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Environment and Economics

Recent studies

A broad range of studies have been undertaken. The results and final reports are accessible below, along with selected facts and figures (fact sheets) for each topic.

Recent studies per topic: Related fact sheets:
1. The economics of environmental policy
2. Green growth, jobs and social impacts
3. Resource efficiency
4. Circular economy
5. R&D; and eco-innovation
6. Green and sustainable finance
7. Market based instruments

 

1. The economics of environmental policy (Full list of studies in this area)

Economics can play a role in showing how most optimally to shift towards a low carbon and resource efficient economy. Studies look at the overall costs and sectoral implications and suggest ways to change. Examples of studies include:

Links between production, the environment and environmental policy (2019)

This study will examine the links between environment and production with a focus on a number of sectors (such as motor vehicles, plastics, food processing, and water and sewerage). How do firms depend on the environment and how do they affect it. Also, as part of the study, life cycle analysis was undertaken for certain single use plastics to feed into the Impact Assessment accompanying the proposal on “Reducing marine litter: action on single use plastics and fishing gear”. This intermediate product is provided below, whilst the full study will be available later in 2019.

Environmental potential of the collaborative economy (2018)

Collaborative- or sharing economy refers to business models where individual/private use of products and services turns into shared usage on a temporary basis, facilitated by online platforms and open marketplaces, to reduce costs while leading to potential environmental gains as well. It was estimated that the collaborative economy can save up to 7% of household budget spending and reduce waste by 20% if the market operates under favourable conditions.

Current literature generally shows positive environmental and social impacts, with room for further research on the net impacts. This study explains that how the collaborative economy affects sustainable development is complex, with both positive and negative drivers behind. The objectives of the study were to assess and quantify to the extent possible the net environmental impact and the socio-economic potential of collaborative economy today and in the future (towards 2030), to analyse the conditions under which its contibution is highest, to assess impacts on consumption and other socio-economic impacts (including rebound effects), to address data/research gaps and to identify ways for EU policies to promote positive impacts while mitigate adverse ones. The study focused on three key areas: transport, tourism and durable goods-sharing and developed five in-depth case studies, Life-Cycle Assessment and macro-econometric modelling and drew some main conclusions as follows. The size (market share) of collaborative economy in Europe is still small, despite the rapid growth in some known platforms, with future environmental impacts likely to remain small-scale when compared to the overall economy. Collaborative and traditional models are however expected to converge. Clear environmental and socio-economic benefits at transaction level are less clear at sector or macro level where several processes take place in different directions, making net impacts largely dependent on rebound effects. Rebound effects can reduce or cancel out environmental gains in case savings are re-spent according to standard consumption patterns, while that can also compensate for some of the production- and job losses induced by the collaborative economy. The potential to reduce energy use and emissions is the largest in case of transport, where car-sharing can cut the number of cars and the total distance travelled by the vehicules.

Scoping study on modelling of EU environment policy (2016)

This study looks at modelling in the context of EU environment policy. Modelling can be structured around the three thematic priorities of the 7th Environment Action Programme (natural capital; resource efficient, low carbon economy; and human health and wellbeing) along with the horizontal priority objectives. Modelling can provide information on all the EU's evaluation criteria: effectiveness, efficiency, relevance, coherence and EU value added. A clear need is for integrated economic, social and environmental analysis. There are modelling gaps and also challenges in terms of data and models. A modelling assessment could have as a priority the combined assessment of environmental policy, its social implications and its contribution to the Juncker priority on jobs, growth and investment though eco-innovation.

Study to analyse differences in costs of implementing EU policy (2015)

This study examines differences in the costs of implementation of EU environmental law across Member States. Differences in the costs of implementation can be a sign of risks to implementation and can lead to unnecessary burdens on individuals and businesses. Both a literature review and case studies find differences between countries: even where the EU requirements are the same, national choices lead to cost differences for businesses. Some differences in costs simply reflect different countries' situations, and is to be expected. However, there also seem to be differences in administrative costs between countries for actions that should be broadly comparable. Whilst the data is too poor to provide systematic evidence, there are indications of potential to improve efficiency, for example, by adoption of best practice.

