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International Conference on Environment and Economics: Conclusions[+]

Place and Date of Adoption Paris, 21. 07. 1984

Parties

The Conference, held at OECD from 18.07. to 21.07, 1984, was attended by Leaders of Government, Industry, Trade Unions, non-Governmental Organizations and experts in economics, environment, science and other fields

Notes

Cf. Council of Europe, Recommendation 9998 (1984), infra 1/G/ 04-10-84, and OECD Recommendation on Guiding Principles Concerning International Economic Aspects of Environmental Policies, Rilster/Simma vol. I : 116

International Conference on Environment and Economics: Conclusions

1. Leaders of Government, Industry, Trade Unions and non-Governmental organizations joined by internationally recognized experts in economics, environment, science and other fields have just concluded a four day Conference at OECD in Paris on environment and economics. The Conference Chairman was the Hon. Pieter Wisemius, Minister of Housing, Physical Planning and the Environment. The Netherlands and the Session Chairman included:

Hon. Mrs. Huguette Bouchardeau, Secretary of State for the Environment and the Quality of Life, France; Hon. Charles Caccia, Minister of Environment, Canada; Hon.Koji Kakizawa, Vice-Minister, Environment Agency, Japan; Sir Rupert Myers, Chairman of the NSW State Pollution Control Commission, and Chairman, National Conservation Strategy Committee, Australia; Hon. Karl-Heinz Narjes, Member of the Commision, Commission of the European Communities; Mr. William Ruckelshaus, Administrator, United States Environmental Protection Agency; Mr. Janez Stanovik, Former Executive Secretary, Economic Commission for Europe; Professor at the University of Ljubljana, Yugoslavia; Hon. Antonis Tritsis, Minister of Physical Planning, Housing and Environment, Greece.

2. The Conference met at a time when, although unemployment remains unacceptably high, overall economic conditions are improving - with growth, on average, foreseen at a rate above four per cent in the OECD area at this year with wide variations around this average. This growth if sustained and extended, will inevitably have both negative and positive implications for the environment. The Conference was thus particularly timely and provided an opportunity to review the work of the OECD on environment and economics over the past ten years and to identify issues and appropriate policy responses through the 1990s.

Emerging trends

3. The Conference recognized that renewed economic growth, whilst bringing benefits, leads to higher levels of conventional pollutants, thus imposing greater pressures on environmental resources, With higher damage costs, unless environmentally favourable measures are taken. Renewed growth will also accelerate the emergence of new and complex pollution problems, linked to technical developments. A number of delegations stressed the need to reduce emissions below current levels.

4. The Conference further recognized that the traditional scope of environmental policy is expanding to embrace quality of life issues (especially urban amenities) and critical issues in natural resource management which are increasingly important for sustained economic development, but where the lack of adequate scientific and other data and the long time scales involved pose special difficulties. In certain cases, present policies, sometimes reflecting inadequate valuation of resources, are leading to actions (e.g. in relation to water, soil and forests) that are not only environmentally unacceptable, but may also undermine the basis for sustained economic development.

5. Industrial innovation and the development of new technologies carry significant implications, both positive and negative, for environment and resource issues by inducing changes in the structure of economic activity, and in patterns of consumption, investment, employment and trade. Appropriate structural adjustments, which respond to environmental requirements as well as to market forces and technological developments, should be promoted especially at the beginning of the business cycle.

6. The growing regional and global dimension of many of these issues and their potential economic and financial consequences, whether action is deferred or action is taken, calls for the urgent and continuing examination of them on an international basis, as well as for increased action at the national and local levels.

Environmental Management and Economic Growth

7. Continued environmental improvement and sustained economic growth are essential, compatible and interrelated policy objectives for OECD Member countries. This, the major conclusion of the Conference, means that the environment and the economy, if properly managed, are mutually reinforcing; and are supportive of and supported by technological innovation.

8. The Conference noted that, in most OECD countries, public demand for better environmental quality remained high during the recession. Renewed economic growth is likely to increase this demand and to broaden it; and at the same time, to make it politically and financially more possible for Governments to respond to it.

9. The resources of the environment, which arc the basis of economic and social development, are scarce. Inadequate environmental policies may have adverse consequences in all fields. Improved management of environmental resources is therefore necessary. Strengthened international cooperation, both within and beyond OECD, is essential to develop the appropriate tools and to put them into use.

10. The Conference recognized that environmental policies must be justified on their own merits for environmental reasons. However, on the basis of the substantial evidence available to it, the Conference concluded that the benefits generated by environmental measures (including the damage costs avoided) have generally been greater than their costs.

11. The macro-economic effects of environmental policies on growth, inflation, productivity and trade have been minor, whilst some positive effects on employment and technological innovation have been demonstrated. At the level of individual firms, industrial sectors or communities cost impacts can be substantial and can lead to environmentally desirable structural, process or product changes. The impacts of these changes can fall unequally on different groups and regions and environmental policies should consider equity aspects.

Towards More Effective and Efficient Environmental Policies

12. The conference concluded that OECD Member countries are at a watershed in the evolution of environmental policies. New directions are needed in order to achieve a continuous improvement in environmental conditions and to avoid irreversible damage to the environment.

