Download I. What is the OECD?

Studia Generalia Lecture
Sustainable Development: One
of the Main Challenges for the
OECD’s Future Work
Kiyo Akasaka
OECD, Deputy Secretary General
1 1
Overview
I.
What is the OECD?
II.
Sustainable Development
III. OECD Recommendations
IV. Finland’s track record
V.
OECD and the Global Challenges
2 2
I. What is the OECD?

An intergovernmental organisation

30 Member Countries + 100 partners

€188m budget and 2000 staff

Mission:
- Growth
- Development
- Trade
3 3
OECD is a forum where countries:

Address the economic, social and environmental
challenges of globalisation.

Provide and pool comparative data.

Do analysis and forecasts to underpin national
policies and multilateral co-operation.

Share experiences about policy among
policymakers.

Submit to “peer reviews” of their national policies
and performance.
4 4
OECD work method
Data collection &
case studies
Analysis
Discussion
Recommendations
Implementation
Peer reviews,
multilateral surveillance
5 5
II. Sustainable Development

3 dimensions of Sustainable Dev:
– Environmental Protection
– Economic Growth
– Social Development

Our Common Future - Brundtland Report
– development which meets the needs of the present without
compromising the ability of future generations to meet their own
needs

OECD aims to reduce trade offs between the
three dimensions
6 6
OECD Environmental Challenges
• Some air pollutants
(lead, CFCs, NOx, SOx)
• Forest coverage in
OECD regions
• Water use
•GHG emissions
• Surface water
quality
• Motor vehicle &
aviation air pollution
• Hazardous waste
& toxic emissions
from industry
• Agricultural pollution &
groundwater quality
• Energy production
& use
• Forest quality in
OECD regions
•Waste management
• Over-fishing
• Biodiversity & tropical
forest coverage
• Chemicals in the
environment
7 7
Considerable progress in:
Water management:
Water pricing, tradable permits, river basin management
Clean up of most polluted waters, point-source pollution
Challenges: groundwater pollution, diffuse pollution (e.g.
agricultural)
Reducing local air pollutants:
OECD NOx emissions reduced by 15% since 1990, and
SOx emissions by 40%.
Regulatory timetables for air quality in all OECD regions
to 2008
Better transport and air pollution taxes, charges and
regulations
Challenges: small PMs, VOCs, smog, critical loads for
8 8
acid rain
Reductions in SOx and NOx emissions
OECD SOx and NOx emissions
150
Index 1990=100
gross domestic product
fossil fuel supply
100
NOx emissions
SOx emissions
50
0
1990
1992
1994
1996
1998
2000
9 9
Progress (contd.)
Environmental and health risks from chemicals & GMOs:
Regulatory frameworks for assessing risks of GMOs, Unique
Identifiers.
Challenges: bioaccumulating and toxic chemicals in the
environment.
Entry into force of multilateral environmental agreements:
Rotterdam Convention on Prior Informed Consent.
Stockholm Convention on Persistent Organic Pollutants.
10 10
Major environmental challenges:
Climate change
Decoupling environmental pressures from
economic growth
Biodiversity management
Resource mobilisation
11 11
Climate Change
●Only
one-third of OECD countries have
stabilised or reduced GHG emissions since
1990.
●Policies
slowly being adopted, but
insufficient.
●Only
a slight decoupling of GHG emissions
from economic growth.
12 12
13 13
The mitigation challenge
14 14
CO2 Emissions
OECD emissions
Index 1990=100
125
100
gross domestic product
75
GHG emissions
fossil fuel supply
50
CO2 emissions
from energy use
25
0
1990
1992
1994
1996
1998
2000
15 15
GHG Emmissions
1990-2001
%
change
Australia
Austria
Belgium
Canada
Czech Republic
Denmark
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Italy