Costs of environmental legislation for selected industries over time (2015)

This study examines how business spending on environmental protection has changed over time. In particular, it looks to see if the cumulative costs of environmental policy are increasing or decreasing for 6 industrial case studies: Mining and quarrying, manufacturing, refineries, chemical industries, the base metal sector and the power sector. The time series cover the period 1995 – 2012. The data used is collected as part of the Structural Business Statistics by National Statistic Offices. Over the period, the analysis shows a small downward trend with some peaks and troughs. In 2012, the environmental protection expenditure was around 2% of value added for these sectors. New environmental regulations do not in general appear to be leading to higher environmental expenditures (at the level of the EU). This seems to be because sectors become more efficient over time in responding to legislation, and so the costs of existing regulations fall over time. However, there are large differences between sectors and member states.

 

2. Green growth, jobs and social impacts (Full list of studies in this area)

Environmental policy contributes to a structural shift in the economy promoting growth and jobs associated with cleaner, more efficient products, services and processes. The eco-industry or environmental economy is small but rapidly growing segment of the overall economy. Besides studies on the green economy, this section also includes studies on the wider relationships between social and environmental issues. Examples of studies include:

Measuring a Just Transition in the EU in the context of the 8th Environment Action Programme (2021)

This paper discusses how to measure whether and to what degree EU environmental policy is socially just by using easily interpretable indicators. Its main task is to assess existing (or officially discussed) European-level indicators at the socio-environmental nexus on their suitability to serve as Just Transition (headline) indicators, and to identify gaps. The paper focuses on social justice within Europe and looks at broad socio-environmental issues.

Just transition in the context of EU environmental policy and the European Green Deal (issue paper) (2020)

This study was drafted in view of preparing for an 8th Environment Action Programme (EAP), with the 7th EAP expiring at the end of 2020. The European Commission adopted in December 2019 a communication on and roadmap for a ‘European Green Deal’, pursuing a transformation towards a climate-neutral, zero-pollution and circular economy, while aiming for a “just transition” that “leaves no one behind”. The main added value of this study is in its holistic approach to raise awareness for environment policy’s social effects among a broad range of areas and actors, with a view to identify possible future work strands.

EU Progress on Resource Efficiency and Green Economy 2020: Technical Report (2020)

This technical publication presents evidence on the following key questions related to climate and environmental policy. Where does the EU stand and is the EU improving? Are we delivering a green and climate neutral economy? Are we protecting and restoring nature? Are we protecting our citizens’ health by moving towards a zero-pollution Europe? What is the progress on the governance issues and systemic challenges that enable action? It looks at a broad set of indicators and explains what they tell us.

The interaction of resource and labour productivity (2016)

Increasing labour productivity has been the main strategy to allow for further economic growth and competitiveness. Recently, resource productivity has gained importance. This scoping study provides a literature overview showing how resource productivity affects labour productivity and employment. It presents the historical trends of labour and resource productivity and their main determinants. It provides theoretical considerations and recommendations on how to better integrate resource productivity into economic models and economic policy making, as well as further research questions.

The number of Jobs dependent on the Environment and Resource Efficiency (2012)

This study explores how 'greening the economy' can boost job creation in areas directly connected to the environment such as conservation, waste, water and air quality. In 2012, it is estimated that the total number of people working in eco-industries is around 3,4 million which represents around 1% of the total workforce, and that the eco-industries have a turnover of around EUR 550 million. The general trend is of a growing number of 'green jobs' and case studies show, not surprisingly, that improving resource efficiency leads to job creation. The global market for eco-industries is estimated at roughly EUR 1.15 trillion a year in 2010. There is broad consensus that the global market could almost double, with the average estimate for 2020 being around EUR 2 trillion a year. The EU-27 has a strong export position vis-à-vis nearly all of the world's largest economies.

