Commercial Utilisation of Australian Native Wildlife

CHAPTER 5 - ECONOMIC VIABILITY OF COMMERCIAL ACTIVITIES

Term of Reference (b) - the current and future economic viability of these commercial activities

Introduction

5.1 In assessing the economic viability of commercial utilisation of wildlife it is important to make a distinction between the financial costs and benefits of a particular industry, and the economic costs and benefits, because the latter encompasses a much broader range of factors (including non-monetary factors) than the former. With a commodity such as wildlife, there are many 'values', both financial and non-financial to be taken into account. For example, the protection and improvement of habitat quality through wildlife use has many beneficial aspects to it that are difficult to evaluate financially: these include soil and water quality, nutrient storage and cycling, pollution storage and breakdown, and contribution to climate stability. [1]

5.2 Similarly, it is important to make a distinction between the value of an industry based on a particular animal or plant, and what that plant or animal is worth to society. The former may be relatively simple to quantify in conventional economic terms while the latter, being a subjective concept, will vary in magnitude according to what 'value' society places on it. Thus one species may have an inordinately high 'value' to society (koalas, for example) while other species may be viewed by some people as having a negative 'value' (rats or toads, for example).

5.3 In its submission to the Committee, the Department of Environment warned that: 'a narrow financial analysis should be avoided as this may lead to short term benefits for a number of individuals or firms but result in long term costs to broader environmental values and thus the community in general'. [2] In determining the economic viability of wildlife use, the Department suggested that there were several broad principles which should be taken into account:

• the precautionary principle (see Paragraph 1.51);
• the opportunity cost (the economic cost of the loss of options for using resources that results from making a particular choice, for example, it may be the case that rural producers may be less well off through commercial uses of wildlife than through the development of non-consumptive approaches to wildlife management for ecotourism);
• the user-pays principle (those that benefit from an investment pay for its creation); and
• ecological sustainability (which requires indicators of ecological sustainability to be identified and factored into active management decisions through a sound, scientifically-based, monitoring regime). [3]

5.4 The three propositions that form the economic basis for the commercial utilisation of wildlife as a conservation 'tool', and which are currently debated, are:

• that revenue generated from commercial utilisation of wildlife will provide an economic incentive for sustainable management of natural resources;
• that economic incentives will provide flow-on benefits to biodiversity conservation; and
• that sale of products from the harvest of superabundant wildlife species will provide some compensatory benefit. [4]

5.5 Whether these propositions work in practice depends to a large extent on whether an economic value can be placed on wildlife.

Placing a 'Value' on Wildlife

5.6 There are four basic ways in which wildlife can be valued:

• social and aesthetic values (usually intangible values derived by the community from a knowledge and interest in wildlife and the environment);
• recreational values (income derived from eco-tourism);
• scientific values (the worth of services rendered to humans by wildlife); and
• commercial values (income derived from sale of live animals or products derived from them). [5]

5.7 These values are at times contradictory and because different sectors of the community place different values on particular species, proposals to commercially use a species may become controversial. Although not usually quantified, the recreational and scientific values of wildlife are generally accepted by the community and their worth, however measured, is not frequently debated. However, social values and commercial values have become strongly polarised in the minds of some people; the former being considered by some people as being necessary and desirable, while the latter is considered to be unnecessary and undesirable. These people believe that Australian native wildlife is nominally 'owned' by all Australians as custodians and does not exist for the economic benefit of a few individuals; it has an intrinsic right to exist and does not need an economic value placed on it to attain this right. It may also have important spiritual and educational values.

5.8 As argued by the Australian Conservation Foundation, Humane Society International, animal liberation groups and a number of other conservation groups, the allocation of a monetary value to wildlife reduces it to a mere commodity. This causes considerable alarm to those groups because there are many examples throughout the world of over-exploitation of natural resources for short-term economic gain, evident at present with the commercial over-harvesting of ocean fisheries and native forests. [6] It is of concern to the ACF that wildlife industries can become powerful lobby groups and can exert strong influence over political decisions regarding regulation and management of wildlife populations. The ACF believes that 'a human or corporation does not have a priori right to deprive a wild organism of its existence or to reduce the viability of populations in order to create wealth for personal profit'. [7] Once species are commercialised, market demands 'create unacceptable pressure to exceed the ecologically sustainable yield of harvested species' [8] and will take over any original conservation objective. As emphasised by Animal Liberation (ACT): 'if you create a market you create a demand. That demand does not conveniently disappear just because a flood or a drought or, more probably, some anthropogenic disaster has reduced the supply so that the industry is no longer sustainable'. [9]

5.9 While the Nature Conservation Council of NSW is in support of using economic instruments to assist with biodiversity conservation, it believes that market forces are not an appropriate mechanism because, in the end, commercial imperatives will drive the process rather than the needs of conservation. In the words of Vice-Chairperson, Dr Judy Messer:

I would like to emphasise that commercialisation is capitalism. There is nothing wrong with capitalism. We live with it and you cannot do anything about it except try to make it work better, but the key point of capitalism is that there are inevitable and unavoidable tendencies. You cannot be a good capitalist unless you do certain things. The first thing is to make a profit but that does not work very well unless you amass capital, so the second thing you have to do is to have an expanded rate of capital accumulation. To do that you have to carry out certain strategies, which are increasing your market share and increasing the price, having vertical or horizontal integration, and acquiring intellectual property rights over your commodity; and that is the inevitable driver that will shape how wildlife is consumed in a commercial manner. [10]

5.10 Another major concern is that different species will be given different values; some will be given a high value and some may not be valued at all. [11] Yet in terms of biodiversity, all species should have equal value. The placement of a value on a particular species is likely to produce a narrow view of conservation based on a profit-ethic, and will draw attention away from non-profit-making species, rather than a holistic conservation ethic which takes into consideration the needs of all species. [12] The imbalance resulting from a single-species focus may introduce new stresses and risks to ecosystems, particularly if they are vulnerable in the first place.

5.11 Animal Liberation (Victoria) believes that placing an economic value on wildlife ignores the ethical imperative that wildlife has an innate right to exist; conservation policies should take into account the well-being of every individual animal. Judging animals in economic terms ignores their feelings and well-being, and disregards their intrinsic value. The only way to guarantee the long-term survival of wildlife is to protect it for its intrinsic value alone. Animal Liberation (Victoria) does not agree that placing an economic value on endangered species (such as tigers), and legalising trade in that species will make any difference to its conservation status, and may in fact make the situation worse because 'those in for a quick dollar would simply make their money and run'. [13]

5.12 The Conservation Council of Western Australia also saw dangers in attributing a commercial value to wildlife because, first, no guarantee could be made that the money made out of a species would be put back into conservation of that species and, second, intrinsic values would lose out to commercial values. As expressed by Ms Rachel Siewert, Council Coordinator:

We are also concerned that species conservation value will in the future, if it becomes commercial, be judged by its commercial value rather than its pure conservation value or intrinsic value, and that if you are managing an ecosystem for a particular species for its commercial value, you may in fact compromise that ecosystem, because you are trying to maximise the value of one particular species. You may therefore, as I said, compromise another species or an entire ecosystem. [14]

5.13 However, in contrast to these views, proponents of the new approach to conservation through sustainable use believe not only that an economic value can be placed on wildlife, but that it must. They have, as a basic tenet, the view that 'integration of commercial and conservation philosophies and management is not only possible but is an essential prerequisite for the achievement of sustainable nature conservation'. [15]

5.14 This belief has come from the observations that conservation and conservationists standing alone have failed to adequately protect large areas of natural habitat in Australia (and elsewhere), and that conservation on its own cannot protect the environment and the animals in it simply because the job is much larger than the public purse can or wishes to accommodate. [16]

5.15 Finally, it should be noted that within some cultures it has been possible to ascribe both commercial and intrinsic values to wildlife. In the words of Dr Grahame Webb of Wildlife Management International:

Aboriginal culture is a glowing example of how the same people can attribute to wildlife the highest moral and spiritual values, in addition to strong consumptive use-values: namely the consumptive use of wildlife for food, recreation and traditional needs, and the pursuit and enjoyment of hunting. Any claim that these values are mutually exclusive, or that conservation requires them to be mutually exclusive, is simply wrong. [17]

Role of Market Forces

5.16 Resources which are undervalued are susceptible to over-exploitation. The corollary of this is that there will be a value for any given natural resource at which it will more likely be conserved than used. Thus when society has difficulty in determining an economic value for a resource, markets will often reflect the simplified financial value of that resource. For example, timber harvested from native forests may be valued by industry according to the financial value of the logged trees, yet society may place a much greater 'economic' value on other aspects of the forest ecosystem (as wilderness if preserved intact, as a shelter for animals, as a water catchment area, etc).

