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Lib Dems promise financial reward for good environmental behaviour

September 22, 2004 10:40 AM

Vince Cable MP and recycling fairyEnvironmentally friendly behaviour will be financially rewarded under new plans to link environmental and economic policy, the Liberal Democrats announced today.

Economic incentives for consumers to choose less polluting and less damaging products and services will be offset by plans to ensure polluters pay for the environmental costs of their activities.

Research by the Lib Dems reveals that environmentally damaging behaviour will cost Britain a massive £67 billion this year. Over half of that, £37bn, is the impact of road transport, whilst £5.7bn comes from domestic and commercial energy waste. Flooding is estimated to cost the British economy £1bn, a figure that could rise if action is not taken to combat global warming.

Key features of the plans to link the economy and the environment include:

Commenting, Norman Baker MP, Liberal Democrat Shadow Environment Secretary, said:

"Doing nothing is not the cheap option; it is costing Britain £67 billion per year. For the sake of prudence we need a Chancellor who's green, not Brown.

"The simple message is that polluters must pay. But that doesn't mean more tax for everyone; it means a fairer tax system that will financially reward those who use environmental factors in their decision-making.

"By shifting the tax burden onto polluters, we can cut other taxes to help the poorest in society whose quality of life is already disproportionately affected by pollution."

Dr Vince Cable MP, Liberal Democrat Shadow Chancellor, added:

"The Labour Government's heavy handed use of environmental taxes to raise more revenue for the Treasury has undermined public trust.

"We are not proposing higher taxes but using existing taxes to reward environmentally friendly behaviour. The revenue from these taxes will not disappear into a bottomless pit within the Treasury but will be fed back into lower taxes elsewhere."


Notes :

Annual Costs of Top Environmental Issues in Britain

(£bn per annum: at today's prices)

Total Environmental Cost Per Annum (£bns)

2004 2010 (potential without action)

A)Direct costs to the economy

1. Waste Management £5.0bn £5.7bn

2. Flooding Costs £1.0bn £1.2bn

3. Nuclear Liability Costs £2.0bn £2.0bn

B) Hidden Costs to the economy

4. Road Transport Impacts £37.3bn £44.9bn

5. Greenhouse Gas Emissions (Household and Business) £12.1bn £11.5bn

6. Costs of Aviation £1.4bn £2.3bn

7. Agricultural Impacts £2.0bn £2.0bn

C) Costs to individuals and businesses

8. Energy Efficiency Waste £5.7bn £5.9bn

9. Water Leakage £0.8bn £0.8bn

Total £67.3bn £76.3bn

1. Waste

Spending on waste management and disposal in the UK represents around 0.5% of GDP (Waste Want, Want Not - Cabinet Office Strategy Unit Report on Waste Management, December 2002)

Total UK GDP equates to around £1,000bn (Source)

This means total spending on waste management and disposal (municipal, business and construction) = £5bn per annum in 2004

The growing volume of municipal waste is pushing up the costs of waste management. At current rates, the amount of municipal waste produced in England will double by 2020, with the costs of managing this waste stream, doubling to £3.2 billion per annum from £1.6 billion currently on unchanged policies (Waste Want, Want Not - Cabinet Office Strategy Unit Report on Waste Management, December 2002). This would be a rise in the costs of dealing with the municipal waste stream of £1.6bn over the 18 years to 2020, meaning a rise of £0.7bn by 2010 - and bringing overall spending on waste to at least £5.7billion by 2010 (NB: this does not even account for any rise in waste streams other than municipal).

2. Flooding

The Foresight Future Flooding Report concluded that the current annual cost of flooding of £1bn could increase by £30m per year for the next 80 years (DTI Press release, 22nd April 2004).

This means the cost of flooding would increase from £1bn in 2004 to £1.2bn in 2010

3. Nuclear Liabilities

The 2004 Spending Review foresees that the NDA will have an annual budget of approximately £2 billion comprised of central government grant and income from its commercial activities.

