Peter Cosier. A Healthy Environment and a Productive Economy

Policy Series

Wentworth Group of Concerned Scientists[*]

When faced with significant environmental challenges in the past, Australian governments, businesses, communities and individuals have shown their capacity for responding creatively and energetically to environmental challenges, with positive outcomes for the health of the environment and economic productivity. While there are thousands of examples across Australia every day where individuals, communities and businesses strive to live sustainably, too often, despite best intentions, we place short-term interests over long term benefits.

The consequence is that as a nation, we are taking more from our environment than can be replenished, and that by any definition is unsustainable. The destruction of native vegetation, over-extraction of water, degradation of agricultural soils, and poorly planned urban and industrial development are driving the continued, long-term degradation of the Australian landscape.

As our population and incomes continue to grow, these assets will come under even more pressure. Climate change will exacerbate many existing challenges. The continent will continue to get hotter and experience changes in rainfall patterns, more droughts, and higher bushfire risks. Agricultural productivity is likely to be diminished by decreased rainfall and soil water availability, and urban and coastal assets will be at increasing risk from more intense storms, sea level rise and floods.1,2

The problem is the narrative: jobs or the environment.

In recent times, national policy has been plagued by short-term vested interests striving to shift the public dialogue to a position that we must sacrifice the environment to pursue a growing economy. We have witnessed the winding back of national water reform; the repeal of the emissions trading scheme; constant attacks on the Renewable Energy Target; the approval of thousands of coal seam gas bores across the landscape without proper assessments of their cumulative impacts on water resources, agricultural land or native vegetation; the Commonwealth seeking to give away responsibility to protect matters of national environmental significance; and very significant cuts to scientific research and national environmental programs.

This myopic attitude flies in the face of both good science and it flies in the face of good economics because, in the long run, we cannot have a prosperous society if we continue to pollute our environment and degrade our natural capital.

Conservation of natural capital is a universal human value that should underpin all political philosophy. The great Republican President Theodore Roosevelt once said: “Of all the questions which can come before this nation, short of the actual preservation of its existence in a great war, there is none which compares in importance with the great central task of leaving this land even a better land for our descendants than it is for us.”3

Generations of Australians have overwhelmingly supported this philosophy. For the past three decades, The Australian newspaper has commissioned Newspoll to survey the issues that Australians consider important in Federal politics. In every opinion poll conducted since 1993, the majority of Australians have said they considered the environment as a very important public policy issue.4

A sustainable economy

Productivity is the key to long-term economic growth. It is also a pillar of sustainability, because people can create greater value using less materials and less energy, with less impact on the environment.

If more people are to benefit from industrialisation, the world will need to produce more energy. How this energy is produced will be critical to achieving a sustainable economy, because the world needs to reduce greenhouse emissions by at least 50 per cent within the next 40 years to avoid the most dangerous consequences of climate change.5 This will require developed countries such as Australia to reduce net greenhouse emissions by more than 95 per cent over the next 35 years.6

If Australia chooses to act now in our own long-term self-interest, we can achieve that target without fundamental changes to the economy, through a combination of energy efficiency, low carbon electricity generation, and carbon farming.7 Carbon farming is particularly important because not only does it provide an economic mechanism to help offset Australia’s existing greenhouse gas emissions, it also provides an economic foundation for the restoration of degraded land across the continent.8 This is because natural landscapes and healthy agricultural systems store vast quantities of carbon.

Federation and the role of science in public policy

The health of the natural environment matters because it affects the wellbeing of people. The Australian Treasury defines wellbeing in terms of the total stock of capital – human physical, social and natural – that is maintained or enhanced for current and future generations.9 If we are to improve the stock of natural capital to enhance the wellbeing of current and future generations, we need to ensure that sustainability principles are embedded across all sectors of the economy, and for this we need science.

