Select Committee on Environmental Audit Minutes of Evidence


Supplementary memorandum from the Royal Society for the Protection of Birds

  The RSPB presented written evidence to the inquiry of the Environmental Audit Committee on the 1999 Pre-Budget Report in September 1999. In November, we were invited to present oral evidence to the Committee on the subject of a pesticides tax. The memorandum below presents further information on three issues, to provide more details on points we raised in oral evidence and to follow-up the publication of the Pre-Budget Report:

    —  pesticides taxes;

    —  the Climate Change Levy;

    —  environmental appraisal of the Pre-Budget Report.

1.  PESTICIDES TAX

1.1  Scope for Cost Savings Through Reduced Pesticide Use

  In providing oral evidence, the RSPB made specific mention of two studies estimating the potential for farmers to reduce pesticide use profitably. The first of these was a study by RPA and Entec for DETR, and the second a critique of this by Morley Agricultural Consultants for the British Agrochemicals Association. We believe that there is broad scope for cost-effective pesticide reduction and that it is therefore a crucial issue when considering a possible pesticides tax. In this context we feel that it is useful to give further details of the findings of the two reports.

  The first report "Private Costs and Benefits of Pesticide Minimisation" was prepared for the Department of the Environment by Risk & Policy Analysts Ltd and Entec UK Ltd, and completed in March 1997. It estimated the financial costs and benefits to farmers associated with the adoption of techniques to minimise pesticide risks. These estimates were made at three levels: for specific crops, using farm case studies, and at a national level.

  The study identified cost savings through adoption of pest and disease thresholds, improved application techniques, more appropriate rates of use, and the use of independent advisers. National estimates were made of both the overall net cost or benefit of different pesticide reduction techniques, and the potential savings in pesticides themselves.

  A critique of this report was undertaken by Morley Agricultural Consultants for the British Agrochemicals Association, and completed in January 1998. This concluded that the RPA/Entec report had overestimated the potential benefits and pesticide savings from the pesticide minimisation techniques advocated, but also that:

    "the report correctly identifies many pesticide minimisation techniques where improvements and further adoption can be achieved".

  The Morley report gave its own estimates of the overall net benefits and savings in pesticide costs of fully adopting pesticide minimisation techniques in the UK. It estimated that:

    —  total net benefits from pesticide reduction techniques amount to £182.75 million per year in the UK, compared to the RPA/Entec estimate of £605 million;

    —  the actual savings in pesticides from these techniques totals £100.25 million, compared to the RPA/Entec estimate of £274 million (see Table 1).

  In response to this report, the British Agrochemicals Association commented:

    "BAA in broad terms agrees with the conclusions of Morley that the original report seriously overestimates the potential cost savings to farmers of pesticide minimisation techniques. Morley's conclusion that future savings of £100.25 million are available to farmers with the full integration of integrated farming systems and new application technology are in line with current industry estimates of 20-30 per cent market decline over the next 10 years. (The agrochemical market at farm gate prices is approximately £500 million)".

  (A BAA perspective to the Morley Analysis of "The Private Costs of Pesticide Minimisation", February 1998).

Table 1: Estimated National Benefits and Pesticide Savings for Pesticide Minimisation Techniques


CropTechnique
Net Benefit (£m)*
Pesticide Saving (£m)*

WheatUse of independent advisers
81 (23)
44 (13)
Improved spray application
120 (21)
59 (12)
Use of disease/pest thresholds
61 (7)
5 (3)
Resistant varieties
35 (15)
26 (10)
2m buffer zones
34 (16)
11 (11)
6m buffer zones
36 (36)
25 (25)
Spring cerealsIndependent advisers
21 (5)
7 (1)
Use of appropriate rates
9 (3)
6 (3)
Thresholds
8 (0)
5 (1)
2m buffer zones
10 (5)
1 (1)
6m buffer zones
15 (15)
2 (2)
Winter oilseed rapeImproved application
11 (3)
6 (1)
Independent advisers
18 (5)
7 (2)
Thresholds
20 (2)
3 (2)
6m buffer zone
6 (6)
3 (3)
Sugar beetImproved application
17 (3)
6 (1.5)
Independent advisers
7 (3)
4 (2)
Thresholds
5 (0.25)
1 (0.25)
Appropriate rates
1 (0.5)
3 (1.5)
PotatoesImproved application
28 (7)
18 (4)
Independent advisers
37 (7)
4 (1)
Crop rotation
25 (0)
28 (0)
TOTAL
605 (182.75)
274 (100.25)

    *The first figure in each column is the RPA/Entec estimate, and the figure in brackets the Morley estimate

    Source: Morley Agricultural Consultants (1998): An analysis of "Private costs and benefits of pesticide minimisation".

