Index

Background Paper 7 1995-96
Ecological Economics: A Conference Report

Keith Hughes
Economics, Commerce and Industrial Relations Group

Contents

• Introduction
• What is Ecological Economics?
  Mick Common, Centre for Resource and Environment Studies, ANU and University of York
• Towards More Accurate Indicators of Economic Progress
  Fulai Sheng, World Wildlife Fund International
• Commercial Exploration of Biodiversity
  Andrew J Beattie, Commonwealth Key Centre for Biodiversity and Bioresources, Macquarie University
• Integrating Ecology and Economics: a Conflict of Space and Time
  Dan Lunney, Bob Pressey, Michael Archer, Suzanne Hand, Henk Godthelp and Alison Curtin, NSW National Parks and Wildlife Service
• Energy and the Contributions from Georgescu-Roegen
  John Peet, University of Canterbury, NZ
• How 'Dangerous' is Climate Change?
  A Barrie Pittock, Climate Impact Group, CSIRO Division of Atmospheric Research
• Political Implications for Resource Management: Guidelines for Environmental Improvement
  M D Young, CSIRO
• Ignorance and Uncertainty: Challenges to Implementing Environmental Goals for Sustainability
  Tony Norton, Centre for Resource and Environment Studies, ANU
• Sustainability, Policy and Ecological Economics: Hubris or Humility?
  Stephen Dovers, Centre for Resource and Environment Studies, ANU
• Sustainability, Impact Assessment and Scientific Uncertainty: Application of the Precautionary Principle
  Adrian Deville and Ronnie Harding, Institute of Environmental Studies, UNSW
• What's New About BCA and Risk Analysis: Its Application to the Precautionary Principle
  M F Rogers and T DeLacy, Johnstone Centre, Charles Sturt University
• Use of Multi-Criteria Analysis in Decision Support for Ecologically Sustainable Development
  M E Qureshi, P F Greenfield, F Kingham and A A Krol, Department of Chemical Engineering, University of Queensland
• Rethinking the Role of Economics in Environmental Impact Assessment
  Tor Hundloe, Environment Commissioner, Industry Commission
• EPA's Multi-disciplinary Approach to Assessing the Impacts of State Environment Protection Policies
  Terry A'Hearn and Wayne Robins, EPA, Victoria
• Generational Justice: The Marriage of Sustainability and Social Equity
  Clive Hamilton, The Australia Institute
• Towards Integrating Farming and Nature Conservation in Australia
  Christopher Nadolny, NSW National Parks and Wildlife Service
• Planning for Agricultural System Sustainability
  Roderic Gill, CARE, University of New England
• Global Development Debate: Global Warming, Sustainability and the Need for Institutional and Policy Reform
  Jim Gigas and Sardar N M Islam, Centre for Strategic Economic Studies, Victoria University of Technology
• The Effect of Social Time Preference on the Future of the Australian Economy and Environment: Findings from the Australian Dynamic Integrated Climate and Economy Model (ADICE)
  Sadar N M Islam and Jim Gigas
• References
• Attachment A: Conference Papers

Introduction

The conference attracted over 350 participants representing a diverse range of organisations and included economists, ecologists, community activists, politicians, public servants, academics, consultants, resource managers and business people.

Environmental and resource policy making and management were the major themes underpinning the conference. Interdisciplinary cooperation and a recognition of the pressing need to change the way we are doing things on the environmental management front were features. On display was a timely rethink of conventional processes and ideas with the ultimate objective of economic, ecological and sociocultural sustainability to guide and ensue from human-ecology interactions.

A wry observation was that economists know the price of everything but the value of nothing whereas ecologists know the value of everything but the price of nothing. Accordingly, interest was focussed on institutional and policy mechanisms designed to incorporate the strengths of the disciplines, rather than their weaknesses.

Conference plenary sessions were conducted under the titles: ecological economics issues in Australia and New Zealand, ecological economics from an international perspective , and resource use conflicts . Parallel sessions focussed on forestry, sustainable agriculture, wilderness management and conservation, resource policy, holistic modelling for ecosystem management, environmental equity and understanding value, environmental impact assessment procedures and management , and sustainability indicators and monitoring .

The sampled papers are not necessarily a representative collection and in their condensing much of their original messages may have been lost. However, this publication attempts to reproduce some of the points of a selection of papers without misrepresenting their authors. The words are generally those of the authors, but heavily cut. These are intended to provide an indication of content so that the reader can follow up papers of interest. Neither omissions nor length of summary extracts are intended as any reflection on the quality or importance of any of the papers. In particular, resource management, sustainable agriculture and Landcare issues which were prominent throughout the conference are underrepresented in this paper.

The emerging discipline of ecological economics reflects an attempt by scientists from varying backgrounds to come to grips with an emerging problem. Solutions will require a combination of skills to help furnish suitable advice. The central problem has been summarised by Goodland, Daly, El Serafy & von Droste (1991) as:

Two realisms conflict. On the one hand, political realism rules out income redistribution and population stability as politically difficult, if not impossible; therefore the world economy has to expand by a factor of five or ten in order to cure poverty. On the other hand ecological realism accepts that the world economy has already exceeded the sustainable limits of the global ecosystem and that a five-to-tenfold expansion of anything remotely resembling the present economy would simply speed us from today's long run unsustainability to imminent collapse. We believe that in conflicts between biophysical realities and political realities, the latter must eventually give ground. The planet will transit to sustainability: the choice is between society planning for an orderly transition, or letting physical limits and environmental damage dictate the timing and course of the transition.

 

Significant themes addressed by the conference included the need for economic statistics to reflect environmental realities, common property management issues, biodiversity and the reform of political processes so that the most important environmental issues are tackled in a systematic way.

If, as is likely, environmental considerations increasingly influence economic activity, then Parliamentarians need to be aware of the nature of the issues and the range of policy instruments available to address them.

Biophysical realities were accepted by the conference with debate focussed on the design of political and scientific institutions so that economics and ecology reinforce each other. Tensions between ecology and economics are on the point of resolution as it is increasingly recognised that the central issue is not the (false) choice between the environment or the economy, but rather seeking the best environmental and economic outcomes. The conference reflected an increasing awareness of the need to embed economic systems in the environment which provides raw material inputs to, and receives wastes resulting from, economic activities. Ecological economics requires consideration of economic, environmental and social issues.