5.17 However, because intangible values are difficult to estimate, they are often ignored and market forces which affect financial values may play a more dominant role than possibly warranted or desired. In this way, some industries may remain profitable only because the intangible values (which often translate ultimately to costs) are left out of their budgetary equations. The alternative is for the market to be manipulated to allow a higher rate of return, or for the government to indirectly subsidise the industry with public funding of intangible 'costs'. In terms of wildlife, hunting may be the single form of commercial use where industry is able to manipulate the market in this way and charge considerably more through an exorbitant levy than the normal commercial value of an individual animal. [18] Government subsidies which pay for 'intangible' costs are more often the norm.

5.18 The question of whether market forces could be used to effectively preserve species through their commercial use, and ultimately conserve biodiversity, was addressed in a submission by economist Dr John Hatch, and later discussed at length in oral evidence with the Committee. [19] His submission noted that many western countries have moved towards using free-market instruments to solve a variety of problems, including environmental problems. [20] However, because wildlife could have assigned to it both financial and non-financial values and because the notion of 'commodities' was not designed to deal with complex social goods, commercial utilisation of wildlife did not fall easily into the basic market model.

5.19 While modern economic theory has been extremely creative in extending its valuation techniques into non-financial areas (see Paragraph 5.23), to extend the use of the market model into wildlife conservation was, in Dr Hatch's opinion, pushing it into areas for which it was not designed and 'where it may indeed have serious and unforeseen effects'. [21] In addition, market forces could be very powerful and so when a wild animal became a commodity, forces were released which could well be largely outside society's control. Whether environmental and biodiversity goals were then furthered became 'something of a gamble'.

5.20 One of the greatest dangers of commercialising wildlife is that putting a monetary value on things (commodification) changes people's perceptions of that thing (for example, an item purchased by someone may be valued differently than if that same item was given to them as a gift). [22] Once something becomes a commodity, it becomes subject to vested interests; people's livelihoods and regional economies became dependent on it and any reduction in commercial use thus became linked to other social impacts. Dr Hatch questioned whether society wanted to change today's wildlife into tomorrow's farm animals and suggested that if that was the case, 'we should not labour under the illusion that this can be done without cost'. [23]

5.21 According to Dr Hatch: 'Another feature of the commercial use of wildlife is that it is inevitably grossly selective'. [24] Only a very few wild species would ever attract commercial interest. While cautioning on the over-dependence of market forces to save wildlife, Dr Hatch conceded that in the short to medium-term, 'in some cases … we may well have to use the market to save something from eradication because we live in a world in which the market is dominant'. [25]

5.22 Thus despite polarised ideological views on the desirability of placing a monetary value on wildlife, it is clear that material self-interest is a powerful determinant of human behaviour. The real issue is whether giving wildlife a commercial 'value' will ultimately benefit that wildlife, or work against it.

Methods of Placing a Value on Wildlife

5.23 Regardless of any philosophical debate as to the merits of placing a commercial value on wildlife, increasing pressures stemming from conflicting land use proposals have created a practical need to evaluate natural resources in economic terms. While subjective values do not fit readily into conventional economic models, ways to overcome this problem have on occasion been explored. [26] Two recent methods are worth recounting: choice modelling and economic accounting.

Choice Modelling

5.24 Choice modelling is a new economic technique which has the potential to provide accurate and reliable estimates of the dollar-value of 'non-market' goods and services such as those associated with the environment. The method is currently being developed by a group of Australian environmental economists as a collaborative research project using two case studies. The procedure is based on a comprehensive public questionnaire; each choice involves selecting an option, each of which represents a specific good or service. When a sufficiently large number of choices are made, the relative relationships between the attributes can be determined. In this way, public willingness to trade off one attribute for another can be evaluated. This would in turn enable governments to determine how much people value, in economic terms, various aspects of the natural environment and allow the environmental impacts of alternative uses to be compared on a monetary basis. The two test cases are: (1) stands of remnant vegetation in the desert uplands region of central Queensland; and (2) the Macquarie Marshes and Gwyder Wetlands in NSW. [27]

Economic versus Financial Accounting

5.25 A more direct method of placing a value on wildlife is to employ economic accounting methods, rather than financial accounting for wildlife businesses - a method pioneered in Australia by Earth Sanctuaries Ltd. [28] According to Earth Sanctuaries, economic values can be best thought of as 'the value of the entity to society' whereas the financial value can be best though of as 'figures arrived at after following formally laid out rules of accountancy and valuing which are fairly meaningless'. While conventional accounting statements are widely considered to be the most important information provided by a company about the level of its 'success', this measure gives no indication of the impact of the activities of that company on social and environmental qualities. A company can destroy habitat, create pollution and dispossess indigenous communities, and be considered financially to be very 'successful'. Conversely, conventional accounting practices penalise businesses concerned with improving the environment because conventional profit and loss statements do not take into account the 'value' of wildlife or the integrity of habitat. The major problems encountered by industries based on conservation values are:

• assets can only be valued at their recoverable value;
• endangered species cannot be traded; and
• therefore endangered species can only be revalued at zero.

5.26 Thus because Earth Sanctuaries' main assets are endangered species and their habitats, using conventional profit/loss statements to calculate the 'success' of the company can be very misleading. In the 'Consolidated Economic Accounts' balance sheet produced by Earth Sanctuaries, environmental 'assets' such as 'vegetation', 'wildlife' and habitat' are given an economic value. In this way, the accumulation or disposal of such items of environmental 'wealth' can be compared from year to year.

5.27 About Earth Sanctuaries' economic accounting method Professor R H Gray, Director of the Centre for the Centre for Social and Environmental Accounting Research, University of Dundee (Scotland), has stated:

The approach taken by Earth Sanctuaries in its 'Consolidated Economic Accounts' is a state-of-the-art approach to employing economic valuation techniques to try to assess the value of the natural 'assets' of the organisation and, thereby, track overall improvements (additions to natural wealth) from year to year. … The Earth Sanctuaries' [annual] report … has two important added advantages:

1. it successfully communicates the enormous success and importance of the company's work illustrating explicitly the extent of the achievements of the company which is missing from the financial statements; and,
2. it is published – together with especially helpful explanations of the bases on which the figures are calculated – so that all stakeholders can see clearly how conventional financial accounts grossly understate the environmental contribution of the company.

The report has a further advantage. Being one of very few companies anywhere in the world to undertake and publish such a report, Earth Sanctuaries is proving to be as much a leader in accounting as it is in conservation. [29]

Economic Benefits of Commercial Use of Wildlife

5.28 The most significant economic factor in favour of commercial utilisation of wildlife is that, if managed in an ecologically sustainable manner, it is a renewable resource. From this fact stems the potential for a variety of economic benefits to flow to the industry involved, to conservation and to regional areas.

5.29 The harvesting of wildlife presents quite different costs and benefits than does the farming of wildlife. Wild harvesting requires large inputs in terms of land and labour and small inputs in terms of capital. However, many wildlife species exist at such low densities that harvesting may not be economically viable. The major advantage that farming has over harvesting or ranching is that supply can be tailored to demand with a much greater degree of confidence and, conversely, markets can be developed with the knowledge that supply can be guaranteed. Another major advantage is the ability to monitor demographic, physiological and behavioural factors. These factors readily translate to economic benefits. However, farming of wildlife has higher capital costs and concomitantly higher risks if markets are not found for products. [30] Farming of wildlife may also result in an increase of other problems, such as disease and animal welfare, and may reduce natural advantages such as efficient use of food and water, all of which will increase costs.

Industry Benefits

5.30 With the exception of a few long-term industries, the commercial utilisation of wildlife is relatively new to Australia and thus the economic benefits to industry have not been quantified in any systematic way. A range of more specific figures provided in evidence to the Committee are presented in Table 5.1.

