by Clara Berestycki
Based on Berestycki, C. and A. Dechezleprêtre (2020), “Assessing the efficiency of environmental policy design and evaluation: Results from a 2018 cross-country survey”, OECD Economics Department Working Papers, No. 1611, OECD Publishing, Paris, https://doi.org/10.1787/482f8fbe-en.
Environmental policy implementation may incidentally create distortions in some sectors of the economy. Think of a simple example: if the government subsidizes electric car makers, this could give an advantage to the clean car maker over its non-green competitors. We set up a qualitative survey to understand whether OECD countries take into consideration potential economic distortions in their environmental policies. More broadly, the survey collects data on environmental policy design and evaluation. In practice, we send out questionnaires to policy experts in environment ministries of OECD countries. We then compile their answers into an indicator called the DEEP (Design and Evaluation of Environmental Policies).
The first part of the questionnaire approaches environmental policies from a classical economic point of view. We ask countries if they have policies in place like grandfathering, which might disrupt competition by giving unfair advantages to certain firms. For example, when the United States introduced its landmark air pollution control policy, the Clean Air Act, in 1970, old pollution sources were not subject to the law: only new air pollution sources were. Old pollution sources were “grandfathered”: they were given a sizable advantage compared to new plants.
The second part of the index aims to understand how countries implement and evaluate environmental policies, which can generate many administrative burdens. For example, we ask countries if they have a “one-stop-shop” website where firms can fill out all the necessary forms to request an environmental permit. Other questions relate to the environmental policymaking process itself.
This questionnaire was sent out twice, once in 2013 and once in 2018. Overall, between the two vintages of the questionnaire, countries improved their policy design and evaluation while decreasing entry barriers for firms. In practice, more countries made ex-ante and ex-post policy evaluation mandatory and public. Countries also simplified administrative procedures related to environmental permitting, in part due to digitalization. In particular, Portugal, Spain, and Israel entirely overhauled their policy design and evaluation process to make it more transparent and systematic.
Environmental policy is a complex and multifaceted issue, and this paper far from addresses all its dimensions. For instance, important policy decisions are often not made in the central ministries but decentralized to local authorities- something we do not capture. In addition, the DEEP is a quantitative indicator enabling a ranking of countries based on a qualitative survey, which is always difficult to justify. However, open-access datasets on environmental policies across time and countries remain scarce and this dataset and paper contribute to filling that gap. We hope that this work may help the public and policy makers understand how other different countries tackle the challenges associated with environmental policy design and evaluation.