By failing to meet targets and regulations set out in EU environmental laws, Member States collectively cost the bloc’s economy almost €55bn last year, a new report from the European Commission’s Directorate General for the Environment has found.
Published late last week, the “costs of not implementing EU environmental law” report examines the financial and social impact of missed environmental targets during 2018, covering legislation across seven major policy areas: air, nature and biodiversity, water, waste, chemicals, industrial emissions and major accident hazards and horizontal instruments.
The report assigns a monetary value to the “implementation gap” of each of these areas – the disconnect between what is mandated by law and what has been achieved to date. It does so by measuring the size of the gap using official data on factors such as air pollution levels and forest cover and correlating these factors to costs relating to time off work, reduced productivity, healthcare, resource scarcity and biodiversity loss.
Crucially, the report also assesses the “measurability” of progress in each area, analysing the data and metrics available. It states, for example, that air quality is “highly” measurable due to quantitative targets and scientifically proven measuring frameworks.
The 166-page document concludes that the cost of the “implementation gap” was the highest in regard to clean air legislation last year, an area which racked up €24.6bn, largely in healthcare costs and missed days of work and education. The second most costly gap was in nature and biodiversity (€13.1bn) and the lowest in chemicals (€0), with the total bloc-wide cost standing at €54.7bn.
The study was led by global consultancy COWI, which provided research and analysis on air, nature and biodiversity, water, chemicals, major accident hazards and horizontal instruments, and environmental consultants at Eunomia, who contributed their expertise on waste and industrial emissions. Both firms claim the publication will help EU stakeholders commonly accept that failing to deliver on key environmental measures does bear a measurable economic and social cost.
“It is crucial to understand the effects failing to meet environmental targets has on the EU economy,” Eunomia’s lead author for the report Tanzir Chowdhury said.
“This report clearly shows how important it is to ensure that Member States are complying with environmental legislation: meeting the targets will result in stronger economies, better public health, and, of course, a diverse natural environment for our children to enjoy well into the future.”
A natural capital approach
The publication of the study marks the first time that the societal costs of failing to meet environmental targets have been combined with natural capital accounting in an EU-wide report.
Such an approach integrates ecosystem-oriented management with economic decision-making and development by placing a financial value on natural resources, and has received increased support from Europe’s investment, public sector and business communities since the world’s total natural capital was valued at £53trn by the United Nations Environment Programme (UNEP) in 2010.
In Scotland, for example, the Scottish Environment Protection Agency (SEPA) and the Scottish Wildlife Trust recently teamed up to launch a new project aiming to attract £1bn of investment in protecting the nation’s natural capital, while similar regional projects are also being developed across Manchester, Birmingham and Barnet.
As for policy, Chancellor Philip Hammond confirmed in his Spring Statement last month that the UK will undertake a major global review into the economic value of biodiversity, including the financial risks of its decline and rewards of its stewardship, while the European Commission enshrined the need for natural capital accounting into several key areas of law in its 2015 Biodiversity Strategy.
And in the business sector, Kering is one of several big-name companies to have adopted a natural capital approach to finance, along with the likes of Dow Chemical Company, home improvement retailer Kingfisher and designer Stella McCartney. The fashion firm uses a biodiversity metric, developed as part of a partnership with companies including Mars and Asda, to help translate the less tangible benefits of biodiversity impact to its internal decision-makers and external investors.