In addition, special programmes of co-operation continue with Russia and China. An OECD-China Seminar on Environmental Indicators was held in Paris, France, on 15-16 December 2003. ●

OECD (forthcoming 2004), Environmental Finance in China.

●

OECD (forthcoming 2005), Environmental Performance Review of China. Strengthen co-operation between the Environment Policy Committee (EPOC) and the Development Assistance Committee (DAC) on priority issues of mutual concern.

EPOC and the DAC have been working together since late 2001 on a project exploring synergies and trade-offs in mainstreaming climate changes responses into development assistance, projects and plans. As part of this project, 6 country case studies have been conducted, focussing on the links between climate change, natural resource management, and economic development in developing countries. A conference on development and climate change will be held in late 2004 as part of the OECD Global Forum on Sustainable Development. The DAC started in 2003 a new project on the use of environmental fiscal reform for poverty reduction. They are drawing on the extensive work of EPOC on environmentally related taxes in the development of this project.

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Notes 1. See also National action 3 of the “Transport” section of Objective 2 and National action 5 of the first section of Objective 4. 2. See National action 7 of this Objective for more information. 3. See also National action 4 of this Objective.

References OECD (1994), Methodologies for Environmental and Trade Reviews, OECD, Paris. GEF (2001), Project Performance Report 2001, GEF, Washington DC. OECD (2001a), Private Initiatives for Corporate Responsibility: An Analysis, OECD, Paris. OECD (2001b), Corporate Responsibility: Results of a Fact-Finding Mission on Private Initiatives, OECD, Paris. OECD (2002a), Integrating the Rio Conventions into Development Co-operation, OECD, Paris. OECD (2002b), Assessing the Environmental Effects of Services Trade Liberalisation: A Methodology, OECD, Paris. OECD (2002c), The Development Dimension of Trade and Environment: Case Studies on Environmental Requirements and Market Access, OECD, Paris. OECD (2003a), “Development and Climate Change in Bangladesh: Focus on Coastal Flooding and the Sundarbans” [COM/ENV/EPOC/DCD/DAC(2003)3/FINAL], OECD, Paris. OECD (2003b), “Development and Climate Change in Tanzania: Focus on Mount Kilimanjaro” [COM/ ENV/EPOC/DCD/DAC(2003)5/FINAL], OECD, Paris. OECD (2003c), Fourth Survey of OECD Member Country Development Assistance Activities for Capacity Building, OECD, Paris. OECD (2003d), OECD Guidelines for Multinational Enterprises: 2003 Annual Report of the National Contact Points, OECD, Paris. OECD (2003e), An Overview of Corporate Environmental Management Practices, Joint Study by the OECD Secretariat and EIRIS (Ethical Investment Research Services Ltd.). OECD (forthcoming 2004), Environmental Review Procedures in International Financial Institutions, OECD, Paris. OECD/EIRIS (forthcoming 2004), “An Overview of Corporate Environmental Management Practices” in OECD, Encouraging the Positive Contribution of Business to Environment through the OECD Guidelines for Multinational Enterprises, OECD, Paris.

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ISBN 92-64-10780-0 OECD Environmental Strategy: 2004 Review of Progress © OECD 2004

Conclusions on further work in OECD

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T

his report provides a very early review of progress in the implementation of the OECD Environmental Strategy for the First Decade of the 21st Century, adopted by OECD Environment Ministers in 2001. It assesses progress in both the implementation by OECD countries of the 71 National actions Environment Ministers agreed to in the Strategy, and also the implementation by OECD as an Organisation of the 55 items of “Further work in the OECD” requested by Ministers.

While the Strategy is intended to be fully implemented by the end of the decade, this initial review provides an opportunity to consider: ●

the elements of “Further work in the OECD” that have not yet been started;

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some of the gaps in data and information that hamper adequate monitoring of the implementation of the Strategy; and

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the process for future reviews of implementation.

When they meet on 20-21 April 2004, OECD Environment Ministers will have the opportunity to consider whether there are areas of further work which they would wish the OECD to introduce or to accelerate in the 2005-2006 programme of work, in order to better support their implementation of the OECD Environmental Strategy.

