OECD Environmental Outlook to 2050:The Consequences of Inaction

March 15, 2012

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What is it?

• Projects demographic and economic trends to 2050, and their impacts on the environment without more ambitious policies = the “Baseline” scenario

• The “Baseline” scenario is…

– not an acceptable future

– calls for urgent action now to avoid the costs and consequences of inaction

• The Outlook examines policies that could change that picture for the better (via policy simulations)

• Joint economic-environment modelling by the OECD and the PBL Netherlands Environmental Assessment Agency

Environmental Outlook to 2050: Introduction

• Executive Summary

• 1. Introduction

• 2. Socioeconomic Development

• 3. Climate Change

• 4. Biodiversity

• 5. Freshwater

• 6. Health and Environment

• Annex on the Modelling Framework

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Structure of the Report

Environmental Outlook to 2050

Note: values using constant 2010 purchasing power parity (PPP) exchange rates.Source: (OECD, 2012) OECD Environmental Outlook to 2050; output from ENV-Linkages.

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Projections for real gross domestic product: Baseline, 2010-2050

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

2010 2015 2020 2025 2030 2035 2040 2045 2050

Bill

ions

of c

onst

ant 2

010

US

D

OECD BRIICS RoW US China India

SOCIO-ECONOMIC DEVELOPMENTS:World economy will nearly quadruple by 2050

Source: (OECD, 2012) OECD Environmental Outlook to 2050; output from ENV-Linkages.

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CLIMATE CHANGE:GHG emissions to increase by 50% by 2050

0

10

20

30

40

50

60

70

80

90

2010 2015 2020 2025 2030 2035 2040 2045 2050

GtC

O2e

OECD AI Russia & rest of AI Rest of BRIICS ROW

GHG emissions by region, Baseline

Source: (OECD, 2012) OECD Environmental Outlook to 2050, Baseline projection using IMAGE model suite

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CLIMATE CHANGE: Global temperature to increase by 3-6°C by 2100

CO2 atmospheric concentrations

CLIMATE CHANGE: Human and economic costs of more extreme weather events, crops & infrastructure at risk, etc.

7Source: (OECD, 2012). OECD Environmental Outlook to 2050; output from IMAGE model suite

Change in annual temperature between 1990 and 2050

Source: (OECD, 2012), OECD Environmental Outlook to 2005; output from IMAGE

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HEALTH & ENV : Urban air pollution to become the top environmental cause of premature deaths by 2050

Global premature deaths from selected environmental risks: Baseline, 2010 to 2050

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0

Particulate Matter

Ground-level ozone

Unsafe Water Supply and Sanitation*

Indoor Air Pollution

Malaria

Deaths (millions of people)

2010

2030

2050

* The region South Asia excludes IndiaSource: (OECD, 2012), OECD Environmental Outlook to 2050; output from IMAGE

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HEALTH & ENV: Urban air pollution is already worse thanWHO safe levels in most cities

0 20 40 60 80 100 120 140 160 180 200 220

OECD

Brazil

Russia

India

Indonesia

China

Africa

South Asia*

μg/m3

2010

2030

2050

WHO Air Quality Guideline20

PM10 concentration in major cities: Baseline, 2010-2050

Source: (OECD, 2012), OECD Environmental Outlook Baseline; output from IMAGE

10

0

1 000

2 000

3 000

4 000

5 000

6 000

2000 2050

World

Km3

electricity

manufacturing

livestock

domestic

irrigation

WATER: Global water demand to increase by 55% by 2050

Rapidly growing water demand from cities, industry and

energy suppliers will challenge water for irrigation to 2050.

Global water demand: Baseline scenario

WATER: In 2050, 4 out of 10 people will live inriver basins under severe water stress

1.61.6

1.31.3

3.2 Bn3.2 Bn

2050 (9.2 Bn)

People under no or low water stress

People under medium water stress

People under severe water stress

2000 (6.1 Bn)

3.9 Bn

1.4

3.9 Bn

Nearly half of the world population is projected to live under severe water stress in 2050

OECD BRIICS Rest of the world

2000

2050

= 200MM

Source: OECD Environmental Outlook Baseline; output from IMAGE12

WATER: Water pollution from urban sewage to increase 3-foldNitrogen effluents from wastewater: baseline

Source: (OECD, 2012), OECD Environmental Outlook to 2050; output from IMAGE13

WATER: 1.4 billion people still without access to sanitation in 2050

…improved water source …sanitation facilities

0

100

200

300

400

500

600

700

800

900

1 000

1 100

1990 2010 2030 2050 1990 2010 2030 2050

Urban Rural

mill

ions

of p

eopl

e

OECD BRIICS RoW

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

1990 2010 2030 2050 1990 2010 2030 2050

Urban Rural

Population lacking access to…

Source: (OECD, 2012), OECD Environmental Outlook Baseline; output from IMAGE

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0%

10%

20%

30%

40%

50%

60%

70%

80%

Nor

th

Am

eric

a

Eur

ope

Japa

n/K

orea

Aus

tralia

/NZ

Bra

zil

Rus

sia

Sou

th A

sia

Chi

na

Indo

nesi

a

Sou

ther

n A

frica RoW

Wor

ld

Mea

n sp

ecie

s ab

unda

nce

2010 2020 2030 2050

Terrestrial mean species abundance (MSA) by region: Baseline

BIODIVERSITY:Global biodiversity to decline by a further 10% by 2050

RoW = rest of the world. Infra+Encr+Frag = infrastructure, encroachment and ecosystem fragmentation Source: (OECD, 2012), OECD Environmental Outlook to 2050; output from IMAGE