Australia’s Federation has by any measure been an extraordinary story. It has underpinned the development of one of the most successful and stable democracies in the world, which now sees us enjoying a remarkable 24 years of uninterrupted economic growth. This history has also positioned us to take advantage of the rise of the Asian century, creating a vast array of new economic opportunities.10

The conservation of natural capital however, did not factor prominently in the creation of our Federation or our constitution – and herein lies our problem. We built our political and economic institutions at a time when the natural world seemed endless – where land clearing was part of a heroic vision to develop the nation – where fresh water flowing to the sea was thought to be wasted – and where coal was the great new energy source that would power the industrial revolution.

With a new century come new challenges – challenges that our founding fathers could not have dreamed of. Today’s challenges of climate change, food security, the increasing scarcity of fresh water resources, the loss of biodiversity, and the increasing cost of natural disasters,11 are the defining issues of our age that will increasingly challenge our notion of progress.

These challenges require a new set of skills and institutions built on an understanding not only of market economics and social sciences, but also the natural processes that drive our ecosystems, such as the water cycle and the carbon cycle, and through maintaining the capacity of ecosystems to provide the goods and services that underpin our society and our economy.

The challenge and the opportunity

The challenge we all face is that the economic transformations needed are far beyond the ability of any individual or company to address on their own. The current government’s intentions to reform both Federation and the tax system present a golden opportunity for us to put in place practical, forward-looking reforms that embed sustainability throughout the economy, so that everyday actions also lead to the conservation of our natural capital.12

So how do we bring the economy and the environment together? The Wentworth Group of Concerned Scientists, in consultation with experts in economics, land use planning and land and water management, has put forward what we believe are five interconnected, long-term economic and institutional reforms that will lead to a healthier environment and a more productive economy:13

1.  Modernising Australia’s reactive land and water use planning systems  

Ineffective land use and infrastructure planning is not only a drag on economic growth – delays, uncertainty in development approvals, congestion, and damage from extreme weather events – it is also the driver of long-term environmental degradation because it fails to take into account the cumulative impact of development on the long-term health of environmental assets. It also causes significant economic costs. According to a report by Deloitte Economics, ineffective planning currently costs the Australian economy over $6 billion a year to repair damage from floods and storms, and without substantial reform, these costs are forecast to increase to over $2 billion per annum over the next 35 years.14,15

Australia sits on the edge of the most rapid economic expansion in human history.10 This will create a vast array of new economic opportunities. Such an expansion in combination with an expected 60 percent growth in Australia’s population in coming decades also means that competition for and conflict over land and water resources will continue to grow.

Major public investment in a new generation of land use and infrastructure plans will not only help manage these pressures, they will improve the livability of our towns and cities and because they are more efficient, will also help secure Australia’s economic prosperity long into the future.

2. Using markets to finance conservation.

Many market activities damage the environment, but this is often not reflected in the market price of the goods or services these activities produce.16 For example, industries will continue to emit excessive greenhouse gases if there is no market value placed on a stable climate system, and farming may cause land degradation if there is no market value placed on the ecosystem services they provide to society.

Often these problems arise because many aspects of the environment have public good values – that is, because no individual or company owns them, these values are not priced by the market, and are often used without regard to the costs that may be imposed on others. It is therefore in the public interest for governments to create the economic conditions for these impacts to be incorporated into the cost of doing business.17

Our proposition is a simple, but fundamentally important one: remove subsidies from activities that pollute the environment and create economic incentives for business and consumers to restore and maintain environmental assets that have been degraded in the past.

One way of doing this is to put a price on carbon and use carbon offset markets for the reasons described earlier: healthy landscapes store vast quantities of carbon. Another way is to eliminate fossil fuel subsidies and tax expenditures that are costing the economy in the order of $8 billion a year[†], and use some of these savings though an equitable, broad-based land tax to pay farmers, indigenous communities and other landholders to restore degraded environmental assets.

As a package these measures in combination with a price on carbon, would go a long way to restoring and maintaining the nation’s natural capital long into the future.18

3.  Conserving Australia’s natural capital.

On our watch,[‡]19 the clearing of native vegetation, pollution of rives and estuaries, over extraction of water, introduction of weeds and feral animals, and inappropriate fire management, has resulted in the listing of over 1,600 species of native plants and animals as threatened with extinction.20

We can turn around this systemic decline in Australia’s natural capital by: closing the gaps in our public and private reserves; connecting these across the landscape; and committing to a long-term plan to conserve our native plants, animals and ecosystems. In doing so, we will also create wealth and employment opportunities for more people, because access to nature in an increasingly congested world will be valued more highly by Australians and attract growing numbers of international visitors.