Japan
OECD
21
10
6.7
18.5
-22.9
0.3
4.7
0
-18
26.1
-22.7
-4.1
31.5
7.2
9.5
1990-2001
%
change
Korea
Luxembourg
Mexico
Netherlands
New Zealand
Norway
Poland
Portugal
Slovak Republic
Spain
Sweden
Switzerland
Turkey
United Kingdom
United States
..
-55
..
4.6
17.2
8.1
-32.2
36.4
-30.6
33.1
-3.1
0.7
..
-11.7
13
5.6
16 16
Decoupling Environmental
Pressures from Growth
Agriculture
Government support to farmers = €229 billion (2003).
80% are environmentally damaging subsidies.
Transport & Energy
Air pollution, CO2 emissions, congestion, urban sprawl.
New technologies: promising, but slow.
Challenges: air transport, public transport, energy
efficiency, fuel mix.
17 17
Biodiversity
Protected areas have increased in OECD to 14.6%
of land area, but biodiversity loss outside these
areas continues.
Percentage of endangered species continues to
increase.
75% of marine fish stocks are fully exploited,
overexploited, depleting, or recovering.
Challenges: better management of protected areas,
establishment of marine parks, integration of
biodiversity concerns in sectoral policies.
18 18
Biodiversity (contd.)
Protected areas, OECD
% of total area
16
14
12
IUCN categories:
I to VI
Strict nature reserves (Ia)
Wilderness areas (Ib)
National parks (II)
Natural monuments (III)
Habitat/species management areas (IV)
Protected landscapes/seascapes (V)
Managed resource protected areas (VI)
Without IUCN category assigned
10
8
6
4
2
0
1980
1985
1990
1997
2003
19 19
International Financial Resources
Resources are insufficient:
$68.5 billion ODA in 2003
Only $5-6 billion to environment-related
projects.
MDG goals to halve population without
access to water & sanitation by 2015
Additional investment needs = $75 billion p.a.
(current ODA and lending = $4 billion).
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Traffic Lights Summary
Some progress, but not enough.
Priority red lights: climate change, biodiversity,
decoupling in agriculture, transport, energy.
More efficient and effective environmental
policies -- taxes, tradable permits, subsidy
removal.
Need for greater environmental policy integration
and international co-operation.
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III. OECD Recommendations
Based on:
Costs & benefits of present and future
environmental policies
Costs of inaction on environmental issues
Obstacles to reform, such as competitiveness
concerns and social impacts
Appropriate policy mixes for particular sectors
22 22
Environmental Goals &
Economic Efficiency
Environment protection costs about 1 to
2% of GDP in OECD countries.
Design policies that lead to more
economically efficient environmental
policies.
Costs could be reduced by approximately
25%.
23 23
Economic Instruments
Voluntary agreements
Regulations
Trading Schemes
Taxation
Removal of Subsidies
24 24
Trends in environmental policy
Increased use of economic
instruments (taxes; tradable permits)
Concern with impacts on society and
competitiveness
Increased use of voluntary
approaches… but these are often
ineffective and costly
25 25
Regulations
The main instrument used to control air
pollution and resource extraction.
Many forms of regulations.
Regulatory instruments typically impose
different costs across emitters.
Regulations mandating the use of a
particular technology discourage innovation
and have very high costs.
26 26
Environmentally related taxes
7 % of total tax revenue (OECD average)
2.5 % of GDP (range 1 - 4.5%)
Motor vehicles
26%
Other
9%
Transport fuels
Heating &
process fuels
5%
Electricity
3%
64%
Waste 1%
Other 1%
http://www.oecd.org/env/policies/taxes/index.htm
27 27
Effectiveness of taxes?

