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Cablegate: Oecd Reporting: Environmental Policy Committee And

This record is a partial extract of the original cable. The full text of the original cable is not available.

190844Z May 05

UNCLAS SECTION 01 OF 04 PARIS 003416

SIPDIS

FROM USOECD

STATE FOR EUR/ERA
EPA FOR OIA/JAYRES, JCLIFFORD AND JMORANT
EPA FOR OAR/KMASON AND JLEGGETT
STATE FOR OES/CARTUSIO AND ABEDNAREK

E.O. 12958: N/A
TAGS: SENV ETRD KSCA FR OECD
SUBJECT: OECD REPORTING: ENVIRONMENTAL POLICY COMMITTEE AND
HIGH LEVEL SPECIAL SESSION MEETING ON "COST OF INACTION,"
APRIL 13-15, PARIS, FRANCE


-------
SUMMARY
-------

1. The OECD Environment Policy Committee (EPOC) held its
meeting on April 13th and 15th, 2005. In addition, EPOC
held a High Level Special Session on the Costs of Inaction
on April 14, 2005. Judith E. Ayres, EPA Assistant
Administrator for International Affairs, led the delegation.
The major actions and decisions taken included: 1) renewal
of the Mandate for EPOC's Working Party on Global and
Structural Policies (WPGSP); 2) agreement that the WPGSP and
the Annex I Experts Group (AIXG) should, to the maximum
extent practicable, annually hold consecutive meetings and
improve coordination and communication concerning Climate
Change work; 3) agreement that a meeting of the Environment
and Development Ministers would be useful; 4) establishment
of a task force to draft a Strategic Vision for the OECD
Environment Program; and 5) election of a new EPOC Bureau.

2. The High Level Special Session on the Costs of Inaction
included presentations and discussions on three issues: (a)
human health impacts from pollution; (b) climate change, and
(c) loss of biodiversity; and discussions about possible
next steps for the EPOC on costs of inaction. END SUMMARY

--------------------------------------------- -------------
Renewal of Mandate for EPOC's Working Party on Global and
Structural Policies (WPGSP)
--------------------------------------------- -------------

3. The U.S. has had concerns with the proliferation of OECD
work on climate change, and has refused to renew the WPGSP
mandate as a result. At this meeting, countries agreed to
hold back-to-back meetings of the WPGSP with the Annex I
Experts Group as frequently as possible. The Secretariat
agreed to notify climate contact points in delegations
whenever an OECD body intends to conduct work with
significant climate elements. As a result, the U.S. and
other countries agreed to renew the WPGSP mandate.

4. The new WPGSP mandate includes the following language on
climate change: "...to analyze the environmental and
economic aspects of climate change, focusing on strategies
and policies and to provide information and analysis to
policy-makers and main stakeholders to enable them to better
understand mitigation and adaptation options, including
approaches which would benefit from international co-
operation."

--------------------------------------------- -------------
Possible Joint Environment and Development Ministerial
--------------------------------------------- -------------

5. Following the suggestion of the Development Assistance
Committee (DAC) and the Environmental Policy Committee
(EPOC) in late 2004, the EPOC Chair introduced the
discussion of a joint meeting, its substance and its
potential timing. It was suggested that the meeting may
happen in May 2006 as a back-to-back meeting with the DAC
High Level meeting to be held at that time. Following a
discussion that reiterated the necessity of the Environment
and Development Committees of OECD to work more closely
together, delegates, including the U.S., noted that the
proposed agenda was too ambitious for a one-day meeting.
Suggestions for tightening the Agenda were made and the
Secretariat committed to a) discussing with each delegation

SIPDIS
their suggestions; b) sharpening the draft agenda; c)
proposing a revised agenda and budget to EPOC in the near
future; and d) reporting back to the DAC on the comments and
suggestions by the EPOC delegations.

--------------------------------------------- ------
Efficient and Effective Partnerships Project Update
--------------------------------------------- ------

6. The Secretariat reviewed a revised work proposal, which
was generally agreed to by delegations. Further financial
support from delegations was not forthcoming and the
Secretariat will proceed to secure assistance in-kind from

SIPDIS
member countries and the project budget will be covered
within the existing program of work and budget for 2005-2006
already approved. The U.S. supported further work in this
area as did Australia, the European Commission, the
Netherlands, Japan and others. The U.S. noted its recent
success in sponsoring partnerships such as the "Methane-to-
Markets" program.

