Resilience, reduction and responsiveness

Turku, 15-16 July 2006

Finland's EU presidency - Informal ministerial meeting: Environment

Resilience, reduction and responsiveness

Speech by Professor Jacqueline McGlade,
Executive Director of the European Environment Agency

Mr President,
Ladies and Gentlemen

Introduction

It is an honour and a privilege to be invited to speak here in the context of the Presidency initiative on the 'Next Generation of Environment Policies' and to share this platform with Commissioner Dimas and Bob Watson. I hope what I have to say can provide some contribution to the later discussions by emphasising the importance of increasing our focus towards the preservation of ecological and social resilience. A direction I hope to demonstrate has consequences for our lives and our deaths.

I would like to start from the recently adopted review of the EU Sustainable Development Strategy which is now to be established as the 'over-arching framework' in which 'economic, social and environmental objectives can reinforce each other and [..] should therefore advance together'.

We now recognise that sustainability is not an option. If we undermine the natural functions that hold this unique planet together we may be creating conditions that will make life very unpleasant for generations to come, and impossible for those already at the margins of survival.

How then should we formulate this shared EU model, develop it politically and make it support effectively a global transition towards social and ecological sustainability?

When communities have a shared mental model of core values and basic principles that define meaningful and dignified goals, experience tells us it is possible to prevent diversity from compromising decisiveness, leadership from compromising subsidiarity, the short term from compromising the long term, and self-interests from compromising the common good.

Indeed, seemingly contradictory aspects can be made mutually supportive. But the benefits do not come free; in order to overcome many of the obvious problems we must develop and share a set of basic principles that are

• scientifically verifiable and can be endorsed across cultures,
• generic for all scales and fields of activities,
• are practical enough for scrutinizing today's situation as well as of proposed solutions and visions and
• are sufficient for the development of integrated indicators and tools to monitor complex and inter-related transitions.

We must find ways of creating public visibility for such principles - always more difficult than for concrete actions. We need to find a calm area of entry - the opposite of a crisis-generating tipping point - for sharing and experiencing such principles at a time when haste seems inherent in our industrialized society.

Perhaps these requirements are overwhelming, forcing us towards a more diffuse and ad-hoc approach. But experience tells us that without a shared framework of robust principles, sustainable development will remain a sidecar to other goals.

Typically, sustainability is dealt with through defensive terms: 'doing as little harm as possible', minimizing impacts' and 'we require more research to be more proactive than this'. In this world, phrases such as 'wasting resources is like pouring money down the drain' and 'eco-efficiency' are of limited use.

Worse still, maintaining the reactive, ad-hoc approach characteristic of today, means that we are failing to do four things:

• to recognise the very real dangers of extrapolating our current unsustainable course into the future,
• to plan with reference to the future rather than the past,
• to look at investments as strategic platforms for further improvements; and
• to regard the economy as a means to reach dignified goals for overall well-being rather than as a goal in itself.

The renewed recognition of Europe's SDS provides the environment community, and especially you as Ministers, an opportunity to put in place the main asset of leadership - a well-structured framework for strategic policy-making that is large enough in time and space and developed with scientific consensus. Such a framework is not an alternative to data, knowledge, management systems, laws, methodologies and tools. It creates comprehension and a stronger basis from which to promote your objectives and policies to your counterparts in economics, trade and other domains. And to present them with both evidence and argumentation that will resonate with their own interests.

Last but not least, it is genuinely a matter of life and death. As shown by European Science Foundation-funded work on social inequalities in health, once the basics of food and shelter have been provided, it is the presence of social cohesion together with a shared model of society that overwhelmingly leads to higher life expectancies, rather than absolute levels of GDP. This is evidenced in Japan and even within Europe, where it can be linked to cohesion amongst policies.

So today I would like to present some evidence and argumentation that will hopefully resonate with you and which you will even be able use to answer the innocent but often difficult questions from your children about what you do all day!

I shall present my case by using an updated version of the 3Rs - previously reading, writing 'n rithmetic - that should appeal to your families and help them to remember what we are striving for: Resilience, Reduction and Responsiveness.

