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Rio: Rating the environmental stars

Richard Black
Former environment correspondent

image copyrightAFP

Should nations receive ratings on their environmental performance?

In some ways, they already do; carbon emissions are assessed on in toto and per capita bases, deforestation rates are calculated.

But is it possible - is it desirable - to put all of this together in a single number?

Matt Prescott, the ex-Oxford University academic who put together the Energy Saving Day initiative a few years back, believes it is.

Just as financial credit ratings agencies such as Standard and Poor's or Moody's rate countries as AAA, A-, C, junk or whatever, on how solid a bet they are for investment, Dr Prescott believes there should be a simple environmental scorecard for countries.

In time for both the Rio+20 summit here and the G20 meeting in Mexico, he's just released his initial analysis under the Environmental Rating Agency (ERA) banner.

It covers the G20 countries (which number 19, as the EU is among the 20).

Each receives a rating on various indicators such as per-capita greenhouse gas emissions, extent of protected area, the net rate at which forests are being planted or chopped down, air quality, the presence of threatened species, and so on.

For each country, these are then combined to produce an overall indicator.

Perhaps unsurprisingly given the strong influence that "Die Gruenen", the Greens, started exerting on politics back in the 1970s, Germany emerges at the top of the G20 table.

But it falls short of an AAA rating, the most coveted in the financial arena, because of sub-maximal performance in terms of forestry and carbon efficiency.

The presence of the US and Canada in fourth and fifth places would raise some eyebrows in the environmental community, given that neither has fulfilled its pledges under the UN climate convention, and that both are ploughing ahead with "unconventional" fossil fuel extraction in the form of tar sands and shale gas.

However, the US has clean air, significant protected areas on land and sea, and efficient power plants, while Canada garners AAA status on power plant efficiency, sustainable use of freshwater, and low corruption.

image copyrightERA

Bottom of the G20 pile with a B- rating come Saudi Arabia and India.

The Saudi ranking is pulled down by DDD ratings on air quality and water extraction. India receives three DDDs, on carbon efficiency, water extraction and marine protected areas.

While no country gets AAA overall, equally no-one is at "junk" status - which, in the financial world, means "don't touch it with a bargepole".

Three caveats on the ERA approach spring pretty quickly to mind.

Firstly, how do you select your indicators? Various groups of the environmentally-minded would pitch for issues such as nuclear waste, corrosive influence on international negotiations or killing of marine mammals to be included. There are more examples too.

Secondly, how good is the data? There's a very active debate ongoing, for example, on what constitutes effective marine protection - and government statistics on many things aren't always reliable.

Thirdly, on some indicators, nations are either beneficiaries or victims of their geography. Canada can gain a stellar rating on water use, because it has so much of the stuff and relatively few people; it's not the Saudis' fault that their territory is largely arid and barren.

But some of these issues also apply to the financial credit ratings, which, it would appear, have the potential to break a country's economy and bring governments down.

Matt Prescott admits this first report isn't the finished article. Refining will occur, and if others want to come forward to help make this a more comprehensive exercise, they're entirely welcome.

What effect would it have if ERA-style ratings were applied to countries?

Would we ever hear on the news, for example, that "the UK has been downgraded from A to A- after it slashed subsidies for renewable energy"? And if we did, what would it mean?

It could - perhaps should - have some impact on long-term economic investment.

"Every nation's economy is embedded within its environment, and our new environment ratings could provide a useful tool for investors seeking to reduce their exposure to both short and long-term risks," Dr Prescott suggests.

Environmental factors already influence investment decisions to some degree, as corporations and indeed individuals have to take projections of things such as sea level rise and water availability into account.

But the real impact might be reputational. South Korea, for example, is generally regarded as a "green" nation these days, but the ERA analysis suggests it's underperforming against its peers.

Would we see proud Germany getting even greener to maintain its lead? Would South Africa's ecotourism industry suffer as it garners a mere BB rating?

Increasingly, companies vie with each other to be seen as "green". Ratings on things as diverse as the efficiency of electronic appliances and the sustainability of fishing methods are changing consumer behaviour and, therefore, the performance of suppliers.

Could the same thing happen through rating countries? And who'd be first in line for an AAA or a junk rating?