« THE OECD CONTRIBUTION TO EVIRONMENTAL ECONOMICS, TO RIO+20 AND TO THE EUROPEAN DEBATE»

1. CISL TOSCANACENTRO STUDI CISLFirenze 3-5 April 2012GREEN TRADE UNIONS NEGOTIATORSFOR EUROPE 2020 OBJECTIVES «THE OECD CONTRIBUTION TO EVIRONMENTAL ECONOMICS, TO RIO+20 AND TO THE EUROPEAN DEBATE» Aldo Ravazzi OECD WPIEEP Vice-President and former President (Working party on the Integration of Environmental and Economic Policies) OECD WPEP Vice-President (WP on Environmental Performance Country Reviews) OECD WPBWE Co-President (WP on Biodiversity, Water & Ecosystems)

2. 10 Planet Ecosystems to be kept under control (Rockstroem et al., Nature, 2009) 1. Climate change 2. Biodiversity loss 3. Nitrogen cycle 4. Phosphorus cycle 5. Stratospheric ozone depletion 6. Ocean acidification 7. Global freshwater use 8. Land system change 9. Atmospheric aerosol loading* 10. Chemical pollution* * not yet quantified

3. SCIENTIFICALLY-BASED KNOWLEDGEFOR EFFICIENT DECISION-MAKING The PlanetaryBoundaries (Rockstroem et al., Nature, 2009) The «Limits to Growth» of the Club of Rome (1972), oftenmisunderstood/underestimated (Meadows &Meadows, Aurelio Peccei, Fiat manager, and Alexander King, Oecd manager) IPCC (UN ClimateChange) RP (UNEP Resource Panel) - Von Weizsaecker State of the Planet Declaration Planet Under Pressure: New Knowledge Towards Solutions London 26-29 March 2012

4. ECONOMICS & ENVIRONMENT: key references • Nicholas Stern (2006), "The Economics of Climate Change - The Stern Review ”, HM Treasury, London • Nicholas Stern and James Adams (2009), “The Global Deal: Climate Change and the Creation of a New Era of Progress and Prosperity”, Library Edition • Pavan Sukhdev ed. (2010 e 2011), “TEEB - The Economics of Ecosystems and Biodiversity”, vol.1 “TEEB: Ecological and Economic Foundations , vol.2 “TEEB in National and International Policy Making”, Earthscan, London • E. Von Weizsaecker et al. (2009), “A Long-Term Ecological Tax Reform”, ch.7 in “Factor 5 - Transforming the Global Economy through 80% Improvements in Resource Productivity”, Earthscan, London

5. OECD MEMOOECD = [OCSE] =Organisation for Economic and Development Cooperation 34 MemberCountries 21 (out of 27) EU membercountries (not in: Lit-Lat-Rom-Bul-Cyp-Mal) 4+1 otherEuropeans: Nor-Ice-Swi-Tur and Isr 4 Americas: Can-Usa-Mex-Chi 4 Asia-Pacific: Jap-Kor-Asl-Nze - Marshall Plan, industrialised/developed/market economies Statistical Data production, Economic Analysis, Peer Reviews Legal Instruments: (few) Decisions, (several) Recommendations IntergovernmentalOrganisation (civilservantsstudy centre) Stakeholdersinvolvementthrough TUAC, BIAC (+EEB for env.)

6. OECD MEMO (2) 200 Committees, Working Parties, Experts Groups, … An important contribution to the work on environment and economics (presently 7 committees): - Economic instruments for environmental policies: environmental taxes and charges, creation of markets, EHSs, … - Environmental data, statistics (e.g. material flows) and indicators (core-key-integration-SD-GG-etc.) - Analysis of efficiency and effectiveness of environmental policies - Integration of environmental policies in other policies - Assessment of environmental performance of member countries’ policies and some non-MCs (70 EPRs since 1992) * - Economics of Climate Change, Transport, Biodiversity, Waste, Water, Chemicals, etc., Costs of Inaction, CBA, etc.