Resilience

As we have heard [from Bob's presentation], our planetary ecosystems are seriously threatened, in some instances irreversibly so, undermining their long-term resilience to ongoing pressures. This global picture is replicated at the European level where pressure on our own natural capital and that of others across the world is moving beyond the limits of resilience and future growth.

Two examples show this European perspective: the first is the huge global dependency that Europe has on oil resources from elsewhere in the world; the second is how Europe has moved from equilibrium between its ecological footprint and its biological capacity forty years ago to requiring today more than twice Europe's biological capacity to maintain its production and consumption patterns. We can argue about the robustness of the Footprint's coverage but there can be little argument about the trend. Europeans' use of natural capital has outgrown our own resources and now absorbs increasingly the environmental space of the rest of the world.

Natural resources and the ecosystems that provide them, underpin our economic activities, quality of life, and social cohesion, but environment and economy are not equal partners in this relationship. There are no economies without environments, but there are environments without economies.

The decline of ecosystems which are robust and resilient to the pressures of economic activities, will inevitably mean more of the planet becoming uninhabitable. The planet will continue to function without us; but we cannot function without its life-support.

The problem of unsustainability is not simply about a series of negative impacts, but more about underlying systemic errors in societal design that makes things worse and worse. One key source of misinformation lies in the concept of market values.

In today's industrialized economies, many of the goods and services provided by ecosystems in the conventional market economy are currently valueless. But if the resilience of our ecosystems continues to diminish, these goods and services could become priceless and eventually unattainable. No future economy can stand this. There will be huge consequences for jobs, health and prices.

Thus the risk of continuing in an undervalued market is to deprive us of what ecosystems provide in terms of supplies of food and fibre, metals and minerals, support of cultural and spiritual meaning, and services, such as nutrient and water recycling, soil formation and retention, pollination of plants , climate regulation, pest and pollution control. It is to lose sight of their potential by allowing pollutants to increase, systemic encroachment of areas of high biodiversity and loss of identity in our everyday language.

We can always put some kind of monetary price on ecosystems in order to create the warning signals of loss. The Chinese recently estimated that the water and soil retention of trees in the Yangtze catchment area, following the disastrous floods which cost EUR 30bn, was three times the economic value of the cut timber. But this is not the point. We need to regain a sense of humility when facing the reality of the natural world. As traditional peoples have come to understand, in the end it is nature that we must confront. It is at this point that 'you cannot negotiate with a beetle'.

We are all familiar with the socio-economic pressures that push ecosystems beyond their carrying capacities. With fish stocks in decline, a warming and increasingly unruly world of climate change, urban decay, biodiversity loss, health hazards, water stress, mounting levels of waste, we can hardly seek to disagree. But we now understand that it is the multi-dimensional, integrated form of the pressures that give rise to most concern, for it is through this that the loss of Xiao kung - the Chinese sense of completeness- and greenlash - the sudden loss of ecological diversity - are likely to occur generally with limited notice.

An obvious example of this phenomenon can be seen today in the Arctic region. On the one hand the rate of melting of the ice cap and the reduction of sea-ice cover is leading to a loss of resilience, witnessed in the plight of the polar bear, only recently evolved from the brown bear, and now under serious threat in some areas. Whilst on the other hand an entirely new planetary-scale ecosystem is being 'built' as the lid of sea ice is lifted off. To enable its resilience to become firmly established, Member States will need to show restraint and eventually our legal regimes will not only need to shift from exploitation of the sea bed and ultimately the water column but may even require a new treaty for the Arctic.

Reduction

Reducing the overall pressures on environments from resource and energy use plays to a European strength. Through efficiency gains we have achieved an almost 50 % reduction in the resources needed to generate a unit of GDP over the last 20 years. But in Europe today, our overall use of resources is increasing, leading to potential resource scarcities and price increases from competition for natural capital.

The type of natural capital we are over-using is also increasing our vulnerability. At the beginning of the last century about 50 % of our natural capital came from renewable resources and about 50 % from non renewables. At the beginning of this century the contribution of renewables had dropped to 25 %, with 75 % coming from the finite stocks of non-renewable resources.

