Sustainable development
Summary: May 17, 2001: Pedro Solbes comments on "Sustainable Development" at the OECD Ministerial meeting in Paris (Brussels)
Commissioner Solbes participated today in the Ministerial Council joint meeting of the Ministers of Economy and Finance and Ministers of the Environment on "Sustainable Development"
The main points of his intervention were:
On the priority challenges and priorities for action
- The European Commission supports immediate action to deal with the two key challenges (climate change and the management of natural resources) identified in the OECD Policy Report. They both overlap with the key challenges identified in the European Unison's Sustainable Development Strategy[1].
- However, the EU strategy paper, adopted by the Commission last Tuesday, identifies four more key challenges, i.e. threats to public health, mobility and land-use management, poverty and social exclusion, and ageing and demographic change. In its background paper the OECD secretariat clearly makes the link to the economic and social dimension of sustainable development. However, eventually only environmental challenges are highlighted because it is assumed that more urgent action is
needed in the environmental sphere, while action is already underway in the other domains. Such an approach is somewhat risky because it could leave the public with the impression that sustainable development is mainly on environmental issues. This is wrong. Both the economic and the social dimension are as important as the environmental one. What is needed is an approach covering clearly the three pillars in an integrated way.
- Also on the priorities for action there is substantial overlap between what is said in the OECD paper and what is said in the EU paper: making markets work for sustainable development, strengthening decision-making, further policy integration, harnessing science and technology and managing linkages with the global economy. Actually, the Commission proposal for an EU strategy even goes further and gets more concrete on these actions, by proposing policy responses for all six key
challenges identified, partially including numerical objectives and targets, or deadlines for the implementation of policy responses.
On the urgency for action:
- Urgent action is needed in several fields. Indeed, what we need are policy responses (i) based on sound science, (ii) aiming at cost-effective solutions, and (iii) allowing for a gradual phasing-in in the case that required adjustment efforts were to have strong and adverse distributional implications.
- The sooner we start to put a comprehensive policy response in place, the cheaper will be the overall cost of our response in the long run, both from an allocative point of view as well as from a distributional point of view.
On bridging differences between OECD governments
- Differences between OECD governments are mainly based on different answers to two sets of questions:
- Should we really act now or wouldn't it be better (cost effective) to wait and see, and then probably adapt to climate change rather than try to hold it up? This is a question on efficiency.
- Are the different societies prepared to shoulder the abatement effort, and is everybody responsible for climate change undertaking a similar effort? This is a question on fairness, and the burden of adjustment.
- To bridge these differences requires (i) to convince governments and societies of the urgency and adequacy of action, and (ii) to establish a fair burden sharing between different parties, while limiting the adjustment burden to potential losers.
- The existing United Nations Climate Change Convention as well as its policy process, culminating in the signing of the Kyoto Protocol, is the appropriate road to follow in order to bridge differences, and in order to develop the necessary common approaches.
On the speed of progress made
- To achieve progress towards sustainable development often requires changing the status quo and its institutions, and it often requires engaging in trade offs that are (although beneficial for societies as a whole) creating 'losers' of policy change. As a result there is resistance.
- The changes required for progress towards sustainable development are often front-loaded investments, i.e. the costs are occurring in the short run, while the benefits will only materialize in the medium to long run. In consequence, policy initiatives are unpopular if seen as a costly investment with an uncertain return.
- In consequence, policies aiming at sustainable development must be presented as visions and challenges, as investments in our future and the future of next generations. If one only highlights the cost of a policy change one will never succeed.
On overcoming obstacles to greater use of market-based instruments
- The advantages of market-based instruments (transparency, efficiency-increasing incentives, tradable property rights) are often perceived as disadvantages:
- The transparency of e.g. taxes, subsidies or tradable permits makes clear who benefits, who loses, what the price tag is etc. This activates resistance, and vested interests to become very powerful.
- The increased transparency also becomes important in the absence of a level playing field when some countries implement tight policies while others don't.
- The efficiency argument is often dubbed to invite to ethically unwarranted behavior (e.g. the right to pollute).
- Obstacles could be overcome if one did not discuss individual market-based instruments in isolation, but if one always also outlined the alternative regulatory approach. Indeed, the alternative to a higher energy tax is not 'no tax at all' but other alternatives, like for example, tighter limit values, tighter and costly energy efficiency standards etc. Comparing the cost and efficiency of alternative policy responses, however, also requires that one is able to establish the cost and
efficiency of all the instruments. Here, a lot has still to be done on the methodological side.
- The Commission supports the OECD secretariat views on market-based instruments and the important role in internalizing into the costs paid by the polluters the external costs of their activities. We need to step up our work in coordinating methodologies on economic evaluation of external costs to allow the more widespread and effective use of market-based instruments.
- One has to be able to show that proposed market-based approaches provide price incentives likely to achieve social and environmental objectives in a flexible and cost effective way.
On the developed countries preparation ahead of the World Summit on Sustainable Development
- The Commission strongly supports the adoption of a well-designed and relevant set of indicators. This would improve measurability thus allowing the debate to be focused on facts rather than perceptions and for progress to be measured.
- Indeed, in its Sustainable Development Strategy, the Commission underlines the need to have indicators capable to measure progress in the long-term objectives.
- We should start by putting our own house in order. This is the objective of our EU Sustainable Development Strategy. This will show our commitment, and allow us to provide a leading role and to contribute to the global sustainability.
- Further, with our Communication on the preparations for the 2002 Summit, we have launched an intense process of internal EU preparation, through the identification of strategic objectives and key themes for the Summit, where one of the keys for success will be to show to developing countries that industrialized countries are reversing their unsustainable production and consumption patterns and are credible in integrating their environment and development policies.
- Ref: EC01-045EN
- EU source: European Commission
- UN forum:
- Date: 17/5/2001
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