United States: Decoupling the Economy from Natural Resource Degradation: Enhancing the Role of the Environmental Impact Assessment

1 Moving Down the Path of Destruction

The most comprehensive report on the global environment since 2012 – UNEP’s Global Environmental Outlook 6 (GEO-6) 1 – has just been published and it shows the environmental situation is deteriorating and we are not on track to achieve our agreed environmental goals, such as the Sustainable Development Goals (SDGs) by 2030, nor to reach desired long-term sustainability by 2050. 2 ^, 3 Natural resources are often over-exploited, poorly managed and polluted, and unsustainable production and consumption patterns and trends, coupled with population growth, have increased resource use and exposed human lives to severe health threats. Our planet is deteriorating and “increasingly serious consequences” are arising. GEO-6 found current actions too slow – or sometimes in the wrong direction – to achieve our common environmental targets. It warns that “the window for action is closing” and calls for urgent and strengthened international cooperation to reverse negative trends and restore the planet’s and human health, as continuing failure is leading to on-going and further potentially irreversible adverse impacts. 4

Scholars and scientists emphasise the urgent need to use all our resources and power to halt the current, progressively worsening trends and restore the deteriorating environment. In the few opportunities still remaining, policy-makers are unwilling to take fundamental steps and to make ambitious decisions, instead minimising the required actions as much as possible. Among the progressive proposals for the conservation and revitalisation of natural resources is “decoupling” economic growth from environmental degradation, discussed in detail in a report prepared in 2011 by the International Resource Panel Working Group on Decoupling (the IRP Decoupling Report). 5 Currently, economic growth has a significant impact on the quality and quantity of natural resources, to an extent which is considered unsustainable, especially taking into account population growth and climate change. In the “decoupling” scenario, the interlinkage between economic growth and extracting natural resources would be limited and fewer resources would be used per unit of economic output, leading to a more sustainable economy.

However, simply decoupling economic growth from environmental degradation in one region or sector will not necessarily increase the protection of nature, in the broadest sense. A country or region may decouple its economic development from extracting natural resources in that particular area, but if the economy itself relies on some type of environmental extraction, natural degradation could be transmitted to another less developed location, where probably unsustainable economic growth is pursued. As mentioned in GEO-6, even though moves to implement the circular economy can help preserve raw materials and decouple economic growth from resource use and associated environmental externalities, 6 “in some cases the appearance of growth decoupling in one sector or territory can mask a continued environmental and social impact somewhere else ...   and [shift] the cost somewhere else”, like in the case of importing resource-intensive consumer goods from developing countries. 7 This trading is a very critical element in analysing decoupling, as the destruction of nature may shift to areas and countries where environmental liability is poorly developed 8 and where its costs are often being borne by the poorest and most vulnerable in society, including indigenous and local communities, particularly in developing countries. 9 Thereby, absolute or relative decoupling could conserve the natural resources in a territory, but it may not reduce the overall environmental degradation on the planet.

Furthermore, concerning conservation and protection of shared natural resources between jurisdictions, implementation of decoupling would be even more complex. As the number of stakeholders and sources of destruction increases, each tries to adhere to the applicable domestic policies and rules. Due to the costs involved in that adherence they are resistant to responsibilities on a broader scale. Regulators may resist the need to expand their view as broadly as might be necessary to decouple the entire affected area. Still however, it is necessary to adopt a more practical, fact-based approach, with a focus on segregating the planet’s environment and economic growth, especially in the more complex platforms.

2 Decoupling as a Prerequisite for Sustainable Development

When it was issued in 1987, the Brundtland Commission’s Report first postulated the purpose of sustainable development in the environmental context as follows: “to ensure that [humanity] meets the needs of the present without compromising the ability of future generations to meet their own needs”. 10 While the consumption of natural resources is still rising rapidly, with the growth of the world’s population, the rising level of consumption is projected to triple resource use by 2050. Material resource extraction and modification to create economic value are still seen as “reliable companion[s] of economic prosperity”. In some developed countries, the resource consumption ratio to the economic growth (GDP) has stabilised or even shown a modest decline; however, the resource consumption rate is still on the rise or the resource intensity is exported somewhere else. 11 In developing countries, even though the level of resource used by each person is still well below that in the developed nations, the ratio of GDP to resource extraction is now higher. 12

