Global Policy Forum

World's Richest Nations Urge Green Taxes

Environment News Service
April 9, 2001

Industrialized countries should launch a coordinated program to remove environmentally damaging subsidies and introduce environmental taxes, according to a new report by an organization that represents the world's richest countries. The Paris based Organization for Economic Cooperation and Development (OECD) is urging the removal of subsidies and introduction of green taxes "to prevent irreversible damage to our environment over the next 20 years," the OECD said in a statement. The call comes in a major review of key environmental challenges to 2020, to be considered by OECD environment ministers May 16.

Only with such widespread use of economic instruments will it be possible to tackle the more complex, interrelated and international environmental problems of the future, says the organization which groups 30 member countries that produce two-thirds of the world's goods and services. A wide range of different types of policies will be necessary, but to ensure cost effectiveness economic instruments should play the "predominant" role, OECD environment director Joke Waller-Hunter told reporters before the study was launched on Thursday.

"OECD Environmental Outlook" identifies the key environmental challenges for industrialized countries over the next two decades using the traffic light system. In this, environmental pressures, environmental states and society's responses are classified as red light, yellow light or green light issues. The main conclusions were finalized over a year ago. What has been added since then, according to Waller-Hunter, is a series of policy simulations designed to show whether and how red light issues such as deteriorating groundwater quality, greenhouse gas emissions, local air pollution and rising waste generation can be tackled and how much it would cost.

The red lights:

  • Three-quarters of marine fisheries are fished to their limits or over-fished.
  • Tropical deforestation continues at alarming rates. Non-OECD regions will lose another 10 percent of their forests by 2020.
  • Human induced climate change already affects weather patterns worldwide. This will worsen as OECD CO2 emissions increase by a projected one-third to 2020.
  • Urban air quality and associated health problems are deteriorating in many OECD countries.
  • Energy use and transportation are already the main contributors to greenhouse gas emissions and air pollution. Motor vehicle use in OECD countries is expected to increase by 40 percent to 2020, passenger air kilometers to triple, and energy use to increase by 35 percent.
  • Municipal waste generation is expected to increase substantially in OECD countries to 2020.
  • In most OECD countries groundwater is polluted, largely by farm chemicals. By 2020, nitrogen loading of waterways from agriculture will increase in OECD countries by more than one-quarter. Persistent and toxic chemicals will be widespread in the environment, seriously affecting human health.
  • Overall, environmental damage is responsible for two to six percent of disease in OECD countries.

The policies suggested to address these urgent red light issues draw on lessons learned from environmental success stories, including "green lights," such as the virtual elimination of ozone depleting CFC emissions, the removal of lead from petrol, the expansion of protected natural areas, and significant increases in the efficiency of resource and energy use.

But in many cases, efficiency improvements have failed to counter total increases in the environmental pressures caused by rising consumption and production levels, the OECD report says. "More stringent policies are needed to ensure that environmental degradation is de-coupled from economic growth," the report urges.

Computer simulations conducted for this report showed that removing subsidies in OECD countries and applying an energy tax linked to the carbon content of fuels and taxing all chemicals could lead to 15 percent lower OECD carbon dioxide emissions in 2020 than would have been the case in 2020 under business as usual assumptions. There would be nine percent lower SOx emissions, three percent lower methane emissions, and 30 percent less run-off of nitrogen to waterways from agricultural chemicals.

The economic costs of implementing this package of policies would be almost negligible - with projected Gross Domestic Produce in OECD countries in 2020 less than one percent lower than under a business as usual scenario.

The OECD Outlook is available here
The OECD member countries are listed here


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