Promoting a Greener Economy in Israel


	Date Published: 6/18/2008	Last Updated: 6/30/2008
	Category: Events

The Caesarea Forum calls for increasing environmental taxes and incentives: imposing a tax on building on open spaces; charging employees for parking costs; and making public transportation a recognized expense.

Greater regulation, more green taxes, fewer subsidies that result in harm to the environment, and more incentives for environmental preservation – these are the recommendations in the environmental report issued by the Caesarea Forum of the Israel Democracy Institute in anticipation of to the conference to be held on July 2nd in Eilat. One of the major topics to be discussed at the conference is a “Green Economy” whereby environmental policies would be incorporated into Israel’s economic decision-making process in both the public and private sectors.

“Together with a growing realization on the part of all sectors in Israel of the importance of environmental issues and their economic ramifications, there is still a market failure in Israel that does not strike a balance between the benefit to the polluter and the convenience of those harmed by its actions. There are numerous regulatory gaps that must be filled in order to stem the deterioration of the environment in Israel and the resulting harm to the economy,” states Prof. Eran Feitelson, who headed the research team dealing with environmental quality. “The time when green policies were seen as incompatible with business and economic growth is long gone. Today, it’s obvious to everyone that they are an essential engine for growth. What’s left to discuss is how to make this vision a reality.” The Caesarea Forum team has put forward a number of economic and regulatory recommendations in its report, a sampling of which are presented below:

Less Suburban Development, More Urban Renewal

Investing in Public Transportation while Workplaces Encourage Travel by Private Car

Redirecting Chief Scientist Grants toward Environmental Technologies

Less Suburban Development, More Urban Renewal

One of the team’s recommendations is to impose a tax on building on open spaces, to be levied on any open space, public or private, where construction would entail a change in the regional building plan. Such a tax would raise the cost of building beyond the periphery of existing communities—thereby increasing the desirability of urban renewal through such projects as Pinui Binui (demolition of old neighborhoods and construction of new ones in their place) and Project Renewal (neighborhood revitalization)—and would encourage vertical construction. Land is a scarce resource in a small and crowded country such as Israel, and the preservation of open spaces carries numerous benefits, among them safeguarding the functioning of life-sustaining ecological systems, maintaining the landscape and heritage values, filling the need of the country’s residents for recreational and leisure activities, and protecting land reserves for the development and infrastructure needs of future generations. These benefits are not priced by the market, making it necessary for government to step in to ensure that they are allocated efficiently.

In recent years, building on open spaces has largely taken the form of low-density, single family/semi-detached construction in rural communities (suburbanization), causing a major depletion of open spaces. Small communities require high investment in infrastructure development, which cuts off open spaces and can have a negative impact on biodiversity. Low-density construction also generates more commuter travel (since workplaces are generally located in cities), leading to a rise in traffic congestion and air pollution.

The team further recommends including the alternative value of the land in the cost-benefit analysis of public projects, given the present disregard of this aspect—a factor that contributes to the wasteful use of land in many projects.

Investing in Public Transportation while Workplaces Encourage Travel by Private Car

Travel in private cars has risen thirty-fold since 1963, with the rise in the level of motorization and kilometers traveled outstripping the expansion of Israel’s roadways. What this means is that highway congestion has grown significantly, and along with it, traffic bottlenecks and air pollution. And this trend will only intensify. According to Prof. Feitelson, even as major resources are being invested in improving public transportation in Israel, many workplaces continue to give their employees car benefits and free parking, which in effect encourage them to come to work by private car and not by public transportation—for which we all pay a heavy environmental price.
Accordingly, Feitelson’s team recommends raising the taxable value of company cars; debiting salaries for the cost of parking expenses; and treating public transportation as a recognized expense and not as part of a salary. In his view, guaranteeing a parking space represents a de facto addition to an employees’ salary that is denied to those who do not come to work by private car, whereas the cost of public transportation comes out of the existing salary and is seen by the employees as being laid out directly from their own pocket.

Redirecting Chief Scientist Grants toward Environmental Technologies

An additional issue that was discussed is promoting environmental R&D in Israel. The authors of the report note that the greatest potential for environmental improvements, in Israel and abroad, lies in innovation. Thus environmental research shows the most significant promise of creating a relative “edge” for Israel in this area. But the uncertainty involved in such research, coupled with the lack of clarity regarding future environmental standards, create a situation in which the feasibility of a firm’s investing in environmental R&D is often lower than the social feasibility of doing so. To overcome this failing, a number of steps are proposed that focus on bringing down the costs of development and reducing employment costs by lessening the uncertainty for businesses:

Directing sizeable grants from the Chief Scientist’s Office of the Ministry of Industry, Trade and Labor toward environmental technologies
Expanding Ministry of Environmental Protection support for environmental innovation by significantly increasing budgetary allocations
Establishing a center for environmental technology to reduce the risk shouldered by businesses

Promoting a Greener Economy in Israel

Less Suburban Development, More Urban Renewal

Investing in Public Transportation while Workplaces Encourage Travel by Private Car

Redirecting Chief Scientist Grants toward Environmental Technologies

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