ECONOMIC POLICY

Counting properly: financial indicators that acknowledge nature

© Adam Oswell / WWF-Canon

Given that the environmental dimension has yet to be reflected in macroeconomic indicators, natural capital remains by and large the invisible foundation of the economy. Of equal significance is the disregard for natural capital in taxation policies. The objective there is the integrated implementation of the polluter pays principle and an overall reform of the taxation system that will shift the tax burden from labor and productive and investment capital to the use of natural resources and environmental pollution.

Interventions are necessary concerning:

  • macroeconomic indicators
  • taxation
  • investment law
  • the new programming period of Cohesion Policy 2014–2020.

Macroeconomic indicators

Conventional economic indicators are deficient and outdated in relation to the tremendous social and environmental challenges that contemporary socioeconomic systems have triggered and are urgently called to face.
Developing indicators for an ecologically sustainable or green economy is not an academic exercise or some long-term vague visionary goal. The European Union and other international institutions have developed and are already monitoring indicators regarding the transition to green economy.

Living economy indicators

Indicators of the ecological transition of the economy that could be initially implemented are:

  • the ratio of environmental to total taxes and to total employer contributions;
  • the level of taxation of pollution and natural resources consumption;
  • the absorption of EU funds and channeling to environmental investments;
  • carbon taxes revenue and the breadth of the specific tax base (sectors, number of businesses etc.);
  • the ratio of the recycling and waste management sector turnover to total GDP;
  • environmental violations—quantity, type and related fines;
  • per capita raw material consumption and the ratio of total raw material consumption to GDP;
  • per capita waste disposal;
  • the total and per capita pumping of ground and surface water per economic sector (primary production, industry etc.);
  • the ratio of organic farming to total agricultural area;
  • the volume of biodiversity conservation investments;
  • greenhouse gas emissions and energy consumption per unit of GDP;
  • the ratio of green jobs to total employment and the rate of change.
Rechanneling of tax revenues towards real, living economy

© Chris Martin BAHR / WWF-Canon

Tax system

The objectives of a comprehensive environment-oriented tax reform are not only fiscal, but also ecological and social. In principle, the necessary reform combines the increased taxation of environmental pollution and energy and natural resources use and consumption with the redistribution of the tax burden, relieving the burden on investment capitals and labor, which must be bolstered to restart the economy and create new employment opportunities.

Tax system for living economy

Indicators of the ecological transition of the economy that should be implemented are:

  • the ratio of environmental to total taxes and to total employer contributions;
  • the level of taxation of pollution and natural resources consumption;
  • the absorption of EU funds and channeling to environmental investments;
  • carbon taxes revenue and the breadth of the specific tax base;
  • the ratio of the recycling and waste management sector turnover to total GDP;
  • environmental violations and related fines;
  • per capita raw material consumption and the ratio of total raw material consumption to GDP;
  • per capita waste disposal;
  • the total and per capita pumping of ground and surface water per economic sector;
  • the ratio of organic farming to total agricultural area;
  • the volume of biodiversity conservation investments;
  • greenhouse gas emissions and energy consumption per unit of GDP;
  • the ratio of green jobs to total employment and the rate of change.

Investment policy

Investment and/or development legislative acts have been for decades the vehicle Greece has used to financially support all sorts of entrepreneurship according to non-existent, deficient and all in all questionable criteria of economic viability, competitiveness and innovation, with weak control mechanisms and no provision for the environment.
Aiming at a truly sustainable and competitive development policy in the context of a broader reform that will address failings in all relevant sectors, state support of business development must take a green turn.

Investment policy with a future

Strategic goals:

  • balanced growth with support distributed to eligible business plans in regions with comparative advantages and the necessary natural resources;
  • employment increase with emphasis on green jobs;
  • enhancement of the competitiveness of the economy;
  • advancement of innovation in high-quality sectors with small ecological footprint;
  • termination of the financial and commercial dependency on subsidies of real economy sectors.

Determining priority sectors: As a main tool for attracting investment, investment laws must focus on supporting plans that boost entrepreneurship in commercial, extrovert, innovative and, hence, viable sectors with small ecological footprint.

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