![]() |
![]() |
![]() |
![]() |
![]() |
![]() |
|
![]() |
![]() |
|||||||||||
|
![]() |
![]() Economic Instruments for Environmental Protection and Conservation: Lessons for Canada
6 ConclusionsCanada is lagging most of the OECD in its use of economic instruments. In 1992, a Government of Canada discussion paper identified an implementation gap and various opportunities to introduce economic instruments. Ongoing reviews by the OECD and others suggest that other countries are significantly outpacing Canada in finding ways to use economic instruments to manage their environmental objectives in a manner that also contributes to economic or other social objectives. This gap means that Canada may not be addressing its environmental problems as cost-effectively as some other countries are. The experience elsewhere suggests that economic instruments can have many advantages over other risk management measures. In some cases, they can be used as the primary mechanisms for addressing an issue, and in others they can provide valuable and low-cost incentives for continuous improvement More fundamentally, Canada needs to make greater use of economic instruments in order to promote sustainable development. Canada is a market-based society. As such, most decisions that affect the environment or natural resources are in response to market signals. There are significant limitations to the degree to which non-market based signals can restrain, influence or inform these decisions. If the market does not reflect environmental costs, there will inevitably be overuse of our common resources. Clear regulatory restrictions may be required to ensure the baseline protection of basic ecosystem conditions (clean water, clean air, etc.). However, only economic instruments can address the underlying production and consumption challenges we face in a way that stimulates and builds on the innovation and economic development dynamics of the market place. In seeking to overcome this gap, Canada would do well to draw on the growing international experience with economic instruments. Although there are various legal, geographical and other considerations that may limit the direct applicability of some of the foreign experience, there are important examples of economic instruments that have been demonstrated to be effective in addressing an issue of importance to Canadians and that could be implemented in Canada without significant law or institutional reforms.21 International experience also provides many valuable process and design lessons for Canadian efforts to introduce economic instruments. The Guiding Principles outlined in Section 5 of this paper summarize many of these lessons. Many European countries are moving beyond the piecemeal approach of using economic instruments for discrete issues and towards more fundamental ecological fiscal reform. This trend holds prospects for significantly changing the way those countries promote sustainable development. Using increased revenue from consumption taxes to reduce distortionary taxes on capital or labour offers the long-term prospect of enhancing the efficiency and pervasiveness of incentives for environmentally sound decision-making while stimulating economic development and employment. Canada's close economic relationship with the United States may limit our ability to diverge widely on some issues. Nonetheless, emerging support from both industry and environmental advocates for shifting the emphasis in fiscal policy away from taxing income and onto "consumption", together with initiatives such as Winnipeg's New Deal, suggest the possibility of made-in-Canada solutions that build on the basic tax-shifting, double dividend premise of EFR. Regardless of the precise direction Canada takes, the main lesson from the foreign measures is the importance of developing domestic experience with what works and what does not (both in terms of the effectiveness of certain instruments as well as in the manner in which they are introduced). Experience is essential to overcome scepticism and to ensure appropriate design. Fundamentally, such experience can only be gained through implementation, ongoing innovation and careful scrutiny of outcomes and lessons learned. 21 See, for example, the options identified and described in: Stratos Inc., 2003. Economic Instruments For Environmental Protection And Conservation: Best Practices And Opportunities For Canada, prepared for Environment Canada. ReferencesAnderson, Mikael Skou, 1996. "The Use of Economic Instruments for Environmental Policy - A Half Hearted Affair" Sustainable Consumption and Production - Linkages Virtual Policy Dialog. www.iisd.ca/consume/skou.html Anderson, Robert. 