4. Road Traffic Impacts

a/ Total costs of car traffic

Answer to a written parliamentary question tabled by Norman Baker MP, House of Commons, Official Repor, 11/03/2003,Column 119W

Mr. Jamieson : A study commissioned by my Department from the Institute for Transport Studies* at the University of Leeds made the following estimates of the marginal external social costs of car use per vehicle kilometre in Great Britain:

(a) Congestion costs: 9.0 to 10.4 pence/km

(b) Accident costs : 0.79 to 1.38 pence/km

(c) Air pollution costs: 0.18 to 0.88 pence/km

(d) Noise pollution costs: 0.01 to 0.52 pence/km

(e) Climate change costs: 0.12 to 0.47 pence/km

However, the total revenue from motorists (VED/Fuel Tax) equates to 4.4pence per km (from 'Surface Transport Costs and Charges', Great Britain 1998) = £17.3bn per year

Total external costs from car traffic not covered by revenue (£53.6bn-£17.3bn) = £36.3bn

b/ Total costs of non-car traffic (i.e. Goods Vehicles and Buses etc.)

The same report ('Surface Transport Costs and Charges', Great Britain 1998) refers to the marginal costs for other modes of road traffic. The external costs not covered by revenue are 12.1 pence per km.

Total non car kilometres = 93.5bn kms;

Total external costs from non-car traffic not covered by revenue = £1.1bn

c/ Rises in costs from traffic by 2010

5. Greenhouse gas emissions

This represented the range of best guesses from existing studies for carbon emitted in the period 1991-2000. Existing studies generally produce social cost estimates that increase through time. For the period 2001-2010, the relevant range increases to $7-$154 per tonne of carbon (in 1990 prices, or $9- $197/tC in 2000 prices)" (Source)

DETR Climate Change Strategy 2000:

Current levels = 119.5mtC (Million Tonnes of Carbon Equivalent) per year emissions from business/domestic and public sectors

This equates to a damage cost in the range US$0.72bn - $19.1bn; or £0.46bn - £12.1bn

2010 levels (according to the Government's own figures, if these are met)

= 113.4mtC per year emissions from business/domestic and public sectors

This equates to a damage cost in the range $0.68bn - $18.1bn; or £0.44bn - £11.5bn

6. Aviation

In a consultation paper published on the 14th March 2003, the Treasury and the Department for Transport put the "national cost" of global warming caused by air travel at £1.4bn a year, rising to £4.8bn by 2030.

At this rate of increase , this means a total of £2.3bn by 2010.

7. Agricultural Impacts

House of Commons Library Figures 09/01/03 as follows:

"Pollution of water, erosion of soil and loss of natural habitat, caused by chemical agriculture, cost the Earth" (from Resurgence, issue 205) "We conservatively estimate that the total costs are £2.34 billion for 1996 alone in the UK. Significant costs arise from contamination of drinking water with pesticides (£120 million per year), nitrate (£16m), Cryptosporidium (£23m) and phosphate and soil (£55m), from damage to wildlife, habitats, hedgerows and drystone walls (£124m), from emissions of gases (£1,113m), from soil erosion and organic carbon losses (£96m), from food poisoning (£169m), and from BSE (£607m)."

The annual total external costs of UK agriculture, 1996

Cost Category £m

1 Pesticides in sources of drinking water 120

1b Nitrate in sources of drinking water 16

1c Phosphate and soil in sources of drinking water 55

1d Zoonoses (esp. Cryptosporidium) in sources of drinking water 23

1e Eutrophication and pollution incidents (fertilizers, animal wastes, sheep dips) 6

1f Monitoring and advice on pesticides and nutrients 11

2 Damage to Natural Capital: Air 280

2a Emissions of methane

2b Emissions of ammonia 48

2c Emissions of nitrous oxide 738

2d Emissions of carbon dioxide 47

3. Damage to Natural Capital: Soil

3a Off-site damage caused by erosion 14

3b Organic matter and carbon dioxide losses from soils 82

4. Damage to Natural Capital: Biodiversity and Landscape

4a Biodiversity/wildlife losses (habitats and species) 25

4b Hedgerows and drystone walls 99

4c Bee colony losses 2

4d Agricultural biodiversity +

5. Damage to Human Health: Pesticides

5a Acute effects 1

5b Chronic effects +

6. Damage to Human Health: Nitrate 0

7. Damage to Human Health: Micro-organisms and Other Disease Agents