A meso-economic approach

Traditionally, the study of environmental costs and benefits of an economic activity is either micro (at the level of a company) or macro (at the level of a country).

At the micro-economic level, environmental costs are most often listed according to the real costs incurred (costs of waste treatment, fees on wastewater, etc). At the macro-economic level, the estimation of environmental costs tends to grasp the economic consequences of environmental non-action. At the level of Algeria, Egypt and Tunisia for example, the global assessments have emphasised national costs of environmental degradation estimated at 5.8%, 6%, and 3.4% of GDP (Algeria: Action plan for the environment; Egypt and Tunisia: World Bank studies).

Therefore, on the one hand, we have individual expenses of management (micro) and on the other hand, costs at the level of a country (macro). In between, nothing. Neither one nor the other approach highlights the status of an economic sector as such. For example, what is the part of the cement sector in the global national degradation of the environment? In return, what are the economic benefits for a given sector to act in favour of the environment?

This is the whole matter of the "meso-economic" approach. It estimates economically environmental costs and benefits of a specific sector, in this case the cement sector in Arab countries.

Meso-economic profile of environmental costs and benefits of the cement industry

The economic estimations of environmental costs and benefits applied at the meso level provides the economic-environmental profile of the cement industry in a country by environmental domain, first in terms of damage costs, then in terms of remediation costs. In Algeria, for example, the estimations of environmental degradation costs and economic losses in the cement sector reveal environmental degradation of almost 7% of the value-added (VA) and economic losses due to inefficient use of resource of more than 10% of the VA of the sector (see Fig.) Effects on the global environment are to be added.

In order to appraise the benefits of action over non-action, remediation costs of the analysed situation were estimated. For Algeria, they amount to approximately 9% of the VA of the sector.

Therefore, we can affirm that on average in the Algerian cement sector, the benefits of depollution and of improving the economic efficiency are worth twice the remediation costs. They actually come close to three times for the economic losses of resource inefficiencies and energy and are significantly twice as high for air pollution.

At the level of individual units, it was highlighted that basic technical solutions like repairing a defective electro-filter are comprised in a benefit/cost ratio superior to 3.

A tool for decision-making

These meso-economic profiles of environmental costs and benefits provide a background for decision-making by giving benefit/cost ratios by environmental domain. Thus, they enable to measure the effort needed to protect the environment and give an idea of the expected return on investment.

These indications will be followed by technical-economic analyses to confirm in detail the actions, the techniques implemented and the performances accomplished.
The meso-economic profiles of environmental costs and benefits enable a given sector to position itself against the overall environmental costs of its country, other sectors of its country and the same sector of other countries.

Applications

The development of the meso-economic profiles of the cement sector in Syria, Egypt, Tunisia, and Morocco is in progress by Ecosys and SBA. This programme is undertaken in the framework of the Swiss Co-operation in the Mediterranean, with the support of Arab Union for Cement and Building Material.

Meso-economic approach of industrial and urban communities

Meso-economic indicators (download)