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BIODIVERSITY:Climate change is the fastest growing driver of lossEffects of different pressures on terrestrial MSA: Baseline

50%

60%

70%

80%

90%

100%

2010 2030 2050 2010 2030 2050 2010 2030 2050 2010 2030 2050

OECD BRIICS RoW World

MS

A

Infr+Encr+Frag

Climate Change

Nitrogen

Former Land-Use

Forestry

Pasture

Bioenergy

Food Crop

Remaining MSA0-

POLICY ACTION: Act now – because delay is costly

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Delaying climate action would increase the global cost of GHG mitigation by nearly 50% by 2050, and could make it unaffordable

Real income in 2050 (% deviation from baseline)

-10%-9%-8%-7%-6%-5%-4%-3%-2%-1%0%

450 ppm Core 450 ppm delayed action

Source: OECD (2012), OECD Environmental Outlook to 2050, output from ENV-Linkages model

Optimal mitigation: 450ppm

Cancun pledges: Delayed action

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POLICY ACTION: What policies do we need?

• Make pollution more costly than greener alternatives

– e.g. through environmental taxes and emissions trading schemes. These can also generate much-needed fiscal revenues.

• Value and price the natural assets and ecosystem services

– e.g. through water pricing, which is an effective way of allocating scarce water; payments for ecosystem services, natural park entrance charges.

• Remove environmentally harmful subsidies

– an important step in pricing resources and pollution properly (e.g. to fossil fuels, irrigation water).

POLICY ACTION: Environmental taxesRevenues from environmentally related taxes in per cent of GDP1

Source: OECD-EEA database on instruments used for environmental policy, wwww.oecd.org/env/policies/database

1. Includes: taxes on energy products, vehicles, pollutants and natural resources, but Excludes: royalties and taxes on oil and gas extraction.

The importance of pricing: water conservation(% ownership against water fee structure)

Source: OECD (2011), Greening Household Behaviour: The Role of Public Policy

POLICY ACTION:Why make CO2 cheaper if you’re trying to make it scarcer?Impacts on GDP in 2050 of unilateral phase-out of fossil fuel consumer

subsidies in emerging and developing countries(% deviation from baseline)

(1) Middle East & Northern Africa (2) Other Asian, African and Latin American Emerging economies

Source : OECD (2012), OECD Environmental Outlook to 2050; OECD ENV-Linkages Model ; based IEA subsidies data for the year 2009

Note: This graph is based on an arithmetic sum of the individual support measures identified for a sample of21 OECD countries, i.e. the 24 OECD countries included in the inventory net of those countries for whichestimates have not been collected yet (Chile, Iceland and Luxembourg). It reflects the value of tax reliefmeasured under each jurisdiction’s benchmark tax treatment. The estimates do not take into accountinteractions that may occur if multiple measures were to be removed at the same time

Source: OECD (2011), Inventory of Estimated Budgetary Support and Tax Expenditures for Fossil Fuels.

POLICY ACTION: Fossil fuel support in OECD countries

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POLICY ACTION: What policies do we need?

• Devise effective regulations and standards

– e.g. to safeguard human health and environmental integrity

– for promoting energy efficiency

• Encourage green innovation– e.g. by making polluting production and

consumption modes more expensive, and investing in public support for basic R&D

– e.g. attracting private sector investment

• Facilitate better consumer choices– e.g. through energy and water efficiency labelling,

organic food labels, information, etc.

Source: OECD (2010), The Invention and Transfer of Environmental Technologies

POLICY ACTION: Clear policy signals are needed to drive innovation

Patenting activity pre- and post-Kyoto Protocol’s adoption (3-year moving average, indexed on 1990=1.0)

POLICY ACTION: Recognition & Use of Energy-Efficiency Labels

Source: OECD (2011), Greening Household Behaviour: The Role of Public Policy

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POLICY ACTION: Mainstreaming Green Growth

• Maximise synergies and co-benefits– e.g. tackling local air pollution can cut GHG emissions while reducing

the economic burden of health problems

– e.g. climate policy can also help protect biodiversity if GHG emissions are reduced by avoiding deforestation.

• Integrating environmental objectives in economic and sectoral policies

– e.g. energy, agriculture, transport, development

– ensuring coherence with policies in these areas can have greater impacts than environmental policies alone.

www.oecd.org/environment/outlookto2050

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