5.31 While there may be a belief in the community that the commercial utilisation of native wildlife is highly profitable, this is not generally so. [31] Once an industry is established, profit margins are substantially reduced owing to competition for developing markets. However, as with any other business, if it has a sound basis and is well managed, profits will be made. If it does not, then it will fail.

Industry	Economic Parameter	Value ($/pa)
Kangaroo	- income generated	200 m
	- total value of industry	245 m
	- potential for increase in value	10 m
Emu	- farm-gate value	6 - 8 m
Crocodile	- sale of meat and skins (1995)	3 m
	- crocodile cruises (NT)	2 m
Possum	- export income generated if whole quota used (250,000 animals)	$5m
Koala	- whole koala 'industry' in Australia	336 m
	- contribution koala industry made to the Australian tourism industry	1.1 billion
Essential Oils	- current value of production (excluding tea-tree oil but including exotic species)	20 m
	farm-gate value	6 m
Tea Tree Oil	- present industry value	12 m
T. lanceolata oil	- present industry value	c 50,000
Wildflowers	- exports (1997)	30 m
Tree-ferns	- exports: Tasmania to Victoria	800,000
Bushfoods	- bushfood sales (1996)	over 14 m
	- by year 2000, market expected to grow to	100 m
Muttonbirds	- oil (1990)	12,000.
	- feathers (1990)	5,300
Pearls	- export income	200 m
Hunting	- expenditure in Victoria (duck)	30 m
	- expenditure in Victoria (quail)	6 m
Seed collection	Cape York Peninsula (over the last five years)	590,000.

Table 5.1 – Economic indicators for various wildlife industries.

(Source: Evidence as described in Part II – Wildlife Industries).

5.32 Similarly, as with any industry, there are significant spin-off economic benefits to other sectors. In the aviculture industry, for example, the purchase of prefabricated metal for aviary construction provides a significant economic benefit to regional metal prefabricators. In addition, where exports are involved, there are benefits to Australia's balance of payments. For profitable industries, there is a benefit to consolidated revenue.

Conservation Benefits

5.33 There are three main ways in which conservation can benefit economically from the commercial utilisation of wildlife:

• first, by providing incentives to private landholders to preserve habitat which would otherwise require government funding if conserved through the public nature reserves system (or not be conserved at all);
• second, by managing superabundant wildlife which causes damage to the environment (a cost in itself), the control of which represents a cost to landowners (private or government); and
• third, by providing direct and indirect revenue from wildlife industry activities.

5.34 An example of each of these types of benefits follows.

(1) For Aboriginal people in Arnhem Land, the ranching of crocodile eggs has provided a significant alternative to the draining of swamps for cattle pasture. While preserving the natural habitat (which benefits not only the crocodiles but all other species and the physical environment), some Aboriginal communities are now making more money from crocodiles than they previously did from cattle (for more detail, see Paragraph 11.39).

(2) Brushtail possums in the midlands area of Tasmania are now so abundant that they are causing considerable damage to their environment, particularly through the defoliation of trees. Previous eradication programs involved the use of 1080 poison at considerable cost to rural landowners, to government and to other native species. The Launceston company, Lenah Game Meats has established an export industry which is both alleviating the environmental problem and contributing to the Launceston regional economy through employment. According to Lenah: ' … the environmental impact of not managing the possum population could be disastrous'. [32] (See also Paragraph 12.7)

(3) The Western Australian Government has allocated new statutory responsibilities to the Department of Conservation and Land Management (CALM) to promote the use of flora for scientific and therapeutic purposes. CALM now has the power to enter into business arrangements and can negotiate royalty payments from any use of Western Australian flora. As an example of such arrangements, an agreement was signed in 1993 between CALM and the pharmaceutical company AMRAD to develop an anti-HIV drug from an extract (conocurvone) taken from a native plant. In 1995, $300,000 was made available through the agreement for conservation projects. [33]

Regional Economic Benefits

5.35 Simply because wildlife exists in rural and regional areas, rather than urban areas, its commercial use can have a beneficial impact on rural and regional economies. Benefits can be derived from profitability through diversification of industry, expanded employment opportunities and infrastructure development. Benefits can accrue from all types of wildlife use; hunting, harvesting, farming and eco-tourism. In discussing the reasons for developing new industries, the recent RIRDC Report, The New Rural Industries, listed as its first imperative, 'to create employment opportunities, particularly in rural areas and for young Australians'. [34]

5.36 The recreational hunting industry, for example, provides a valuable economic contribution to small country towns. Safari style tours and farm-based hunting operations bring people into rural areas for days or weeks at a time, and money is spent on fuel, food, accommodation, ammunition and clothing. A recent survey conducted in Victoria found that the duck shooting industry was worth $30 million and quail hunting worth $6 million to the economy of that state. [35]

5.37 Harvesting of plants and particularly animals can also provide significant benefits to rural economies. The Kangaroo Industry Association (KIAA) pointed out in its submission that the majority of jobs associated with kangaroo harvesting were in rural areas where there were few other employment options and suggested that in fact many country towns were almost totally dependent on the industry for economic survival. The Association gave the example of Orroroo in South Australia where over 50 per cent of the town's people were dependent on the kangaroo industry in some way for their income. [36] Professor Gordon Grigg also noted in his submission that many rural towns in western Queensland and New South Wales were heavily dependent on the income gained from harvesting of kangaroos. [37] According to Dr David Freudenberger of CSIRO Wildlife and Ecology, every four rural properties in the rangelands support a kangaroo shooter and 'each shooter could be considered a small business feeding into the rural economy'. The kangaroo industry is thus an important part of the economy in many parts of rural Australia. [38]

5.38 Other examples of regional economic activity arising from wildlife use include:

• collection and sale of coral (North Queensland);
• involvement of Aboriginal people in crocodile ranching and farming;
• emu farming;
• harvesting of bushfoods (South Australia particularly);
• possum harvesting and processing (Launceston);
• ecotourism ventures (by their very nature are usually located in regional or remote areas);
• wildflower harvesting (Western Australia);
• muttonbirding (Bass Strait islands);
• kelp harvesting (Tasmania); and
• inland aquaculture (abalone, barramundi, eels, marine fish, marron, prawns, crayfish and yabbies).

5.39 Diversification into wildlife enterprises may provide rural landholders with the important financial benefits arising from a broader income base and the regularising of short-term cash flows. In addition, there may be increased earnings from marginal farmlands left under native vegetation and possible export income for Australia.

5.40 The Far North Queensland Network (FNQ) sees commercial utilisation of wildlife as an important element in its objective to encourage and enhance a co-operative approach to the sustainable development of the greater Far North Queensland region. The FNQ Network believes that the diverse range of native fauna in the region provides 'a potentially significant economic development opportunity, which cannot be ignored'. [39] In suggesting this approach, the FNQ Network noted that a number of bird and reptile species had been identified which may lend themselves to commercial use (primarily live export). The submission suggested that the development of such an industry 'would serve to end the illegal trade in native fauna', but would itself require strong regulation. The submission also acknowledged that there were significant statutory limitations to be overcome.

5.41 Plant production was also identified by the FNQ Network as having significant potential, but development in this area was hampered by a range of factors including lack of infrastructure, lack of management and business skills and environmental barriers. However, despite these difficulties, seed collection has already commenced and over 950 kilograms of seed has been collected from the Peninsula over the last five years, having an estimated value of $590,000. The seed has two uses: local revegetation programs (often following mining reclamation) and commercial sale. There is also a strong interest in bushfoods and medicinal plants in Far North Queensland and some trial plantations have already been established. [40]

5.42 According to the FNQ Network, regional areas such as the Gulf of Carpentaria and Cape York Peninsula do not have the same development opportunities present in other areas of Australia. Far North Queensland is very much in need of opportunities for diversification and new animal and plant industries could offer alternatives to domestic species. [41] Development of wildlife-based industries could provide significant economic, social and environmental benefits to regional areas, and ultimately to the nation. There is a need, however, for potential industries to be reviewed and, where assessed as environmentally and economically viable, their development facilitated with infrastructure support and the removal of legal impediments.

