Yearly Archives: 2013

259 – Increasing environmental benefits

It is obvious that the budgets of our public environmental programs are small relative to the cost of fixing all of our environmental problems. If we want to achieve greater environmental benefits from our public investments, what, in broad terms, are the options?

I remember seeing a graph last year – I think it was from the Australian Bureau of Statistics – showing the level of concern felt by the Australian community about environmental issues. It looked to have peaked a few years ago, and was pretty flat, or slightly declining. In that context, the prospects for a big increase in environmental spending over time don’t look good, particularly given the general tightness of government budgets. So I was wondering, if we wanted to double the environmental values protected or enhanced by our public programs, what are the options? I was able to identify several. I’ll list them here, and briefly comment on their potential effectiveness, cost and political feasibility.

  1. Double the budget. Effectiveness: high (in the sense that we could actually double the environmental benefits generated). Cost: high. Politics: very unlikely in the foreseeable future. It wouldn’t be my first priority, anyway. Increasing the budget would be more effective if we first delivered some of the strategies below.
  2. Improve the prioritisation of environmental investments. Improve the usage of evidence, the quality of decision metrics (Pannell 2013), and the quality of evaluation of proposals. Effectiveness: high (because most programs currently have major deficiencies in these areas). Cost: low, especially relative to doubling the budget. Politics: Implies a higher degree of selectivity, which some stakeholders dislike. Probably means funding fewer, larger projects. Achievable for part of the budget but the politics probably require a proportion to be spent along traditional lines (relatively unprioritised).
  3. murray_riverEncourage more voluntary pro-environmental action through education, persuasion, peer pressure and the like. Effectiveness: commonly low, moderate in some cases. Cost: moderate. Politics: favourable.
  4. Increase the share of environmental funds invested in research and development to create pro-environmental technologies (Pannell 2009). Note that this is about creation of new technologies, rather than information. Examples could include more effective baits for feral cats, new types of trees that are commercially viable in areas threatened by dryland salinity, or new renewable energy technologies. Feasibility: case-specific – high in some cases, low in others. Cost: moderate. Politics: requires a degree of patience which can be politically problematic. Also may conflict with community desire to spend resources directly on on-ground works (even if the existing technologies are not suitable). There tends to be a preference for research funding to come from the research budget rather than the environment budget, although this likely means that it is not as well targeted to solve the most important environmental problems.
  5. Improve the design of environmental projects and programs. Improve evidence basis for identifying required actions. Improve selection of delivery mechanisms. Improve the logical consistency of projects. Effectiveness: high (because a lot of existing projects are not well founded on evidence, and/or don’t use appropriate delivery mechanisms, and/or are lacking in internal logical consistency). Cost: low. Politics: Implies changes in the way that projects are developed, with longer lead times, which may not be popular. There may be a perception of high transaction costs from this strategy (although they would be low relative to the benefits) (Pannell et al. 2013).
  6. Increase the emphasis on learning and using better information. Strategies include greater use of detailed feasibility studies, improved outcome-oriented monitoring, and active adaptive management. Effectiveness: moderate to high. Would feed into, and further improve, options 2 and 5. Cost: low. Politics: main barrier is political impatience, and a view that decisions based on judgement are sufficient even in the absence of good information. Often that view is supported/excused by an argument that action cannot and should not wait (which is a reasonable argument in certain cases, but usually is not).
  7. Reform inefficient and environmentally damaging policies and programs. Examples include subsidies for fossil fuels, badly designed policies supporting biofuels in Europe and in the USA, and agricultural subsidies. This strategy is quite unlike the other strategies discussed here, but it has enormous potential to generate environmental benefits in countries that have these types of policies. Successful reform would be not just costless, but cost-saving. Effectiveness: very high in particular cases. Cost: negative. Politics: difficult to very difficult. People with a vested interest in existing policies fight hard to retain them. Environmental agencies don’t tend to fight for this, but there could be great benefits if they did.

In my judgement, for Australia, the top priorities should be strategies 2 and 5 followed by 6. Strategy 4 has good potential in certain cases. If these four strategies were delivered, the case for strategy 1 would be greatly increased (once the politics made that feasible). To succeed, strategies 2, 5 and 6 would need an investment in training and expert support within environmental organisations. Over time, in those environmental organisations that don’t already perform well in relation to strategies 2, 5 and 6 (i.e. most of them), there may be a need for cultural change, which requires leadership and patience.