7. OECD Environment & Economic Principles • Polluter-Pays-Principle [Principio Chi-Inquina-Paga] (PPP) • User-Pays-Principle [Principio Chi-Usa-Paga] (UPP) • Internalisation of externalities (external costs: social costs, environmental costs, …) • Prevention Principle [P. di prevenzione] (it costs less to intervene before than after) • Precautionary Principle [P. di precauzione] (if I have two uncertain alternatives… - irreversibility risk) *

8. OECD Environment & Economic Principles (2) • Integration Principle [Principio di Integrazione] (of environmental policies in sector policies - e.g. energy, transport, industry - and in economic-financial-fiscal policies) • Sustainable Development All these principles have been mostly analysed and developed at OECD and are now institutionalised (even constitutionalised) in EU Treaties But also major strategies, e.g. Resource Productivity/Efficiency - Green Growth

9. OECD contribution to Rio+20 • OECD Green Growth Strategy • OECD Review of the Implementation of the Environmental Strategy 2000-10 • OECD Environmental Outlook to 2050 – The consequences of inaction (a strong call for green growth policies) • Ministerial Policy Statement to Rio+20

10. OECD Review of the Implementation of the Environmental Strategy 2000-10

11. OECD Review of the Implementation of the Environmental Strategy 2000-10 (1) • OBJECTIVE 1: MAINTAINING THE INTEGRITY OF ECOSYSTEMS THROUGH THE EFFICIENT MANAGEMENT OF NATURAL RESOURCES 1.1. Climate- 1.2. Freshwater- 1.3. Biodiversity • OBJECTIVE 2: DECOUPLING ENVIRONMENTAL PRESSURES FROM ECONOMIC GROWTH • OBJECTIVE 3: IMPROVING INFORMATION FOR DECISION MAKING: MEASURING PROGRESS THROUGH INDICATORS • OBJECTIVE 4: THE SOCIAL AND ENVIRONMENT INTERFACE: ENHANCING THE QUALITY OF LIFE 4.1. Environmentalhealth 4.2. Environmental democracy and education 4.3. Employment and environment 4.4. Distributional effects of environmental policies • OBJECTIVE 5: IMPROVING GLOBAL ENVIRONMENTAL GOVERNANCEAND CO-OPERATION

12. OECD Review of the Implementation of the Environmental Strategy 2000-10 (2) Areas where progress has been achieved include: • Advances in the scientific and economic understanding of climate change, biodiversity, and other key elements of global change science; • The more active participation of a better informed citizenry in environmental policy development and implementation; • The development and use of more cost-effective policy instruments, individually and in combina-tion, in many environmentally related areas;

13. OECD Review of the Implementation of the Environmental Strategy 2000-10 (3) Areas where progress has been achieved include: • Initiatives by cities and other sub-national levels of government; • Beginnings of an international carbon market; • An increase in the share of official development assistance allocated to the environment, particularly to support implementation of the Rio Conventions; and • Strengthened environmental governance in areas such as the marine environment and chemicals.

14. OECD Review of the Implementation of the Environmental Strategy 2000-10 (4) Reductions of some environmental pressuresand improvement of environmentalconditions: • Overall emissions of some key air pollutants such as SO₂, NOx, have decreased, thereby reducing theirrelatedenvironmentalimpacts; • Water-borne disease in large urban areas is generally a thing of the past for OECD countries, life has returned to many rivers that had been considered dead, and water bodies are increasingly managed on the basis of hydrological rather than administrative boundaries; •  There are many local examples where populations of endangered species, and the extent of • protectedareas, haveincreased; •  Some OECD countries have reduced their emissions of greenhouse gases in absolute terms; in • others, the increase has been less than the rate of growth of GDP; •  Some of the key environmental pressures from the agricultural sector, including the use of • freshwater for irrigation, GHG emissions and inputs of nitrogenous fertilizers, have been • reduced; •  Total annual water abstractions have remained unchanged in the OECD area, and some countries • have reduced the volume of water abstracted; •  Donors have helped some developing countries to improve their environmental conditions and to • strengthen their capacities for environmental management; •  Damage to the ozone layer has been arrested and is beginning to be reversed.