13. Three such directions were identified as fundamental at both national and international levels:

- Integration of Environment and Economic Policies;

- " Anticipate and Prevent" Strategies;

- More Cost-effective and Efficient Environmental Policies.

14. Integration of Environment and Economic Policies - Development trends in all OECD member countries offer significant opportunities for long-term economic gains through sound management of the environment, as well as risks of major losses. If these gains are to be realized and the losses minimized, including those of a social character, the Conference concluded that environmental considerations should, as a matter of priority, be brought effectively into the centre of national decision-making on overall economic policy. They also need to be fully integrated with other policies such as agriculture, industry, energy, transportation and land use management.

15. The means to achieve this integration are available and include:

- Improving institutional arrangements:

with planning, programme review and budget procedures that ensure continuing interaction between the environmental authorities and other government departments, especially at early stages of policy development;

- Improving aids to decision making:

amongst them, environmental impact assessment, cost-benefit analysis (in both physical and monetary terms) and risk assessment.

- Extending effective forms of environmental impact assessment to proposed policies, as well as programmes and projects, that have potentially significant implications for environmental and resource management;

- Including environmental considerations in planning: especially land use planning, zoning and development control schemes;

- Increasing public information and involvement: by making available to the public relevant facts about risks, benefits and costs, thereby ensuring that it is in a position to express its preferences.

- Adopting a multimedia approach to management, in order to treat pollution problems that occur in different environmental media, air, water or land, in an integrated manner.

16. A Stronger Basis for "Anticipate-and-Prevent" Strategies. -Although "react-and-cure" strategies remain necessary to deal with existing problems, "anticipate-and-prevent" strategies which are attractive from the point of view of economic efficiency and cost-effectiveness, will increasingly be needed. By their nature they are difficult to apply because they often call for action in advance of demonstrated damage, scientific certainty and public support and require a strong data and knowledge base.

17. The Conference concluded that strengthening this knowledge base was necessary, urgent and cost-effective and that the means were available to do it, including:

- Economic evaluation of the potential advantages of anticipatory action;

- Improving inter-disciplinary scientific research on priority environmental issues;

- Improving the collection of data on environmental quality, resources, benefits and expenditures at national, regional and local levels;

- Improving public understanding of environmental objectives and policies through

environmental education and training:

18. More Cost-Effective and efficient Environmental Policies - The Conference noted the substantial evidence demonstrating that the effectiveness and efficiency of environmental measures can be improved by various means, and concluded that the following were of special importance;

- The consistent application and extension of the Polluter-Pays Principle, which aims at ensuring that polluters bear the costs of pollution control and consequently that they are not subsidized nor given-unfair trade advantages over their competitors;

- More effective use of economic instruments, with their reliance on market type mechanisms, as complements to regulatory instruments;

- Streamlining and improving institutional and regulatory systems with a view to improving coherence in policy, consistency in regulation and decision-making processes, to ensure adequate enforcement and to avoid negative side effects.

- Encouraging consultation between regulatory authorities and industry in order to increase the understanding of environmental policy requirements and of problems in their application; and to provide appropriate time schedules for compliance;

- Encouraging employee participation in environmental protection measures undertaken by firms (including those affecting working conditions); through the provision of adequate information;

Strengthening international co-operation

19. The growing interdependence of the world's economic system has become a central question for governments as they examine the critical issues likely to dominate the world scene to and beyond the turn of the century. This interdependence is seen to cover not only population, energy, food and technology, but also the environment, which constitutes the resource and ecological base for sustainable future development. The Conference recognized the need for increased international co-operation in relation to key problems of a global or regional character or where direct impacts on neighbouring countries arise. Furthermore, at a national level, environmental policies should reflect the reality of global environmental interdependence. The Conference noted that in many cases, these problems stem from the activities and policies of the advanced industrial societies; but that rapid industrial and population growth in developing countries will also be increasingly important. The special responsibility of OECD Member countries to cooperate in seeking solutions, especially with developing countries and relevant international organizations, must be acknowledged.

20. The Conference concluded that several forms of co-operation on environmental and resource issues have proved effective and could be extended and deepened through the use of the OECD's capabilities in providing a forum for the early recognition, analysis and resolution of these issues. These include:

- Encouraging the development of an improved capacity on the part of Member governments to undertake coordinated and integrated policy analysis, including the development of appropriate methodologies and of long term scenarios at a global, regional and national levels;

- Preparing periodic State of the Environment Reports as a basis for evaluating progress in the implementation of environmental policies;

- Identifying and assessing those economic, investment, trade and other policies of the OECD area that have the greatest potential environmental impact, both within and beyond the OECD;

- Promoting the greater integration of environmental assessment in the development process;

- Encouraging harmonized approaches to environmental policy with a view, inter alia, to minimizing trade distortions;

- Developing better information on the economic, social and trade dimensions of environmental policies; and sharing that information widely.

Follow up

21. The conclusions reached by the Conference require careful examination and consideration by the Governments of OECD Member countries. They should be presented in an appropriate form to OECD Council. The Conference urges the OECD Secretariat to take suitable steps to this end.


+ This is a part of the International Environmental Agreements Compendium, compiled 1995 by the Pollution Prevention and Pesticide Management Branch, Ministry of Environment, Lands and Parks, British Columbia, Canada.