 

3. Resource efficiency (Full list of studies in this area)

Shifting to a sustainable economy requires to use less resources and to use them more efficiently. Increasing resource-efficiency means to produce units of economic output with less amount of resources (raw materials, energy) on average as before. EU’s resource efficiency initiative is integrated across all main EU policies such as circular economy, climate- and energy policies etc.

Impacts of the digital transformation on the environment and sustainability (issue paper) (2020)

This paper reviews findings on the (potential) impacts of the digitalisation (or “digital transformation”) on the environment, with a focus on non-energy impacts. The overall objective of the paper is to gather a first glimpse on available, up-to-date evidence on positive and negative environmental effects of the digital transformation in a holistic way. However, for practical reasons the focus of this paper is on non-energy and non-GHG aspects because energy and climate related risks and opportunities of digitalisation are generally more well-known.

Study on the Energy Saving Potential of Increasing Resource Efficiency (2016)

Improving resource efficiency often brings multiple environmental benefits, one of them being reduced need for energy. The purpose of this study was to quantify the energy savings that are generated as a co-benefit of improved resource efficiency in select product groups, sectors and examples of industrial symbioses in the EU. Among the areas offering the greatest energy savings from resource-efficiency initiatives are improved recycling, reduced food waste and limited growth in average EU per-capita living space. Potential savings amount to 5 to 9 thousand petajoules or 8% to 15% of EU28 primary energy consumption in 2020, as defined by the EU's energy efficiency target.

Follow-up study on impacts on resource efficiency of future EU demand for bioenergy (ReceBio follow-up) (2016)

This study complements the work in the “Study on impacts on resource efficiency of future EU demand for bioenergy” (ReceBio – 2016). It presents further modelling work and analysis focusing on possible options to limit the environmental and resource impacts of increased EU demand for bioenergy. As in the 2016 ReceBio report, the assessment presents results in terms of types of feedstocks used, land, biodiversity and GHG impacts. It also presents sensitivity analysis results for the main variables.

Study on impacts on resource efficiency of future EU demand for bioenergy - ReceBio (2016)

The study examines the resource efficiency implications of various levels of EU use of bioenergy for electricity and heat until 2050. Methods of analysis include an extensive literature and statistical review, detailed modelling of cross-sectorial wood biomass production and use, and in-depth analysis of the implications on several sustainability indicators. The results for biomass use for material and energy are reported for EU28, while the sustainability indicators are assessed both for the EU and globally. In addition, country specific assessments were carried out for three case countries (Finland, Germany, and Italy) to examine the results against country-specific policies and resources.

A framework for Member States to support business in improving its resource efficiency (2015)

Member States use a variety of approaches to support businesses in improving their resource efficiency, an act which can improve their competitiveness and also the environment. This study assesses the scope of application of ten relevant measures across Member States. There is a wide range of examples of measures, varying from country to country and region to region. Beyond EPR schemes, no support measure has been replicated by all Member States. Many of the support measures investigated could be more systematically adopted, building on the lessons learnt from where they have proven to be a success. This necessitates identifying ways of transferring and adapting knowledge to other Member States in their respective context(s). Using EU funding to finance international best practice exchange seems promising to continue enabling Member States to help their businesses improve their resource efficiency.

 

4. Circular economy (Full list of studies in this area)

To reduce resource depletion and environmental degradation we need to move to more sustainable, resilient and responsible consumption and production corresponding to the principles of ’circular economy’ with the value of materials and products maintained (and recovered) in the economy as long as possible and waste generation minimised. The uptake of circular economy is integral part of the sustainability path, with large potentials to unlock for for jobs and growth as well.

Life Cycle Inventories of Single Use Plastic Products and their Alternatives (2018)

A life cycle analysis was undertaken for certain single use plastics to feed into the Impact Assessment accompanying the proposal on “Reducing marine litter: action on single use plastics and fishing gear” – as part of the study ‘Links between production, the environment and environmental policy‘ which examines the links between environment and production with a focus on a number of sectors (such as motor vehicles, plastics, food processing, and water and sewerage), looking at how firms depend on the environment and how they affect it. Full study will be available in 2019.