Sustainable development satisfies current needs without compromising future wealth. Ecological economics is the science of sustainable development. It extends the usual domain of economics to include time and other physical features of the natural world. Classical economists such as Adam Smith, Malthus and J S Mill recognised this, but mainstream economics subsequently lost sight of it. Ecological economics also has an abiding interest in social and equity issues. Ecological economics stresses the need to balance economic efficiency, equity and environmental integrity.

Early studies of environmental limits such as the Club of Rome in the 1970s emphasised the depletion of finite natural resources such as petroleum, copper etc. Recent studies indicate that sink constraints (the capacity of the biosphere to dissipate byproducts of industrial production) will affect 'business as usual' earlier than the depletion of finite resources. The Greenhouse effect, ozone depletion, local air and water pollution have contributed to an increasing awareness of the natural limits to industrial growth. It is argued that market incentives encourage overuse of common property such as environmental resources because individuals directly benefit from their use while any costs associated with that use are shared with everyone else. The overuse of common property - for example, sink functions - is not readily correctible by market adjustment.

One example of the limits of the carrying capacity of the biosphere is climate change and rising sea levels from the atmospheric accumulation of greenhouse gases. Scientists now generally accept the reality of the greenhouse effect even though the complexity of natural systems leaves considerable uncertainty about the exact nature and degree of some of the consequences. Measures to curb greenhouse gas emissions may be necessary unless this generation wants to bequeath a less viable environment and economy to future generations. Such measures will have to be undertaken on a global scale and are complicated by the incentives facing individual countries to opt out of any agreed measures unilaterally. The successful adoption of an international action plan on greenhouse gas emissions may have even larger benefits as a template for dealing with arising issues than for its impact on climate change.

Reduced resource consumption at any given level of economic activity will require accelerated technological development. A reorientation of the tax system could help signal the desirable direction. Existing taxes on employment and income might be replaced by taxes on pollution and resource depletion.

There is increasing pressure to reform economic indicators to provide a less narrow picture of economic performance. Existing measures of wealth such as Gross Domestic Product (GDP) aggregate all spending without regard to its purpose. Spending to help repair environmental damage adds to GDP just as the original activity which generated the damage counted as value added. For example, a factory which emits pollution requiring costly clean up adds more to GDP than would a clean factory making the same product. Similarly, activities which detract from future production are treated like any other activity under existing statistical conventions. For example, agricultural production adds to GDP whether or not the production techniques lead to soil degradation.

Green accounting - modifying economic indicators by ascribing a monetary value to natural resource depletion and environmental degradation - seeks to assign an economic value to the environment. 'Green accounting' in environmental terms is a very cautious and modest concept: it does not seek to include attributes such as the environment's ecological, ethical and cultural values.

Biodiversity is a vital scientific attribute which is also not represented in conventional economic models. In economics, all goods are substitutable. If, for example, the long term reproductive rate of some whale species is below the long term bond interest rate, the profit maximising whale owner would kill the whales and invest the earnings. Extinction is an example of natural irreversibility: whales can be converted to money but once a species is extinct, money cannot buy whales.

The main reasons for the conservation of biodiversity may be ethical and moral, but 'quality of life' and economics reasons for conserving all species are far greater than previously imagined and vital in their own right. The use of biodiversity provides resources for products as diverse as pharmaceuticals, high-tensile fibres and new construction materials and designs.

The conference tended to focus on areas of common ground where economists and ecologists could explore techniques for reinforcing their approaches to issues. More contentious issues, such as the relationships between international trade and the environment and the prospects for economic growth, which had the capacity to polarise views within the conference, were downplayed.

Environmental considerations are increasingly important in a diverse range of important government policies: competition; transport; energy; agricultural, forestry and fisheries; tourism; population and trade negotiations all reflect various aspects of the environment debate.

The conference confirmed that science has a key role to play in informing policy development and analysis. Ecology, economics and the emerging discipline of ecological economics are based on approaches that are explicit, repeatable and can be evaluated. Scientific data and information, and its attendant reliability and uncertainty, are needed to guide choices on resource use and management. Where information is limited and the risk and decision stakes high, then science can improve policy outcomes by outlining means to evaluate the effectiveness of decisions, over time.

As environmental problems develop, Parliament will be increasingly required to set standards or frameworks to reduce unacceptable activities or to mediate competing claims on natural resources. There is a need for information on environmental choices to be publicised so that any decisions can be reinforced by consultation with, and the involvement of, the general public. Strategic thinking is required to implement systematic processes so that environmental issues are approached in a coordinated fashion rather than as a series of ad hoc reactions to crises as they arise. Parliament will also need to consider how Australia is to contribute to the global solutions required to tackle global problems.

 

What is Ecological Economics?

Mick Common
Centre for Resource and Environment Studies, ANU and University of York

Economics conceptualises the sustainability problem as that of maintaining a constant level of per capita aggregate consumption for ever. Ecology sees the problem in terms of maintaining the resilience, or functional integrity of ecosystems. Ecological economics' conceptualisation of sustainability would involve maximising present and future income subject to constraints implied by the maintenance of resilience.

Analysis of this problem shows that ecological economics' sustainability may require compromising consumer sovereignty. Human preferences may be such that economic activity is consistent with system integrity. If not, correcting market failure is not sufficient for sustainability.

The problem: how to alleviate current poverty without so depleting natural resources and damaging the integrity of natural systems as to entail future poverty. Since 1945, growth has been touted as better than redistribution to cure poverty. In the light of subsequent growth but continued poverty, that conclusion may need reconsideration.

From a systems interdependence perspective, ecological economics recognises uncertainty as a fundamental feature of economic activity, whereas economics does not. Hence the development and use of safe minimum standards and environmental performance bonds as precautionary responses to uncertain outcomes. Under safe minimum standards, a project with irreversible environmental consequences should not proceed unless the social costs of not proceeding with it are unacceptably high.

Moral suasion policy instruments are orthodoxly viewed by economists as ineffective and would imply wrong existing preferences (contrary to the holy shibboleth of consumer sovereignty). But they may be viewed more favourably by ecological economics: there is a collective interest in a properly informed electorate.