5.43 Nature-based tourism also has the potential to inject finances into regional areas and to have many flow-on economic benefits, which in the long run are returned to conservation. These economic benefits, however, may be difficult to measure and, perhaps because of this, they have received some academic attention in recent years. [42]

5.44 Finally, it should be noted that the Nature Conservation Council of NSW sees a danger in the formation of industries based on wildlife in rural and regional areas. The Council believes that, once a wildlife industry is established, a region may become dependent on that industry with adverse consequences should there be a need to scale it down due to lack of availability of the resource (the species harvested):

… it is very important to note that in Australia the labour force, frequently out there in the sticks, so to speak, that supports commercialised consumption is very often a low-skilled, relatively isolated group. This group becomes dependent on this activity,and the kangaroo shooting industry in arid lands is a very good example,and these people live at a very low socioeconomic level. If their livelihood is threatened because of public resistance, government policy or whatever, this becomes politicised. So then the whole issue of sustainable land management becomes distorted by socioeconomic interests. It is very important to recognise that these sociopolitical consequences arise from what appears to be just a normal business practice. [43]

Future Economic Benefits

5.45 There is considerable potential for the expansion of emerging industries, such as bushfoods, and development of new industries, such as specialist applications for Australian native timbers. In particular, the potential of Australia's native flora and fauna as a source of both pharmaceuticals and industrial chemicals is only just beginning to be realised and, with the right development infrastructure, could provide considerable economic benefits. Examples of possible products include 'sunscreens from coral, light and high tensile fibres from spider silk, and instant adhesives from velvet worms and barnacles'. [44]

5.46 Noting the loss of commercial wildlife opportunities to overseas ventures (see Paragraph 5.64), the Department of Environment recommended in its submission: 'As the country of origin of its unique biodiversity, Australia should take advantage of its competitive advantage to secure the full potential export revenue derived from its natural bio-resources'. [45] The Department also recommended: 'Governments must determine the best mechanism for capturing the benefits of bioprospecting and using a portion of those benefits to manage the wild populations of flora and fauna from which the products have been derived'. [46]

Concern that Wildlife Industries are Uneconomic

5.47 A pessimistic attitude to the economic viability of ventures based on farming native Australian wildlife was evident in some submissions to the Committee. Nascaring Wildlife Carers, for example, claimed that in the face of emerging emu industries in USA and Europe, the industry in Australia would never be competitive. [47] Mr Pat O'Brien, President of the Wildlife Preservation Society of Queensland (Capricorn Branch), stated that he believed that the emu and kangaroo industries would 'collapse by themselves'. [48] Mr Richard Jones (MLC) also claimed that the kangaroo industry had questionable profitability and therefore was not economically sustainable. [49]

5.48 Animal Liberation (Victoria) claimed in its submission that: 'reports on the economic viability of farming native animals seem to suggest that most farms will not be able to obtain profits' and, after comparing the reproductive biology of sheep and kangaroos, concluded that 'for kangaroo farms to work, kangaroo meat would have to be incredibly expensive'. [50] Animal Liberation (ACT) also noted the 'unviability' of wildlife enterprises and claimed that this was of 'profound concern', not for financial reasons but because of the consequences to the animals involved and the impact on the environment. [51]

5.49 TRAFFIC Oceania concluded that the economic viability of any export industries based on Australian native wildlife was uncertain for a number of reasons: the substantial costs of providing enforcement, quarantine and administration; the unpredictability of overseas markets; the possibility that overseas countries would not allow wildlife product imports; and the possibility that, because of the above factors, over-capitalisation by industry would result in substantial losses. [52]

Public Sector Costs of Commercial Utilisation of Wildlife

5.50 As with all industries, there are public sector costs associated with the commercial utilisation of wildlife. Government financial involvement can be direct (grants, subsidies, incentives, supporting R&D and the provision of information resources [53]) or indirect (the costs of regulatory control - administration, monitoring, quarantine and enforcement). Presuming a user-pays principal, it is important that new industries based on wildlife do not result in government infrastructure which cannot be supported should the industry not grow as predicted, or fail completely. The potential for the public sector to financially support wildlife industries was of particular concern to those people and groups opposed in principle to the commercial utilisation of native wildlife. They were also of concern to industry representatives themselves, though for other reasons. [54]

5.51 There was a strong view expressed in a number of submissions, particularly those made by people opposed to commercial utilisation of wildlife, that the public should not be made to contribute financially to wildlife industries [55] and that governments should not put money into exploring options of commercialisation of certain species to the detriment of conservation benefits to other species. [56] Strong criticism of government financial support for wildlife industries was made by a number of groups, although many of the comments made by these groups were general and were not supported by data. [57] Examples of such criticisms are as follows.

• The Native Bird Liberation Alliance stated in its submission: 'Most of the industries which revolve around wildlife exploitation appear to be barely viable and are usually propped up by Government'. [58]
• Animal Liberation (ACT) claimed: 'Current wildlife trade export programs are not economically self-sustaining. They are heavily subsidised by public moneys. The kangaroo industry would not be viable without the enormous Federal funding spent on supporting and (ineffectively) controlling it'. [59]
• ANZFAS likewise claimed: 'Since the establishment of the kangaroo industry, an enormous amount of Federal and state funding has been spent on controlling and supporting this industry and assisting its development and establishment overseas. It has been estimated that, without such financial assistance the industry would not be viable. It is unacceptable that taxpayers are being charged for the inhumane exploitation of wild animals for the benefit of a few'. [60]
• Nascaring Wildlife Carers claimed that the emu industry was 'heavily subsidised' by the government and that this meant, ipso facto, that it was not economically viable. [61]

5.52 Animal Liberation (Victoria) expressed particular concern that commercial utilisation of wildlife would result in a considerable regulatory burden, the cost of which would not be accounted for by industry alone: 'The fact is that those paying for regulation and surveys are likely to be the taxpayers, and not the financial beneficiaries of the commercial utilisation of wildlife'. [62] The Arid Lands Environment Council claimed in its submission that the cost of regulation was often underestimated in proposals for wildlife utilisation, and consequently monitoring and regulatory controls were inadequate. [63] An example of this was given by Mr Pat O'Brien, President of the Wildlife Preservation Society of Queensland (Capricorn Branch):

In the case of Queensland, we declared a duck shooting season on Saturday, in spite of the fact there is very little monitoring being done on ducks and in spite of the fact there have been hundreds of signatures on petitions presented to the government opposing it. The Queensland Treasury department have worked out it costs $170 to issue one duck shooting licence per season per shooter with half an inspection. In fact they only charge $40 for a licence. Their reasoning was that, if they charged $170-odd, nobody would buy a licence so they only charge $40. [64]

5.53 In expecting that wildlife industries follow a 'user-pays' principle, conservation groups also noted that costs associated with population monitoring and mitigation of any adverse environmental impact should be included. TRAFFIC Oceania argued that: 'it would seem unreasonable to expect the general public to subsidize, through taxes or other means, an industry from which it was unlikely to receive any benefit, and may even jeopardise the survival of some species in the wild'. [65] In claiming that wildlife industries must be responsible for all costs, the Zoological Board of Victoria went so far as to include 'all capital and recurrent infrastructure costs such as roads, community involvement (advice from councils, etc), environmental rehabilitation and monitoring, advocacy, and trade assessment'. [66] It is probable, however, that if all those costs were included, wildlife industries certainly would be uneconomic. [67]

5.54 In an analysis of the economics of the possum industry in Tasmania, the Tasmanian Conservation Trust estimated that royalties paid on harvesting possums were insufficient to fund a single full-time administrative position despite the investment by government in the many bureaucratic activities associated with the industry (preparation of a management plan, issue of permits, preparation of a code of practice, market access activities by AQIS, inspection activities, etc). According to calculations made by the Trust, at the current level of harvesting, the income was about $22,600; if the full quota of 250,000 animals was taken, the total income would still only be $75,000. [68]

5.55 However, evidence was also given to the Committee that some industries operated at a net profit to government. The South Australian Government, for example, gave evidence that the kangaroo industry now paid its own way. The royalty fee paid for each tag (currently at 70 cents but likely to increase to $1) provided for full cost recovery by the Department of Environment and Natural Resources. [69] Similarly, the Queensland Government collects a tag levy and from that fund comes research on both commercial species and recovery plans for non-commercial threatened species. [70] In NSW, the management program costs $200,000 per annum and the government collects $800,000 from the industry via fees. The KIAA suggested that to this should be added the cost to government for alternative control methods if the industry did not exist. [71]