15. OECD Review of the Implementation of the Environmental Strategy 2000-10 (5) Reductions of some environmental pressuresand…: • There are many local examples where populations of endangered species, and the extent of protectedareas, haveincreased; • Some OECD countries have reduced their emissions of greenhouse gases in absolute terms; in others, increase less than GDP (decoupling); • Some key environmental pressures from the agricultural sector, including use of freshwater for irrigation, GHG emissions and inputs of nitrogenous fertilizers, have been reduced;

16. OECD Review of the Implementation of the Environmental Strategy 2000-10 (6) Reductions of some environmental pressures…: • Total annual water abstractions have remained unchanged in the OECD area, and some countries have reduced the volume of water abstracted; • Donorshave helped some developing countries to improve their environmental conditions and to strengthen their capacities for environmental management; • Damage to the ozone layer has been arrested and is beginning to be reversed.

17. OECD Review of the Implementation of the Environmental Strategy 2000-10 (7) Keychallenges: Despite the progress that has been achieved over the last decade, the overall result falls short of what is needed to ensure the integrity of ecosystems. In particular: • We are not on track to limit the rise in the average temperature of the global atmosphere to 2°C above pre-industrial period; overall GHG emissions from OECD countries increased in the last decade; • The overall energy mix in OECD countries has not changed appreciably and is still more than 80% reliant on fossilfuels;

18. OECD Review of the Implementation of the Environmental Strategy 2000-10 (8) Keychallenges: Despite the progress … • The environmental gains associated with more fuel-efficient, less-polluting motor vehicles have been overwhelmed by the increased scale of their use, which is related to the continued dominance of motor vehicles in the modal split, urban sprawl, and the expansion of motorways; • Air quality, particularly in many urban centres, poses an increasing risk of premature death and disease, particularly to vulnerable populations such as children and the elderly;

19. OECD Review of the Implementation of the Environmental Strategy 2000-10 (9) Keychallenges: Despite the progress … • There are increasing risks of non-linear, irreversible changes in ecosystems on which economic and social development depends; one indicator is the increasing number of endangered animal and plantspecies; • Major changes in agricultural policies and practices are needed if a growing world populationis to be fed without over-exploiting scarce natural resources or further damaging the environment;

20. OECD Review of the Implementation of the Environmental Strategy 2000-10 (10) Keychallenges: Despite the progress … • Diffuse sources of pollution, the declining quantity and quality of groundwater, as well as the increasing frequency and severity of droughts and floods, in some countries partly due to climate change, is making the sustainable management of aquatic and related ecosystemsmore challenging; • Increased collaboration is needed to better under-stand the risks as well as the benefits associated with chemicals, including nanomaterials and the products of modern biotechnology.

21. OECD Environmental Outlook to 2050 – The consequences of inaction (a strong call for green growth policies)

22. OECD Environmental Outlook to 2050 – The consequences of inaction (1) • Unprecedented economic growth in recent decades in the pursuit of higher living standards • However, the sheer scale of economic and population growth has overwhelmed progress in curbing environmental degradation. • Providing for a further 2 billion people by 2050 will challenge our ability to manage and restore the natural assets on which all life depends. • The OECD Environmental Outlook to 2050 projects demographic and economic trends over the next four decades (previous in 2008 covered till 2030)

23. OECD Environmental Outlook to 2050 – The consequences of inaction (2) • Joint modelling by OECD and PBL-NEEA • Impacts of economic/population trends on the environment if we do not introduce more ambitious policies to better manage natural assets. • It then examines some of the policies that could change that picture for the better. • Focuses on four urgent areas: climate change, biodiversity, water, the health impacts of pollution. • Conclusion: urgent action is needed now to avoid significant costs of inaction, both in economic and human terms