Towards More Accurate Indicators of Economic Progress

Fulai Sheng
World Wildlife Fund International

Most environmental problems are induced by human resource-use activities, which are driven by a society's value systems, both economic and non-economic. Non-economic values such as precautionary principles, equity within and across countries, and care for future generations are strong forces that can reduce human pressure on the environment. But economic values based on market prices often dominate decisions on resource use activities in modern societies. An over-reliance on economic values is not justified because sustainable development requires resource use activities to be socially, environmentally and economically balanced and coordinated. The problem of disproportionate influences of economic values is aggravated when economic values are themselves inaccurate.

Current economic statistics fail to account for changes in the income generating capacity of natural resources and environmental services. GDP and national income levels are therefore exaggerated, thus providing distorted signals for decision makers. This is like a malfunctioning gas meter which shows there is still plenty of gas in the tank whereas in fact the gas is quickly running out. The driver is misguided by the gas meter and the car is prone to sudden breakdown.

Methodologies are available to monetise natural resource depletion and environmental degradation. They are collected in the UN SEEA handbook published in 1993. Environmentally adjusted GDP, national income, sectoral value added, savings, investment and other indicators will provide a much more truthful picture of economic performance than current estimates of GDP.

Green accounting is, by itself, inadequate to better inform decisions on sustainable development. Green accounting is not fully green as it is able to capture only the economic values of the environment. It only attempts to identify the environment's contribution to economic output thus enabling decision makers to better plan the use of natural resources and environmental services and to invest in the maintenance and enhancement of their income-generating capacity. The environment's ecological, ethical, cultural and other non-economic values need not be brought into economic measures. These non-economic values are better reflected by free-standing environmental and social indicators expressed in non-monetary terms. Decisions should be based on a set of social, environmental, and true economic indicators.

Commercial Exploration of Biodiversity

Andrew J Beattie
Commonwealth Key Centre for Biodiversity and Bioresources, Macquarie University

Examples of successful commercial development of products from obscure species are given and are considered the tip of the iceberg. The main reasons for the conservation of biodiversity are ethical and moral but the judicious exploration of biodiversity has clearly demonstrated that the economic incentives for the conservation of all species are far greater than previously imagined.

The paper describes some recent discoveries and innovations to illustrate the wide variety of adaptations and organisms that have emerged as potential or proven biological resources. For example, 60 million years ahead of human development of antibiotics, some ants have evolved glands specialised for antibiotic production. These antimicrobial chemicals are now being explored for medicinal, agricultural and industrial use.

In the context of its application to the discovery of new biological resources, natural history is at the cutting edge of commercial exploration. Most research so far has concentrated on finding useful bioactive compounds. However, naturally produced chemicals are only one type of adaptation and the strength of the evolutionary approach is that adaptations of all kinds can be explored in the vast array of species that constitutes world biodiversity.

Integrating Ecology and Economics: a Conflict of Space and Time

Dan Lunney, Bob Pressey, Michael Archer, Suzanne Hand, Henk Godthelp and Alison Curtin
NSW National Parks and Wildlife Service

Unless the broad framework of ecological ideas are accepted then the basis for continuing diversity will be lost. If the last thirty years have taught us anything about communicating the ecological imperatives for conserving biodiversity, it has been that timidity in identifying the magnitude of the current extinction process, hesitation in implementing a representative reserve system and failure to see the vital link between extinct species and the need for spectacularly large reserves has heightened the environmental crisis, driven up the cost of restoration and allowed this generation to consume the biological wealth of subsequent generations.

We have also been ill served by seeing ecologists in a narrow way, one that primarily employs them to fix a problem after it has been thrust into the political arena on the basis of economic criteria. This paper is written in the spirit of this conference: to redefine resource management and environmental policy through ecological economics.

Reserve systems protect species, communities and ecosystems from damage or outright extinction and provide for human recreation, inspiration and spiritual development. Virtually all the planet's biota relies on protection in the wild. The protection of natural processes, just as important as the elements of natural pattern, can only be achieved in situ.

There are problems in specifying the benefits derived from natural areas like atmospheric and climatic regulation, catchment processes and control of pest species. Although these benefits are likely to have very high values, they are impossible to exactly quantify. From the short term economic perspective, however, reserves can generally be seen as sinks for money. The controlled commercial use of selected wildlife species will not necessarily pay for the long term conservation of those species and the economic benefits of nature conservation are often much lower than the opportunity costs of alternative land uses. The fact that a reserve system is to some extent an economic liability does not indicate that its days are numbered. Rights of other species to long term survival are being increasingly recognised.

It is desirable to design, implement and maintain an adequate reserve system so that the inevitably limited resources are used as efficiently as possible. Economics is necessary to refine estimates of cost for different reservation scenarios and to investigate the costs of 'off-park' approaches to conservation as replacement for reserves. Most comparisons of reservation scenarios have been based simply on the required number or areas of reserves. These must be extended to include realistic economic costs for establishment and maintenance.

If we are serious about long term conservation and inter-generational equity, about wanting to keep Australia's unique animals for future generations thousands of years down the road, we must find ways of increasing the size of Australia's protected environments to about 39% of the area of the continent. Economically viable paths to this goal could involve: 1, ecotourism: reshaping Australia as the 'Environmental Riviera of the World'; and 2, ecologically sustainable harvesting of kangaroos for human consumption: replacing sheep and cattle which at present lock-up and devastate - to the tune of two billion dollars per year in land degradation costs - land required for effective long term conservation. These changes which would enable sufficiently large areas of Australia to 'heal' would require a major shift in attitude about economic land usage. The dollars and cents of this are already under scrutiny. Where the proposed change from sheep and cattle to kangaroos has been examined by graziers, academics and economists, such as in the mulga lands of Queensland, it has been found to be economically far more viable than current land use practices.

Energy and the Contributions from Georgescu-Roegen

John Peet
University of Canterbury, NZ

How 'Dangerous' is Climate Change?

A Barrie Pittock
Climate Impact Group, CSIRO Division of Atmospheric Research

Climate change will interact in complex ways with the direct biological effects of increasing carbon dioxide concentrations , and the effects of population growth, land-use change, and other types of pollution and land degradation. Added to the complexity of the response of natural systems are issues of inter-sectoral, international and intergenerational equity.