1999. Economic Savings from Using Economic Incentives for Environmental Pollution Control. Environmental Law Institute. Washington, D.C. EE-0415. http://www.epa.gov/economics Canadian Council of Chief Executives, October 2003. Managing For Growth: Fiscal Prudence, Competitive Taxation and Smarter Spending. Submission to the Standing Committee on Finance, House of Commons. Commissioner of the Environment and Sustainable Development (CESD), 2000. "Government Support For Energy Investments", chapter 3 of the CESD's Report to the House of Commons, Ottawa. Environment Canada, February 2003, Convergence Analytical Framework For Evaluating Canada/U.S. Environmental Performance European Environmental Agency, 2000. Recent developments in the use of environmental taxes in the European Union. European Environmental Agency, 1999. Environmental Taxes – Implementation and Environmental Effectiveness, Environmental Issues Series No 1. Felder, Stefan and Reto Schleiniger, 2002. "Environmental tax reform: efficiency and political feasibility" Ecological Economics 42 107-116 Hamond, M.J., S. Decanio, P. Duxbury, A. Sanstad, C. Stinson, 1997. Tax Waste, Not Work. Redefining Progress, San Francisco. Hoerner, J. Andrew, 1998. Harnessing The Tax Code For Environmental Protection, Center for Sustainable Economy. Johnston, D., 2000. "Sustainable Development – An OECD Perspective," International Council on Metals and the Environment Newsletter, vol. 8. Lord Marshall, 1998. Economic Instruments and the Business Use of Energy. Report to the U.K. Chancellor of the Exchequer. Majocchi, Alberto, 2000. "The Italian Experience" Presentation to Symposium on Green Tax reform in Europe, Paris. Majocchi, Alberto, 2000. "Greening Tax Mixes in OECD Countries: A Preliminary Assessment" prepared for the OECD, Paris: http://www.oecd.org/dataoecd/13/38/2385866.pdf Mintz, Jack, undated. "Should Taxation Be Based On Environmental Policy?" Undated C.D. Howe Institute presentation. National Center For Environmental Economics, U.S. E.P.A, January, 2001. The United States Experience With Economic Incentives For Protecting the Environment, EPA-240-R-01-001: http://yosemite.epa.gov/ee/epa/eerm.nsf/ Noble, Michael, 1999. Environmental Tax Reform in the States: Can Major Change Happen? Minnesota As A Case Study. Minnesotans For An Energy Efficient Economy NRTEE, 2002. Toward A Canadian Agenda For Ecological Fiscal Reform: First Steps Netherlands Green Tax Commission, 2001. Greening the Tax System. OECD, 1995. Environmental Performance Reviews: Netherlands, OECD, Paris OECD, 1996a. Environmental Performance Reviews: Sweden, OECD, Paris OECD, 1996b. Implementation Strategies For Environmental Taxes. OECD, Paris. OECD, 1997a. Environmental Performance Reviews: France, OECD, Paris OECD, 1997b. Environmental Performance Reviews: Finland, OECD, Paris OECD, 1998. Environmental Performance Reviews: Belgium, OECD, Paris OECD 2001, Environmentally Related Taxes In OECD Countries: Issues and Strategies, Paris. OECD 2000, Economic Survey of Canada, OECD, Paris OECD, 2003. Environmental Taxes and Competitiveness: an overview of issues policy options and research needs, http://www.olis.oecd.org/olis/2001doc.nsf/LinkTo/com-env-epoc-daffe-cfa(2001)90-final Oregon Tax Review Policy Committee, January, 1999. Governor's Tax Review Phase II Policy Recommendations. Palmer, Karen and Margaret Oates, 1999. "Extended Producer Responsibility: An Economic Assessment of Alternative Policies," Resources For The Future Discussion Paper Panayotou, 1994. Economic Instruments For Environmental Management and Sustainable Development. Prepared for UNEP, Boston, Mass. The Pembina Institute, 2000. Analysis of U.S. Ecological Fiscal Reform Activity. Prepared for the NRTEE. Pieters, Jan, 2000. "Green Tax Reform in The Netherlands," in Jeong, Min and Jung (eds) Green Tax Reform, Korea Environmental Institute; Institute for Global Environmental Strategies. Snel, Menno, October 2000. "Green Tax Reforms: The Dutch Experience." Presentation to Symposium on Green Fiscal Reforms in Europe, Paris. Schlegelmich, Kai, October 2000. "The Ecological Tax Reform in Germany." Presentation to Symposium on Green Fiscal Reforms in Europe, Paris. Stavins, Robert, 1999. "Experience With Market-Based Environmental Policy Instruments," chapter 21 of The Handbook of Environmental Economics, Elsevier Science, Amsterdam. Stavins, Robert, 2003. "Market-Based Policies: What Can We Learn From U.S. Experience (And Related Research)?" for presentation at "Twenty Years of Market-based Instruments for Environmental Protection: Has The Promise Been Realized?" University of California, Santa Barbara, August 23-24, 2003. Stratos Inc., 2003. Economic Instruments For Environmental Protection And Conservation: Best Practices And Opportunities For Canada, prepared for Environment Canada. Swedish Environmental Protection Agency. 1997. "Evaluation of green taxes in Sweden: Large environmental impact at small cost." Press Release. www.internat.naturvardsverket.se/documents/press/1997/ep970313.htm UK Roundtable on Sustainable Development, 2000. Not too difficult – Economic instruments to promote sustainable development in a modernized economy. London. Wolff, Gary H. 2000. "When will business want environmental taxes?" Redefining Progress: Oakland, CA. www.rprogress.org/publications/etr_business/etr_business_execsum.html |
![]() |
![]() |
||
[ Français |
Contact Us |
Help |
Search |
Canada Site ] [ Home | About Us | EACSR Activities | Resources | Media Room ] |