1.2  Impact of Pesticides on Farmland Birds

  In the last 10-20 years concern about the impact of pesticides on birds has mostly shifted away from direct toxic effects to "indirect" or food-chain effects.

  Pesticides are known to affect bird populations by reducing the abundance of food items such as weed seeds and insects and consequently the survival of both adults and chicks. Concerns about these effects have been heightened by well-publicised data showing major and widespread declines in the breeding populations of a variety of characteristic farmland bird species. Government have made commitments to conserve these species through the UK's Biodiversity Action Plan (BAP).

1.2.1  Studies on the indirect effects of pesticides

  A report entitled A review of the indirect effects of pesticides on birds (Campbell et al, 1997) for the then Department of the Environment, the Joint Nature Conservation Committee and English Nature examined the relationship between birds, their food and pesticides. Although scientific knowledge on the subject is incomplete, the review concluded that:

    —  there is convincing evidence that a range of both scarce and more widespread farmland breeding birds are in decline;

    —  there is good evidence of both long-term and short-term declines in many of the types of invertebrates and plants on which these birds feed;

    —  there is evidence to suggest that the declines in bird food are, in part, attributable to the effects of pesticides; and

    —  there are temporal associations between trends in pesticide use (measured by percentage of cropped area sprayed) and the periods of rapid decline in many of the declining bird species.

  The clearest, and completely convincing, evidence of food-chain effects of pesticides is the work on grey partridge done by The Game Conservancy Trust. This study has been running continuously for the past 30 years and has considered aspects such as cropping patterns, predation and pesticides in the decline of this game bird. This study provides convincing evidence that grey partridge chick survival has been reduced by the removal of its key food source (sawfly larvae) thereby leading to a decline in breeding bird population density. Insecticides kill the sawfly larvae and herbicides remove the habitat (weeds) on which sawfly larvae depend. Manipulation of pesticide use alone has been shown to result in significant improvements in chick survival (Potts & Aebischer 1995; Potts 1986).

  Recent shorter-term research has yielded further evidence of the effects of pesticides on another species of bird, the corn bunting. The research found that the survival of corn bunting chicks in the nest depends on food availability, and that corn bunting chick food (such as harvestmen, sawflies, spiders and ground beetles—similar to the requirements of grey partridge chicks) is more abundant in fields where fewer pesticides have been applied (Brickle 1998).

  Where cereal fields receive more pesticide applications they hold a lower abundance of chick food, and the chicks weigh less and have a poorer chance of survival. The UK population of the corn bunting has declined in numbers by 74 per cent in the past 25 years (data from the BTO).

  The similarities in the ecology and in the pattern of population declines of a further 18 species of birds of lowland farmland suggest that food-chain effects of pesticides cannot be ruled out as a significant cause of population decline. The likely role of pesticides is noted in the numerous Species Action Plans for birds published by Government as part of the work under the Biodiversity Action Plan (see Appendix).

1.2.2  Effects of pesticides on other species

  Whilst invertebrates and plants may be regarded as important in the food chain, they are also important in themselves and many appear on the UK BAP. Aebischer (1991) recorded a 4.2 per cent decline per annum between 1972 and 1989, in arthropods occurring in cereal fields on the South Downs. Many plants of arable land have also dramatically declined in the past 40 years, indeed a few species are on the verge of extinction or have already become extinct in the UK, for example corncockle and thorow-wax. This is particularly disturbing since less than 30 years ago such species would have been considered as very common weeds. Whilst research into the causes of these losses has not widely taken place, the increased use of insecticides and herbicides on farmland is likely to be among the most significant factors as is recognised in numerous Species Action Plans published by government (see Appendix).

1.2.3  The UK regulatory system

  The current regulatory system for pesticides in the UK does not take into account the full environmental effects that pesticides have on wildlife. Currently pesticides are tested for their toxic effects on a small selection of species, for example quail, earthworms and honey bees. Other valuable insects and plants (valuable either as part of the food chain or as part of the UK BAP) are not tested, and the effects on farmland birds and other species higher up the food chain of removal of certain invertebrate and weed species are not tested.

2.  CLIMATE CHANGE LEVY

  The RSPB welcomed the confirmation of the levy in the Pre-Budget Report. It gives a clear signal to businesses to use energy more efficiently and will significantly reduce carbon emissions. However, we have some concerns about the details, as outlined below.

