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You are here: Home / News / Environmental taxes on aggregate materials in the EU: towards sustainable construction

Environmental taxes on aggregate materials in the EU: towards sustainable construction

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Environmental taxes on construction materials can be a key element in achieving better sustainability in the construction sector, says a report presented today by the European Environment Agency. The study reviews taxation schemes for extractive activities in the Czech Republic, Italy, Sweden and the United Kingdom, focusing on a EUR 15.2 billion industry producing essential materials for the construction sector.

The aggregates industry contributes significantly to Europe's economy, where 3 billion tonnes of sand, gravel and rock are released onto the market every year.

Mining activities have considerable impacts on the environment, as materials are extracted directly from the ground in surface excavations, such as quarries or pits. More importantly, extraction of aggregates can substantially alter the landscape and affect groundwater reserves. There are also associated impacts in terms of energy use from the extraction and transportation of these materials.

While the study acknowledges that there is potential to extend taxation in the area of natural resource management to other sectors, it also reflects that the four countries surveyed in the report have achieved mixed results. Italy and the Czech Republic showed weak evidence of improved landscape following the introduction of the tax, whereas Sweden has succeeded in reducing demand for natural gravel — an invaluable resource to guarantee groundwater quality.

The report, presented today at the 16th annual conference of the European Association of Environmental and Resource Economists (EAERE) in Gothenburg, Sweden, also shows that taxes could encourage innovation and support research and development, in an attempt to balance economic growth with the protection of environment and health.

The report states that adopting environmental taxation schemes is helping to improve the quality and reliability of extraction data, which can then be used to encourage changes in quarry management activities. In the United Kingdom, for example, the tax on raw construction materials gives the sector added confidence when purchasing materials, since part of the levy revenues have been used to support the development of quality standards for recycled aggregates.

Taxes work better as part of a policy package

Other concerns highlighted by the report Effectiveness of environmental taxes and charges for managing sand, gravel and rock extraction in selected EU countries include the need to avoid tax distortions across country borders. Coordination is imperative to prevent an overload of extraction in regions with lower or no tax schemes, underlines the study. Furthermore, taxes 'need to be used as part of a package of policies', the report says, to ensure more effective environmental improvements.

In recent years, the EEA has published several reports assessing policy effectiveness and has become increasingly engaged in exploring the link between society's needs and the final impact of policies.

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Footnote:

According to Eurostat, the Gross Value Added of mining and quarrying, except fuels, in the EU-27 amounted to EUR 15.2 billion in 2003. Gross value added is the difference between output and intermediate consumption for any given sector/industry. That is the difference between the value of goods and services produced and the cost of raw materials and other inputs which are used up in production.

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