Energy, materials, water and land are natural assets extracted deliberately and their quantity or quality deteriorate to grow the economy. Among them, water is a prerequisite for the health and wellbeing of humans, and the conservation of nature and ecosystem services. At present, however, the function of water bodies as sinks and sources is severely constrained. Unlike energy, water is not subject to price volatility and its extraction and modification are not expensive. 13 Although climate change has already impacted the hydrological cycle, water withdrawal and pollution by human activities are still the largest factors in reducing water resources. Agricultural activities contribute the largest quantity of water pollution in many places, followed by untreated industrial waste dumped into waters, mining activities, energy production, landfills, and urban wastewater effluents. 14 According to the UNEP report, with the current trends in water management, half of the world’s population will face severe water stress by 2030. 15

In 2015, the UN General Assembly adopted the following as its sixth SDG: “Ensure availability and sustainable management of water and sanitation for all”. 16 Reliable access to clean water for a range of purposes (e.g., as a source of energy, for agriculture, as a component of some industrial processes, and as a basis for transportation systems) is essential in sustainable development. A large amount of income is spent on access to water, and in water-stress situations people should spend more to get or transfer the water. 17 Accordingly, significant constraints on the availability of fresh water beside increasing pollution loads are becoming a limiting factor to development in many regions. 18

Increase in demand, as a result of the world’s population growth, will lead to extra pressure on natural resources, which are already under stress, both in terms of quantity and quality. Considering the limitation of natural resources and the interrelationship between ecosystems, some experts suggest that the only possible scenario to meet the needs of the world’s growing population, eradicate poverty and pursue economic development without threatening future life on earth, would be to substantially reduce the dependency on natural resources associated with economic activities. This scenario is referred to as “decoupling”. 19

In this sense, “decoupling” means “using less resource per unit of economic output and reducing the environmental impact of any resources that are used or economic activities that are undertaken”. 20 At the World Summit on Sustainable Development in 2002, States agreed that “the interdependent and mutually reinforcing pillars of sustainable development” are “economic development, social development, and environmental protection”. 21 Based on this three-dimensional concept of sustainability, the decoupling idea would support the Green Economy, in which human welfare is enhanced while sustaining environmental resources. 22

Decoupling can be applied by all governments, private and civil society sectors and toward different resources such as water, land, soil and metals. It can increase resource productivity 23 to reduce the rate of use of primary resource per unit of economic activity or it can increase eco-efficiency in increasing economic output to mitigate negative environmental impacts. 24 The IRP Decoupling Report distinguishes between relative and absolute decoupling. 25 Although relative decoupling (reduction in per-unit resource impact) is easier to achieve and fairly common, absolute decoupling (reduction in the total amount of resource used) is clearly more effective in conserving natural resources. As the report notes, “Absolute reductions in resource use are rare; they can occur only when the growth rate of resource productivity exceeds the growth rate of the economy”. As UNEP noted in its summary of the Working Group’s four country studies (China, South Africa, Germany and Japan), “developing countries pursue no strategies of absolute decoupling and  ...   industrialized countries may have policies but very modest success in absolute decoupling”. 26

SDG 6 states that improving water quality by 2030 is achievable through “reducing pollution, eliminating dumping and minimizing the release of hazardous chemicals and materials, halving the proportion of untreated wastewater and substantially increasing recycling and safe reuse”. 27 Globally, the rate of water resource use increase is lower than that of economic growth. This example of relative decoupling was more significant in the 1990s, when the global economy expanded thirty-fold while global water consumption only increased six-fold, mostly in developed countries. 28 In developing countries such as China and Singapore, relative decoupling also happened through reducing demand and improving efficiency programmes. 29 Companies could also reduce water pollution significantly by enhancing water efficiency in production processes, mostly as an adaptation measure to the probable upcoming shortage of resources. 30

