A new report quantifies the cost of failing to meet the EU's environmental targets, highlighting the importance of effective green regulation in the process
Failure to effectively implement environmental laws cost the EU economy around €55bn in 2018, according to a new report that quantifies the costs and foregone benefits of not abiding by the environmental targets and rules set out in EU legislation.
The report, authored by engineering consultancy COWI in partnership with environmental consultancy Eunomia, calculates the size of the green policy "implementation gap" in seven key areas: air quality; nature and biodiversity; water; waste; chemicals; industrial emissions and major accident hazards; and horizontal instruments. It does so by measuring the difference between estimates of the environmental status of each area last year and the respective environmental targets EU member states should have met.
The report acknowledges that difficulties quantifying precise costs associated with the implementation gap mean its calculations are only an estimate. But its conclusions are stark and highlight the significant economic impacts that result from the failure to deliver the cleaner air and water and improved environmental performance that member states had promised. The estimated €55bn cost lies in the middle of a broad range of possible totals, running from €29bn to €79bn.
"It is crucial to understand the effects that failing to meet environmental targets has on the EU economy," said Eunomia lead author Tanzir Chowdhury. The report identifies a range of negative outcomes responsible for this economic impact, including damage to public health, reduced biodiversity, and unrealised market opportunities.
Some areas were easier to estimate than others, Tanzir Chowdhury told BusinessGreen. "Air and noise pollution is one of the areas with the most significant implementation gap, although it's much easier to measure in the context of air as clear targets have been established," he said. "Another major area is biodiversity, although here the implementation gap is difficult to measure, both in terms of the cost associated with it and in terms of quantifying the extent to which biodiversity is falling in the long term."
In other areas costs were likely underestimated, as a lack of data made it impossible to include detailed impacts in the assessment.
"Water is very important although we mostly focused on drinking water quality, when there are other elements we couldn't include due to a lack of data, such as microplastics, which would have a significant impact," Chowdhury said.
The report has particular implications for the UK, where some leading Brexit campaigners have argued leaving the EU presents an opportunity to strip back what they regard as restrictive environmental 'red tape' imposed by the EU. Pro-Brexit politicians and think tanks have argued that by cutting regulations, Britain can benefit from increased flexibility in trade negotiations with economic giants like India, China, and the US. Other campaigners have called for EU regulations on waste management to be rolled back to reduce burdens on small business.
Domestically, the UK government is committed to plans to cut regulation, which it claims will save £9bn for business by 2022. Originally part of the Cameron government's deregulation agenda, the policy - known as the Business Impact Target - was reaffirmed by the May administration in June 2018.
But COWI and Eunomia's analysis suggests far from undermining economic growth environmental rules and targets can deliver an economic boost. By highlighting the economic risks created by an absence of effective environmental regulation, it flags up the dangers of leaving the framework of EU legislation if replacement rules are not established quickly and effectively following Brexit.
Chowdhury offers the example of environmental or industrial accidents. "If you do not have corrective and preventative measures to prevent accidents, the risk that they will happen goes up, which could lead to serious costs down the line," he said. "This can be significant, as one major environmental accident can cause a lot of problems - plus there could be insurance implications if risks are judged to be high."
The report was published on the same day as the European Commission's Environmental Implementation Review (EIR), which aims to enhance implementation of EU environmental law and policy by analysing the progress made by Member States and identifying areas for improvement. It found that many countries continue to struggle with high levels of NOx and particulate emissions and that waste prevention remains a sizeable challenge. It also highlighted particular problems with urban wastewater in many areas, committing to boost EU funds to back up implementation efforts.
To tackle these issues, the review called on Member States to improve their integration of environmental objectives with other policy goals, as well as enhance transparency. It also advised them to engage more with each other and with local and regional authorities to streamline environmental governance. A new tool, the Peer-to-Peer programme, is intended to help environmental authorities share experiences and advice across borders.
There is an expanding body evidence to show how effective environmental policy can curb risks and drive economic growth. However, the task of convincing policymakers that regulations and targets do not immediately translate into 'red tape' remains as challenging as ever.
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