Impacts of circular economy policies on the labour market (2018)

Circular economy is a basic pillar of greening the economy. EU’s Circular Economy Package promotes a shift from linear economy to circular models to keep resources in the loop for longer time, thus achieving more efficient resource-use, minimising waste and easing environmental pressures. Improved efficiency and productivity can generally reduce resource-use while increase growth and employment, however the strength of these correlations have not been sufficiently tested.

The objective of the study is to research and quantify the net impacts of circular economy transition on the labour markets in more detail through large-scale macro-econometric modelling, with regard to sectoral changes (and re-allocation), Member States differences, variation by skill and age, while also looking at direct, indirect, induced and rebound impacts. Among others, the study concluded that approaching circular economy towards 2030, EU GDP can increase by 0.5%, net employment by 700,000 jobs compared to baseline, mainly through additional demand from recycling plants, repair services, rebounds in customer demand by savings via collaborative actions. It confirms it’s possible to become more resource efficient while adding to growth and jobs at the same time. It projects that raw material extracting and processing sectors will decrease in size along with durable goods production, eg. electronics, machinery and vehicules (due to longer product lifetimes) as well as accomodation. Employment in construction is also expected to fall due to productivity gains from new building techniques. In paralel, circular economy sectors, including service branches and electricity can take up. Sectoral employment shifts and changing skill needs (eg. towards cross-cutting competencies) will need to be addressed by support policies. Uncertainties around future labour intensity in the waste sector are large, due to eg. automation and new technologies. Circular economy impacts on skill needs are estimated to be small-scale compared to other drivers of change eg. technological change or shift to high-skilled jobs in some sectors, resulting in a lack of transformative effect on the labour markets by circular economy skill needs. Increased demand for problems-solving and analytical skills (STEM) is a common theme across a number of sectors. Rebound effects are important, eg. savings from efficiency gains can lead to additional consumption adding to growth, while entailing increase in eg. material consumption on the other hand, indicating the need for further/additional policies to meet targets on overall material use.

Waste: Optimising markets for recycling (2008)

Whilst recycling brings significant environmental benefits, it is primarily an industrial activity. The most efficient ways to increase the volumes of recycling (and so the economic and environmental benefits) are those that treat recycling as an economic activity and assist the recycling market to function. This study examines the market failures that limit levels of recycling in the EU and suggests policy solutions. With much primary research, it identifies the 10 sectors which may have the greatest potential for recycling growth and bases recommendations for policy on very detailed investigations of the cardboard/paper, PVC, Batteries and Food Waste sectors, focussing on the situations in the Estonia, Flanders, France, Poland, Spain and the UK. Constraints in supply of separated wastes and trade restrictions between Member States are two of the main constraints on greater recycling.

 

5. R&D and eco-innovation (Full list of studies in this area)

Eco-innovation is the ability to take new ideas and translate them into commercial outcomes to the benefit of ecological improvements. Its economic analysis examines how economic agents interact and which factors influence them. Examples of studies include:

Lags in the EU Economy's response to change (2011)

This study examines why economies do not always respond optimally to changing economic conditions. In particular, it identifies reasons why the EU economy may be slow in its response to changes in resource scarcity to the detriment of its competitiveness. The analysis of lags to the spread of innovation suggests that some of the existing literature is too simplistic, that the considerations involved are complex, and that smart policies which seek to influence consumer behaviour through differentiated, non-traditional approaches may be needed.

