Introduction to economic instruments & the study
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This presentation was given at IEEP's capacity building for environmental tax reform conference on 5 October 2017 in Brussels, Belgium. Speakers: Patrick ten Brink and Emma Watkins, IEEP
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Introduction to economic instruments & the study
- 1. www.ieep.eu @IEEP_eu Introduction to economic instruments & the study Patrick ten Brink and Emma Watkins, IEEP 5 October 2017, Committee of the Regions, Rue Belliard 99, Brussels Final conference: Capacity building for environmental tax reform
- 2. www.ieep.eu @IEEP_eu #EnvTaxConf17 Economic instruments to address pollution and resource use • Experience with market-based instruments (MBIs), in particular environmental taxes, has grown over the past two decades • Environmental taxes and charges already in place in many EU countries, and also planned/being reformed in many • Main focus to date on energy, transport and climate; but growing number of cases for pollution and resource use
- 3. www.ieep.eu @IEEP_eu #EnvTaxConf17 Revenues rising, but mainly from energy and transport. Resource and pollution tax small – in macroeconomic terms 0 50 100 150 200 250 300 350 400 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Environmental Tax Revenues in the EU (bn EUR) Energy Transport taxes Resource taxes Pollution taxes Source: own figure building on Eurostat data: http://ec.europa.eu/eurostat/statistics-explained/index.php/Environmental_tax_statistics As % of GDP and % of revenues, revenues broadly flat over time. 2015 @ ~ 2.4% GDP and 6.3% of tax revenues
- 4. www.ieep.eu @IEEP_eu #EnvTaxConf17 Objectives of Resources and Pollution Taxes • Mainly to address resource availability, efficiency and pollution mitigation objectives – to reduce environmental externalities, health impacts etc. • Revenues can be important – e.g. to pay for services, raise revenues for innovation, even though the primary aim is not revenue raising from a macro-economic perspective
- 5. www.ieep.eu @IEEP_eu #EnvTaxConf17 Diversity of economic instruments Taxes Fees/charges Others: Air pollutants Waste Products (e.g. packaging) Aggregates / natural resources Fertilizers Pesticides Water abstraction Land Waste collection Products (e.g. plastic bags) Water pricing Producer fees Forestry / stumpage Hunting / fishing Refundable fees: Deposit refund schemes (e.g. on beverage bottles) Payments / subsidies: e.g. Payments for ecosystem services (PES), fiscal transfers Other: offsets & habitat banking
- 6. www.ieep.eu @IEEP_eu #EnvTaxConf17 Economic instruments across the EU & Case selection
- 7. www.ieep.eu @IEEP_eu #EnvTaxConf17 Economic instruments across the EU & Case selection Selected cases Other interesting practice No current instrument* * Please get in touch if you know of examples of practice in these areas
- 8. www.ieep.eu @IEEP_eu #EnvTaxConf17 1. Frustration over pollution is growing – e.g. city air, polluted aquifers, marine litter on beaches, eutrophication of surface & coastal waters – creates scope for new instruments 2. Growing use and acceptance of (full) cost recovery and that services should be paid for (e.g. water supply, waste collection), that pricing helps funding, efficiency and service delivery – affordability constraints, but the direction of travel seems clear 3. Resources understood to be finite and worth managing efficiently to avoid scarcity (inc. future generations) – e.g. wood, fish, soil, land, rock. Scope for more resource pricing 4. Citizens responsible for products they buy & waste they dispose – plastic bags & bottles 5. Business should embrace producer responsibility – e.g. take back of packaging, reuse and recycling 6. Those supporting natural assets that are public goods should be rewarded – e.g. PES, fiscal transfers 7. A constant: Putting in place fiscal instruments often faces resistance – politically, from business and the public. Need civil society engagement to help realise the opportunities The Broad Trends
- 9. www.ieep.eu @IEEP_eu #EnvTaxConf17 Aims of the Capacity Building study • Develop an overview of existing economic instruments to address pollution and resource use • Contribute to broader development and use of instruments • Improve the knowledge base, promote exchanges of experience and best practice • Encourage and help civil society to actively and effectively participate in EU and national policy-making
- 10. www.ieep.eu @IEEP_eu #EnvTaxConf17 Overview of the study • Study for DG Environment, European Commission & European Parliament • 15 study partners across the EU • Inventory of existing market-based instruments in the EU-28 • Case studies on 40 specific instruments (at least one per Member State) • Five regional workshops to engage civil society & policy makers (Mar/Apr 2017) • Final report and conference (Oct 2017) Janis Brizga Prof. Theodoros Zachariadis Katja Kavcic Sonnenschein
- 11. www.ieep.eu @IEEP_eu #EnvTaxConf17 Task 1: Inventory of instruments • Inventory of existing MBIs in the EU-28: - Water stress; water quality; marine litter; air pollution; waste management & products; materials; biodiversity; land use • 365 separate MBIs identified and listed • Information on rationale, coverage, rates, revenues, exemptions, payers, collectors, beneficiaries • Used to select case studies
- 12. www.ieep.eu @IEEP_eu #EnvTaxConf17 Task 2: Case studies • 40 in-depth case studies • Coverage: ‒ Eight themes ‒ All Member States ‒ Wide variety of MBI types • Information on: ‒ Instrument design & scope ‒ Revenues & revenue use ‒ Effectiveness & impacts ‒ Stakeholder engagement • All 40 available now on IEEP’s website www.ieep.eu !