4. Regionalising management of Australia’s natural resources

In recent decades Australia has adopted a regional model for identifying investments in natural resource management.21 We are not proposing a fourth tier of government. What we are advocating is that all three levels of governments work more effectively with Australia’s existing regional natural resource management bodies, so that public and private investments lead to more effective management the Australian environment.[§]

The benefit of a regional model is that investment decisions are underpinned by an understanding of how landscapes function. It is also an effective mechanism for aligning government policies with peoples’ expectations and values.22 It is able to do this because it operates at a scale large enough to manage the pressures on our landscapes, yet small enough to use local knowledge to tailor solutions that suit those landscapes.  

5. National environmental accounts.  

At its most fundamental level, many of our environmental problems arise because we only measure half the ledger. We have sophisticated economic accounts that measure benefits of economic growth, but we do not account for the depletion of natural capital.

It is not possible to manage our economy without economic accounts. Neither is it possible to manage the environment without accounts that measure the condition our natural capital.

If Australia is to become a sustainable society – one that creates wealth without degrading its natural capital – a most fundamental reform is to create a system of environmental accounts that measure the condition of environmental assets (such as rivers, soil, native vegetation, fauna, and estuaries) appropriate to the scales at which economic and policy decisions are made.23 When we do it will change the way we manage Australia.

We all have a role …

The twenty first century goal of promoting economic growth has for too long been framed as a trade-off between the economy and the environment. We must move on from this phase of our industrial history.

We live in an extraordinary country. Our natural heritage is truly breathtaking. We enjoy one of the highest living standards of any nation – ever, and our prospects for the future seem endless.  

There is no reason why the Australia of today cannot grow the economy, create jobs and maintain a healthy environment. But to do so, we have to stop kidding ourselves that the short term decision-making that is pervading public policy today is not having a negative long term impact on our environment and our economy. And we have to stop kidding ourselves that the small handful of people who are responsible for managing Australia’s vast land and water resources have anything like the resources to do it without financial support from the rest of the community.

If we want to leave our world in a better condition than the one we inherited, it is incumbent on each of us, no matter where we live, to participate actively in public processes to plan for these long-term outcomes, and then take action so that they take us on a pathway where a healthy environment becomes a natural by-product of our economy – a partner to economic growth, rather than a competitor.

With land use plans that promote development and protect the environment, long-term emissions reduction targets to address climate change, the elimination of fossil fuel subsidies that cause pollution and their replacement with a tax system that finances conservation, it is possible to have a productive economy and a healthy environment.

When we do these things, we will create a truly sustainable society, because the market will direct investments that grow the economy and protect the environment.

 

The Wentworth Group of Concerned Scientists is an independent group of Australian scientists, economists and business people whose objective is to help policy makers identify solutions to the long-term conservation of Australia’s land, water and biodiversity assets.

Current Members of the Group are Mr Peter Cosier, Dr Richard Davis, Professor Tim Flannery FAA, Dr Ronnie Harding, Dr Terry Hillman AM, Professor Lesley Hughes, Professor David Karoly, Professor Hugh Possingham FAA, Mr Robert Purves AM, Dr Denis Saunders AM, Professor Bruce Thom AM FTSE, Dr John Williams FTSE.