2.1  Treatment of renewables and CHP

  We welcome the announcement that renewables will be exempt. This seems to mean all renewable energy, old and new, except large-scale hydro. This does not make environmental sense, as hydro is carbon-free, but does make economic sense, because large-scale hydro is already cost-competitive with conventional generation. For Combined Heat and Power, it appears that primary fuel will be exempt, as will any electricity/heat used on site. However surplus electricity exported to the grid may not be exempt. It would be perverse if efficient, large-scale CHP was not fully exempt.

2.2  The level of the levy

  The reduction in the rate for the levy will mean that smaller commercial and retail offices—for which energy costs are a relatively small proportion of overall costs, but which collectively account for a high proportion of energy use and for whom many cost-effective savings exist—will have even less incentive to reduce use than before.

2.3  An energy levy

  The fact that the levy remains directed primarily towards reducing energy, rather than carbon use, is perverse for a policy designed to mitigate climate change. The rates continue to be applied equally to coal and gas on a per kilowatt hour basis even though it should be possible to differentiate the rates between fuels based on carbon content.

2.4  Carbon savings

  The Government's assertions that the new levy package will result in carbon savings above 2 million tonnes per annum, and that the negotiated agreements will double these savings, are welcome, but require analytic verification.They would equate to about 14 per cent of the Government's 20 per cent reduction target by 2010 (29 MtC). However, we have seen no analysis supporting these figures.

2.5  Negotiated agreements

  Of greatest concern is the leniency and flexibility apparently being granted in the negotiated agreements. In return for a large tax reduction of 80 per cent, energy intensive sectors (already subject to the Integrated Pollution Prevention and Control [IPPC] Directive) will seemingly only need to agree to achieve "cost effective" energy efficiency improvements. We have two concerns with this:

    —  If "cost-effective" is defined as action yielding a two-year pay back, this is likely to include action the company would have taken anyway as part of its ordinary business investment cycle.

    —  IPPC requires companies to adopt Best Available Techniques, which take into account energy efficiency, so the energy reductions under the negotiated agreements may require little beyond what IPPC could have been interpreted to require anyway.

  We have additional concerns with the negotiated agreements:

    —  The apparent option to trade efficiency obligations entered into under the agreements provides companies with even greater flexibility in meeting them. While trading is an efficient means of meeting obligations, the flexibility provided by trading argues for the negotiation of stronger agreements in the first place.

    —  By linking levy reductions to energy efficiency targets rather than carbon reduction targets, it will be much more difficult to facilitate trading, since carbon emissions (and therefore credit prices) will fluctuate with productivity. It will also be more difficult to guarantee that absolute carbon emission reductions will be delivered; if output growth is greater than forecast, emissions may rise even though efficiency has increased.

    —  The nature of negotiated agreements means that they will provide little information about the cost of reducing emissions, information which would be extremely useful for the successful design or modification of future policy.

    —  It is our understanding that, in addition to the ten energy intensive sectors originally considered for agreements, more than thirty additional sectors have also requested consideration. It is important not to cast the net so wide as to dilute the effect of the levy or to make it bureaucratically top heavy.

  Recommendation 1: In order to be effective, the negotiated agreements must be limited to energy-intensive sectors, set out ambitious improvement targets with strict penalties for failure and should be based on carbon emissions, rather than energy efficiency.

2.6  The Way Forward

  Negotiated agreements may have a role to play within the short-term policy agenda but, given the problems identified above, too much reliance on them over the longer term could be bureaucratic, lack legitimacy and render the policy ineffective in achieving its primary goal: reducing carbon emissions cost-effectively and without compromising competitiveness. A preferable longer-term alternative, therefore, and one in which industry itself has shown a good deal of interest, may be a carbon emissions cap and trade system. This could operate alongside the climate levy, which is and should remain the primary instrument for achieving carbon reductions cost-effectively. In return for an exemption from the climate levy itself, companies could be given the option of entering a firm commitment to an agreed absolute carbon emissions ceiling, which they could then trade with other companies in the scheme.

2.6.1  How would a cap and trading scheme operate?

  The cap would be set and allocated at a level to ensure real cuts in greenhouse gases, so it would need to balance what is environmentally necessary (eg the Government's 20 per cent carbon emissions reduction target by 2010) with what is economically possible. Companies would then be able to trade their reduced CO2 emissions allowance with other companies in the scheme.

  Such a scheme, operating in parallel with the levy, would overcome most of the problems identified above with respect to negotiated agreements: it would deliver a fixed, known carbon reduction cost-effectively and would make transparent the cost of achieving those reductions. It would also be relatively simple to implement and avoid the bureaucracy involved in negotiating and monitoring individual agreements. To overcome the objection that meeting the emissions reduction target might prove too costly, it would be possible simply to fine non-compliance at the full rate of the levy; in other words, every company would have the option of paying the levy like anyone else if it could not meet its target more cheaply through trading.