24. OECD Environmental Outlook to 2050 – The consequences of inaction (3) What could the environment look like in 2050? • Earth’s populationfrom 7 to over 9 billion • World economynearly quadruple, with growing demand for energy and natural resources • OECD countries >25% of population aged over 65, compared to 15% today. China and India also likely ageing; Africa expected to grow rapidly.  evolving lifestyles and consumption patterns,  significant consequences for the environment. 70% of the world population in urban areas (vs 50%) exacerbating challenges (air, congestion, waste)

25. OECD Environmental Outlook to 2050 – The consequences of inaction (4) What could the environment look like in 2050? • A world economy 4 times larger than today is projected to use 80% more energy in 2050. * Without more effective policies, the share of fossil-fuel based energy in the mix will still remain at 85%. “BRIICS” to become major energy users. • Growing population with changing dietary preferences, agricultural land projected to expand. • Continued degradation and erosion of natural environmental capital is expected to 2050, with the risk of irreversible changesthat could endanger two centuries of rising living standards.

26. OECD Environmental Outlook to 2050 – The consequences of inaction (5) Without more ambitious policies, by 2050: • More disruptive climate change is likely to be locked in. • Biodiversity loss is projected to continue. Climate change to become the main growing driver of biodiversity loss by 2050, followed by commercial forestry and, to a lesser extent, bioenergy croplands.

27. OECD Environmental Outlook to 2050 – The consequences of inaction (6) Without more ambitious policies, by 2050: • Freshwater availabilityfurther strained in many regions, with 2.3 billion more people than today (in total 40% of global population) living in river basins under severe water stress. • Global water demand is projected to increase by some 55%, due to growing demand from manufacturing (+400%), thermal electricity generation (+140%) and domestic use (+130%). • Nutrient pollution from urban wastewater and agriculture to worsen in most regions, intensifying eutrophication and damaging aquatic biodiversity. • Air pollution is set to become the world’s top environmental cause of premature mortality. The burden of disease related to exposure to hazardous chemicals is significant worldwide, but most severe in non-OECD countries

28. OECD Environmental Outlook to 2050 – The consequences of inaction (7) Without more ambitious policies, by 2050: • Air pollutionis set to become the world’s top environmental cause of premature mortality. • The burden of disease related to exposure to hazardous chemicals is significant worldwide, but most severe in non-OECD countries

29. OECD Environmental Outlook to 2050 – The consequences of inaction (8) Conclusions: • Natural systems have “tipping points” beyond which damaging change becomes irreversible (e.g. species loss, climate change, groundwater depletion, land degradation). However, these thresholds are in many cases not yet fully understood, nor are the environmental, social and economic consequences of crossing them. • Acting now makes environmental and economic sense.

30. OECD Environmental Outlook to 2050 – The consequences of inaction (8) Avoiding the consequences of inaction is affordable: • Natural systems have “tipping points” beyond which damaging change becomes irreversible (e.g. species loss, climate change, groundwater depletion, land degradation). However, these thresholds are in many cases not yet fully understood, nor are the environmental, social and economic consequences of crossing them. • Acting now makes environmental and economic sense.

31. OECD Environmental Outlook to 2050 – The consequences of inaction (9) Avoiding the consequences of inaction is affordable: • Make pollution more costly than greener alternatives; • Value and price the natural assets and ecosystem services; • Remove environmentally harmful subsidies (e.g. irrigation water; support to fossil fuels has been: • OECD countries (production and use): 45-75 B U$ per year (OECD-IEA-WB). • Developing and emerging economies: 400 B U$ in fossil fuel consumer subsidies (in 2010, IEA).

32. OECD Environmental Outlook to 2050 – The consequences of inaction (9) Avoiding the consequences of inaction is affordable: • Devise effective regulations and standards; e.g. to safeguard human health or environmental integrity, for promoting energy efficiency. • Encourage green innovation; e.g. by making polluting production and consumption modes more expensive, and investing in public support for basic R&D.