Ethical issues such as the comparative value of human life in rich and poor countries loom large as determinants of negotiating positions in the implementation of the FCCC. Conventional economics is poorly equipped to deal with these issues. Aside from this, attempts at integrated climate change impact assessments, which might feed in to global cost-benefit analyses on emission reduction strategies, are fraught with omissions, uncertainties and value laden assumptions. These are illustrated by reference to the impact of climate change on world food security, impacts and loss of life from extreme events, and possible future rises in sea levels.

Ecological economists have to come to grips with these complexities to contribute to the debate about what to do about the enhanced greenhouse effect. How dangerous is it, and how soon and how radically must we act? Answering such questions will not be easy. It will certainly involve close interaction with physical and biological scientists. There may well be no objective answers but if not, at least we can try to clarify the issues and sharpen the debate on the value judgments which must be made.

Political Implications for Resource Management: Guidelines for Environmental Improvement

M D Young
CSIRO

Recommendations for future government economic policy directions should also recognise the prospect of policy failure and build in arrangements to enable other instruments and organisations to take over before failure has irreversible consequences. Many of the resource conflicts observable today arise because the general social, institutional and political structures favour processes and mechanisms biased against the future. Australia's macroeconomic framework, for example, is very short term in its orientation. Investment determines patterns of energy and resource consumption, shapes amenity values and ultimately determines environmental quality.

Three macroeconomic issues are important: how does macroeconomic policy influence relative prices, how does macroeconomic policy affect industries preference for short versus long term considerations, and how can macroeconomic policy be used to redistribute income without adversely affecting relative prices. Prescriptions:

• polluters and resource users should pay the full cost of their environmental consequences;

• do not tax savings: taxes on savings encourage consumption rather than investment;

• use "green taxes" on resource use to raise price of natural resources and thereby encourage their conservation;

• do not tax land transactions or other structural adjustment mechanisms which are environmentally friendly; and

• use land ratings systems and other wealth taxes to collect revenue needed to reduce the gap between the haves and the have nots.

Monetary policy - low interest rates encourage industry to invest for the long term: high interest rates send a signal that investors need not worry about the long term consequences of their actions. A short term view of interest rate policy means nations like Australia have no agreed long term (twenty five-fifty years) investment strategy.

Ecological economists will need to understand the role, potential and failings of regulatory instruments: closing loopholes, setting precautionary standards and building the regulatory safety nets necessary to prevent irreversible loss. Recognition of community and institutional processes makes the agenda pursued by ecological economists both more complex and more challenging. Instead of a simple marriage between economists and ecologists, a union with political scientists and social psychologists is also required - 'markets are excellent servants but poor masters'. In this vein, the notion of consumer as king should be replaced with one where consumers are guided by a wise community which seeks to maintain and improve their sense of value to and impact on society and the environment.

One message that arises from institutional economics is that it is often more appropriate to build upon and reshape existing institutions rather than build new ones. By creating a new institution one simply reinvents the wheel while leaving the existing ones with all their design faults in place.

Adaptive targets and adaptive management are designed to accommodate uncertainties and imperfect knowledge. Ecological economists who wish to suggest resource management systems for presentation to Parliament will need to design them so they encourage the adoption of adaptive management strategies and encourage resource managers to manage for the long term.

Tradeable property rights and permit systems encourage efficiency. These efficiency benefits are of trivial importance compared to the associated administrative benefits that such systems offer. Well designed adaptive management systems enable incentives for community and industry stewardship to be added to property rights systems and for them to be managed in a way that emphasises making them resilient to the continuous ecological and economic pressures placed upon them. Most adaptive management systems achieve this by foreclosing the option for administrators to manage reactively. If a problem arises then the rules must be changed in a proactive strategic manner.

Ignorance and Uncertainty - Challenges to Implementing Environmental Goals for Sustainability

Tony Norton
Centre for Resource and Environment Studies, ANU

This paper considers some of the insights that ecology can provide in addressing ignorance and uncertainty in sustainability and some of the elements that appear necessary to promote a precautionary approach to environmental management, impact assessment and the maintenance of the biosphere. Key issues include:

• modelling economy-environment interactions

• dealing with pervasive uncertainty generated by the linkages between the economy and the environment

• developing a better understanding of the notion of development in relation to ecological and economic determinants

• developing principles and methods for social decision making and valuation

• developing measures or indicators of sustainability and human progress towards it.

How should ecological systems be managed on a sustainable basis when it is often very difficult or simply not possible to reliably identify impacts arising from human activities and establish their ecological significance? Risk and uncertainty are pervasive. It is essential that the institutions and processes concerned with environmental management and sustainability accommodate these technical limitations.

The assessment of potential impacts of human activities on ecological systems requires the following information:

• the relative ecological importance of the attributes of the site or area in relation to the ecological system that sustains them

• the natural variability (including disturbance) of the overall ecological system in space and time

• the status of the overall ecological system and

• the status of the attributes of the site or area in relation to the overall ecological system.

A number of commentators have remarked on the need to greatly enhance the capacity of institutions to conduct ecological monitoring and maintain the data sets so arising. Common and Norton (1994) includes consideration of the specific components of ecological systems that might be monitored (and why).

Contingency planning should play an important support role in the development of a systematic, precautionary approach to environmental impact assessments and environmental management. Costly in-situ mechanisms to ensure the protection and conservation of biological diversity, for example, may be of limited long term value unless such contingencies are also in place.

Concerns that economic growth beyond the carrying capacity of the biosphere will lead to dramatic changes in the environment including environmental collapse (e.g. Daly 1973, 1991) are increasingly supported and strengthened by eminent ecologists (e.g. Vitousek et al 1986, Erlich and Erlich 1990, Wilson 1992).

Many of the uncertainties and risks associated with the intensive use of ecosystems and environmental management are irreducible within at least the timeframes of current policy formulation, implementation and decision making. While many of the central goals of sustainable development remain controversial (e.g. Common 1995), sustaining the biosphere and managing economy-environment interactions demands a cautionary approach and suitable frameworks for policy analysis and decision-making. Ignorance, uncertainty and risk are serious impediments to sustainability and will remain so unless properly considered.

