Will Nations Compete to Be Green?

This web feature appears in the Spring 2006 issue of Resources.

At the World Economic Forum in Davos, Switzerland, in early 2006, a new global survey was unveiled that assigns a numerical ranking to individual nations based on their environmental practices and outcomes.

The Environmental Performance Index (EPI), which has prompted both praise and controversy in the international environmental community, draws on available data to measure 133 countries on 16 indicators in six established policy categories: environmental health, air quality, water resources, biodiversity and habitat, productive natural resources, and sustainable energy. A team of experts at Yale and Columbia University's Earth Institute analyzed the data to produce the rankings.  The EPI is the brainchild of Daniel C. Esty, director of the Yale Center for Environmental Law and Policy and Hillhouse Professor of Environmental Law and Policy. Esty, a member of RFF's Board of Directors, believes that it will be a critical tool in bolstering successful pollution control and natural resource management worldwide. (Full text of the report and a summary for policymakers are available at www.yale.edu/epi.) Resources asked Esty to explore the policy aims and outcomes of the EPI with Senior Fellow Jim Boyd. Their conversation follows. Boyd: Give me the big picture as a place to start. What was your primary motivation for doing this? And how does your ranking system relate to other performance measures, such as national welfare accounting?		Figure 1: Environmental Rankings and Scores
Esty: Our goal is to shift environmental decisionmaking onto firmer analytic foundations. We're trying to make policymaking across the full spectrum of pollution control and natural resource management issues, more empirical, more fact based, and more durable. One of our motivations was to provide a counterbalance to the emphasis on GDP growth, which is taken so seriously, not only by economists, but also by decisionmakers in government. We believe the index provides a fairly clean and clear look at current government performance across a spectrum of core environmental challenges.

Boyd: One of the things that will immediately jump out at people is the fact that the United States ranks 28, not far from Cyprus. That's a little surprising to me personally, but how do you view that?

Esty: When I present the EPI in the United States, people are often surprised-even shocked-that the United States ranks as low as 28. When I present the EPI in Europe, people are often surprised-even shocked-that the United States ranks as high as 28. The United States does very well on some issues, like provision of drinking water-it really is unsurpassed in the world in terms of the percentage of the population that has access to safe water. But it does much worse, if not quite poorly, on a range of other issues, like greenhouse gas emissions. So, if you are sitting in America, where the air looks pretty clear and the drinking water looks pretty clean, you might say, gee, why aren't we closer to the top? But in Europe, where people are very much focused on the U.S. failure to step up to the climate change challenge, people think the United States should rank about 130 out of 133 countries.

Boyd: Certain things that you are measuring are more amenable to control by government or society, while others seem more like a country's natural resource inheritance, such as its geography or climate. Are areas for improvement things that all countries can act on, or are some countries stuck with their bad environmental luck?  Esty: All six of the core policy areas that we are looking at represent important challenges that governments can be held accountable for: the quality of their air, water, land-use, and biodiversity, how they manage productive natural resources, habitat protection, and energy and climate change. Clearly, some governments are better positioned to hit the established targets because of their underlying natural resource endowments or, for example, because of their relatively low population density so they don't strain the resources of their land--a good example would be Sweden. But are these things that governments should be looking at? Absolutely. Are governments being held accountable for these things? All across the board.

Boyd: Tell me your thoughts on how this work relates to the Millennium Ecosystem Assessment, issued in 2005.

Esty: The Millennium Ecosystem Assessment and the EPI share a common vision of a more data-driven approach to evironmental decisionmaking, where we really look at on-the-ground facts and results so that policy priorities can be based on good information and good science. What differentiates the EPI and gives it particular traction is that it is aligned not on an ecosystem basis, like the Millennium Ecosystem Assessment, but rather on a national basis. Nation-state boundaries are the true lines of accountability.

In our index, where countries rank low, there's no ducking, there's no hiding. The political officials find they are called upon to answer for poor performance, and we think that's a very powerful tool. No one wants to be at the bottom of the rankings: every country would like to be higher up. We made particular efforts to group countries with regard to appropriate peers so that they are not ranking themselves against the top of the spectrum, per se, but against others that are similarly situated.

Take Haiti, for example, which ranks really quite low on our scale, at 114 out of the 133 countries we ranked. It's not Haiti's job to figure out why it is not number 2, like Sweden, or number 3, like Finland. But it is interesting, if you are Haiti, to figure out whyyou are doing so much worse than the Dominican Republic, at number 54. These are two countries that share an island, that have a lot in common. And obviously, something is going seriously wrong in Haiti with regard to natural resource management and pollution control. But for a poor country, the Dominican Republic is doing quite well. So we think there is some learning there for Haiti, and perhaps for the Dominican Republic as well, because across 16 issues, there are probably some things that Haiti is doing better.

Boyd: Inherently this is a global data exercise. Comment on the increasing availability of spatial data on environmental condi- tions, but also about where a government, particularly the U.S.government, stands on its ability to produce and present information that people like you would find useful.

Esty: We are moving into an era of information-age environmental protection, which is exciting. There is a great deal of data that weren't out there before, which gives us a much better handle on problems, the chance to track trends, and a better basis for evaluating policies and understanding what's working and what's not. Having said that, I think the U.S. government still underinvests in producing relevant data.

Boyd: In that regard, how close a connection is there between the top five countries in the ranking and the quality of the data you are getting about those countries? Or is there no correspondence?

Esty: Much better data sets are available for the top 30 countries, basically the ones that are part of the Organisation for Economic Co-operation and Development, the Paris-based, "developed country" think tank. Beyond that, the data become very thin, and frankly, after about 130 countries, it becomes so thin that we can't include all the countries that we would like. So if this move toward a more data- driven approach to environmental protection is to gain further traction, we are going to have to collect data on many more countries. We are also going to have to go after some issues that aren't tracked at all, not even in the most developed countries. These include exposure to toxic chemicals, waste management practices, releases of SO2 and acid rain, recycling rates, lead and mercury exposure, and wetlands loss.

Esty: We took a hard look at this question in the context of exporting dirty businesses and whether countries benefit because someone else is willing to take up the challenge of producing things like steel or aluminum. And it turned out to be very difficult to get at that and hard to do consistently with our model, which centers on the government's responsibility for what it can achieve within its borders. For example, the United States imports steel from Korea but the numbers don't exist to allow us to shift some of the public health and environmental burdens that Korea faces back to this country. It's a weakness of the structure and means that in some respects we haven't captured the full picture.

Boyd: When you unveiled the index at the World Economic Forum in Davos, what indications did you get that the environment is present i