--------------------------------------------- -------------
Development of a Strategic Vision for the OECD Environment
Program
--------------------------------------------- -------------

7. The Chair led a discussion about the need for and
potential content of a Strategic Vision for the OECD
Environment Program. The U.S. stated that if work on a
strategic vision moves forward, decisions to improve
efficiency by strengthening ongoing work and identifying
areas of lower-value added from which to reduce or cut
resources should be a goal of the new strategic vision.
Furthermore, the U.S. noted that the strategic vision should
be consistent with the objectives in the OECD Environmental
Strategy for the First Decade of the 21st Century, which was
adopted in 2001. The U.S. proposed an "electronic"
discussion of the Strategic Vision amongst interested
delegations. A decision by Chair Mats Olsson was made to
bring together a small steering group of former and current
Bureau members for a discussion in the end of June, to be
followed by further electronic discussions. The results of
this discussion will be presented to the extended EPOC
Bureau session on November 9-10, 2006 in Paris.

--------------------------------------------- -------------
Update on Ongoing Environment Directorate work
--------------------------------------------- -------------

8. Presenters from the Directorate discussed progress on (a)
the Work Program on Sustainable Development; (b) the
Environmental Policy and Firm-Level Management study; (c)
Towards an Integrated and Pro-Active Outreach Strategy for
the EPOC; and (d) progress on the next OECD Environmental
Outlook.

8a. The work program on sustainable development: a
presentation and suggestion was made that the potential
joint meeting of the DAC and EPOC would present an
opportunity to identify areas of common interest, best
practices, and lessons learned through environmental
auditing efforts associated with multilateral environmental
agreements.

8b. Firm-Level environmental management: a presentation on
the initial results of the survey of firms' environmental
management activities generated engaged discussion amongst
delegations. The final results of this survey work will be
presented at the forthcoming OECD/US-EPA/Environment Canada
Conference on "Public Environmental Policy and the Private
Firm, to be held in Washington D.C. on 14-15 June 2005.

8c. EPOC Outreach Strategy: discussion amongst delegates
ranged from Germany's comment that outreach capacity of OECD
is by necessity limited due to resources and existing work
loads, to Norway's enthusiastic support for additional
outreach, to the U.S. position which noted that the U.S.
strongly supports the development of an outreach strategy to
non-member countries that is geographically diverse and that
we support the participation criteria of "mutual benefit"
and "major player". In particular, the U.S. endorsed the
inclusion of Brazil, Russia, India, Indonesia, China, South
Africa, Israel and Chile in the work of EPOC and other
related OECD bodies.

8d. Developments of the next OECD Environmental Outlook:
Directorate's Rob Visser discussed the economic modeling
that will be used for the Outlook to evaluate a set of
"policy packages" that will be determined over the coming
six months or so.

----------------------------------------
EPOC Bureau Elections and Other Business
----------------------------------------

9. EPOC Chair Mats Olsson noted the resignation of Judith E.
Ayres as the Vice Chair of the EPOC Bureau (due to the
expiration of her term of service) and thanked her on behalf
of the Bureau and all delegations for her diligent service
to the Bureau and OECD. Elected to the Bureau are two new
Vice Chairs, Mr. Kevin Keefe, Assistant Secretary,
Department of Environment and Heritage, Australia and Ms.
Nicole Ladouceur, Director General, International Relations
Directorate, Environment Canada. In addition, Chair Mats
Olsoon was reelected, along with Paolo Soprano of Italy,
Kazuhiko Takemota of Japan and Kamil Vilinovic of the Slovak
Republic.

10. EPOC delegates agreed to hold the next meeting in
plenary session on 1-3 March 2006 in Paris. Chair Olsson
also reported to the group on discussions with the Polish
government to hold the EPOC meetings on 25-27 October 2006
in Krakow, Poland due to the upcoming renovations of the
OECD Headquarters in Paris. Final arrangements are
proceeding. Finally, Chair Olsson noted that the European
Environmental Bureau will not be able to participate in
future stakeholder sessions of the OECD Environment
Directorate due to the expiration of financial grant support
from the government of Greece.