However, UNEP’s published summary and analysis of the IRP Decoupling Report (the UNEP Decoupling Report) notes that the UN Food and Agriculture Organization projects that global food production will increase by 40 percent by 2050. It also notes that irrigated agriculture currently provides 40 percent of the world’s food. 31 Non-renewable groundwater resources are still being extracted in many parts as primary sources and, in developed countries, up to 59 percent of the water used by industry is extracted fresh water. 32 Water quality challenges would also impact the physical scarcity of water resources and would exacerbate water stress in many river basins. 33 If the current system of water development and management continues, there will be a 40 percent gap between water supply and demand. 34 The depletion of non-renewable water resources and changes to water ecosystems, and their effect on human welfare and health, and on economic systems makes it imperative to decouple water from economic activities, beyond “business as usual” as the current trend. Improving efficiency in water harvesting, more effective water storage, more comprehensive and fairer approaches to water sharing, greatly enhanced water recycling and reducing demand are all measures suggested in the two Decoupling Reports. 35

3 Case Study: The Great Lakes Water Quality Agreements

The Great Lakes, consisting of five connected lakes, form the largest fresh surface-water ecosystem on earth. They are shared between the US and Canada. They are the source of drinking water for more than 48 million people, and of irrigation in nearly 25 percent of Canadian agricultural production and 7 percent of US farm production. 36 They have a significant direct impact on the regional economy, generate more than US$ 52 billion annually, and form a habitat for more than 3,500 plant and animal species. 37

However, with massive population growth in the Great Lakes basin, expanding human settlements, urbanisation and industrialisation have exposed the environment of the lakes to multiple threats, from disappearing native species to invasive species, from shoreline development and cargo ship channels to water withdrawal. But the biggest challenge is water pollution. 38 The pollution comes from air pollution deposition, dumped liquid waste, pesticide use, manure management practices on agricultural lands and solid waste disposed of in landfills which leaches into the lakes, carried by rainfall and snowmelt, or directly by soil erosion. 39 In some areas, pollution hotspots have been created, major aquatic habitats and wetlands lost and high levels of persistent toxic substances detected, causing concern. 40

As a response to rising public and scientific concern about the pollution problem of the Great Lakes basin, using the advisory capacity of the International Joint Commission (IJC) 41 established in the Boundary Waters Treaty (1909), 42 the two countries entered into the first international water quality agreement 43 in 1972 “to prohibit discharge of toxic substances in toxic amounts and eliminate the discharge of persistent toxic substances, to provide financial aid to waste treatment works and to develop and implement practices that control all sources of pollution”. This treaty initially focused on “pollution control” 44 to improve water quality, measuring phosphorus levels as a primary metric. In 1978, the Parties adopted the 1978 Protocol to cover the entire Great Lakes ecosystem, aimed at the “virtual elimination” of toxic pollutants and addressing other environmental problems beyond phosphorus levels. 45 The agreement was modified again by the 1987 Protocol which introduced new programmes to restore and protect the waters of the Great Lakes. Also, the power and responsibilities shifted from the IJC to the governments to make them more accountable and engaged in the processes. 46 In an additional annex to the 1987 revision, the Parties recognised “the need for strengthened efforts to address the continuing contamination of the Great Lakes Basin Ecosystem, particularly by persistent toxic substances”. 47

Together, the agreement and its various subsidiary instruments and plan have come to be known as the “Great Lakes Water Quality Agreements”. They provide a framework for identifying binational priorities and implementing actions to improve water quality. As they have evolved over time, the GLWQA indicate the Parties’ interest in applying an “ecosystem approach to pollution”, 48 recognising that the restoration and enhancement of the waters are linked directly to “the restoration and enhancement of those parts of the Great Lakes basin ecosystem with which the waters interact”. 49 The Parties laid out general and specific objectives jointly, based on available information on cause-and-effect relationships between pollutants and receptor points that are considered to protect most sensitive uses in all waters and are required to use their “best efforts” to implement them. They are also required to aim to achieve target levels annexed to the agreement.

