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Using the economy for a sustainable future

Economic policy must be used to encourage sustainable behaviour, taking account of the value of natural systems.

If people and businesses automatically thought about the impacts on resources, health and the environment when taking decisions, many problems would be avoided. One way of encouraging people to protect nature, avoid pollution, eliminate waste and manage natural resources is to introduce a financial incentive. This is why environment policy tries to use economic incentives to encourage changes in behaviour.

Much of Europe is locked in to business models, infrastructure and behaviour that use resources with too little regard for efficiency. But our world is changing, and the end of unlimited resources is already here. It's time for a shift to resource efficiency in all sectors of industry.

No one loves taxes, but policymakers can use them to help society alter its course. By increasing taxes on activities that harm the environment, and reducing taxes on labour, we can improve the environment and create more jobs. A number of EU countries have already introduced such reforms.

Economic policy is a powerful tool for change. Why don't we have prices that reflect the real costs of resource use? Subsidies often look like a good idea in the short term, but unless they are used carefully, they can harm the environment.

But we also need better information. We have to change the ways we measure economic factors. We need a way to understand the value of natural systems, and real cost of environmental impacts like air pollution, climate change, biodiversity loss, and the way we are using up natural resources.

Changing the way we measure economic growth would help too. We need different indicators in addition to GDP, which can often give a false idea of how we are really doing. We need indicators that show our use of resources as well.