The conference confirmed that science has a key role to play in informing policy development and analysis, rather than driving it. Science can be used to improve the quality of outcomes of government policies - an example given at the meeting was Australia's domestic forest policy. Ecology, economics and the emerging discipline of ecological economics are based on scientific approaches that are explicit, repeatable and can be evaluated. Scientific data and information and its attendant reliability and uncertainty, can be presented to decision makers. Where information is limited and the risk and decision stakes high, then science can improve policy outcomes by outling means to evaluate the effectiveness of decisions in relation to stated social and government goals, over time. That is, scientific information can be used to guide a precautionary principle that is defendable.

Sustainability, Policy and Ecological Economics: Hubris or Humility

Stephen Dovers
Centre for Resource and Environment Studies, ANU

• discussion constrained within historically defined or currently topical political fields;

• sectoral approaches with limited cross-sectoral integration;

• limited temporal scales;

• emphasis on production (supply) over consumption (demand) aspects;

• difficulty in dealing with pervasive uncertainty;

• lack of attention to problem definition and prioritisation;

• reluctance to consider possible ecological limits to human activities;

• definition of environment and even sustainability as a minor or adjunct policy field;

• emphasis on mild, inoffensive policy instruments; and avoidance of setting firm timelines or policy targets.

In this sense sustainability policy is a logical extension of the lurching, episodic ad hocery that has characterised Australian environmental policy in the past: responses not reflecting the nature of the problems.

A systemic approach demands that attention shifts from the episodes, contests, expediencies and immediate topicalities that have too often dominated both policy and intellectual discourses towards longer term matters of process. This requires recognition of the deep and structural basis of sustainability problems: that some problems may require substantial change to the status quo. Further, it requires that this possibility be an overriding imperative for policy, and that relevant policy processes and institutional arrangements reflect this through their status, permanence and longevity.

Sustainability differs in both kind and degree from other policy fields. Sustainability problems more commonly display the following attributes: possible existence of ecological limits to human activity; broadened spatial and extended temporal scales of concern and analysis; irreversibility; cumulative impacts; urgency; pervasive uncertainty and complexity; connectivity with other problems; new ethical dimensions; lack of defined responsibilities and property rights; and sheer novelty.

Sustainability, Impact Assessment and Scientific Uncertainty: Application of the Precautionary Principle

Adrian Deville and Ronnie Harding
Institute of Environmental Studies, UNSW

A number of definitions of the precautionary principle exist and in Australia the most widely recognised definition is that contained in the Intergovernmental Agreement on the Environment (IGAE):

where there are threats of serious or irreversible environmental damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation. In the application of the precautionary principle, public and private decisions should be guided by:
1. careful evaluation to avoid, wherever practicable, serious or irreversible damage to the environment; and

2. an assessment of the risk weighted consequences of various options.

The precautionary principle has emerged with recognition of the failure of the paradigm of the assimilative capacity of the environment to absorb anthropogenic waste. The various definitions of the precautionary principle indicate that its application may be appropriate to a range of activities, from specific instances of pollution to the development of administrative policies and laws. Accordingly the precautionary principle should apply through a hierarchy of 'decision points'. Secondly, it can be applied to existing as well as new activities, and thirdly, it can be applied at a variety of geographic scales from local to global. Underlying the principle are a number of values: environmental well-being has intrinsic value and legitimate status; global commons exist and there are obligations to protect them; the environment must be passed to future generations without further damage irreversible damage to biological diversity, resources and systems; and, there is a need to be more effective at preventing environmental degradation.

The precautionary principle (Precautionary principles are based on the understanding that definite scientific proof about some cause and effect mechanisms in the ecosystem may not soon or never be attained. Uncertainty should therefore not be used as a reason for postponing measures to prevent possible environmental degradation.), by explicitly noting the limits of scientific determinism, legitimates a public political determination of these questions (Cameron 1993) and institutionalises caution (Young 1993). Much discussion about environmental impact assessment revolves around the issue of public involvement and transparency of process. The widespread employment of science to legitimate much decision making should be tempered by recognition that:

• the scientific community (as it is currently organised) has failed to predict various important outcomes such as ozone depletion

• it is unclear that science can provide an adequate basis for environmental decision making since it cannot completely eliminate uncertainties about cause and effects and reversibility; and

• what constitutes degrees of acceptable environmental damage is not a scientific question, but one which ultimately rests on judgements rooted in the cultural, political and economic sphere.

Much has been written about the difficulty of operarationalising the precautionary principle. The principle seems to suggest that the choice is between risk and caution, but often the choice is between one risk and another depending on how the picture is framed. The importance of subjectivity in the framing of issues is recognised in this argument and needs to be borne in mind in applying the principle: the application of precaution at one point may increase the risk of less desirable environmental outcomes at another point.

Some have suggested that the principle is a composite of value-laden notions and loose, qualitative descriptors and that in order to anticipate environmental damage, the decision maker is left pondering how to anticipate the uncertain, indeterminate or unknown. It has been suggested that this paradox effectively leaves the precautionary principle as little more than a moral injunction (Dovers and Handmer 1995)

However, as the precautionary principle can be seen to be filtering down through many levels of human activity directed by growing legislation, its application in concrete actions is a key issue. A number of key questions arise within this larger issue: under what sort of circumstances should it be applied? by whom? at which level of decision making is it to be applied? what are the tools and techniques available for its application?

What's New About BCA and Risk Analysis: Its Application to the Precautionary Principle

M F Rogers and T DeLacy
Johnstone Centre, Charles Sturt University

This paper discusses:

• the application of scientific, economic and social data to a wide range of decision criteria to choose between alternatives of differing precautionary strength

• the extension of Cost Benefit Analysis through risk simulation

• the exploration of individual and community attitudes toward environmental precaution, and

• the explicit acknowledgment of the risk and uncertainties in both an economic and scientific sense.

Use of Multi-Criteria Analysis in Decision Support for Ecologically Sustainable Development

M E Qureshi, P F Greenfield, F Kingham and A A Krol
Department of Chemical Engineering, University of Queensland

The complexity of information related to environmental problems, the number and variety of participants and the value choices involved in environmental issues makes it difficult to achieve a single optimal approach to decision making and decision support tools. Cost Benefit Analysis (CBA) is useful in addressing short term allocative efficiency, and some benefits and costs which are the result of direct resource use can be valued using market prices. However, a large number of benefits and costs relevant to biodiversity, irreversibility and resilience, and aesthetic values are difficult to measure and value in monetary terms. A better approach is to evaluate the outcomes of alternative policies/projects against criteria sets, an approach known as Multi Criteria Analysis (MCA). MCA can complement CBA, where CBA is one criterion. This paper proposes the analytic hierarchy process (AHP) as an MCA technique suitable for problem structuring and accommodating the views of several stakeholders. AHP can be linked with a generic MCA methodology capable of using quantitative and qualitative information.

