§ Lord Kennet
asked Her Majesty's Government:
Whether it is still their opinion that it is "not possible to quantify environmental consequences of economic activity with sufficient confidence to 251WA incorporate these into the Treasury's economic model" (14th July 1989 H.L. Debs. col. 562); and if so, what steps are being taken to ensure that the absence from the Treasury's model of the environmental consequences of economic activity do not lead to errors in the Treasury's decisions.
The Earl of Caithness
Yes, but in any case the Treasury economic model would provide a far from ideal analytical framework within which to appraise the environmental consequences of economic activity. The main role of this model is in analysing and forecasting the macroeconomic aggregates that make up the national accounts. In so far as measures aimed at reducing environmental damage affect macroeconomic variables e.g. prices, costs and incomes, then the Treasury economic model would take them into account wherever possible. However, assessment of the effects of economic activity on the environment is better handled separately by more appropriate analytical techniques. The Government is actively involved in the international research effort on this subject as noted in the 14th July reply.