FINLAND:
– Pioneer in carbon taxes (1990)

DENMARK:
– sulphur tax
– tax on non-hazardous waste NORWAY:
– CO2 tax

SWEDEN:
– sulphur tax
28 28
But… taxes can be distortionary

Tax rate variations or exemptions such as:
–
–
–
–

under-taxing transport diesel fuel.
under-taxing coal.
tax-free aviation fuel (& airlines tickets).
almost full energy tax exemption to the industrial
sector.
Over 1500 tax exemptions recorded in the
OECD environmental taxes database.
29 29
Voluntary approaches
Broad use in EU, US, Japan
 Some Benefits
 Limitations:

– may not achieve extra environmental benefits
– asymmetry in information – industry knows
more about costs
– need of back-up policy for non-compliance
30 30
Tradable permits

High potential for CO2/ GHGs:

Continue/ extend in other areas:
– SOx
– Water, waste, transport

OECD: strategic guidelines and ex
post evaluation.
31 31
Reform of harmful subsidies

OECD country subsidies:
– Well over €400 billion p.a.
– $318 billion (2002) for agriculture

Environmentally harmful subsidy
reform:

Obstacles to reform:
– lack of comparable/ reliable data.
– vested interests.
– difficult to agree on alternative (e.g. income support)
32 32
Estimates of Env-Related
Subsidies – late 1990s
Sector
OECD
countries
non-OECD
countries
Total
335
65
400
Water
15
45
60
Energy
80
160
240
Forestry
5
30
35
Fisheries
10
10
20
Other sectors (mainly
road transport)
280
30
310
Total
725
340
1065
(3.4)
(6.3)
(4)
Agriculture
(% GDP)
33 33
Integrated Decision Making





Is there a common understanding of SD?
Is there clear commitment and leadership?
Are institutional structures in place to steer
SD?
Is stakeholder involvement in decision
making encouraged?
Is the diversity of knowledge and scientific
input to problems well managed?
34 34
Future Work on SD at the OECD
Obstacles to removing environmentally
harmful subsidies
Obstacles to the further use of
economic instruments
Material flow accounting, decoupling
and resource productivity
Inputs to the UNCSD process
35 35
IV. Finland’s Track Record
The economy:





Impressive record from 1993-2000
Strong recovery since 2002
GDP per capita well ahead of Euro-area
and OECD averages
Population aging a major challenge
Need to enhance effectiveness of public
spending
36 36
Finland and Sustainable
Development
What is Finland’s environmental policy
track record?
 What more can it contribute to help
reach targets such as those set out in
the MDGs?

37 37
2002-2003 OECD Economic
Surveys : S.D. in Finland
1. Climate Change
2. Air Pollution
3. Natural Resources - forests
38 38
SD Policy Advice to Finland (1)
Climate Change:
Participate in EU-wide permit trading scheme
in order to increase cost effectiveness of
emission abatement.
Equalise carbon taxes across various sectors
of the economy.
Reassess exemption of energy taxes on peat.
39 39
SD Policy Advice (2)
Air Pollution:
Reduce particulate pollution by accelerating
the replacement of older cars and diesel
engines by new models.
Reconsider tax differential between diesel
and gasoline so they reflect externalities.
Create a trading scheme for NOx emissions.
Institute road pricing.
40 40
SD Policy Advice (3)
Natural Resources:
Good governance of forest resources.
Costs and benefits of expanding protected
areas needs to be weighed.
Competitive bidding might expand forest
protection at least cost to society.
41 41
V. Global Challenges
Millennium Development Goals
Plan of Implementation of the World
Summit on Sustainable Development
–
–
–
–
Poverty eradication
Changing patterns of consumption and production
Protecting and managing natural resources
Health (HIV/AIDS, etc)
42 42
OECD Development Strategy
Shaping Globalization
– Regionalisation, Globalisation, the Doha Agenda, International Migration,
Global Risk Management, Security and Development
Supporting Reforms for Development
– Policy Coherence, Poverty Reduction, Investment and Private Sector
Development, Institutions, Governance and Capacity Building
Improving Development Co-operation and
Finance
– Aid Effectiveness, Aid Harmonisation, Mobilisation of Domestic Resources
and Taxation, Statistical Capacity Building
43 43
OECD Contributions
OECD Clients:
OECD Member Countries
100 partner Countries
International organisations &
forums
– UNCSD, MDG+5, G-8
44 44
Finland and the OECD
Julin Report
Trade and Development Ministerial
Active participation in the OECD
45 45
Kiitos!
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