Rethinking the Role of Economics in Environmental Impact Assessment

Tor Hundloe
Environment Commissioner, Industry Commission

Key tenets of sustainable development:

• intergenerational and intragenerational equity

• the elimination of poverty and deprivation

• the conservation and enhancement of the resource base which alone can ensure that the elimination of poverty is permanent

• a broadening of the concept of development so that it covers not only economic growth but also cultural and social developments

• unification of ecology and economics in decision-making at all levels.

Economic values are usually calculated by reference to market prices. The price of a product is influenced by the distribution of income and wealth in the world. From the supply side, the price at which a good or service will be supplied depends on the cost to the producer of land, raw materials, labour and capital. If we accept the prices resulting from market transactions as the value of something we are implicitly accepting that the prevailing distribution of income is appropriate.

Economic calculus assumes each individual is the best judge of his or her welfare but there is debate as to circumstances when this ethical principle is appropriate. This principle requires each individual to be very well informed, able to predict in a probabilistic sense future events, and not subject to addictions or any other external influence which diminishes the person's rationality. (Economics does not take a great interest in how people come to have the preferences and tastes they exhibit in the market - if people are influenced by advertising, charismatic leaders, or 'the Joneses', there is a tendency to ignore the effect this has). There is a further question as to whether the individualistic (and generally materialistic) ethic is a true reflection of human nature and behaviour, and therefore whether models based on this notion capture the complete and complex nature of human decisions.

Some contemporary economists believe that individuals make decisions in two contexts, private and social. In the social context, individuals make community decisions which are altruistic and consider future generations. Values determined by the market represent private decisions. Social values have to be determined by other processes.

The extent of scientific understanding has a fundamental bearing on what economists can do. The high level of uncertainty with regard to the possible impacts of certain pollutants (for example, greenhouse gases) makes it impossible, or near to impossible, to estimate economic values.

Discounting (future returns expressed as equivalent current values) is a common economic tool justified by reference to impatience, productive capital etc. There are a range of arguments against discounting such as:

• from a social perspective, individual time preference is not necessarily consistent with lifetime welfare maximisation;

• discounting because of impatience is irrational; it is satisfaction of wants as they arise that matters - tomorrow's satisfaction matters, not today's assessment of tomorrow's satisfaction;

• what individuals want is not necessarily what society would want.

Discounting is not intended to address intergenerational issues (indeed it explicitly counts against future generations) and hence has a limited range in moving society towards sustainable development.

We need to search for practical rules which allow cost benefit analysis to be extended, and also know when to put it aside and make decisions on other criteria. In the first instance, the environment (as a factor of production, as an assimilator of wastes, and as a direct consumption good) has to be factored into traditional cost benefit analysis. (See Hufschmidt et al 1983). Pearce et al (1990) extend cost benefit analysis further by using it as a tool which has a set of objectives rather than the usual objective of economic efficiency: what constitutes a gain or loss depends on the objective function chosen.

Because distributional issues, particularly intra-generational equity within and between nations, are so difficult to deal with, they have been largely neglected in recent years. It would seem fair comment to suggest they have been completely neglected in cost benefit analysis but found their way into environmental impact assessments under headings such as incidence analysis, multi-criteria analysis, or social impacts.

For environments or environmental processes which are considered on scientific or some other grounds to be sacrosanct, the simple solution is to place them outside the economic calculus. Accordingly, safe minimum standards may be prescribed or environmental constraints could be set to circumscribe cost benefit analyses.

EPA's Multi-disciplinary Approach to Assessing the Impacts of State Environment Protection Policies

Terry A'Hearn and Wayne Robins
EPA, Victoria

Assessing the costs and benefits of SEPPs using narrowly applied traditional cost benefit analysis techniques is neither easy nor useful. Instead, EPA's economists have developed an innovative multi-disciplinary approach which is specifically designed to:

• help promote practical ways of implementing environmentally sustainable development, intergenerational equity and the precautionary principle

• harness the various technical expertise, such as scientific and economic analysis, which is used during the development of a SEPP, and

• support the extensive public consultation process through which a SEPP is developed.

In this paper an outline of this approach is presented as well as some of the experiences gained from the public release of EPA's first three draft Policy Impact Assessments

Generational Justice: The Marriage of Sustainability and Social Equity

Clive Hamilton
The Australia Institute

This paper uses three recent environmental issues (the excise on leaded petrol, the carbon tax, and native forest logging) to argue that packages of measures based on environmental policies can offset any negative social welfare impacts and that the equity impact of failing to act is likely to be severe.

Policy packages should be developed with a double dividend: advancing environmental sustainability and promoting employment growth and equity as well. (In Europe there is a major push towards ecological tax reform aimed at greening the tax system and decoupling environmental preservation from the economy, so that the former is not a drag on the latter). Recycling of revenues from environmental taxes to reduce taxes on employment and income is at the centre of this reform process.

Towards Integrating Farming and Nature Conservation in Australia

Christopher Nadolny
NSW National Parks and Wildlife Service

Possibly 2000 exotic plant species have been introduced, seventy six plant taxa were presumed extinct by the mid 1980s, and undocumented and recent extinctions probably increase this number dramatically. seventeen mammals, three birds and one lizard are known to have become extinct, and nearly 300 other vertebrate species are considered endangered.

Agricultural development has almost certainly been a prime factor influencing this dramatic decline of native vegetation and wildlife in Australia. Farming techniques do not fully utilise or take account of the indigenous biota. The choice of agricultural 'technology' leads to major long term consequences for the landscape, biodiversity and the regional economy.

Planning for Agricultural System Sustainability

Roderic Gill
CARE, University of New England

Global Development Debate: Global Warming, Sustainability and the Need for Institutional and Policy Reform

Jim Gigas and Sardar N M Islam
Centre for Strategic Economic Studies, Victoria University of Technology

Growth does have limits and those immediate limits are not non-renewable resources (though they exist), they are the environmental resources used in production and growth and nature's capacity to accommodate environmental degradation.