5.56 Some industry representatives argued that direct government subsidies were, on the whole, not beneficial to emerging businesses, such as those in the emu industry. As expressed by Mr Graeme Ison of Yellabiddy Marketing in Perth:

It is a commercial industry, and the industry needs to prove whether or not a particular producer or marketing company is economically viable. To be propped up I do not see as being a good investment for either the federal government or a state government. [72]

5.57 This view was also expressed by Mr Neil Duncan of Emu Oil Therapies in Victoria who told the Committee: 'We do not really want any handout but we would like to be well and truly recognised as a viable industry and be encouraged'. [73]

5.58 In its submission to the Committee, the Department of Environment noted the importance of the principles of 'cost recovery' and 'user-pays' in commercial utilisation of wildlife, but pointed out that there were circumstances where either it was impossible to recover costs or where it was in fact not in the public's interest to do so. An example of the latter is where management expenses for issuing import or export permits cannot be fully recovered because, if they were, costs would be considered to be too high by importers and there would by a strong incentive for them to smuggle wildlife or wildlife products instead. [74] The Department thus recommended: 'The community benefits of wildlife need to be considered when applying cost-recovery and user-pays principles to the administration of government controls over the commercial use of wildlife - a component of the costs of administration, which is commensurate with the public good value of wildlife, will need to be met from Government sources'. [75]

5.59 Finally, it should be noted that in discussing the importance of law enforcement and compliance, the Department of Environment recommended that costs be shared among all stakeholders:

Any changes to policy or legislation should be supported by effective compliance and enforcement, with appropriate resources and training being provided for compliance and control function, with relevant stakeholders (including the community) sharing the costs. [76]

Impediments to Increased Commercialisation

5.60 The most fundamental constraint to the economic expansion of wildlife industries is the biology of the species utilised: its capacity to reproduce and the ability of offspring to survive to reproductive age (recruitment). To this the Department of Environment added a number of other limitations:

• lack of detailed knowledge of the biology and ecology of many native species (making it difficult to propagate them);
• limited research into the best strains for commercial use (unlike most exotics);
• great variability in the wild populations, and exposure to weather and other natural forces, affects product quality and reliability;
• limited availability of seedstock and nursery stock for most native species;
• local pests and diseases are adapted to native species (which are not present when these species are grown overseas), and which adversely affect product quantity or quality; and
• extrinsic factors such as drought, fire, flood, plagues which can impact on the security of the investment. [77]
•  

Market Impediments

5.61 According to RIRDC, the two key issues for animal product industries are marketing and, in particular, difficulties associated with public perceptions of products (see Paragraph 9.96 for example). [78]

5.62 An example of the problems with marketing occurs in Tasmania with the wallaby harvest. While the number of wallabies that can be harvested sustainably in Tasmania is about 500,000, a very large number of animals are wasted because the market is not large enough to support that much product. According to the Tasmanian Government, there are five major impediments to realising a greater market share:

• biological impediments (the proportion of meat on a wallaby compared to a kangaroo is very small and so wallaby meat must be sold as a premium product);
• attitudes to eating wildlife (there is resistance to eating game meat in major urban areas and so promotion and public education is needed if this is to change);
• animals welfare concerns (many people oppose commercial use of wildlife on animal welfare grounds and so codes of practice need to be continually developed to maintain minimal stress levels as scientific knowledge improves);
• public health concerns (some groups and individuals have claimed that eating wildlife poses disease risks); and
• bureaucratic impediments (the export of Tasmanian wallaby meat is prevented under the Commonwealth Wildlife Protection (Regulation of Exports and Imports) Act 1982.

5.63 The problems experienced in Tasmania with wallaby harvesting have also been experienced by other industries (notably the kangaroo, emu and brushtail possum industries).

Missed Opportunities and Loss of Resources to Overseas Businesses

5.64 While many businesses have embraced the concept of commercial utilisation of wildlife in Australia with enthusiasm and commitment, the partial and ad hoc bureaucratic acceptance of these industries has hindered business plans, resulting in missed opportunities and, in a number of clear instances, has resulted in industries based on Australian native wildlife being developed offshore. Many people in industry believe that too often Australia has 'missed the boat' in relation to commercialising wildlife. Nowhere is this more obvious than in the case of wildflower production which is greater now overseas than in Australia (see Paragraph 16.5).

5.65 While Australia fails to fully embrace commercialisation of endemic species, other countries have been quick to take up market potential. Examples of industries which have greater production outside Australia include macadamia nuts (production is now concentrated in Hawaii), [79] reptile pets (Europe and America), [80] emus (America), wildflowers (New Zealand, USA, Israel, South Africa, Holland), Australian desert shrubs (Africa, Israel, USA), wattle tannin (South Africa) [81] and possums (New Zealand). [82]

5.66 Malaysia is now producing a cordial drink from cultivars of Australian wild rosella. [83] Australia now imports eucalyptus oil from China, South Africa and Portugal. New Zealand has recently started marketing the waratah (the floral emblem of New South Wales) as the 'Kiwi Rose'. [84] The red claw crayfish, which comes from the western side of Cape York is being farmed in Ecuador and Germany. [85] Mr John Allen of the wildlife business Avi-Ark noted that because Tanzania and Saudi Arabia were supplying galahs to Europe, Australians were missing out on a lucrative trade. [86] There is also the threat of international companies removing large amounts of genetic material without any return to Australia. [87]

5.67 Thus it appears that whatever role Australia plays in the commercialisation of its wildlife resources, there are very high risks that those resources will be taken by overseas interests and produced offshore. While the commercial impact of this can be reduced to a certain extent by only allowing sterile stock to be exported, a far better approach would be for industry in Australia, once established, to seek cooperative joint-ventures with overseas interests.

5.68 In this regard the Department of Environment recommended that; 'As the country of origin of its unique biodiversity, Australia should take advantage of its competitive advantage to secure the full potential export revenue derived from its natural bio-resources'. [88] The Department also recommended: 'Governments must determine the best mechanism for capturing the benefits of bioprospecting and using a portion of those benefits to manage the wild populations of flora and fauna from which the products have been derived'. [89]

Activities of Non-Government Organisations

5.69 The activities of community lobby groups, and in particular animal rights groups, can have a detrimental impact on attempts to establish or expand commercially profitable industries with Australian wildlife. Both industry and government expressed concern about this (see Paragraph 9.98 for a discussion of the impacts of NGO activities on the kangaroo industry). As outlined by the Department of Environment:

… wildlife industries are sometimes targeted in campaigns by activists who are opposed to such industries. This can destroy markets and have a major debilitating impact on communities reliant on the targeted industry. For example, European restrictions on the fur trade had a devastating impact on Inuit communities for whom the fur trade represented the principal source of cash income. [90]

5.70 The submission from Mr Julian Grill, Member for Eyre (WA Parliament) suggested that one of the greatest impediments to increased commercialisation of wildlife, and in particular to the crocodile industry in Western Australia, was the influence on government coming from lobby groups opposed to commercialisation:

… some elements in our society would like to see the activities of companies like Mr Wieringa's [Fremantle Crocodile Farm] closed down or severely curtailed. Some of these people are very close to government. In fact the bureaucratic interference that has accompanied Mr Wieringa's ultimately successful attempts to set up his export industry have been horrendous. … I can assure you that such interference by government has been lengthy, time consuming and expensive … [91]

5.71 Industry, in particular, noted that radical groups which were dogmatically opposed to any use of wildlife had the potential to adversely affect the financial viability of their operations. Lenah Game Meats stated in its submission to the Committee:

The Tasmanian Conservation Trust (TCT) is an organisation that appears to be inherently against the harvesting of native animals. Although Lenah respects their freedom of expression, we do have concerns that radicals within the organisation will do anything they can to achieve their aims, including misrepresenting facts. The possum meat industry is currently a target of this organisation and they are threatening to run a "baby seal clubbing" campaign on the possum industry. This could have a disastrous effect on export markets and thus the future economic viability of the industry, not to mention Australia's reputation overseas. [92]

5.72 The submission from Lenah then cited several examples where information has been misrepresented by the Trust (animal welfare in relation to possum handling, 1080 poisoning of humans and parasite contamination of meat). [93]

5.73 The submission from the Tasmanian Government noted: 'Adverse publicity from animal welfare groups can seriously damage this industry [wallaby harvesting]'. [94] In response to these problems, the Tasmanian Farmers and Graziers Association has moved to make the wildlife management program in Tasmania world best practice in the hope that once an official audit had been completed, Tasmania could defend activities carried out under its wildlife management program in the face of criticism from overseas. [95]

5.74 Another example of the impact of activist NGOs was the experience related in evidence to the Committee by Mr Phil Reader of the Northern Territory Cockatoo Breeding and Research Centre:

… as with a lot of aviculturists, I am always very afraid,and I subscribe to a lot of journals throughout the world,of saying that I am an aviculturist and advertising what I do carry out. I am very scared as regards animal liberation groups. I had a lot of my birds let out a few years ago by someone,persons unknown. A lot of these birds, once they are captive bred, will not survive in the wild. [96]

5.75 Thus it is clear that lobby groups can, and do, have an economic impact on wildlife industries; a result that such groups would no doubt consider to be a sign of success of their activities. It is worth noting, however, that while wildlife industries must be established under a proper legal framework, and operate according to regulation, the activities of some NGOs in attempting to discredit industry at times transcend the law. In addition, it appears anomalous that there is a lack of factual rigour in the information provided by some NGOs, which is surely unethical, when they oppose commercial utilisation of wildlife on such strong ethical grounds.

