Source: OECD

The OECD- the Organization for Economic Cooperation and Development - today cut its forecast for growth this year and now expects expansion of ``less than'' 2% in its 30 member nations, Secretary General Angel Gurría said. In a separate report published today, the OECD says that policies to challenge environmental challenges such as climate change are perfectly affordable and would have only a minor impact on future economic growth.

``2008 will be a difficult year of lower growth and some more unpleasant surprises,'' Gurría said in an interview in Oslo. ``We have revised downwards a number of our projections.''

In December 2007, the OECD forecast a 2.3% growth rate in 2008 and 2.4% in 2009 following last year's 2.7%. It's due to release new forecasts on March 20th.

``2008 will be a difficult year of lower growth and some more unpleasant surprises,'' Gurría said in an interview in Oslo, where he attended the launch of a key report. ``We have revised downwards a number of our projections.''

"Solutions to the key environmental challenges are available, achievable and affordable, especially when compared to the expected economic growth and the costs and consequences of inaction", Angel Gurría  said at the worldwide launch of the 2008 OECD Environmental Outlook, hosted by Norway's Prime Minister, Jens Stoltenberg.

"The Outlook is an impressive body of work. It combines hope for the future with an urgent call for action today. It offers important guidance for decision-makers and integrates economic and environmental analysis", said Prime Minister Stoltenberg. 

The 2008 OECD Environmental Outlook  is termed by the Paris-based think-tank for governments, "a pathbreaking report" that marries economic and environmental projections for the next few decades and simulates specific policies to address the key challenges. It identifies four priority areas where urgent action is needed: climate change, biodiversity loss, water scarcity and the impact on human health of pollution and toxic chemicals.

Economic-environmental projections show that world greenhouse gas emissions are expected to grow by 37% to 2030 and by 52% to 2050 if no new policy action is introduced. To meet increasing demands for food and biofuels world agricultural land use will need to expand by an estimated 10% to 2030; 1 billion more people will be living in areas of severe water stress by 2030 than today; and premature deaths caused by ground-level ozone worldwide would quadruple by 2030.

"Countries will need to shift the structure of their economies in order to move towards a low carbon, greener and more sustainable future. The costs of this restructuring are affordable, but the transition will need to be managed carefully to address social and competitiveness impacts, and to take advantage of new opportunities", Secretary-General Gurría said. (read the complete speech)

The 2008 OECD Environmental Outlook projects that world GDP will almost double by 2030. And the OECD policy simulation shows that it would cost just over 1% of that growth to implement policies that can cut key air pollutants by about a third, and contain greenhouse gas emissions to about 12% instead of 37% growth under the scenario without new policies.

OECD recommends use of policy mixes, and to keep the costs of action low these should be heavily based on economic and market-based instruments. Examples are the use of green taxes, efficient water pricing, emissions trading, polluter-pay systems, waste charges, and eliminating environmentally harmful subsidies (e.g. for fossil fuels and agriculture). But more stringent regulations and standards (e.g. for transport and building construction), investment in research and development, sectoral and voluntary approaches, and eco-labelling and information are also needed.

Gurría said that technological developments will also contribute to the solution but that the generalised application of breakthrough technologies poses important challenges in the area of intellectual property rights which will have to be confronted.

The Outlook identifies ways to share the cost of policy action globally. Developed nations have been responsible for the majority of greenhouse gas emissions to date, but rapid economic growth in emerging economies - particularly Brazil, Russia, India and China - means that by 2030 the annual emissions of these 4 countries together will exceed those of the 30 OECD countries combined.  Fair burden-sharing and distributional aspects will be as important as technological progress and the choice of policy instruments.

"We must be aware that getting it right in the field of the environment is not only about what to do and how to do it. We also need to address the question of who will pay for what. The global cost of action will be much lower if all countries work together", Gurría underlined. 

The 30 member countries of the OECD are: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States.

Twenty of these countries became members on 14 December 1960, when the Convention establishing the organisation was signed. The others have joined over the years.