The 1987 Protocol sets out procedures to identify and improve waters with advanced contamination and identified 43 of the most polluted areas as Areas of Concern (AOCs), based on the “Beneficial Use Impairment” 50 of those locations. To restore each of these areas, the two federal governments (including their related state and local governments) jointly developed Remedial Action Plans. Each of these plans outlines the relevant impairment and its causes; the actions needed for restoration; the agencies and organisations responsible; the timeline to complete them; the criteria to measure all restoration; and the requirements enabling areas to be taken off the list. Parties also agreed to implement Lakewide Management Plans to restore and protect open lake waters. 51 IJC retained its responsibility to collect, analyse and disseminate information and data, give recommendations and investigate issues on the Great Lakes and their pollution levels, 52 and therefore it could have a role in identifying AOCs and designing the specific remedial action plans as well as the broader Lakeside Management Plans.

The GLWQA was successful in decreasing water pollution, especially in areas with fewer interdependencies, more stakeholder involvement, or for RAPs formed with more consensus. However, in more complex restoration plans, when several jurisdictions or ecosystems were engaged, the performance was weaker. 53 The standards and objectives were not clear enough to create accountability and not assigning definite roles for related governments made it easy for them to avoid including the restoration costs in their budgets. 54 In implementing the commitments in the agreement, no jurisdictions had the enforcement power. The IJC had only an analytical and advisory role and no adjudicative or enforcement power. For its effectiveness in pollution control, it largely relied on the appropriation of funds, legislative enactment, and cooperation between states and provincial governments. In the US, the GLWQA was considered an executive agreement. The US Environmental Protection Agency successfully argued that it should be integrated into domestic law to gain enforcement power. 55

In addition, the disparity in the two Parties’ approaches presented significant challenges for the effectiveness of the GLWQA. US environmental policies are more consistently dominated by federal legislation, built upon the judicial interpretation of the US Constitution (specifically, the Commerce Clause). 56 With regard to geographically focused efforts, those policies more often focus on the preservation of biodiversity and restoration of habitats. 57 With the US Environmental Protection Agency in charge of implementing the GLWQA, however, it was required to refocus – to establish water quality guidance, designate limits on pollutants in the waters of the lakes and set minimum water quality standards, anti-degradation policies and implementation procedures. At the state level, legislatures and agencies are required to adopt the same standards, policies and procedures for the Great Lakes water and to implement them in a manner consistent with that guidance. 58

In Canada, on the other hand, restoration programmes are subject to more discretion on the part of institutions and agencies, and apply on a discharge-based or site-based basis. Canadian restoration plans rely on provincial regulations and management resources as well as on federal regulations. 59 The focus of their environmental protection plans is on the elimination of pollution. The federal government’s compliance is reflected in the framework of the Canadian Federal Great Lakes Program, through the Great Lakes Action Plan for providing financial support for the restoration. With regard to the restoration of degraded areas, habitat protection, and prevention and control of pollution in the Great Lakes, the federal and provincial government of Ontario work together through a non-binding instrument known as the Canada-Ontario Agreement Respecting the Great Lakes Basin Ecosystem (1971). 60

4 EIA as a Platform for Decoupling

Current environmental policies and regulations are essential but not sufficient to decouple the global economy from the unsustainable extraction or despoliation of natural resources and to overcome challenges in the way of sustainable development. Partial decoupling can be observed for some impacts and resources in some areas of the world but there is still a need to scale up existing sustainable practices as well as more fundamental transitions in production, consumption, and disposal of goods and materials across the globe. 99

According to the GEO-6 report, solutions with a more holistic approach are necessary to address systemic ecological problems of this kind. 100 It mentions the need for “urgent cross-sectoral policy action, through a whole-of-society approach” to address environmental challenges at the national level. 101 The same type of transformative change is necessary in the international environmental context, to consider a cross-sectoral and broader concept of ecosystems in long-term analyses and be able to change the current downward trend in extracting natural resources throughout the world and follow a sustainable form of economy, separate from environmental destruction.

