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A case for environment tax incentive scheme

Our environment is under various forms of stress which pose a fundamental threat to people and species that live in it. With planet Earth’s rising…

Our environment is under various forms of stress which pose a fundamental threat to people and species that live in it. With planet Earth’s rising temperatures already above 1.11oC according to the World Meteorological Organisation (WMO), collective actions to address environmental challenges through sustainability, restoration, protection and management could turn the tide benefiting both humanity and the ecosystem.

A few popularly quoted words attributed to the late astrophysicist, Prof. Stephen Hawking, and Prof. Mike Berners-Lee, researcher at Lancaster University and author of “There is NO planet B” best highlighted the state of our planet Earth. The book lays out the challenges and ways humanity can mitigate and adapt to lifestyle changes that will have less impact on the environment for a sustainable future.

The Stockholm conference in 1972 under the theme “Only One Earth” heralded the establishment of UNEP (United Nations Environmental Programme) aimed at focusing the world’s attention on the relationship between environmental, social and economic issues confronting the environment.

Africa accounted for less than four per cent of the total global greenhouse gas emissions but climate change has further highlighted the vulnerability of the people in the continent to mitigate and adapt to its impacts. According to IPCC-AR6 (Intergovernmental Panel on Climate Change-Assessment Report 6), section A.2.4; there’s high confidence that “Climate change has reduced food security and affected water security, hindering efforts to meet Sustainable Development Goals.” According to new research published on April 15, 2023 in Nature Communications (Article # 2152), unprecedented heat extremes “could occur in any region globally”.

Nigeria is Africa’s biggest economy and most populous nation with population figures estimated at 211.11m as at December 2022. Like most African countries, Nigeria’s environmental challenges are multi-dimensional with political leaders legislating laws to protect the environment but struggling to enforce such laws. For example, laws were enacted in 2013 which came into effect in 2014 aimed at regulating plastic bags pollution. Ten years after, only a little progress, if any, has been made, paving the way for widespread plastic wastes in our environment impacting our soil health, choking our canals, rivers and coastlines.

In Nigeria, annual loss and damage cost estimates from climate-induced floods, coastal erosion, and desertification are barely quantified due to lack of robust and comprehensive disaster evaluation mechanisms in the affected areas. But government figures on the 2022 floods estimated an economic loss of $9.12 billion for the year. Recently, the NIHSA (Nigeria Hydrological Services Agency) issued a flood-warning outlook for 2023 which indicated 314 local government areas at high risks of flooding representing 41 per cent of the local government areas (774) in the country. The six geo-political zones of the country had similarity/peculiarity risks outlook for climate change related impacts. For example, the northern region grapples with heat waves, deforestation, pollution, biodiversity loss, drought (e.g., the shrinking of Lake Chad) and flooding in some states. The southern region experiences coastal flooding, rising temperatures, loss of habitat (e.g., mangrove swamps), deforestation, air pollution (gas flaring and industrial pollution), erosion and wildlife destruction.

Climate change mitigation and adaptation is an emergency for our country and the rest of the African continent. Financing mitigation efforts such as tree planting, forestation and reforestation, re-wilding, urban greening, biodiversity conservation, pollution control require substantial funding, planning and execution for the desired outcome. Many countries incentivised their citizens and corporate entities to adopt, for example, tree planting, solar, wind and other energy sources for their homes, schools, communities and towns in return for tax relief/waiver and other benefits for the mutual benefit of humanity and the environment. A liveable and sustainable environment is first that humanity will aim to preserve before other human activities could thrive. Therefore, we must innovate and re-think financing options such as “environmental tax incentive scheme” solely designed for the prudent financing of our environmental restoration, development and preservation.

At mid-term of the current administration, one key focus area the government embarked upon was infrastructure development. Among other measures towards funding these projects was the president’s introduction and assent of Executive Order 007 “Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme 2019” which encourages private companies to execute infrastructural projects in return for tax incentives. Several 1st tier companies, including the state oil giant (NNPC), embraced the tax scheme having secured N621 billion tax credit for 21 road projects with a cumulative distance of 1,804km across the six (6) geo-political regions. In pursuit of a funding mechanism for our NDCs (Nationally Determined Contributions) and net-zero targets, Nigeria issued the Sovereign Green Bonds in 2017 and 2019 worth N10.69 billion and N15 billion respectively but the envisaged impact to the climate change goals has been lacklustre according to findings by the Premium Times newspaper. In comparison to the sovereign green bonds, much progress has been achieved under the Executive Order 007 agenda.

Tax relief/credit has been shown to be attractive to businesses for investment in developmental sectors yearning for urgent attention but lacking in policy-maker’s budgetary finances. It’s therefore pertinent to innovate environmental funding mechanisms that are tax incentivised and attractive for businesses to tap into for the benefit of a sustainable environment. For example, if the oil, telecoms and the conglomerate companies could take up Nigeria’s inland/coastal mangrove ecosystem restoration, reforestation, tree planting and flood control in the Niger Delta region under the proposed “environmental tax incentive Scheme”, the crucial benefits of being on track on our NDCs, the 2060 net-zero low carbon pledges and the SDGs (Sustainable Development Goals: SDG07, SDG11 & SDG13) could well be on track to achieve. Under the proposed scheme, the planting and nurturing of 100 million trees in the northern cities, towns and villages could create thousands of jobs and further enhance the environment’s biosphere (shade, food, cleaner underground water, reduced air pollution, soil enrichment, mental wellness… etc.). In the central region, flood defences are crucial in the protection of riverine communities from the annual floods, thereby enhancing the aquatic ecosystem.

According to a recent report by the Climate Change Committee (CCC), the UK government’s official climate change adviser, the government was found to be “strikingly unprepared” for at least a decade to make efforts to tackle climate change impacts. Climate change impact has no boundary. Nigeria must therefore act fast to explore innovative options to mitigate and adapt to the changing climate so we could have a better and more sustainable environment for future generations.

 

Yunusa Isa can be reached via

[email protected]  

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