Bridging the Valley of Death: public support for commercialisation of eco-innovation (2009)

The report recommends the Commission and Member States to use greater demand-side innovation policy to tackle constraints on eco-innovation. It analyses the experience of existing innovation procurement policies. A major block to greater eco-innovation is the uncertainty over future market demand for an innovation. That uncertainty partly reflects an information failure: buyers do not indicate they will buy until the innovation is put on the market. This block can be mitigated cost-effectively if groups of market players are brought together to indicate the characteristics of an innovation that they would be likely to buy. This needs to be coupled with pre-announced use of demand-support measures, in an expansion of current EU demand-side innovation policy. The report analyses the areas of innovation where this would be successful and identifies the practical needs of the policy.

The Potential of Market Pull Instruments for Promoting Innovation in Environmental Characteristics (2009)

Firms select which innovations to commercialise on the basis of expected future demand. Those expectations are based on assessments of trends in demand and the innovation undertaken by competitors. Policy measures which signal increased future demand, or rewards, for certain innovations (e.g. energy efficiency) have the potential to boost innovation rates. The effect could be substantial - an increase in energy efficiency improvement by only 2%/year could lead to new products being 25% more efficient in 15 years time. This study examines the potential of policy instruments - for example financial incentives for products - to increase innovation, how they influence firms' decisions and how such instruments (or existing related policy instruments) should be designed to maximise the increase in innovation. The report is aimed at EU, regional and national policy instruments, with a focus on environmentally advantageous innovation.

 

6. Green and sustainable finance (Full list of studies in this area)

Sustainable finance generally refers to the process of taking due account of climate-, environmental and socio-economic and governance considerations (ESG factors) and incorporating those into investment decision-making, leading to increased sustainable investment flows in longer-term to enable to the sustainability shift committed to at European and global level.

Technical Support Document for Environmental Proofing of Investments funded under the InvestEU Programme (2020)

This technical support document is aimed at helping InvestEU Implementing Partners (IPs), financial intermediaries and project promoters/final recipients to perform Sustainability Proofing for the InvestEU Fund. The focus is on environmental proofing, where this requires consideration of the impacts of an investment on the different elements of natural capital: air, water (fresh and marine), land and biodiversity. The ultimate objective of this supporting document is to ensure that investments deliver economic development that is environmentally sustainable. Proofing involves consideration of mitigation measures to reduce environmental impacts, as well as consideration of the opportunities to improve the project’s environmental performance. Where there are residual risks (post-mitigation), these should be identified with an analysis of the impacts that is qualitative, quantitative and monetised where proportionate to do so.

Defining “green” in the context of green finance (2017)

UN’s Sustainable Development Goals and the Paris agreement constitute landmark steps towards sustainable development, a concept aiming at tackling climate change and environmental degradation, while maintaining growth and competitiveness for the economy as well as creating inclusive social systems. This calls for a better alignment of the financial system with EU policies and with the concept of sustainable development in general.

The report, with the EU High-Level Expert Group on Sustainable Finance behind, analyses worldwide efforts on defining ‘green’ in three segments: for green bonds, green lending and green equity investment. It describes tools to indetify green assets and activities through definitions, classifications, ratings etc., while listing and assessing such definitions and sectoral taxonomies. It proposes five EU policy actions – with possible implications – such as the development of a conceptual definiton, a universal- and an EU-specific taxonomy (i.e. ‘what’ is green), a green rating methodology (i.e. ‘how’ green assets and projects are) as well as process criteria (to increase stakeholder involvement), accompanied with feasabiliy assessment and recommendations for concrete steps the EC could take. Data for the study arise from literature review, interviews and a survey with stakeholders of the international financial community, including asset owners and managers, financial service providers, NGOs etc.

