MED BRIEF is a series of Policy Briefs written by FEMISE researchers. The objective: providing a brief and politically relevant analysis on crucial Mediterranean issues for policymakers. A recent MED BRIEF (n°16) focuses on environmental policy instruments in the region.
Environmental policies figure highly in national and international policy agendas. In the last decades they have developed in different directions and have generated intense debates on their ecological effectiveness and economic consequences.
Written by Vera Danilina and Federico Trionfetti, this MED Brief entitled “Green Public Procurement v.s. Environmental Taxation : implications for the EU-MENA environmental policy”, focuses on environmental taxation and green public procurement (GPP), two environmental policy instruments which differ in terms of political viability and impact.
The brief offers a comparative analysis of their effectiveness and reveals the opportunities and threats of a (un)harmonized environmental policy across countries. It sheds some light on the pros and cons of the implementation of environmental taxation and GPP in general and, particularly, in the EU-MENA (Middle East and North Africa) partnership.
“Taxation is more powerful than GPP”
To introduce the topic, the two authors review the implementation of these instruments in the Mediterranean countries. “Environmental taxation has been widely represented all over the world, accounting for 2.4% of the EU-28’s GDP, varying from 0.77% in Liechtenstein to 4.14% in Denmark (Eurostat, 2013). The data on MENA countries is scarce, but the OECD reports that green taxes account for 3%, 2% and 1.3% of GDP in Israel, Morocco, and Tunisia, respectively (OECD, 2016)”, they explained.
The researchers then compare the effectiveness of the two policies in the different countries. “The simulations show that one unit of purchasing power loss with GPP corresponds, on average, to a 6.7 times more significant environmental degradation decrease in comparison with taxation. Meanwhile, in terms of absolute impact, taxation is more powerful than GPP because it results in a 1.8 times greater decline in environmental degradation”.
For the FEMISE economists, the two policies are complementary, because they compensate for each other’s disadvantages.
Based on their finding the authors suggest three types of recommendations :
First, they support the wide implementation of GPP as an efficient approach to environmental policy design in any country of the EU and MENA regions regardless of the level of their development and/or eco-concerns.
Second, they support the environmental policy harmonization across trading countries. This strategy can be seen as a first-best or a “win-win” option that allows the actors to better coordinate their environmental efforts.
Third, the authors advocate for environmental support across countries when one can be a donor, and another one – a recipient.
Ultimately, one of the main conclusions of this MED BRIEF is that coordination of environmental policies is of particular importance for MENA countries in view of meeting the Sustainable Development Goals.
The FEMISE MED BRIEF is available for download here : http://www.femise.org/wp-content/uploads/2019/03/MEDBRIEF-16.pdf