- 13. www.ieep.eu @IEEP_eu #EnvTaxConf17 Air pollution Water stress Waste, resources & circular economy Water quality & marine litter Biodiversity & land use Air pollution fees and taxes: CZ, HU, SK, SE Fluorinated greenhouse gas tax: ES Water abstraction charges: BG, FR Water pricing: CY, MT, PT, NL Landfill taxes: AT, EL, UK Pay-as-you-throw: BE, NL, LU Packaging charges/taxes/deposit refund*: BE, FI, LV, RO Plastic bag levy*: IE Environmental/natural resource charges*: BE, EE, LT Aggregates levy: UK Wastewater fee: PL Pesticide/fertilizer/ phosphorus-related taxes/charges*: DK x2, IT, SE Packaging charges/taxes/deposit refund*: BE, FI, LV, RO Plastic bag levy*: IE Environmental/natural resource charges*: BE, EE, LT Port fee reductions: NL Forestry-related fees/charges: AT, HR, SI, ES Biodiversity offsetting: DE Result-based agri- environment measures: DE Peatland tax reform: FI Pesticide/fertilizer/ phosphorus taxes/ charges*: DK x2, IT, SE Hunting and fishing-related fees/taxes: EE, IE, IS Ecological fiscal transfers: PT Task 2: Case studies
- 14. www.ieep.eu @IEEP_eu #EnvTaxConf17 Task 3: Five regional workshops • Around 150 participants from MS governments, NGOs, civil society • Presentation of case studies • Interactive discussions on stakeholder engagement • Circular economy (Amsterdam) • Water stress (Barcelona) • Water quality & marine litter (Copenhagen) • Biodiversity & land use (Berlin) • Air pollution (Budapest)
- 15. www.ieep.eu @IEEP_eu #EnvTaxConf17 Findings & conclusions: Design • Clear objectives linked to environmental goals can increase acceptability & success • Rate applied & phased predictable change impacts effectiveness • Scope of the tax base & payers impact effectiveness • Managing administration costs can reduce burden • Good design can stimulate innovation & investment • Wider tax reform provides a window of opportunity • Clear communication is critical to an instrument’s success • Revenue use influences effectiveness, impact & acceptability: e.g. revenue reimbursement, reduction in other taxes • Regular monitoring and evaluation is critical
- 16. www.ieep.eu @IEEP_eu #EnvTaxConf17 Findings & conclusions: Civil society engagement • NGOs, academics & experts, consumers, landowners, industry & business, political parties, the public… • Varying levels of engagement & influence: • Problem recognition & policy formulation: identifying need for (further) action, input to consultations • Decision-making: shape instrument design, help increase acceptance • Implementation: management, rate-setting, revenue use • Monitoring: data collection & reporting • Evaluation: gather evidence on impacts More engagement Less engagement
- 17. www.ieep.eu @IEEP_eu #EnvTaxConf17 Findings & conclusions: Civil society engagement • And the future of civil society engagement? ‒ Policy formulation: still important to contribute to evidence base and engage with consultation processes ‒ Decision-making: greater involvement e.g. in design & management of instruments ‒ Implementation: greater involvement e.g. participate in expert groups, involvement in earmarking of revenues, awareness raising, encouraging good practice ‒ Monitoring: greater involvement e.g. in situ impact monitoring, use of new technologies (e.g. apps), citizen science ‒ Evaluation: independent analysis, own reports, ‘name and fame’ or ‘name and shame’
- 18. www.ieep.eu @IEEP_eu #EnvTaxConf17 Civil society engagement across the policy cycle Problem recognition & policy formulation Decision making Policy Implementation Monitoring Evaluation Participation in Green tax / Green economy commissions / working groups Participation in public hearings & consultation processes Lobbying to ensure appropriate tax rates Encourage groups to back ambitious ETR Integrate civil society in decision- making Involve stakeholders in instrument design & reform Participation in public hearings Preparation of independent reports or proposals Participation in consultative boards Provision of observatories