Potential of the bonds market for resource efficiency finance (2016)

Green bonds, exclusively using funds raised to finance green projects or assets, can play key role to mobilize liquidity to finance climate, energy and environmental goals as well as the UN’s Sustainable Development Goals in a wider sense. The report presents an analysis of the development and functioning of the green bond market since its start (2007-08), with regard to main actors (issuers, underwriters, external reviewers, investors etc.), players (e.g. Multilateral Development Banks, municipalities, corporations) and sectors with special focus on boosting the market and to promote investments for resource efficiency. Today, green bonds mainly finance renewable energy, energy efficiency and transport projects, while environment-related investments make around 15% (water, waste and pollution). It looks at five key bottlenecks and possible public policy measures to address them (e.g. establishing co-ordination mechanisms, support to the development of a green project pipeline etc.), assessing also regulatory feasibility and expected impacts of six key standardisation measures (e.g. on liquidity and market size), potentially leading towards a common European Green Bond Standard. The study also presents various views of stakeholders on the role of public sector in assisting this market and provides a set of recommendations for the EU and the Member States. A Policy Toolbox presents additional measures on the demand and supply side with nine case studies including EU- and non-EU countries.

Study on the potential of green bond finance for resource-efficient investments (2016)

This report presents an analysis of the development and functioning of the green bond market, including the main actors and sectors, with specific focus on financing investments into improved resource efficiency. It summarizes the key bottlenecks limiting the development of the market in specific countries and sectors. It identifies a set of possible public sector measures to overcome these bottlenecks, supported by examples of good practices. The report also assesses the regulatory feasibility and expected impacts of specific standardization options on the liquidity and size of the market. Finally, the report presents a set of recommendations addressed at the EU and its Member States.

Resource Efficiency and Fiduciary Duties of Investors (2015)

The objective of this report was to provide clarification and policy advice on the integration of environmental and resource efficiency issues into the fiduciary duties of institutional investors (e.g. pension funds, insurance companies, asset managers, etc.) in the European Union.

It clearly established that the integration of environmental factors in the investment policies and decision-making process of institutional investors is compatible with the existing legal framework related to fiduciary duties in all jurisdictions across the EU – as long as it is relevant to financial returns and the management of risk. This is also evident in practice: most of the leading institutional investors in the EU have investment policies that take into consideration social and environmental issues. This study does not see a need for legal changes in relation to fiduciary duty, but instead take action to engage, enable and encourage the entire investment community in the practical aspects of taking environmental and resource efficiency issues into consideration in their investment decision process.

Innovative Use of Financial Instruments and Approaches to Enhance Private Sector Finance of Biodiversity (2012)

This study explored ways that innovative financing through new instruments and approaches can be used to finance biodiversity and ecosystem services, responding to the needs of the new EU Biodiversity Strategy to 2020. In addition to the EU co-financing, there is still room to engage more actively the private sector (businesses and financial institutions, the utilities sector and municipalities) and to put forward proposals for bankable projects. The study looked to various types of biodiversity projects with a bankable potential, and analyse the project promoters and beneficiaries that can bring forward these projects. The study examined in detail the following 3 intervention areas: Market-based Instruments & Offsets, Establishing Green Infrastructure and Supporting Carbon Credit Actions, while also it looked to a lesser extent the provision of support for biodiversity-friendly businesses. Furthermore it explored 2 cross-cutting issues that are of concern for all type of biodiversity related investments, i.e. how to address investment and policy risks and how to collect and provide market information about biodiversity. Through interviews with market specialists and investors, as well as key stakeholders (EIB and the financial sector) they explored the potential for investment into the respective areas examined and made recommendations on Private finance opportunities in relation to biodiversity and on the European interventions that can bring these about.

 

7. Market-based instruments (Full list of studies in this area)

Market-based instruments (MBI), such as environmental taxes, tradable permit systems or targeted subsidies, are a cost-effective way to protect and improve the environment. They provide incentives to firms and consumers to opt for greener production or products. Governments can also opt for an Environmental Fiscal Reform or the reform of Environmentally Harmful Subsidies. Examples of studies include:

Toolkit presenting economic instruments used in the EU Member States to make polluters pay (2021)

As well as examples, it includes modelling and advice on how to best ensure they are implemented.

