1. Gordon Hughes Gordon.Hughes@nera.com QUALIDADE DO GASTO PÚBLICO NO BRASIL Meio Ambiente

2. 2 Environmental objectives Human health :air pollution - urban traffic, indoor exposure :water & sanitation - infant mortality :toxic chemicals, etc Amenity :water quality - beaches, rivers - recreation :protection of biodiversity or forests Productivity :reduction in operating costs of industries/utilities :avoidance of damage to infrastructure - corrosion, storms, floods

3. 3 Environmental health damage (NL)

4. 4 Environmental valuation Measuring diverse environmental benefits :how do we compare 10 km of clean beaches with 100 cases of respiratory disease? :weights based on willingness to pay (WTP) for different environmental ‘goods’ :money as a unit of measure, not a source of value Trade-offs implicit in current policies :huge differences in cost per life saved for environmental regulations based on health effects :public investments in safety vs costs imposed on individuals or industries :environmental spending on amenity vs other expenditures on quality of life

5. 5 Benefits of environmental measures

6. 6 Methods of valuation

7. 7 Whose environmental spending? Public expenditures vs regulatory expenditures :budgetary constraints create strong incentives to impose costs on private entities :sometimes justified by the ‘Polluter Pays Principle’ but rarely evaluated properly - requirement for regulatory cost-benefit analysis PPP implies economic instruments rather than regulations :use of fees/taxes to finance clean-up expenditures - but what are the incentives? Relationships within (quasi-)Federal systems :unfunded mandates - US clean water program :uniform standards vs cost-effective interventions

8. 8 Analysing environmental costs What do environmental policies really cost? :public spending, licensing and environmental regulations, opportunity costs, etc :who bear these costs - by income group, geography, sector? What are the benefits of policies? :by program, medium (air / water / waste), income group, geography :how sensitive are the benefit estimates to difference social values? Cost-benefit analysis by objective/program

9. 9 Results for the USA & Europe Air quality :most studies have concluded that benefits of major US programs have greatly exceeded the costs :largely because of health benefits, but also visibility :much dispute about acid rain program Water quality :recreational benefits are usually less than the costs of river clean-up programs :benefits of improving bathing beaches > costs, especially in tourist areas Climate change :key issue is the global distribution of benefits & costs