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 56. In the case of OECD. the guidelines on PPP were intended to discourage subidies that could lead to distortions in trade. Countries agreed to phase out the use of subsidies over varying periods of time. (See Chapter 3 for the application of PPP to international trade and investment.)

57. Incentives to reduce pollution can be enhanced by other mesaures. Energy and water pricing policies, for example, can push industries to consume less. Product redesign and technological innovations leading to safer produces more efficient processes, and recycling of are materials can also be promoted by a more effective, integrated use of economic incentives and disincentives, such as investment tax breaks, low-interest loans, depreciation allowances, pollution or waste charges, and non-compliance fees.

58. Sometimes the way in which other policy objectives are promoted unintentionally reduces the effectiveness of environmental programmes. For example, subsidies to raw materials or water supply or energy to promote the development of industry in remote areas may well dilute the pressure to conserve resources. Governments should examine whether existing economic policies, instruments, or subsidies provided to various industry-based programmes and projects contribute effectively to the promotion of environmentally sound and resource efficient practices.

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3. Broaden Environmental Assessments
}} 59. An increasing number of countries require that major investments be subject to an environmental impact assessment. This broader environmental assessment should applied not only to products and projects, but also to policies and proqrammes especially major macroeconomic, finance, and sectoral policies that induce significant impacts on the environment. /…