PRESS BRIEFING BY EXECUTIVE DIRECTOR OF UNEP

Press Briefing

PRESS BRIEFING BY EXECUTIVE DIRECTOR OF UNEP

Everyone was talking about the use of flexible economic instruments in environmental policy, the Executive Director of the United Nations Environment Programme (UNEP), Klaus Toepfer said today at a Headquarters press briefing.

Mr. Toepfer introduced a new UNEP study, entitled Instruments of Change: Motivating and Financing Sustainable Development, which examines the role of economic instruments in sustainable development. He was joined by the book's author, Professor Theodore Panayotou from the Harvard Institute for International Development .

Emission trading, joint implementation and the Clean Development Mechanism (CDM) were the main economic instruments established by the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC), Mr. Toepfer said. The common denominator was the use, wherever possible, of market instruments with the lowest possible costs to reach environmental goals.

He said integrating environment and sustainable development in the market process helped motivate the efficient use of limited resources and also made possible the financing of urgently needed sustainable development. The CDM would be one of the main concerns of the States parties meeting in Buenos Aires next week to discuss implementation of the Convention and its Kyoto Protocol. Economic instruments were very important in helping find solutions to climate change and such other issues as biodiversity, desertification and hazardous wastes.

Mr. Panayotou said while the world was focusing on the financial crisis, another, less spectacular, but potentially more devastating crisis was increasing unchecked: a global environmental crisis that appeared to be immune to all the traditional cures. Cities from Mexico City to Beijing and from Bangkok to Sao Paulo, were chocked by pollution and congestion. Tropical forests were receding despite all deforestation efforts and whatever was left was being devastated by fires. In the last year, fires in Indonesia, Mexico, Brazil and Central America that had destroyed huge areas of forest had been blamed on El Niño when, in fact, they were really man-made.

He said that in Kyoto, developed countries had undertaken modest commitments to reduce their greenhouse gas emissions, not so much from the conviction that they would be able to do so, but out of guilt. Greenhouse gas emissions from industrialized countries would eventually level off, while emissions from developing countries were increasing quickly. Therefore, developing countries must be helped in their efforts to control climate change. The CDM was the only international instrument (and the smallest one) which allowed developing countries to participate by integrating environment and development.

Like all other economic instruments, he said, "it separates those who pay from those who do". The one who pollutes -- developed countries -- should be the ones who pay. Developing countries should do what is required to control greenhouse emissions because it costs them less to reduce emissions by reducing deforestation and adopting a different development path. But the developed countries should pay for that, he added.

Throwing a lot of money at the environmental problem and imposing a lot of restrictions on economic activity were unnecessary and did not work, he continued. Economic activity and environmental protection should be linked. It was no surprise that environmental degradation was as bad in slow growing sub-Saharan Africa as it was in fast growing Asian countries. Despite the financial crisis in Asia, the environment was suffering. It suffered during times of fast growth and during times of negative economic growth. During fast economic growth there were no mechanisms to encourage more environmentally sound development and no instruments to generate resources to invest in environmental protection. On the other hand, during a financial crisis, social services and environmental protection were the first to be cut.

Therefore, the focus must be on economic instruments, he said. If market mechanisms were part of the problem, they must also be part of the solution. Market instruments, such as environmental taxes, pollution permits or environmental performance bonds, controlled the problem before it occurred. They aimed to change behaviour and make pollution and resource degradation expensive, and make environmentally sound activities more profitable.

Subsidies for energy and pesticide use, and for deforestation were bad for the economy and the environment, and must be removed, he continued. Governments had been taxing good things and subsidising bad things. They taxed labour, work, income and savings and subsidised consumption, pollution, environmental degradation and leisure. The tax burden must be shifted to encourage people to work hard, save more and reduce pollution and resource depletion. Other instruments included pollution charges, emission trading and transferable development rights. In Chile, there was a plan to auction the right to drive in the centre of town during rush hour. Communal management systems for fishing rights and land use in developing countries could use social pressure to regulate the use of resources and protect the environment.

Mr. Toepfer said that at a meeting last week in Nairobi, African environmental ministers had agreed on a common position on the CDM established by the Kyoto Protocol.

A correspondent said there were claims that developed countries were trying to impose new commitments on developing countries without trying to live up to their own. Mr. Toepfer said per capita emissions in the United States were around 20 tons a year compared with developing countries where they were about one and a half tons a year. Developing countries must have the opportunity to stimulate their development and overcome poverty, which was poisonous for the environment. The question could be addressed through emissions trading and by assisting developing countries gain access to better technology. Asking for flexibility in the cooperation with developing countries was in no way meant to indicate any decrease in commitment by developed countries.

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