Defining Environmental Goods and Services: A Case Study of Mexico

by Enrique Lendo

Environmental Goods and Services Series • Issue Paper 1

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At the beginning of the 21st century, the international community reaffirmed its commitment to sustainable development. Several international meetings were convened to redefine the goals, the path and the means to boost economic growth, improve social development and ensure the sustainable use of natural resources and ecosystems. Four commitments from the multilateral agenda stand out due to their potential to enable the implementation of sustainable development: the United Nations Millennium Development Goals, the Monterrey Consensus, the World Trade Organisation (WTO) Doha Ministerial Declaration, and the Plan of Implementation of the World Summit on Sustainable Development (WSSD).

The concept of environmental goods and services (EGS) was addressed directly and indirectly in the above commitments. On the sustainable development front, the Millennium Declaration recommended halving by 2015 the proportion of people without sustainable access to safe drinking water. The Monterrey Consensus called for investment in basic economic and social infrastructure, development of public private partnerships and measures to foster corporate social responsibility, including the prevention of negative environmental impacts and the sustainable use of natural resources. Liberalisation of trade in environmental goods and services is explicitly mentioned in the WTO negotiating mandate adopted at the Doha Ministerial Conference in 2001. Finally, the WSSD Plan of Implementation adopted the target on access to safe drinking water from the Millennium Declaration and added a similar target for basic sanitation services. Moreover, the WSSD Plan of Implementation made specific reference to the creation and expansion of markets for environmentally friendly goods and services. These commitments support the liberalisation and market expansion of the EGS sector as a strategy worth exploring to support the pursuit of sustainable development.

However, implementing such a strategy poses major challenges. Sustainable development is a complex concept. Different definitions and interpretations have been proposed over the last two decades – both by the international community and by national states, the majority of which make reference to the need to integrate economic, social and environmental criteria. All of these criteria should be taken into account when assessing the sustainable development impacts of trade liberalisation of EGS. It is also important to take into account that sustainable development priorities may vary from country-to-country according to their particular developmental needs and circumstances.

The development of instruments at the bilateral, regional and global levels has contributed significantly to setting guidelines and strategies for the implementation of sustainable development. However, it is up to each country to decide the most suitable means of implementation at the national level, including the hierarchy, sequencing, time frame, and level of implementation of each sustainable development goal according to its specific economic, social, environmental and political context.

In terms of the current study, it is more useful to assess the impacts of EGS trade liberalisation against Mexico’s own sustainable development goals and strategies, which in any case capture two decades of participation in the international sustainable development agenda. The following Chapter will address the sustainable development trends, goals and strategies adopted by Mexico over the last three decades. Chapter 3 discusses the current debate regarding the liberalisation of the EGS sector. It focuses on definitional aspects and proposes a definition/classification approach that could increase the potential for positive sustainable development impacts from liberalisation. Chapter 4 addresses the current market structure of the EGS sector in Mexico under a traditional definition (e.g., the Organisation for Economic Co-operation and Development (OECD) approach). Chapter 5 considers the feasibility and potential sustainable development benefits of including some environmentally preferable products of export interest to Mexico under a broadly defined approach to EGS. Chapter 6 proposes and implements a methodology for a sustainability impact assessment specifically for Mexico. Finally, Chapter 7 suggests some possible ways forward for the negotiations of EGS at the WTO, with specific proposals for a negotiating strategy for Mexico.

It is expected that the results of the present study will support North American decision making in the area of environmental goods and services under the current WTO negotiations and in other fora.

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