2.6.2  Encouraging companies to switch from negotiated agreements

  The main difficulty with introducing a cap and trade alternative to negotiated agreements at this point would be that of enticing companies which have already negotiated flexible agreements into a scheme which required firm commitments. There is also the possibility that some energy-intensive sectors may contract in future, meaning that a fixed cap on their emissions could create a surplus of tradeable "hot air".

  Recommendation 2: in terms of effectiveness, transparency and ability to stimulate innovation, the RSPB suggests consideration be give to establishing a carbon cap and trade system alongside the climate levy, as an alternative to negotiated agreements.

3.  ENVIRONMENTAL APPRAISAL OF THE PRE-BUDGET REPORT

  The report reiterates the Government's commitment to "conducting a full evaluation of all impacts on the environment when considering alternative policy options. This applies to all Government measures regardless of whether their aim is environmental". Unfortunately the report failed to meet this commitment.

3.1  Failure to undertake a full environmental appraisal

  Table 6.1 of the report outlines the Government's environmental assessment of those measures whose primary aim is environmental. It does not address the environmental impact of "non-green" measures that might have a significant environmental impact. In some cases the environmental impact of non-green measures is as or more significant than those of green measures themselves. Moreover, those impacts are often negative.

  For example, the environmental impact of the following non-green measures should have been addressed:

    —  Utilities reform bill: an environmental appraisal of the proposed measures was published by the DTI. The results of this appraisal should have been summarised here as it shows that the measures contained in the bill would lead to a modest increase in carbon emissions.

    —  Review of water industry competition: these proposals should be subject to appraisal as the introduction of competition could have significant environmental impacts.

    —  Electronic commerce: this could have environmental benefits.

    —  Modernising the planning system and promotion of clusters of firms: the promotion of clusters in certain locations, eg in Cambridge, could have a significant impact on the Government's policy of minimising the use of greenfield sites. The report states that sustainability appraisal of regional plans will be carried out.

    —  R&D tax credit: this could have a positive environmental effect, through greater innovation in environmental technologies, as well as a negative effect.

    —  Air passenger duty: changes in this duty will have environmental impacts, such as on carbon emissions. This measure is, in effect, a green tax and should have been included in Table 6.1.

  Recommendation 3: The RSPB considers that the report should have summarised the environmental impact of non-green measures as well as green measures. Furthermore, it should have summarised the environmental impact of the proposals as a whole, including the main economic forecasts, as previously recommended by the Environmental Audit Committee.

3.2  Comments on Table 6.1 of the Pre-Budget Report

  To improve the transparency of Table 6.1 we believe that the estimated impacts should have referred to specific published documents, using footnotes. In this way the reader would know where to obtain further details on the environmental appraisal of a specific measure. This was another recommendation of the Environmental Audit Committee's report on the 1999 Budget.

  On fuel duty increases, the table only assesses the impact of the previously announced increases. If fails to assess the impact of removing the escalator earlier than previously indicated.

REFERENCES

    Aebischer, N J, 1991. Twenty years of monitoring invertebrates and weeds in cereal fields in Sussex. In The Ecology of Temperate Cereal Fields, eds. L G Firbank, N Carter, J F Derbyshire and G R Potts. Blackwell Scientific Publications, Oxford.

    Brickle, N W, 1998. The Effect of Agricultural Intensification on the Decline of the Corn Bunting Miliaria calandra. Unpubl. PhD Thesis, University of Sussex.

    Campbell L H, Avery M I, Donald P, Evans A D, Green R E and Wilson J D (1997) A Review of the Indirect Effects of Pesticides on Birds. J NCC Report No. 227, Peterborough.

    Campbell L H and Cooke A S (Eds) (1997) The indirect effects of pesticides on birds. Summary report. JNCC, Peterborough.

    Morley Agricultural Consultants Ltd (1998) An Analysis of "Private Costs and Benefits of Pesticide Minimisation". Report for British Agrochemicals Association.

    Potts, G R, 1986. The partridge: pesticides, predation and conservation. Collins, London.

    Potts, G R, and Aebischer, N J, 1995. Population dynamics of the Grey Partridge Perdix perdix 1793-1993: monitoring, modelling and management. Ibis, 137: S29-S37.

    Risk & Policy Analysts Ltd and Entec UK Ltd (1997) Private Costs and Benefits of Pesticide Minimisation. Report to the Department of the Environment.


 
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