We seriously need to consider how we could shift our economy to 'go with the flow of renewables rather than sticking with the stocks of non-renewables'. This would help improve our economic as well as our ecological security. Otherwise the 'from empty to full world' trend for the world economy we see here for the period 1900-2001 will continue with increasingly negative consequences

Today we cannot compete with Asia and the emerging economies on labour costs, so we must seek to achieve this through material and energy costs, which represent, in any case about 40 % of manufacturing costs, compared to only 20  % for labour costs. Such a resources/ labour costs breakdown is not surprising: the focus of efficiency efforts over the recent decades has been on labour. Since 1960, labour productivity has increased by 270 % whilst materials and energy efficiencies have only increased by 100 % and 20  % respectively.

Responsiveness

What else do we need to do to better respond to improve social cohesion and the environmental resilience?

From our recent work at the EEA, it is clear that much can be learnt from our collective experience in implementing the environmental acquis, within the environment area and across to the economic and social domains, to improve cost-effectiveness.

For example, in comparing the effectiveness of implementation of the Urban Waste Water Directive in several MS - the directive responsible for about 50 % of environmental expenditures - we found that those countries which used realistic waste water charges and recycled their revenues to support clean production measures in the polluting firms achieved twice the pollution reduction per euro than those that just built treatment plants.

We can examine the complementarities between different parts of the environmental acquis which if implemented appropriately can lead to significant co-benefits. For example, Germany has shown that without measures to reduce transport pollution, the volume of traffic, and related economic growth, would have to have been 90 % less than what it is today. In other words environmental measures liberate the economy to grow faster than it could without such measures, partly because the population would not have tolerated the pollution from untrammelled growth.

A second response is to better integrate the environment into the upcoming and large scale challenges such as the CAP review in 2008, the 4th Cohesion report due in 2007, and the review of the Lisbon Strategy expected between now and 2010.

The third response is to internalise the impacts of how we are using our natural capital and the very real connection between social cohesion and life expectancy, into market prices via taxes and tradable permits and the recycling of revenues into a reduction in labour charges. But for materials and energy to be the focus of future productivity, improvements in market incentives will need to be re-aligned to provide the right inducements. Ecological tax reform, including the removal of environmentally perverse taxes, will help do this and at the same time help the unemployed and semi-skilled who would receive most of the benefits of labour cost reductions, and improvements to the environment.

ETR would also help Europe respond to its ageing society by shifting part of the tax base from the incomes of the shrinking working population to the large and lifelong consumption of an ageing population. There may be no other politically acceptable means of paying for our social and ecological securities.

These new forms of evidence and argumentation will need to be supported by new measurement methods and data in four key areas:

• environmental accounting techniques to underpin and account for policies on the relationship between the activities of economic sectors and their impacts on the quantity and quality of ecosystems stocks and resource flows. We should support and anticipate the benefits that could accrue from the recently launched UN initiative to make environmental accounting a global statistics standard by 2010.
• measurements of societal cohesion and hence welfare that go 'beyond GDP' - an area I believe is close to the Commissioner's heart. For example, several EU and emerging economies have published Indices of Sustainable Economic Welfare by adjusting their GDPs for some of the more obvious deficiencies that arise when it is used inappropriately as an indicator of welfare. In the EEA we are now working on other additional measures, including the run down of natural capital, to add insights to this critical area.
• more comprehensive estimations of the true costs and benefits of action and inaction of environmental hazards, especially in the urban and close-to-urban areas.
• and last but not least the development of comprehensive analyses and clear communications to society on the benefits of full and integrated implementation of the acquis alongside the main sectoral policies and funding mechanisms that contribute most to environmental pressures. To take an example, what have been the social, health, employment and other economic benefits for those living in urban areas of the combined reductions in SO_X from power stations, NOX from cars, UWWT, and vastly improved waste management?

Overall conclusion

The new opportunities for the environment provided by the review of the SDS need to be exploited by

• respecting the policies that we have worked so hard to put in place in Europe and adopting new approaches to their implementation that are integrated, cost-effective and sustaining,
• providing better argumentation on the value of caring for ecosystems and moving in general towards a more socially cohesive Europe on the basis of a shared vision and civic acceptance of the critical role of our endangered life support systems and natural capital,
• altering the form of our fiscal systems and adopting new ways of measuring the things that really matter and
• using innovative means to communicate our messages to colleagues and counterparts so that they can join us in an socially responsible, ethical and planetary way of getting on with the job.