The OECD Global Forum on Environment on “Towards Quantifying the Links Between Environment and Economic Growth” was held on 24-25 October 2016 at the OECD Conference Centre, Paris.
The objectives of the Global Forum were to provide a platform for policy experts, academics and government officials from OECD and developing countries to explore how a well-managed natural environment can contribute to economic growth and how such an effective and efficient regulatory system can be designed. The Forum was organised across three themes:
- how economic growth affects the environment;
- how environmental degradation affects economic growth; and
- how environmental policies can help to make the most out of environmental protection and economic growth.
The links between the economy and the environment are manifold: the environment provides resources to the economy, and acts as a sink for emissions and waste. Natural resources are essential inputs for production in many sectors, while production and consumption also lead to pollution and other pressures on the environment. Poor environmental quality in turn affects economic growth and wellbeing by lowering the quantity and quality of resources or due to health impacts, etc. In this context, environmental policies can curb the negative feedbacks from the economy on the environment (and vice-versa). But how effective they are and whether they generate a net benefit or a net cost to society is the subject of much debate and depends on the way they are designed and implemented.
While the main mechanisms that link the economy and the environment are qualitatively known, assessments of environmental policies are often hampered by a lack of consistent metrics to compare the costs and benefits of policy changes, or by a more general lack of empirical evidence. The economic costs of biophysical and environmental consequences of policy inaction, and the associated benefits of new policies, are often not quantified. Therefore, economic discussions are often dominated by the very visible costs of policy action. Thus, it is essential to improve the toolkits that economists use to assess the benefits of environmental policies. This Global Forum aimed to shed some light on this important debate.
The Forum was organised across three main themes:
Opening and scene setting – Key links between environment and growth from a policy perspective and set the context for the following sessions. It also examined the tools and approaches for quantifying such linkages.
- How does economic growth depend on the environment and natural resources? This session focusses on how resource use has fuelled growth in the past, how that is no longer sustainable, and what could be some of the new drivers of growth in a green growth fuelled circular economy.
- How does environmental degradation affect economic growth? What are the key risks to future economic growth from environmental impacts? This session focusses on how impacts from air pollution, climate change damages and water scarcity hamper economic growth. It also provides insights from recent OECD work on the global macroeconomic costs of policy inaction, coupled with insights from experts on specific sectors and regions.
- How can environmental policies be designed to be compatible with (green) economic growth? How can policies exploit synergies and minimise trade-offs between environmental effectiveness and economic efficiency? This session draws on some recent empirical insights into these questions, both from OECD and developing countries.
DAY 1 – Monday 24 October 2016
– Presentations Day 1 (zip file)
SESSION 1: Growth and environment from a policy perspective: quantitative analysis on the links between economic and environmental policy objectives
Chair: Catherine L. Mann (OECD Chief Economist)
This session highlighted the key links between environment and growth from a policy perspective and set the context for the following sessions; and provided an overview of tools and approaches to quantify these linkages.
- How can environmental policy and economic growth be reconciled?
- How can quantitative economic analysis inform environmental policy making?
- Janez Potočnik (Co-Chair – International Resource Panel)
- Anil Markandya (Director – Centre for Climate Change in the Basque Country, Spain; Honorary Professor of Economics – University of Bath, U.K.)
SESSION 2: How does economic growth depend on the environment and natural resources and how can policy achieve delinking: opportunities and challenges of the circular economy?
Chair: Shardul Agrawala (Head of the Environment and Economy Integration Division – OECD Environment Directorate)
This session focused on how resource use has fuelled growth in the past, how that is no longer sustainable, and what could be some of the new drivers of growth in a green growth fuelled circular economy?
- What role have natural resources played in driving economic growth and how can future growth be decoupled from resource use?
- What are the key policies that will need to be set in place to support the transition towards a circular economy and how can these be represented in macro-economic models?