Property Rights and Ownership of Wildlife

5.76 The Convention on Biological Diversity, recognises the sovereign rights of member states over their natural resources. Article 15 states that the authority to determine access to genetic resources rests with national governments and is subject to national legislation. It also calls on Parties to the Convention that derive a benefit from another Party to share the benefits arising from the commercial and other utilisation of the genetic resources. In 1994, following ratification of the Convention, a Commonwealth State Working Group on Access to Australia's Biological Resources was established. The Working Group's paper is currently being considered by a ministerial group (First Ministers). [97]

5.77 Because the Convention on Biological Diversity proclaims that natural resources are owned by the country of origin, the Humane Society International (Australia) questioned the property rights of native species which were farmed. [98] While there may be some value in assigning property rights over animals to landholders, conservation groups saw danger in this proposal. The Conservation Council of Western Australia, for example, argued that the genetic and material resources within Australia belonged to the people of Australia and that commercial rights should not override communal ownership vested in the crown. [99]

5.78 While the Commonwealth Government may have the power to raise revenue by extending property rights to wildlife use (for example, the Government could charge a levy on pharmaceuticals produced from a native plant), property rights are in practice difficult to define or may be impossible to enforce. The Western Australian Government has overcome this in part by entering into agreements with pharmaceutical companies to allow access to specific plant resources in return for royalty payments to conservation (see Paragraph 5.34 (2)).

5.79 In some states, species of native plants that are not listed as threatened or endangered are considered to be the property of the leaseholder or landowner on whose land they occur. This is, however, not consistent across Australia and does not apply to animals (with exception of the granting of 'subsistence' rights in the taking of animals to Aboriginal people and Torres Strait Islanders by statute in some states). [100]

5.80 There is, however, an increasing view that assigning property rights to animals may encourage the conservation of those animals by landholders. Mr Clem Campbell, MP (Member for Bundaberg), for example, argued in his submission that the commercial use of wildlife could make a significant economic contribution to the well-being of rural people, as well as enhancing the Australian environment by securing a strong native wildlife population. The basis of his approach was that the landholder must have some ownership rights to the wildlife on their property through a licensing arrangement. The landholder would then 'receive a financial reward for living with the wildlife (animal or bird) and bearing the cost to society of maintaining these valuable wild natural resources'. [101] In this way the wildlife becomes an asset rather than a liability.

5.81 The National Farmers' Federation supported a farmer's right to choose to be able to farm or harvest native wildlife. According to the NFF, this approach 'is consistent with the National Strategy for Rangelands Management which calls for greater flexibility in land management and for increased opportunities for pastoralists to diversify their activities'. [102] If there was sufficient financial return to farmers from wildlife harvesting, it may encourage them to maintain or rehabilitate natural ecosystems on their land. [103]

5.82 Professor Eugene Moll of the Department of Natural Systems and Rural Management at the University of Queensland argued that:

… the power over biodiversity has to be given to the landowner. If the landowner is in there for the long haul as most farmers are and if the best research data is available to them … I believe that the people who own the land or what grows on the land, will manage it much better because they will be very conscious of the fact that the more stable the vegetation cover is on their farms, the more likely they are to sustain an income over good and bad years. [104]

5.83 When asked about the surplus of koalas on Kangaroo Island, Dr George Wilson stated:

There are private property owners who want to have koalas on their land in areas where there are no koalas at the moment. State wildlife legislation is preventing those koalas crossing the South Australian/New South Wales border and going onto those properties. I find that utterly amazing. It is a typical case of where wildlife protection legislation is counterproductive. [105]

5.84 He then asked rhetorically:

Why do governments not just get out of the way and let these things work at their own level outside national parks? [106]

5.85 Finally, Mr Peter Johnson spoke at length in evidence to the Committee about the concept of ownership of wildlife in southern Africa and the benefits to wildlife abundance that had arisen from the return of ownership rights to indigenous people. He noted that it was important for government to decide what wildlife rights it wanted to retain and, more importantly, what areas of wildlife rights it could administer effectively. Any rights that government could not, or did not want to retain responsibility for, should then be made available to other managing agencies. [107]

Private Investment in Wildlife

5.86 Because property rights for wildlife are vested in the crown and responsibility for conservation has been accepted in full by government, there has been minimal investment by the private sector in conservation in Australia. In fact, in some instances, private sector involvement has been covertly or overtly discouraged. However, commercial utilisation of wildlife by the private sector has potential to contribute financially to biodiversity conservation both on a user-pays basis from wildlife industries and through investment in conservation enterprises. Contributions may be direct (for example, through licences and levies), or indirect (for example, industries may take advantage of tax concessions for wildlife R&D investment). Some submissions thus argued that the government should not hold a monopoly on wildlife and should encourage private investment in conservation. [108]

5.87 Dr John Wamsley was severely critical of the government's conservation effort and its monopoly on wildlife resources. He believes that bureaucratic decisions about wildlife have been largely ignorant of the needs of wildlife. About this he stated in evidence to the Committee:

This would all be irrelevant if it wasn't for the fact that the people wasting these funds are also in a position where they can stop anyone else from spending their own funds properly through rules and regulations. I believe that there is not one regulation in relation to wildlife that is of any benefit to wildlife.

Here we have this massive monopoly on wildlife, which is clearly not in the interests of wildlife and doesn't want any other players. It is like playing a football match with one of the sides being the referee. I cannot save wildlife if I have to follow the rules set by someone who has already proved that they cannot save wildlife. [109]

5.88 Dr Wamsley cited as an example the demise of the bridle nailtail wallaby (Onychogalea fraenata): 'There were over 5,000 bridled nail tailed wallabies left in the world six years ago when the Queensland National Parks and Wildlife Service took over their management. Today there are about 300 left. There would still be 5,000 if the Queensland National Parks and Wildlife Service had left them alone. … I could build up the numbers of bridled nail tailed wallabies to tens of thousands if I were allowed to but the Queensland National Parks and Wildlife Service will not let me have half a dozen'. [110]

Employment

5.89 On a number of occasions the Committee sought information about levels of employment in wildlife-based industries but found that data was generally unavailable. [111] While there was information about the number of licences that had been issued for any given industry or species, there was little information about direct employment, or about flow-on employment. [112] A few examples, taken from evidence, are as follows:

• the kangaroo industry employs in excess of 4,000 people and generates over $200 million per year in income; [113]
• the possum industry in Tasmania would employ 60 people full-time if the annual quota was fully taken (250,000); [114]
• the conservation company Earth Sanctuaries employed 15 full-time staff in 1996 and 30 full-time staff in 1997; the establishment of a Sanctuary at Scotia had provided employment for 'a dozen kids'; [115]
• the contribution of Australian koalas to the tourism industry and thus the Australian economy is $1.1 billion which translates into around 9,000 jobs directly accounted for by koalas; [116]
• the companion animal industry employs over 30,000 people and has a turnover of $2.2 billion; [117]
• Hartley's Creek Crocodile Farm employs 26 people full-time in leather processing and 9 people part-time in meat processing; [118] and
• in Western Australia there are 86 licensed emu farms which employ people directly and there is an emu-only processing facility which employs 15 to 20 people. [119]

Economic Viability of Wildlife Industries

5.90 It is impossible to provide specific information about the economic viability of commercial utilisation of wildlife. To do this, each industry would need to be examined separately and the financial and economic costs and benefits of each assessed, an activity which is beyond the scope of this report primarily because there is little information publicly available (although the recent RIRDC handbook on The New Industries, which considers the economics of production for each industry covered, goes some way to addressing this problem).