Preparation of independent evaluation reports Contributions to formal policy evaluations Provision of scientific advice Campaigns for fiscal reform Provision of evidence by civil society to policy-makers to support introduction of instruments Lobbying to encourage policies, instruments, specific taxes, subsidy reform Create NGO Platforms to support implementation Engage civil society in choices on revenue earmarking & fund management Awareness raising by civil society Promote take-up of / participation in instruments Stakeholder representation on implementation board Engage media to publicise results and encourage public support Citizen science: smart Apps and wider monitoring Volunteering to monitor impacts Surveys of consumer & public attitudes
- 19. www.ieep.eu @IEEP_eu #EnvTaxConf17 Civil society engagement across the policy cycle: Future options Problem recognition & policy formulation Decision making Policy Implementation Monitoring Evaluation Set up Green Tax Committees / Green Economy Commissions with civil society engagement Evidence provision: NGOs to brief MEPs (e.g. to support MBIs for plastics strategy Lobby to avoid low VAT rate product taxes; encourage PES Identify the winners & encourage them to back ambitious ETR Consultation on implementation options: e.g. waste treatment methods, pricing Integrate environmental issues into public procurement criteria Develop guidelines: e.g. to calculate costs (re cost recovery) Civil society engagement in management plans NGOs & experts share information to build enabling conditions for policy commitments MBI evaluation: civil society role on effectiveness et al. Engage independent experts or institutions (eg OECD country reports) Use/create windows of opportunity to explore MBI successes/ weaknesses (e.g. Helcom; WFD reviews; public hearings) Name and shame & name and fame - benchmarking Participation in monitoring and evaluation to create a participatory culture Lobby for real specific tax or charge Campaigns to encourage EU policy and fund reforms, e.g. reform environmentally harmful subsidies Ex ante assessment & future proofing (e.g. civil society inputs, support for Ombudsman for future generation & 3- generation proofing) Civil society engagement (e.g. in expert panels): consultation on revenue earmarking & fund management (e.g. aggregates levy) and instrument implementation (e.g. PES) Civil Society awareness raising – e.g. substitute products Invest in monitoring equipment & apps Engage journalists to get the story / results out (and encourage public support for policy action) Citizen science: smart apps and wider monitoring
- 20. www.ieep.eu @IEEP_eu #EnvTaxConf17 Today’s agenda 09.15-09.45 Setting the scene 09.45-10.25 Thematic session: Air pollution 10.25-11.20 Thematic session: Waste, resources & circular economy 11.40-12.35 Thematic session: Water quality & marine litter 12.35-14.00 Lunch break & poster promenade 14.00-14.55 Thematic session: Water stress & availability 14.55-15.50 Thematic session: Biodiversity & land use 16.10-17.15 Concluding expert roundtable and Q&A
- 21. www.ieep.eu @IEEP_eu #EnvTaxConf17 What is your experience? Your vision on needs? See five posters: a working lunch!
- 22. www.ieep.eu @IEEP_eu #EnvTaxConf17 Questions for reflection – across sessions & expert panel 1. Which environmental taxes and charges have been most effective in promoting environmental improvements? 2. What are your thoughts on the past and present interactions between civil society, policy makers and other key actors? 3. Do you have any specific experiences to share on the role of civil society in environmental tax reform? 4. What would you like to see happen on environmental fiscal reform in the future and what windows of opportunity are there? 5. Are there any design features for instruments that are particularly important to promote positive environmental outcomes? 6. What role(s) could civil society and other key actors play to support future environmental fiscal reform?