Capacity building in the field of environmental taxation, including further analysis of the subject with a focus on pollution and resource taxes, and exchanges of best practice and experience, involving stakeholders, the civil society and governments/parliaments (2017)

Notwithstanding the increasing interest in economic-, or market-based instruments (MBIs), in particular environmental taxes to tackle environmental problems, such instruments have not been widely used and has led only marginal changes in taxation systems, leaving further scope for their wider application which could lead to further economic, social and environmental benefits. To date, environmental taxation efforts have mainly focused on energy, transport and climate issues.

The study investigates the use of economic instruments in further environmental areas, namely for pollution and natural resource use to improve the knowledge base, to stimulate exchanges of experiences and best practices amongst civil society stakeholders and to build civil society capacity to better participate in MBI-related policy-making processes at different levels. The study takes a broad definiton of civil society, including NGOs, business, academia and citizens to ensure a balanced representation of stakeholder inputs throughout the project. The study is organised around three tasks, including an inventory of market-based instruments, an analysis of their use for pollution and resource consumption, as well as workshops organised throughout the EU with the participation of around 30 stakeholders in each of them. In total, 40 specific eonomic instruments, grouped into 8 environmental areas were selected for detailed analysis (constituting 40 case studies).

Enhancing comparability of data on estimated budgetary support and tax expenditures for fossil fuels (2014)

Previous studies on environmentally harmful subsidies have emphasized the importance of transparency and the availability of reliable data as a precondition for successful subsidy reform. This report is contributes to this by developing a harmonized approach to the identification and quantification of government support to fossil fuels and by applying this approach to all 28 EU Member States. In estimating support levels, the ‘transfer measurement’ approach is used, in which the transfer of public money to those benefiting from the support is estimated using budget data and other statistical information. Tax expenditures, however, are not systematically reported by all Member States. Moreover, they require a benchmark in order to be able to estimate subsidy amounts. The study proposes few benchmarks and discusses the outcomes.

Compared to the existing databases, the information reported in this study also covers a slightly wider range of support types, for instance by including subsidies to fossil fuel infrastructure such as pipelines. Data are reported for 2010 or 2011 and compared with the situation 5 to 10 years earlier. The estimated support levels include support to fossil fuel based electricity (by multiplying the total support to electricity by the share of fossil fuels in each Member State’s electricity generation.

Exploring potential Demand for and Supply of Habitat Banking in the EU and appropriate design elements for a Habitat Banking Scheme (2013)

This study provides a critical assessment of the EU legislative framework for addressing the No Net Loss (NNL) of biodiversity and explores potential demand for and supply of habitat banking in the EU, and appropriate design elements for a habitat banking scheme. NNL is not explicitly stated in EU legislation but it is implicit in a number of Directives (Birds, Habitats, EIA and SEA Directives), while several EU laws also require compensation and remediation of damages to biodiversity (EIA, SEA and Environmental Liability Directive), which covers impacts to biodiversity from accidents). Moreover, several Member States have additional national or even regional provisions. Despite these provisions, there is no concrete and coherent framework for NNL in the EU. The new EU initiative on NNL will aim to cover the identified gaps. 

Demand for offsets under a NNL policy can be driven by land use changes, which in the EU account for 50,000 to 100,000 ha per annum, without taking account land changes and biodiversity loss due to natural disasters. Further loss of biodiversity and ecosystem services due to degradation, as well as impacts to global biodiversity from EU actors and actions could also be taken into account, increasing the above figures. To provide for this potential demand, the supply of grassland and wetland habitats for restoration, enhancement or re-creation is least constrained, while coastal, freshwater, forests and heathland habitats are slightly more limited. Dunes and rocky habitats are the most difficult habitats to restore or replace and therefore provide limited opportunities for offsetting. Currently however, the largest constraint on supply is the availability and accessibility of land. Most available evidence in the EU suggests that the total costs of offsets are likely to range from between €30,000 and €100,000 per hectare, but could be higher than this in some circumstances. Offset costs represent only a small proportion of total development costs. Globally, the annual market for biodiversity offsets has been estimated to be worth at least $2.4 billion and possibly over $4.0 billion.