5.91 However, despite the lack of data, some general observations can be made about the economic viability of wildlife industries in Australia:

• many wildlife species exist at such low densities that harvesting may not be economically viable;
• wild harvesting requires large inputs in terms of land and labour and small inputs in terms of capital;
• farming of wildlife species generally increases economic viability but has higher capital costs and concomitantly higher risks if markets are not found for products;
• farming of wildlife (as opposed to wild harvesting) may result in an increase in other problems, such as disease and animal welfare, and may reduce natural advantages such as efficient use of food and water, all of which will increase costs;
• some wildlife industries have been in existence for many years and are still economically viable (kangaroos, eucalyptus oil);
• some relatively new industries are considered to be economically viable (crocodiles, for example); [120]
• some industries appear more viable than others (the emu industry, for example, appears to be undergoing a period of oversupply);
• some businesses within a particular wildlife industry are more viable than others (kangaroo processing businesses in South Australia appear to be stronger than others in other states);
• some industries depend on a diversity of interests to remain viable (crocodile farms which rely on tourism, for example);
• the profitability (and thus viability) of any particular industry will change over time according to predictable phases of development and market growth, [121] but generally increases over time;
• the economic viability of many wildlife industries depends in part on the regulatory activities of state and Federal governments;
• the economic viability of all wildlife industries will ultimately depend on successful marketing strategies;
• wildlife industries have higher marketing risks than other industries based on inanimate resources (or services) because game products are particularly susceptible to fluctuations in consumer preference and social attitudes;
• the potential economic viability of emerging industries is difficult to determine;
• the economic viability of wildlife industries, and especially those based on consumptive use of animals, is susceptible to public perceptions of the ethical/moral desirability of that use; and
• while the commercial utilisation of wildlife must be economically viable to survive, this must not be at the expense of long-term conservation goals or biodiversity.

5.92 According to a recent publication by RIRDC, the factors common to successful new rural industry ventures have been: adequate initial financial resources, adequate funding for operational expenses prior to establishment of profitability, government incentives and tax concessions, and inherent competitive advantage. The report also noted that 'the final success factor' is the role of government, the key activities of which were:

• setting the right economic environment for industry development;
• as a source of informational resources;
• as a provider of R&D support; and
• as a provider of services and representation, particularly in market access negotiations. [122]

5.93 Finally, it should be noted that the economic viability of some wildlife enterprises is seriously hampered by unnecessarily restrictive regulatory responsibilities, compliance with which is excessively costly and time consuming (see Paragraph 6.9).

Summary and Conclusions

5.94 The 'value' of wildlife may be defined in a number of ways (financial and non-financial) which may differ according to personal opinion and understanding. Opponents of commercial utilisation of wildlife reject the notion that wildlife should have a financial value placed on it, choosing instead to believe that wildlife has an 'intrinsic' value and therefore that society should accept responsibility to preserve wildlife simply on that basis. In contrast, proponents of commercial utilisation of wildlife believe that not only can wildlife have a monetary value placed on it, but that it must. However, regardless of these views, it appears important now for wildlife, and particularly habitat, to have some economic value placed on it, if only to ensure that it can compete on an equal basis with other land uses which already have an economic value and which, by default, are seen to be more important. The Committee concludes that natural habitat must be valued as an economic resource if it is to be fully respected and conserved.

5.95 The use of a plant or animal species in a commercial system exposes it to market forces which are based on conventional elements of supply and demand. This is considered to be dangerous by some people who believe that once demand for a wildlife product is established, it will place inordinate pressure on supply, resulting in over-harvesting and serious consequences for the species involved. (There is ample evidence that some species in the past have suffered from commercial exploitation to their considerable detriment.) In contrast, proponents of wildlife use suggest that it is market demand which provides the incentive for that species to be preserved so that supply can be met. (Few if any species have ever become extinct through over-exploitation because economic viability declines long before species viability.) However, despite the merit of these views, the debate over economic viability is perhaps secondary to the debate over sustainability because if a species cannot sustain commercial use biologically and ecologically, the industry will not survive financially anyway.

5.96 The economic benefits of commercial utilisation of wildlife are varied. In addition to creating wealth for the industry involved and for the nation (through employment and taxation), they may assist in biodiversity conservation in a number of ways: first, by providing incentives to private landholders to preserve habitat which would otherwise require government funding if conserved through the public nature reserves system; second, by providing direct and indirect revenue from wildlife industry activities; and third, by managing superabundant wildlife which causes damage to the environment (a cost in itself), the control of which represents a cost to landowners (private or government).

5.97 The costs of commercial utilisation of wildlife are largely borne by the relevant business. However, if the 'user-pays' principle is not kept firmly in mind, there may be substantial public sector costs incurred. These include administrative costs (monitoring, quarantine and enforcement), as well as contributions in the form of grants, subsidies, incentives, supporting R&D and the provision of information resources. If wildlife industries result in damage to the environment, there may also be costs involved in mitigation and rehabilitation. Economic concerns centre on the fact that when public resources are used to assist private enterprise, the benefits often fall disproportionately to those directly involved in the industry, while any costs (environmental and social) are often borne by society at large. Mechanisms are needed to ensure that commercial utilisation of wildlife does not result in a net economic loss to society. The Committee alerts Federal and state Governments to the fact that industries based on commercial utilisation of wildlife have the potential to result in high administrative costs to the public sector, and the consequent need to fully and publicly monitor those costs.

5.98 As with any new industry, the economic viability of emerging wildlife industries may be uncertain. However, compared to industries based on inanimate resources (or services), economic uncertainty in wildlife industries is exacerbated by two factors: the inherent unreliability of supply (the tendency of biological systems to fluctuate); and the fickle nature of demand for wildlife products which is often influenced by decisions based on emotion rather than fact and influenced by zealous animals rights campaigns and a media obsessed with emotive issues.

5.99 Because many wildlife industries are relatively new, and many supply niche markets, their economic importance to Australia is largely unquantified. However, this information is critical to any assessment of the significance of these industries to regional economies and to the general economy of Australia. The Committee recommends that the Government monitor the environmental, social and economic impacts of commercial utilisation of wildlife so that a balance sheet can be constructed to assess the full impact of wildlife industries on the Australian economy.

5.100 The Committee concludes that the related issues of property rights in wildlife assets and public investment in biodiversity conservation are of considerable importance. The Committee believes that the current and potential role of the private sector in biodiversity conservation is significant, but currently considerably undervalued. The Committee recommends that the Federal Government investigate ways in which private sector investment in biodiversity conservation can be supported and encouraged. In particular, the Committee draws attention to the model of sustainable use of wildlife as used in southern Africa, whereby in some areas ownership of wildlife is transferred to local landowners, and recommends that the Government examine the appropriateness of such a model to biodiversity conservation in Australia.

Footnotes

[1] Submission No. 198, p. 39.

[2] Submission No. 198, p. 37.

[3] Submission No. 198, p. 37-38

[4] Submission No. 102, p. 4.

[5] Submission No. 187, p. 3 (adapted from Gilbert F and Dodds D G 1992 The Philosophy and Practice of Wildlife Management 2nd edition, Krieger, Florida).

[6] Submission No. 187, p. 5.

[7] ACF Policy Statement No. 61, Tabled by the Nature Conservation Council of NSW, 8 September 1997, p. 1.

[8] ACF Policy Statement No. 61, op cit, p. 2.

[9] Submission No. 66, p. 2.

[10] Evidence, p. RRA&T 639.

[11] Although, as noted previously, this already exists in non-financial ways.

[12] Submission No. 79, p. 2, Evidence, p. RRA&T 655.

[13] Submission No. 87, p. 2.

[14] Evidence, p. RRA&T 479.

[15] Shea, S R, Abbott, I, Armstrong, J A & McNamara, K J (undated) Sustainable Conservation – A new integrated approach to nature conservation in Australia, Department of Conservation and Land Management, Western Australia, p. 13.