--------------------------------------------- -------
High Level Special Session on the Costs of Inaction
--------------------------------------------- -------

11. At the request of Environment Ministers in the fall of
2004, a High Level Special Session was held to discuss the
costs of inaction. The session was divided into three
presentations on specific issues (human health, climate
change and biodiversity) and a discussion session amongst
delegates on the significance of the issue and possible next
steps.

12. The health impacts discussion highlighted the current
differences in methods and assumptions that are used to
place a value on morbidity and mortality. The need for
additional benefit estimation methods development was
emphasized and questions of health effects thresholds,
discount rates, time horizons, chronic -vs.-acute effects,
and method transparency were noted. Second, presenters and
discussants noted the necessity to extend these health
effects benefits estimation methods to environmental
problems beyond air pollution, and more specifically beyond
particulate matter air pollution. Other environmental
problems needing monetization were mentioned. These
included water pollution; chemicals and toxics; particularly
PBTs; waste issues; and habitat degradation.

13. The third topic of the health impacts discussion
concerned the current application of these methods by policy
makers. The World Banks' application of their cost of
environmental degradation model; the Australian's efforts to
place a value on and modify use practices concerning the
Great Barrier Reef; Mexico's valuation of air pollution
reduction benefits; the Czech Republic's quantification of
electricity generating externalities; Norway's estimates of
PCB cleanup costs; and Canada's assessment of childhood
asthma, school attendance and possible reduced future
productivity all indicate a robust demand for and use of
these cost-benefit tools. The U.S. noted that the U.S. EPA
bases most of its governmental mandate to make further air
pollution reductions in the transport and utility sectors on
these analytic tools.

14. A fourth area of the group's discussion focused on the
difficult social and ethical issues associated with the
application of these tools. Delegates noted that
politicians are making decisions about ethical issues such
as the worth of a child's life -vs.- that of an elderly
person and the worth of a poor person's health -vs.- that of
a relatively wealthier one. Discussants noted that these
choices are usually, in the end, beyond the decision-making
capacity of economists, yet decisions on assumptions are
being made as the demand for the application of these tools
rapidly multiplies.

15. Following this session, the delegates heard
presentations on the costs of inaction with respect to
climate change, focused on a paper by Dr. William Cline.
The EU generally used this as an opportunity to press on the
need for early action on climate change. The U.S. and Japan
noted that the choice of the discount rate determines the
long-term costs, and that this was a difficult choice. The
U.S. felt the issue was poorly framed - that it makes more
sense to speak of the benefits of action, as opposed to the
costs of inaction. EPOC agreed that no further work was
needed beyond that being conducted under the WPGSP on
benefits of climate action.


16. The final cost of inaction session concerned the Costs
of Inaction with Respect to Biodiversity Loss. Dr.
Geoffrey Heal of Columbia University presented a paper
commissioned by the Secretariat. This was followed up by
presentations from Dr. Jackie Van Goethem of the Royal
Belgian Institute of Natural Science and Mr. Ian Dickie,
Senior Economist, Royal Society for the Protection of Birds.
Heal's presentation centered around the point that
biodiversity does matter for the functioning and survival of
ecosystems. Ecosystems provide services of all kinds and
the functioning of natural systems are key and biodiversity
is a big part of why ecosystems matter. It is vital to
agriculture, climate change and a host of other issues. His
paper discussed how to value biodiversity noting the
difficulty of presenting such value in national income
accounts. In the discussion that followed, Portugal noted
that while doing a cost-benefit analysis on biodiversity
will be tough, they support this work because of its impact
on humans; Australia discussed trying to place a value on
natural resource systems, particularly the Great Barrier
Reef which is important to tourism, chemistry, commercial
fisheries and other end uses. The U.S. stated that finding
the benefits of environmental investments is something we
have pioneered and used for the past thirty years.

17. The three papers will be issued under the author's
recognizance, with no OECD or member country endorsement.

18. EPOC members decided that the Secretariat should prepare
a summary of existing work in the OECD on cost-benefit
analysis and suggest additional case studies, if any, that
might be pursued. The U.S. and Finland offered financial
assistance for the next phase of this project once the final
course is determined.

MORELLA

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