Decoupling, even though it cannot serve alone as a full solution to the complex environmental challenges, would make a positive contribution in the analysis of every policy and regulation. The transition to this approach would encourage reliance on long-term, comprehensive, science-based targets as the objective bases for future directions and actions promoting decoupling. Successful examples of environmental improvements are found where problems have been well identified and managed, and where regulatory and technological solutions have been readily available. 102

EIA, “an analytical process or procedure that systematically examines the possible environmental consequences of a given activity or project ...  to ensure that the environmental implications are taken into account before the decisions are made” 103 is one regulatory system that could incorporate a decoupling objective. In fact, it can serve as an anchor, from which to pursue decoupling of environmental degradation and resource use from economic growth and its associated environmental externalities. Originally designed in the National Environmental Policy Act (NEPA) in the US, the EIA process requires federal agencies to prepare an EIA (although NEPA calls it an “Environmental Impact Statement” or EIS) whenever it appears that a proposed major federal action will significantly affect environmental quality. 104 The process uses information exchange and public participation to impose a standard of environmental accountability on agencies that are not otherwise directly held accountable. Its information disclosure requirement forces decision-makers to identify and confront the environmental impacts of their actions and to expose their decisions to a theretofore unprecedented level of public scrutiny. 105

The concept of EIA spread relatively quickly into the laws of the US states 106 and those of over a hundred other countries. 107 The underlying principle remains the same: that before taking an action with environmental consequences, the proponent and decision-makers must assess associated impacts and discuss them with the affected public. Many of these laws offer improvements over the original model incorporated in NEPA. Many require EIA for all projects (not limited to those requiring a federal permit); 108 make local governments also responsible; 109 and/or extend the EIA mandate to more impacts. 110 These reforms exhibit EIA as an evolving regulatory approach.

The EIA model is essentially procedural. EIA does not determine the decision-makers’ choice or require specific substantive measures to prevent environmental harms. Some scholars have criticised the use of procedural standards without some connection to the prevention of environmental harm as substantive requirements. 111 As a result, some EIA models now specify outcomes and mandate “mitigation of environmental impacts”. 112

This evolution can be a proper setting for incorporating decoupling into decision-making. Now that we are well-informed about how the current economic trends are leading us to an adverse environmental future, it is time to insert decoupling at the core of assessments. In each and every EIA, decoupling effects should be identified, studied, evaluated, analysed and provided to the public. EIA should be trying to break down the link between economic growth and environmental degradation as much as possible. This approach to resolving the environmental problems, following the idea of decoupling, rather than simply describing the issue or shifting the problem to another place or sector, would give a practical form to the concept of decoupling.

In integrating the concept of decoupling as a substantive mandate, EIA laws should also expand their scope – to consider, for example, environmental impacts outside of the borders of the jurisdiction in which the EIA is being undertaken. The legal duty to perform EIA arises from domestic laws; however, it can take one step forward by following a long-standing global trend of requiring decision-makers to consider and address transboundary environmental harms. This expansive rule for EIA should be codified in domestic law and better clarified under international law. This approach is found in the US in the form of a guidance issued by the Council on Environmental Quality, which has an advisory role under NEPA. 113 This document “requires agencies to include analyses of reasonably foreseeable transboundary effects” of projects analysed in EIAs. This guidance recognises as a policy matter that NEPA should apply the process to projects within the US that have externalised impacts on other countries. 114 Numerous federal courts’ interpretations have ruled that NEPA applies to actions within the jurisdiction of the agency involved, requiring them to take environmental impacts beyond those boundaries and beyond national boundaries into account. 115

In the international law context, the concept of Transboundary Environmental Impact Assessment (TEIA) is rooted in Principle 21 of the 1972 Stockholm Declaration, 116 and repeated in the Rio Declaration of 1992. 117 There are also regional agreements 118 that require Parties to take into account the extra-territorial effects of certain projects, and instruct them to allow affected States and individuals to participate in EIA procedures, regardless of national origin or residence. These models, however, do not prohibit significant transboundary environmental harms, requiring only that they be considered in the decisions relating to the project. 119 Financial institutions, including the World Bank, also often insist on EIA for the projects they want to finance. 120 However, there is at present no global treaty mandating TEIA, and the enforceability of TEIA has been under debate. 121

5 Conclusion

In order for the policy of decoupling to have effective consequences on detaching the global economy from environmental extraction, it would be useful to incorporate it into the EIA process. In turn, the scope of EIA requirements should be expanded to cover every decision that might have some environmental effects. EIA should also move from merely procedural models to more substantive mandates, which can have more direct, faster and greater results on decoupling. EIA, as a domestic popular regulatory approach, should consider transboundary environmental harms and effects on communities outside of jurisdictional borders, by which decoupling can have a base to reform the global economy.