The limits being approached are not only environmental and physical resource limits but also partly institutional in character. Current institutions cannot implement unilateral policy action without being subject to the prisoner's dilemma and multilateral action is slow and requires the ratification of agreements. These issues are major irritations in the cycle of reaching a policy and institutional agreement. Another major issue is: who will police and enforce any agreement? Without the correct procedures for monitoring emissions, agreements will become unworkable. The discussion on these sensitive issues is slow and progress is slower in addressing the solutions needed.

The Effect of Social Time Preference on the Future of the Australian Economy and Environment: Findings from the Australian Dynamic Integrated Climate and Economy Model (ADICE)

Sadar N M Islam and Jim Gigas

References

Ayres, R U 'Economic growth: politically necessary but not environmentally friendly' Ecological Economics 15, 2, November 1995: 97-9

Borman, F H and Kellert, S R (eds) Ecology, Economics, Ethics: The Broken Circle Yale University Press, New York, 1991

Botkin, D B Discordant Harmonies: A New Ecology for the Twenty-First Century Oxford University Press, New York, 1990

Boyden, S, Dovers, S and Shirlow, M Our Biosphere under Threat: Ecological Realities and Australia's Opportunities Oxford University Press, Melbourne, 1990

Cameron, J 'The Precautionary Principle - Core Meaning, Constitutional Framework and Procedures for Implementation' in The Precautionary Principle Conference University of NSW, September 1993

Common, M S Sustainability and Policy. Limits to Economics, Cambridge University Press, Cambridge, 1995

Common, M S and Norton T W 'Biodiversity, Natural Resource Accounting and Ecological Monitoring' Environmental Resource Economics, 1994, 4: 29-53

Daly, H E 'The steady state economy: toward a political economy of biophysical equilibrium and moral growth' in Toward a Steady State Economy Daly, H E and Freeman, W H, 1973

Daly, H E 'Ecological economics and sustainable development: from concept to policy' Environment Department Divisional Working Paper 1991/24, World Bank Environment Department, Washington DC, 1991

Dovers, S R 'Risk, uncertainty and ignorance: policy process and institutional issues' Background Paper 1995 Fenner Conference on the Environment, Risk and Uncertainty in Environmental Management, Canberra, November 1995

Dovers, S and Handmer, J 'Ignorance, the Precautionary Principle and Sustainability'Ambio, 1995, 24/2: 92-97

Ehrlich, P R and Ehrlich, A H The Population Explosion, Simon and Schuster, New York, 1990

Ekins, P, Hillman, M and Hutchison, R Wealth Beyond Measure: An atlas of new economics Gaia Books Limited, London, 1992

Goodland, R, Daly, H E, El Serafy, S and von Droste, B Environmentally Economic Development: Building on Brundtland UNESCO, Paris, 1991

Harte, J E 'Ecology, sustainability, and environment as capital' Ecological Economics 15, 2, November 1995: 157-64

Holmberg, J (ed) Policies for a small planet from the International Institute for Environment and Development Earthscan Publications Ltd, London, 1992

Hufschmidt, M M, James, D E, Meistra, A D, Bower, B T and Dixon, J A Environment, Natural Systems, and Development: An Economic Valuation Guide, John Hopkins University Press, Baltimore, 1983

Jacobs, M The Green Economy: Environment, Sustainable Development and the Politics of the Future, Pluto Press, 1991

James, D 'Using Economic Instruments for meeting environmental objectives: Australia's experience' Environmental economics Research Paper No 1 Department of Environment, Sport and Territories, Canberra, 1993

Myers, N 'The hamburger connection: how Central America's forests became North America's hamburgers' Ambio 10, 1981: 3-8

Myers, N and Simon, J L Scarcity or Abundance? A Debate on the Environment , Norton, New York, 1994

Pearce, D W Cost Benefit Analysis Macmillan, London, 1983

Peet, J Energy and the ecological economics of sustainability Washington, D.C.: Island Press, c1992

Sheng, F Real Value for Nature: An Overview of Global Efforts to Achieve True Measures of Economic Progress WWF International, World Wide Fund for Nature, Switzerland, 1995

Vitousak, P M, Ehrlich, P R, Ehrlich, A H and Matson, P A 'Human appropriation of the products of photosynthesis', Bioscience, 34, 368-73

Walker, B 'National, regional and local scale priorities in the economic growth versus environment trade-off' Ecological Economics 15, 2, November 1995: 145-7

Wilson, E O The Diversity of Life Harvard University Press, New York, 1992

World Bank Environmentally Sustainable Development Series Monitoring Environmental Progress: A Report on Work in Progress The World Bank, Washington, September 1995

Young, M 'For Our Children's Children: Some Practical Implications of Inter-Generational Equity and the Precautionary Principle' Occasional Publication No 6, Resource Assessment Commission, Canberra, 1993

Attachment A: Conference Papers

Plenary Speakers

Integrating Ecology and Economics: a Conflict of Space and Time.
Daniel Lunney, Bob Pressy, Michael Archer, Suzanne Hand, Henk Godthelp and Alison Curtin (Print Item Number 03-6063)

Energy and the Contributions from Georgescu-Roegen
John Peet

Managing Resources in New Zealand
Cath Wallace

Generational Justice: The Marriage of Sustainability and Social Equity
Clive Hamilton (Print Item Number 03-6794)

Towards More Accurate Indicators of Economic Progress
Fulai Sheng (Print Item Number 03-6795)

Political implications for resource management: guidelines for environmental improvement
M D Young (Print Item Number 03-6064)

Parallel Session Speakers

Native Forest Logging in Australia: Redefining the Marketplace Through Consumer and Investment Initiatives
Tim Cadman

Resolving Forest Conflicts and Providing for a Sustainable Forest Industry through Agroforestry
David Curtis and Mark Sandstrom

Developing a Sustainable Timber Industry in Oberon
Roy Powell

Modelling Land Use Patterns at the Forest Edge: Feasibility of a Static Spacial Model
Jerome K. Vanclay

Sustainable Agriculture Issues

Rangeland Sustainability and Ecological Economics: an African Case Study
Nick Abel

