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OECD countries have long advocated the strong integration of environmental and economic policies as a pragmatic contribution to “sustainable development”. Broadly, sustainable development requires that an appropriate balance be struck between economic, environmental and social goals. Economic activity that is built on a degrading environment is not likely to be sustainable; nor is it likely that environmental quality will be maintained for very long in the absence of a healthy economy, or when environmental policies work against basic social objectives.

Finding the right balance among these complex and often conflicting goals is not easy, but is most likely to be achieved if an “integrated perspective” is used in the policy formulation and implementation processes. The search for better environment-economy-equity integration has therefore underlain many of the recent developments in the environmental policy sphere – certainly, it has been the focus of most OECD work on environmental policies over the years. In turn, effective and efficient policy integration implies the institutionalisation of solid procedures for setting objectives, for identifying and analysing available options, for consulting with stakeholders, and for carrying out regular ex post analysis of both policy objectives and instruments.

There has been considerable progress made in recent decades toward better integration of
economic and environmental objectives. This progress has led to environmental policies that are increasingly efficient, as well as to economic and sectoral policies that are increasingly sensitive to underlying environmental realities. Two obvious examples are the now widespread application of environmental impact assessment procedures and the increasing use of economic-based approaches to environmental policies (e.g. tradable permit systems to control environmental pollutants).

However, much remains to be done, especially in the context of a rapidly-changing and globalising economy. The scope of many environmental problems is widening. Many of these problems are urgent and largely irreversible, involving significant costs of inaction. Despite many improvements in the environmental pressures imposed per unit of economic output, the absolute scale of economic activity continues to increase, placing additional pressures on the environment.

With the globalisation of economic activity, much of the focus in environmental policy is also shifting toward transboundary environmental problems, such as climate change and biodiversity loss. Not only are these problems likely to be more costly to resolve than many domestic environmental problems, it will also be difficult to reach cost-effective international agreements to resolve them.

Fortunately, the level of environmental ambition is growing in many countries. This increasing
ambition is partly a reflection of the growing public understanding of the threats to society from urgent environmental challenges -- and thus, the large welfare benefits to be derived from ambitious and efficient environmental policies. It is also partly a response to the increased incomes that global consumers possess – more affluent consumers tend to demand higher levels of environmental protection.

However, increasing ambitions also amplify the need to choose most cost-effective policy solutions – otherwise, the cost of resolving environmental problems could increase in the years ahead. For example, air and water pollution control costs could rise, as tighter air quality controls are imposed, and as new water infrastructure investments are made. On the other hand, more integrated approaches to policy design and implementation, as well as new technological progress (in part stimulated by the new policies and instruments that are being applied) could help in limiting these costs.

 

As both the costs and benefits of environmental protection expand, the need for stronger integration of environmental and economic policies will therefore also expand, as will the stakes for individual consumers and producers in the society – all of whose incomes and other framework conditions will increasingly be affected by policies aimed at protecting environmental quality.

The OECD has provided considerable leadership in the past toward strong environment-economy policy integration. There are many examples of this leadership, but three in particular can be cited here:.....이하생략