sustainable development 20 years on from the ... - José Eli da Veiga

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from these sectors could suffer given that consumers from developed countries are
increasingly aware of the environmental impact of the goods they purchase
(UNEP/MERCOSUR Network, <strong>20</strong>11).
(v) Promote studies and measures to value the economic contribution of biodiversity and
ecosystem services, using methodologies already available. Valuation does not imply that all
ecosystem services must be privatized or traded and it is acknowledged that this option
entails a range of issues including equity for the current users of common resources and
future generations, as well as considerations of economic efficiency (TEEB, <strong>20</strong>10). Despite
these limitations, however, experiences indicate that the use of market-based mechanisms for
biodiversity conservation may be appropriate in certain circumstances. The Economics of
Ecosystems and Biodiversity (TEEB) study provides several examples in the region. The
challenge for decision makers is to assess when market-based solutions to biodiversity loss
are likely to be culturally acceptable, as well as effective, efficient and equitable.
Guideline 3
Internalize the environmental and social costs and benefits of public
and private economic decisions
Principle 16 of the Rio Declaration states that “national authorities should endeavour to promote the
internalization of environmental costs and the use of economic instruments, taking into account the approach
that the polluter should, in principle, bear the cost of pollution, with due regard to the public interest and
without distorting international trade and investment”. In addition to internalizing costs, the benefits of
environmental protection should be internalized, for example, by increasing the profitability of activities,
sectors and technological choices that have a smaller environmental impact or positive externalities.
The following actions are suggested under this guideline:
(a)
Adopt regulatory measures and economic instruments (such as fiscal tools, public
investment and credit, and government procurement, among others) which attribute value
to externalities (both positive and negative) and enable agents to calculate the overall costs
and benefits of their activities
The pricing of activities that pollute or cause environmental degradation should reflect the social
cost of the externalities in question.
Public investment decisions and the policies of <strong>development</strong> finance institutions should be based
on a book value assigned to environmental damage and health costs, risk management and the application
of appropriate long-term discount rates, so that a proper comparison of the various investment options can
be made. The high discount rate used to arrive at public investment decisions interferes with or precludes
the use of options that could create synergies among economic growth, quality infrastructure and reduced
environmental and social impacts over the medium and long terms (Ocampo, Cosbey and Khor, <strong>20</strong>11).
This practice should be revisited based on the methodology related to social discount rates.
The concept of eco-efficiency could also serve as a useful frame of reference for incorporating
sustainability criteria in the evaluation of investments (see chapter I).