Biodiversity offsets have the potential to compensate for biodiversity loss, but a number of technical, ecological, geographical and economic constraints mean that this is not possible or appropriate in all circumstances. In cases of particularly vulnerable and/or irreplaceable biodiversity, ‘like for like’ offsets should be preferred. Where the biodiversity affected is not vulnerable or irreplaceable, ‘trading up’ to conserve higher conservation priority biodiversity may be the best outcome. For habitat banking and offsetting to be successful, there is a need for a strong regulatory framework to create demand, establish basic standards, and drive the process. The study explores how roles and responsibilities should be defined, including robust mechanisms for monitoring, enforcement, compliance and safeguarding against potential risks and uncertainties to ensure that benefits from offsets are sustained in the long term.

Budgetary support and tax expenditures for fossil fuels. An inventory for six non-OECD EU countries (2013)

The study provides information on measures supporting the production or consumption of fossil fuels in six EU Member States: Bulgaria, Cyprus, Latvia, Lithuania, Malta and Romania. In order to ensure comparability, the methodology and approach taken were as similar as possible to that taken by the OECD in the “Inventory of estimated budgetary support and tax expenditures for fossil fuels”.

Each country section presents a general description of the energy sources and energy market structure in the Member State. Next, energy price regulations, taxes and support mechanisms are described. Quantitative information on specific budgetary support and tax expenditure are given if possible over several years (back to 2002).

Exploring potential Demand for and Supply of Habitat Banking in the EU and appropriate design elements for a Habitat Banking Scheme (2013)

This study provides a critical assessment of the EU legislative framework for addressing the No Net Loss (NNL) of biodiversity and explores potential demand for and supply of habitat banking in the EU, and appropriate design elements for a habitat banking scheme. NNL is not explicitly stated in EU legislation but it is implicit in a number of Directives (Birds, Habitats, EIA and SEA Directives), while several EU laws also require compensation and remediation of damages to biodiversity (EIA, SEA and Environmental Liability Directive), which covers impacts to biodiversity from accidents). Moreover, several Member States have additional national or even regional provisions. Despite these provisions, there is no concrete and coherent framework for NNL in the EU. The new EU initiative on NNL will aim to cover the identified gaps. 

Demand for offsets under a NNL policy can be driven by land use changes, which in the EU account for 50,000 to 100,000 ha per annum, without taking account land changes and biodiversity loss due to natural disasters. Further loss of biodiversity and ecosystem services due to degradation, as well as impacts to global biodiversity from EU actors and actions could also be taken into account, increasing the above figures. To provide for this potential demand, the supply of grassland and wetland habitats for restoration, enhancement or re-creation is least constrained, while coastal, freshwater, forests and heathland habitats are slightly more limited. Dunes and rocky habitats are the most difficult habitats to restore or replace and therefore provide limited opportunities for offsetting. Currently however, the largest constraint on supply is the availability and accessibility of land. Most available evidence in the EU suggests that the total costs of offsets are likely to range from between €30,000 and €100,000 per hectare, but could be higher than this in some circumstances. Offset costs represent only a small proportion of total development costs. Globally, the annual market for biodiversity offsets has been estimated to be worth at least $2.4 billion and possibly over $4.0 billion.

Biodiversity offsets have the potential to compensate for biodiversity loss, but a number of technical, ecological, geographical and economic constraints mean that this is not possible or appropriate in all circumstances. In cases of particularly vulnerable and/or irreplaceable biodiversity, ‘like for like’ offsets should be preferred. Where the biodiversity affected is not vulnerable or irreplaceable, ‘trading up’ to conserve higher conservation priority biodiversity may be the best outcome. For habitat banking and offsetting to be successful, there is a need for a strong regulatory framework to create demand, establish basic standards, and drive the process. The study explores how roles and responsibilities should be defined, including robust mechanisms for monitoring, enforcement, compliance and safeguarding against potential risks and uncertainties to ensure that benefits from offsets are sustained in the long term.

 

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