Further work in the OECD As can be seen from the specific items listed under each Objective in the main body of this report, the OECD has undertaken considerable work since 2001 on the 55 items of “Further work in the OECD” requested in the OECD Environmental Strategy. While much of the work is being carried out under the auspices of the OECD Environment Policy Committee (EPOC) or its subsidiary bodies, a number of elements are undertaken through other OECD Committees or bodies – including the Development Assistance Committee, the Committee for Fisheries, the Joint Working Party on Trade and Environment, the Centre for Co-operation with Non-Member Countries, the Chemicals Committee, the Working Party on Export Credits and Credit Guarantees, and the Joint Working Party on Agriculture and Environment – or through associated organisations, such as the International Energy Agency (IEA) and the European Conference of Ministers of Transport (ECMT). For some of the items of further work requested, new work activities have begun. For others, existing activities were focussed or accelerated. Only for a few items was there very little or no recent work of relevance. These included the further work requested of the OECD to:

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Provide information and analysis related to transboundary water resources and security threats from water scarcity or pollution [Objective 1, “Water” section] – no relevant work was undertaken.

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Analyse barriers to market penetration by environmentally friendly technologies and develop approaches on how to overcome this [Objective 2, “Transport” section] – very limited work of relevance was undertaken.

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Analyse the scope for policies to mitigate the negative environmental impacts from leisure and tourism travel [Objective 2, “Transport” section] – very limited work of relevance was undertaken.

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Continue and further the development of environmental outlooks [Objective 3] – work on the development of a revised OECD Environmental Outlook is planned to start in 2004.

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Further develop methods for environmental accounting in the context of the System of National Account [Objective 3] – new work started only in late 2003 on Material Flows Analysis, as requested by the G8 Heads of State and Government (June 2003, Evian, France).

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Analyse policy implications of urban environmental problems and urban sprawl [Objective 4] – very limited work of relevance was undertaken.

Information gaps that hampered this review In producing this report, it became clear that considerable gaps remain in the data and information that would be required to undertake a thorough review of OECD country implementation of the 71 National actions. To improve coverage and comparability in future reviews of implementation of the OECD Environmental Strategy, work should be undertaken to fill these gaps. Increased data collection and indicator development may be necessary in some cases, while better analysis of the impact of specific policies will be needed in others. The National actions for which comprehensive, comparable information were most difficult to find for the review were: ●

Objective 1, Water, National action 6: Significantly reduce water network leakage – only very limited information was available to monitor policy development and implementation.

●

Objective 1, Biodiversity, National action 1: Integrate biodiversity concerns into physical planning activities, and economic, sectoral and fiscal policies where relevant – insufficient information was available to review the National action.

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Objective 2, Agriculture, National action 5: Set time-bound targets to increase the efficiency of water use and irrigation systems in areas experiencing moderate or high water stress – insufficient information was available to review the National action.

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Objective 2, Transport, National action 5: Better assess the strategic environmental impacts of transport inducing infrastructure investment projects, policies, plans and programmes – the use of strategic environmental impacts in transport is too new to have assessments available of their effectiveness.

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Objective 2, Energy, National action 1: Remove environmentally damaging subsidies and tax provisions in the energy sector and internalise externalities associated with energy use and production – information on subsidies to coal production and to energy-related R&D are the only comparable and reliable information on energy subsidies in OECD countries available.

●

Objective 4, with regard to environmental issues related to health and safety (risks), National action 3: Reduce potential effects on human health from environmental and ecosystem changes, including those resulting from natural and man-made disasters and climate change – information was only available on policies to reduce the potential effects of major chemical accidents and oil spills.

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●

Objective 4, with regard to environmental issues relating to urbanisation and spatial development, National action 2: Increase efficiency of energy, water and material use in growing urban areas through integrated spatial and environmental planning – insufficient information was available to review the National action.

●

Objective 4, with regard to environmental issues relating to urbanisation and spatial development, National action 3: Promote urban and rural liveability and revitalisation, and address environmental implications of changing lifestyles, for example in areas exposed to intensive outdoor recreation and tourism activities (coastal zones, protected areas, etc.) – insufficient information was available to review the National action.

●

Objective 4, with regard to environmental issues related to equity and employment, National action 2: Monitor and reduce disparities in exposure to environmental threats (across households, social groups and communities) – only very limited information was available to monitor policy development and implementation.

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Objective 4, with regard to environmental issues related to equity and employment, National action 4: Assess and address the social implications of environmental policies, in particular the removal of environmentally harmful subsidies – insufficient information was available to review the National action.

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Objective 4, with regard to information, participation, access to justice in environmental matters and environmental education, National action 6: Promote the availability of comparable information on the environmental consequences of the manufacture and use of products, e.g. by means of labelling – insufficient information was available to review the National action.