Pest Control and Sustainable Agriculture: an Oxymoron?
David Adamson

Sustainable Irrigated Agriculture Management through Self Assessment and Spatial Modelling on Geographic Information Systems
Abel Immaraj, Liz Webb, Robert Phyllis and Geoff McLeod (Print Item Number 03-6066)

Towards Integrating Farming and Nature Conservation in Australia
Christopher Nadolny (Print Item Number 03-6067)

Wilderness Management

Markets in Natural Heritage Health Management
Dave Alden

Wilderness - Cultivated Myths and Colonial Battle Grounds
Jason Alexandra (Print Item Number 03-6070)

The Economic Value and Regional Economic Impact of National Parks
Dr Jeff Bennett, Rob Gillespie, Dr Roy Powell and Lindon Chalmers (Print Item Number 03-6825)

Bringing Ecological Economics out of the Wilderness
Sally Driml (Print Item Number 03-6069)

Sustainable Development and Impact Assessment

Contributions of Social Ecology to Ecological Economics
Dr John I. Cameron (Print Item Number 03-6068)

Recreational SCUBA Diving and the Use of Economic Instruments in Marine Protected Areas
Derrin Davis and Clem Tisdell

How 'Dangerous' is Climate Change?
A. Barrie Pittock (Print Item Number 03-6071)

Use of Multi-Criteria Analysis in Decision Support for Ecologically Sustainable Development
M. E. Qureshi, P. F. Greenfield, F. Kingham and A. A. Krol

Farmer's Forum

Landcare Group Networks as Models for Holistic Management
Margaret A. Bailey (Print Item Number 03-6791)

Holistic Management

The Effect of Social Time Preference on the Future of the Australian Economy and Environment: Findings from the Australian Dynamic Integrated Climate and Economy Model (ADICE)
Sadar N. M. Islam and Jim Gigas (Print Item Number 03-6792)

Planning for Agricultural System Sustainability
Roderic Gill (Print Item Number 03-6793)

Sustainable Cropping Management in a Saline Catchment: Farm Level Interdisciplinary Modelling on the Liverpool Plains
Deranie Jackson

Embodied Energy in Systems dynamic simulation of Economic Growth
Grant Ryan and John Peet

Food, Fuel, Fibre and Faces to Feed: Simulation Studies of Land Use Change for Sustainable Development in the 21st Century
Peter Read

Whole Farm Modelling and Ecological Sustainability: a Practical Approach in the NSW Rangelands
Mark Stafford Smith, Nick Milham, Bob Douglas, Nicola Tapp, Joseph Breen, Rosemary Buxton, and Greg McKeon.

Environmental Equity and Valuation

Commercial Exploration of Biodiversity
Andrew J. Beattie (Print Item Number 03-6072)

Symbols and Attitude Expression in Contingent Valuation Responces
Russell Blamey and Mick Common

Identification of Preference Structures: a Method for Assessing Exchange and Lexicographic Preferences for Natural Areas
Michael Lockwood

Ignorance and Uncertainty - Challenges to Implementing Environmental Goals for Sustainability
Tony Norton (Print Item Number 03-6073)

Using Focus Groups to Establish Valuation Frameworks for International Rainforests
John Rolfe and Associate Professor Jeff Bennett

Environmental Impact Assessment

EPA's Multi-disciplinary Approach to Assessing the Impacts of State Environment Protection Policies
Terry A'Hearn and Wayne Robins

Sustainability, Impact Assessment and Scientific Uncertainty: Application of the Precautionary Principle
Adrian Deville and Ronnie Harding (Print Item Number 03-6074)

Rethinking the Role of Economics in Environmental Impact Assessment
Tor Hundloe

The Interest and Discount Rates of Philipines Upland Farmers and their Impact on the Environment
Sarah Lumley

Sustainability Indicators and Modelling

Earthworms as Indicators of Sustainable Production
John C. Buckerfield

Land Quality Indicators: When, How and for Whom?
Ann Hamblin

Internalisation and Outcome-based Approaches in Resource Management: a Framework
Ralph Chapman and Michael Harte

The Status of Soil Macrofauna as Indicators of Soil Health to Monitor the Sustainability of Agricultural Soils
Lisa Alexandra and Lobry de Bruyn

The Value of the SOI
Richard Monypenny

Economic Policy

Economic Implications of NSW Wetland (SEPP 14) Policies
Michael J. Brennan

Sustainability, Policy and Ecological conomics: Hubris or Humility?
Stephen Dovers (Print Item Number 03-6075)

Economics in the Green Party Policy - X Roads Ahead!
Colin Hunt

Issues in Pricing Re-use Water in the ACT
William Leane

Using Transferable Water Permits to Achieve the Sustainable Management of Freshwater Resources
Chris Livesey

Sustainable Cities: Linking Local Growth Management Plans with Financial Incentives
Judith McNiell

Sustainable Resource Management

Institutional Economics, Soft Systems Methodology and Catchment Management
Roger Attwater

Monitoring the Impact of Integrated Catchment Management in the Avon River Basin
Pam Baskind and Colin Campbell

Towards a Science of Sustainability: the Need for a Better Understanding of Human Well-being in Ecological Economics
Steve Dodds

Ecophilosophical Position and Resource Policy Failure
Roderic Gill (Print Item Number 03-6788)

Sustainable Agriculture: Nice Theory - What about the Practice? A Pest Management Case Study
P. Parigi

Poster Presentations

Priority Setting for Integrated Soil, Water, Vegetation and Fauna Programmes in Victoria
Graydon Findlay, Susan Ryan and Brian Coffy

Adjusting Land Valuations Using Indicators of Land Degredation: a Discussion of some Challenges Facing a Proposed Implementation
G. W. Greeves, A. J. Ringrose-Voase, R. H. Merry and C. J. Charters

Sustainability: Linking the Ecological with the Economic
Barbara J. Geno (Print Item Number 03-6076)

Global Development Debate: Global Warming, Sustainability and the Need for Institutional and Policy Reform
Jim Gigas and Sardar N. M. Islam (Print Item Number 03-6789)

Farming as if we Belong: Arguments for an Ecocentric and Ignorance-based Approach to Agriculture
E. C. Lefroy

What's New About BCA and Risk Analysis: Its Application to the Precautionary Principle
M. F. Rogers and T. DeLacy (Print Item Number 03-6790)

Research Implications of a Paradigm Shift in Agriculture
Els Wynen

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