Lib Dems promise financial reward for good environmental behaviour
Environmentally 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:
- Graduating tax on cars on the basis of emissions to increase tax on more polluting cars and reward cars with low emissions;
- Replacing Air Passenger Duty with an Aircraft Departure Duty to ensure maximum use of passenger flights and to start charging for freight flights;
- Giving local authorities the powers to introduce variable waste charging, paying refunds to households that reduce the amount of waste they produce.
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."
- Total cost of damage to the environment in 2004 = £67.3bn
- This equates to £1,077 for every man, woman, and child in Britain
- This is equivalent to roughly 19p per pound additional income tax
- Total cost of damage to the environment in 2010 = £76.3bn - a rise of £1.5bn per annum from 2004
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
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).
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
- 'Surface Transport Costs and Charges', Great Britain 1998, Institute for Transport Studies, University of Leeds, July 2001, page 49.
- Total (Maximum) external cost per kilometre = 13.65 pence.
- Total distance of car traffic = 392.4 billion kms (Most recent figures = 2002; Transport Stats GB 2003).
- Total external costs = £53.6bn
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
- Therefore, total external car from all traffic = £37.4 bn
c/ Rises in costs from traffic by 2010
- Traffic is due to rise 20% on 2002 levels by 2010 according to Government figures (Answer to Written Parliamentary Question tabled by Norman Baker MP, House of Commons, Official Report, 03/02/2004: Column 825W)
- This would mean a rise in the total cost at today's prices to £44.9bn
5. Greenhouse gas emissions
- In 1996 the Intergovernmental Panel on Climate Change's (IPCC) working group III published the report 'Climate Change 1995: Economic and Social Dimensions of Climate Change'. Chapter 6 of the report provided a literary review of the estimates of the marginal damage cost of carbon produced prior to 1995. It suggested the marginal damage cost to be within a range of $5 -$125 per tonne of carbon (in 1990 prices, or $6 - $160/tC in 2000 prices).
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
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