 

References

  1. CSIRO and BoM, Climate change in Australia: projections for Australia’s NRM regions. 2015, Australia Government. p. 218.
  2. Department of Climate Change, Climate change risks to Australia’s coast: A first pass national assessment. 2009: Canberra.
  3. Slack, M. From the archives: President Teddy Roosevelt’s new nationalism speech. The White House Blog, 2011.
  4. Newspoll Political issues and trends: Importance of federal issues. 2015.
  5. Meinshausen, M., et al., The RCP greenhouse gas concentrations and their extensions from 1765 to 2300. Climatic Change, 2011. 109(1-2): p. 213-241.
  6. Wentworth Group of Concerned Scientists, Submission to Garnaut Climate Change Review: Science based emissions targets will require far deeper cuts. 2008.
  7. Denis, A., et al., Pathways to decarbonisation in 2050. Initial Project Report. 2014, ClimateWorks Australia: Melbourne, Victoria.
  8. Wentworth Group of Concerned Scientists, Optimising Carbon in the Australian Landscape. 2009, www.wentworthgroup.org/wp-content/uploads/2013/10/Optimising-Carbon-in-the-Australian-Landscape.pdf.
  9. Australian Treasury, Australia to 2050: Future challenges. 2010, Australian Government: Canberra.
  10. Australian Government, Australia in the Asian Century: White Paper. 2012: Canberra.
  11. Productivity Commission, Natural Disaster Funding Arrangements. Inquiry Report No. 74. 2014.
  12. Institute of Chartered Accountants Australia, An economic policy platform for the next term of government. 2013, www.charteredaccountants.com.au/futureinc.
  13. Wentworth Group of Concerned Scientists, Blueprint for a Healthy Environment and a Productive Economy. 2014.
  14. Productivity Commission, Barriers to Effective Climate Change Adaptation. 2012, Report No. 59, Final Inquiry Report: Canberra.
  15. Deloitte Access Economics, Building our Nation’s Resilience to Natural Disasters. 2013, Australian Business Roundtable for Disaster Resilience and Safer Communities.
  16. Australian Treasury, Australia’s future tax system: Report to the Treasurer. Part Two, Volume 2: Detailed Analysis. 2010: Canberra, ACT.
  17. Australian Treasury, Australia’s future tax system: Report to the Treasurer. Part One: Overview. 2010: Canberra, ACT.
  18. Australian Treasury, Australia’s future tax system: Report to the Treasurer. 2010: Canberra, ACT.
  19. McGraw Hill, McGraw-Hill Dictionary of American Idioms and Phrasal Verbs. 2002, The McGraw-Hill Companies, Inc.
  20. State of the Environment 2011 Committee, Australia state of the environment 2011. Independent report to the Australian Government Minister for Sustainability, Environment, Water, Population and Communities. 2011, DSEWPaC: Canberra.
  21. DEWHA and DAFF, Regional Delivery Model for the Natural Heritage Trust and the National Action Plan for Salinity and Water Quality. Audit report No. 21. 2007, Department of the Environment, Water, Heritage and the Arts and Department of Agriculture, Fisheries and Forestry: Canberra. p. 130.
  22. Natural Resources Commission NSW, Progress Towards Healthy and Resilient Landscapes: Implementing the Standard, Targets and Catchment Action Plans. 2010.
  23. Wentworth Group of Concerned Scientists, Accounting for Nature: A Model for Building the National Environmental Accounts of Australia. 2008: www.wentworthgroup.org/blueprints/accounting-for-nature.

 

[*] This paper is based on the Blueprint for a Healthy Environment a Productive Economy produced by the Wentworth Group of Concerned Scientists in association with Dr Guy Fitzhardinge AM, Prof Quentin Grafton FASSA, Dr Ken Henry AC, FASSA, Mr Max Kitchell, Prof Darryl Low Choy AM, MBE, RFD, FEIANZ, Ms Ilona Millar, Dr Jamie Pittock, The Hon Paul Stein AM, QC, and Mr Martijn Wilder AM.

[†] Primarily from exemptions provided to some industry sectors through fuel tax credits and reductions to the Commonwealth fuel excise, accelerated depreciation for fossil fuel assets, and the failure to index fuel excise for inflation since 2001.

[‡] ‘On our watch’ is an expression that means while someone is on duty; while someone is supposed to be in charge of a situation.

[§] There are 54 Regional Natural Resource Management bodies across Australia that work with governments, farmers, indigenous communities, and community groups who have a passion for public land conservation.

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