For some of these National actions, efforts to collect information on relevant policies in place in OECD countries may be underway or planned through other Organisations. For others, relevant information may be available in the future through the OECD. For example, some of the current and future work of the OECD Territorial Development Policy Committee may provide information to aid review of the National actions on urbanisation and the environment in the future. Similarly, work underway in the OECD Committee on Agriculture and possible future work through the horizontal work on sustainable development may provide a better understanding of the social implications of the removal of environmentally harmful subsidies in the future.

Further monitoring implementation of the OECD Environmental Strategy in the lead-up to 2010 The OECD Environmental Strategy is intended to cover the first decade of the 21st Century, and as such should be implemented by 2010. This report provided an initial review of implementation, but further reviews up to the 2010 deadline will be needed to monitor progress and highlight obstacles to implementation. Following recent trends, it might be expected that OECD Environment Ministers will meet at the OECD once more before the final review of implementation of the Strategy. That would provide one additional opportunity for an interim review by Ministers of implementation, perhaps in 2007. To support that meeting, there will be further results available from the second cycle of the OECD Environmental Performance Reviews, as well as a new OECD Environmental Outlook. It is planned that the new Outlook will indicate some of the emerging priorities in terms of environmental pressures, as well as providing detailed analysis of the impacts of specific environmental policies. The next meeting of OECD Environment Ministers,

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in 2010 or 2011, would provide the opportunity for a final review of implementation of the OECD Environmental Strategy, and the identification of any new actions or policies needed to continue toward environmentally sustainable development in OECD countries. The OECD Environment Policy Committee (EPOC) and its subsidiary bodies will continue to track country progress in the 71 National actions in the meantime, in particular through the OECD Environmental Performance Reviews and through the work on environmental indicators and data. To support the next Ministerial review, EPOC might also monitor in more depth the implementation of each of the Objectives (or their subObjectives) in turn over the next few years.

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ACRONYMS AND ABBREVIATIONS

Acronyms and abbreviations ASEAN CAP CBD CDM CH4 CHP CO CO2 DAC DET EA ECMT EECCA EIA EIS EMS EPOC EPR FAO GEF GHG GHS GISP GMO GTI HFC IAS IEA IMO IPCC IPM IPOA IPPC ITQ IUU IWRM JI

Association of South-East Asian Nations European Union Common Agriculture Policy Convention on Biological Diversity Clean Development Mechanism Methane Combined heat and power Carbon monoxide Carbon dioxide OECD Development Assistance Committee Domestic Emissions Trading scheme Environmental assessment European Conference of Ministers of Transport Eastern Europe, Caucasus and Central Asia countries Environmental impact assessment Environmental impact statement Environmental management system OECD Environment Policy Committee OECD Environmental Performance Reviews UN Food and Agriculture Organization Global Environment Facility Greenhouse gas Globally Harmonised System of Classification and Labelling of Chemicals Global Invasive Species Programme Genetically modified organism Global Taxonomy Initiative Hydrofluorocarbon Invasive alien species International Energy Agency International Maritime Organization Inter-governmental Panel on Climate Change Integrated pest management International Plans of Action Integrated pollution prevention and control Individual transferable quota Illegal, unreported, and unregulated fishing Integrated Water Resources Management Plans Joint Implementation

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ACRONYMS AND ABBREVIATIONS

LA21 LMO LULUCF MA MEA MOU MNE N2O NCP NGO NOX ODA OECD OPPRC OSPAR PEM PentaBDE PFC PFROS POP ppm PPP PRTR PSE R&D SF6 THE PEP TPES TREC UNCSD UNECE UNEP UNFCCC UPP VA VOC WHO WSSD WTO

154

Local Agenda 21 Living modified organism Land use, land use change and forestry Millennium Ecosystem Assessment Multilateral environmental agreement Memorandum of Understanding Multinational enterprise Nitrous oxide National Contact Point Non-governmental organisation Nitrogen oxides Official development assistance Organisation for Economic Co-operation and Development International Convention on Oil Pollution Preparedness, Response and Co-operation Convention for the Protection of the Marine Environment of the North-East Atlantic Policy Evaluation Matrix Penta bromodiphenyl ether Perfluoroucarbon Perfluorooctyl sulfonate Persistent organic pollutants Parts per million Polluter Pays Principle Pollutant Release and Transfer Register Producer support estimates Research and development Sulphur hexafluoride Pan-Europe Programme of Transport, Environment and Health Total primary energy supply Tradable Renewable Energy Certificate United Nations Commission on Sustainable Development United Nations Economic Commission for Europe United Nations Environment Programme United Nations Framework Convention on Climate Change User Pays Principle Voluntary approach Volatile organic compounds World Health Organization World Summit on Sustainable Development World Trade Organization

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