[16] Submission No.s 103, 322, Evidence, p. RRA&T 196, for example.

[17] Submission No. 157, pp. 24 - 25.

[18] Submission No. 102, p. 9.

[19] Submission No. 56, Evidence, p. RRA&T 567 ff.

[20] In fact, as argued by Mr Roger Kerr, Executive Director of the New Zealand Business Roundtable in an address to a Conference on Environmental Justice and Market Mechanisms (University of Auckland Faculty of Law, 6 March 1998) '…those who promoted many of the radical reforms made in this country [New Zealand] on both economic and environmental grounds have done far more to advance environmental goals than the environmental movement in general. The list ranges from the removal of subsidies for fertilisers, irrigation, land development and forestry, to market-related pricing and more efficient production of electricity and other energy products, to the individual transferable quota system for fishing', Market Mechanisms and Conservation, pp 1-2.

[21] Submission No. 56, p. 2.

[22] ANZFAS also commented on the differing values placed on items according to whether they were a commodity with a price, or an object with intrinsic, non-financial value, and the implications that this had for the commercial utilisation of wildlife (Submission No. 178, p. 5).

[23] Evidence, p. RRA&T 568, Submission No. 56, p. 3.

[24] Submission No. 56, p. 4.

[25] Evidence, p. RRA&T 571, see also Submission No. 56, p. 5.

[26] For example, see Rose, R 1990 Valuing environment services, Agriculture and Resources Quarterly 2 (3).

[27] Australian Farm Journal BUSH, August 1997, p. 20-21. Further information can be obtained from Prof Jeff Bennett, School of Economics and Management, University of NSW, Australian Defence Force Academy, Canberra.

[28] Earth Sanctuaries Ltd (ACN 008164903) 1996 Annual Report.

[29] Earth Sanctuaries Ltd, op cit, p. 19, 'Statement by Professor R H Gray, Mathew Professor of Accounting and Information Systems and Director of the Centre for Social and Environmental Accounting Research, University of Dundee, Scotland'.

[30] Submission No. 338, p. 6 for a description of the problems faced by the emu industry.

[31] Submission No. 318, p. 3.

[32] Submission No. 141, p.1.

[33] Shea, S R, op cit, p. 28.

[34] RIRDC 1998 The New Rural Industries - A Handbook for Farmers and Investors, edited by K W Hyde, Canberra, ISBN 0642246904, p. 2.

[35] Supplementary Submission No. 118, p. 4.

[36] Supplementary Submission No. 86, p. 8.

[37] Submission No. 200, p. 8.

[38] CSIRO Media Release 24 March 1998 Ref 98/61, p. 1.

[39] Submission No. 83, p. 3.

[40] Submission No. 83, pp 4-6.

[41] Evidence, pp. RRA&T 198-210.

[42] See for example Submission No. 198, p. 42. See also Commonwealth Department of Tourism 1994 National Ecotourism Strategy, AGPS Canberra; N Preece and P van Oosterzee, Ecoz-Ecology Australia and D James, Ecoservices Pty Ltd 1995, Two Way Track - Biodiversity Conservation and Ecotourism, Biodiversity Series Paper No. 5, Biodiversity Unit, Department of Environment, Sport and Tourism ISBN 0642226970; Professor Tor Hundloe & Dr Clive Hamilton Koalas and Tourism: An Economic Evaluation, The Australia Institute, Discussion Paper No. 13, July 1997, ISSN 1322-5421; van Oosterzee, P and Preece, N 1996 Ecotourism and World Heritage Tropical Forests, keynote address to World Heritage Tropical Forests Conference, Cairns, September (Attached to Submission No. 124).

[43] Evidence, p. RRA&T 639.

[44] Submission No. 198, p. 39.

[45] Submission No. 198, p. 39 (Recommendation 15).

[46] Submission No. 198, p.39 (Recommendation 16).

[47] Submission No. 297, p. 1.

[48] Evidence, p. RRA&T 151.

[49] Submission No. 197, p. 10.

[50] Submission No. 87, p. 8.

[51] Submission No. 66, p. 9.

[52] Submission No. 299, p. 9.

[53] While state and Federal governments frequently provide assistance through R&D, grants and incentives are not common. In Queensland, for example, there are no direct subsidies to farmers. However, there is support to wildlife industries in areas of research and development and market analysis (Evidence, p. RRA&T 82). See also evidence, p. RRA&T 6, 9.

[54] Submission No. 171, p. 2.

[55] For example Submission No. 203, p. 7, Evidence, p. RRA&T 309, Submission No. 55.

[56] Evidence, p. RRA&T 310; Submission No. 79, p. 2.

[57] Evidence, p. RRA&T 790, for example.

[58] Submission No. 67, p. 2.

[59] Submission No. 66, p. 9.

[60] Submission No. 178, p. 7.

[61] Submission No. 297, p. 1.

[62] Submission No. 87, p. 14.

[63] Evidence, p. RRA&T 318.

[64] Evidence, p. RRA&T 157.

[65] Submission No. 299, p. 8.

[66] Submission No. 128, p. 2.

[67] Submission No. 71, p. 3.

[68] Submission No. 203, p. 35.

[69] Evidence, p. RRA&T 544.

[70] Evidence, p. RRA&T 71-2.

[71] Supplementary Submission No. 86, p. 8.

[72] Evidence, p. RRA&T 459.

[73] Evidence, p. RRA&T 1029.

[74] A example has already occurred in the aviculture industry where licence fees increased to such an extent that it was not financially viable for aviculturists to breed certain species that were common in captivity but endangered in the wild (see Paragraph 6.51).

[75] Submission No. 198, p. 46 (Recommendation 22).

[76] Submission No. Submission No. 198, p. 51 (Recommendation 25).

[77] Submission No. 198, p. 47.

[78] Evidence, p. RRA&T 1123.

[79] Submission No. 91, p. 2.

[80] Evidence, p. RRA&T 600.

[81] Submission No. 198, p. 38.

[82] Although the possum industry in New Zealand probably developed out of a near desperate need to reduce feral brushtail possum numbers rather than smart entrepreneurial activities!

[83] Evidence, p. RRA&T 997.

[84] Evidence, p. RRA&T 693.

[85] Evidence, p. RRA&T 221.

[86] Submission No. 210, p. 6.

[87] Evidence, p. RRA&T 21.

[88] Submission No. 198, p. 39 (Recommendation 15).

[89] Submission No. 198, p. 39 (Recommendation 16).

[90] Submission No. 198, p. 47.

[91] Submission No. 305, p. 1.

[92] Submission No. 141, p. 9.

[93] Submission No. 141, pp. 9-10.

[94] Submission No. 338, p. 5.

[95] Evidence, p. RRA&T 890.

[96] Evidence, p. RRA&T 407.

[97] Managing Access to Australia's Biological Resources: Developing a Nationally Consistent Approach, Submission No. 198, p. 46.

[98] Evidence, p. RRA&T 46-47.

[99] Evidence, p. RRA&T 480.

[100] Evidence, p. RRA&T 282.

[101] Submission No. 12, p. 2.

[102] Submission No. 106, p. 2.

[103] Submission No. 7.

[104] Evidence, p. RRA&T 63.

[105] Evidence, p. RRA&T 1126.

[106] Evidence, p. RRA&T 1126.

[107] Evidence, p. RRA&T 1070.

[108] See for example Submission No. 190.

[109] Submission No. 77, p. 3.

[110] Submission No. 77, p. 3.

[111] Evidence, p. RRA&T 138, 191, 368, 392, 419, 447, 453, 515, 805, 1108, 1163.

[112] See for example, Evidence, p. RRA&T 515.

[113] Supplementary Submission No. 86, p. 8; Evidence, p. RRA&T 726.

[114] Submission No. 141, p. 7.

[115] Submission No. 77, p. 6; Evidence, p. RRA&T 618.

[116] Evidence, p. RRA&T 754.

[117] Evidence, p. RRA&T 689.

[118] Evidence, p. RRA&T 171, 173.

[119] Evidence, p. RRA&T 447.

[120] Submission No. 157, pp. 15, 21; also Submission No. 123, p. 2.

[121] See for example Submission No. 338, p. 6.

[122] RIRDC 1998, op cit, p. 6-8.