- 23. www.ieep.eu @IEEP_eu #EnvTaxConf17 Next steps • Case studies available on the IEEP website – www.ieep.eu • We’ll circulate summary proceedings to all participants • We’ll integrate insights from the day in the final report – and circulate to participants • Collaborate on broadening the application of pollution and resource fiscal instruments, where these instruments offer the most promising way forward
- 24. www.ieep.eu @IEEP_eu Final conference: Capacity building for environmental tax reform 5 October 2017, Committee of the Regions, Rue Belliard 99, Brussels
Editor's Notes
- Emma
- Ask partners to stand up/wave – so people can identify them to talk to in breaks!
- Extensive but not fully comprehensive – but fairly so!
- Design & scope: including rates, drivers & barriers for the instrument Effectiveness: environmental in most cases, economic & social where info available Stakeholder engagement: when & where in policy cycle, what type of engagement, what outcomes Also insights on future reforms and potential for replication in other MS
- Some case studies relevant to more than one env theme, hence in the table more than once
- Fun with post-it notes, identifying additional past examples of stakeholder engagement with MBIs and ideas for future civil society engagement
- Objectives/env goals: Many instruments had specific env goals. BE Environmental Charge and IE plastic bag levy accompanied by communication campaigns to make env link clear. Rate/change: successful approaches incl. UK landfill tax (low initial tax rate, predictable increases), SE NOx fee (high initial rate for strong behaviour signal). Scope/payers: DK pesticide tax incl. health & environmental impact considerations = enhanced effectiveness. IE salmon fishing licences increased price for recreational & commercial fishing = fair distribution of burden. Admin costs: IE plastic bag levy administered through Value Added Tax (VAT) collection systems. Innovation/investment: NL water pollution levy stimulated innovation in WWT plants as companies sought to reduce levy payments by cutting emissions. Wider tax reform: window of opportunity for new instruments & coherence with other policies – several e.g.s incl. DK pesticide tax, EE mineral resource extraction charge. Also policy mix/package can increase effectiveness e.g. AT landfill tax accompanied by ban on landfilling of organic waste & incineration tax, FI packaging tax and DRS synergies. Communication: can help increase acceptance, e.g. EE hunting and fishing fees transparent comms to allow public to understand importance of sus natural resource use. Can increase buy-in and raise awareness of issue behind the instrument e.g. comms around Baden-Wurttemberg result-based agri-environment measure. Revenue use: can be used to reduce opposition e.g. UK landfill tax offset by reduction in employers’ social security contributions, DK pesticides revenues recycled back to agricultural sector, SE NOx revenues repaid to power plants based on energy efficiency. Earmarking of revenues for env purposes can increase acceptance & enhance effectiveness, e.g. RO packaging charge (revenues paid into an Env Fund), PL wastewater fee (allocated to National/Regional Env Funds & Water Management), BG water abstraction charges (co-finance water sector investments). Monitoring/evaluation: to ensure continued effectiveness e.g. CZ air pollution fees increased in 2012 after it was recognised they were ineffective.
- More engagement typically at problem recognition & policy formulation stage. Prob recognition: e.g. formal consultations, informal discussions and lobbying. HU NGO Clean Air Action Group kick-started discussions on an air pollution charge that was later adopted, AT landfill tax motivated by public and NGO pressure on contaminated land, PT EFTs and DE bd offsetting schemes inspired by academics, scientists & NGOs. Decision-making: IE salmon fishing licence designed following meetings with 46 different stakeholders, formal consultations on SE air pollution taxes and SI Forest Act helped increase acceptance of design. Implementation: experience to date at this phase more limited. Some involvement of CSOs in instrument management e.g. ES Selvans forestry programme, consultation on changes in fees e.g. EE fishing rates, distribution of revenues e.g. UK aggregates levy, raising awareness e.g. DE RB-AEMs civil society initiatives motivate farmers & spread awareness on importance of species-rich grassland. Monitoring: industry/others monitoring & reporting SE air pollutant emissions, volunteer monitoring of DE RB-AEMs, NGOs/volunteers monitoring plastic on NL beaches. Evaluation: to support evidence-based revision of instruments e.g. stakeholder inputs to UK landfill tax review, consultation board of environmental NGOs responsible for assessing LV packaging tax effectiveness, independent experts evaluating PT EFTs and SI subsidies to private forests.
- Patrick facilitating and presenting