- Kookie Habtegaber (Green economy adviser, formerly global lead for WWF green economy work)
- Bernd Meyer (Senior Adviser of GWS – The German Institute of Economic Structures Research)
- Peter Börkey (Principal Administrator – OECD Environment Directorate)
- Bing Zhu (Executive Deputy Director of Institute of Circular Economy – Tsinghua University, P.R. of China)
SESSION 3: How does environmental degradation affect economic growth and what are the benefits of policy action: measuring the consequences of environmental feedbacks on economic growth?
Chair: Alain de Serres (Head of the Structural Surveillance Division – OECD Economics Department)
This session focused on how impacts from air pollution, climate change and water scarcity damages hamper economic growth. It will also provide insights from recent OECD work on the global macroeconomic costs of policy inaction, coupled with insights from experts on specific sectors and regions.
- What are the major effects of environmental feedbacks on economic activity and economic growth?
- How can standard measures of economic growth adequately reflect the health impacts of environmental challenges such as climate change and air pollution?
- How to effectively and efficiently reduce specific environmental impacts and bring co-benefits to the economy and the environment?
- Rob Dellink (Senior Economist, Coordinator Modelling and Outlooks – OECD Environment Directorate)
- Timur Gül (Senior Energy Analyst, International Energy Agency – IEA)
- Emilio Lèbre La Rovere (Head of CentroClima – COPPE/UFRJ, Brazil)
- Sir David King (Foreign Secretary’s Special Representative for Climate Change, UK)
DAY 2 – Tuesday 25 October 2016
– Presentations Day 2 (zip file)
SESSION 4: How can environmental policies be designed to be compatible with (green) economic growth? Evidence from firms and industries
Chair: Antoine Dechezleprêtre (Associate Professorial Research Fellow – London School of Economics)
This session drew on empirical insights into these questions, both from OECD and developing countries:
- How to design and implement environmental policies to incentivise firms to innovate and become more productive?
- What is the role of other policies (structural, public investment, financial regulation, etc.)?
- To what extent should policies worry about losers?
- Tomasz Koźluk (Senior Economist – OECD Economics Dept.)
- Sharlin Hemraj (Director for Environmental and Fuel Taxes – National Treasury, South Africa)
- Shi-Ji Gao (Director-General and Research Fellow – Development Research Center (DRC) of the State Council, P.R. of China)
- Rafael Cayuela (Author, Director and Corporate Chief Economist – The Dow Chemical Company)
SESSION 5: Quantifying the links between environment and economic growth – key lessons for policy making and next steps
Moderator: Simon Upton (Director – OECD Environment Directorate)
Panel discussion on the main opportunities and challenges for using quantitative assessments of the links between economic growth and the environment to inform policy making, and the key lessons on how to make quantitative analysis most relevant for policy makers?
- Nguyen Thi Dieu Trinh (Senior Official – Ministry of Planning and Investment, Viet Nam)
- Rafael Monge (Policy Adviser – Ministry of Environment and Energy of Costa Rica)
- Christophe Poupard (Head of the Division for the Economics of Natural Resources and Risks – Ministry of Environment, Energy and the Sea, France)
- Stephen White (Economist – Unit for Green Finance and Economic Analysis, Directorate General for Environment, the European Commission)
- Giuseppe Nicoletti (Head of the Structural Policy Analysis Division – OECD Economics Department)
- Russel Mills (Global Director of Energy & Climate Change Policy – The Dow Chemical Company; Chair of the BIAC Environment and Energy Committee)
These questions were raised and discussed by panellists and the audience (no presentations were made):
- How valuable is quantitative analysis on growth and environment linkages for policy decisions in your country?
- What challenges do you face in using quantitative insights for policy preparation and for the engagement of Ministries of Economic, Finance and International Affairs?
- How can the quantitative insights generated by business communities, firms and other societal stakeholders be better used in analytical work and in policy decisions?
- What is, according to you, a good example of how quantitative analytical work influenced actual policies and how and why was it successful? If there is no good example, then what is missing?
This workshop is organised by the OECD under the auspices of the Environment Policy Committee (EPOC).
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