In Europe and the USA, my first choice would be strategy 7, if it was politically feasible. After that, 2, 5, 6 and 4 again.

Further Reading

Garrick, D., McCann, L., Pannell, D.J. (2013). Transaction costs and environmental policy: Taking stock, looking forward, Ecological Economics 88, 182-184. Journal web site

Pannell, D.J., Roberts, A.M., Park, G. and Alexander, J. (2013). Improving environmental decisions: a transaction-costs story, Ecological Economics 88, 244-252. Journal web siteIDEAS page

Pannell, D.J. (2009). Technology change as a policy response to promote changes in land management for environmental benefits, Agricultural Economics 40(1), 95-102. Journal web page ◊ Prepublication version

Pannell, D.J. (2013). Ranking environmental projects, Working Paper 1312, School of Agricultural and Resource Economics, University of Western Australia. IDEAS page ◊ Blog series

258 – How many environmental targets are SMART?

In PD257 I talked about why it is important for environmental managers to set SMART targets for the projects they develop – SMART meaning Specific, Measurable, Achievable, Relevant and Time-bound. In practice, many environmental targets are poorly defined. 

Frustrated at the lack of SMART targets he observed in natural resource management plans and strategies, Geoff Park suggested that we quantify the issue. We looked at a specific set of targets: resource condition targets related to biodiversity, water and community engagement, set by Catchment Management Authorities (CMAs) in the Australian states of Victoria and New South Wales, through several planning cycles commencing in 1997. We examined hundreds of targets that are documented in over 50 regional plans that have been endorsed by governments at different times across the two states.

Because we lacked the information needed to assess achievability and relevance, we focused on whether targets were specific, measurable and time-bound.

Overall, the quality of targets was poor, with less than 30 per cent meeting all three criteria. Some targets met one or two of the criteria, but most failed to meet all three.

The proportion of targets that are SMT has not increased over time, and in New South Wales it has declined. This is perhaps surprising given the robust criticism by the Australian National Audit Office (Auditor General, 2008) when it reviewed the regional natural resource management system. For example, looking at a smaller sample of targets than we examined, they found that around half were not measurable or time bound.

How about the other two criteria: achievable and relevant? The ANAO noted that there was little evidence to indicate whether targets were achievable, and that where there was evidence, the targets clearly were not achievable. “Where the impact on resource condition is identified by regional bodies, the expected results were often low (frequently less than one per cent of the longer term resource condition target).

They also observed that there was “little information” about whether targets represented value-for-money outcomes – that is, in my interpretation, whether they were relevant.

Our experience is in line with the ANAO obervations. Although 30% of targets were SMT, I expect that only a small handful of the hundreds of targets we looked at would meet all five of the SMART criteria.

In the paper we published on this (Park et al., 2012), we suggested some likely reasons for this disappointing result:

  • a lack of appropriate standards and guidelines from governments to enable high quality target setting;
  • a lack of realism about the budgetary and technical feasibility of ambitious environmental targets amongst those involved in natural resource management; and
  • a lack of adequate focus on outcomes by both CMAs and governments.

How can this be improved? Fundamentally, it depends on leaders in government agencies making it a priority. They could start by making sure that the targets of their own agencies are SMART. For outside groups that receive government funding (such as CMAs), the only way we’ll see a general improvement is if government agencies provide guidance and training, send strong signals that improvements are needed, and reward regional bodies that do practice outcome-focused accountability.

Further reading

Auditor General (2008). Regional Delivery Model for the Natural Heritage Trust and the National Action Plan for Salinity and Water Quality, Audit Report no. 21 2007-08, Performance Audit, Australian National Audit Office, Canberra.

Park, G., Roberts, A., Alexander, J., McNamara, L. and Pannell, D. (2013). The quality of resource condition targets in regional natural resource management in Australia, Australasian Journal of Environmental Management (forthcoming). Journal Web Site

257 – Be smart, use SMART goals

SMART goals are widely referred to in writings about planning. The SMART acronym provides a checklist of characteristics that goals or targets should have; they should be Specific, Measurable, Achievable, Relevant and Time-bound. It really is a useful checklist. Many goals for environmental or natural-resource projects are not SMART. In this post, I’ll outline why I believe they should be.

There are many different versions of the SMART acronym, but most are close to the list I’ve given above. In our work helping environmental organisations with their planning and evaluation of projects, we emphasis the importance of specifying goals that are SMART. Users of INFFER are required to specify at least one goal for each project, and we often find that people struggle with making them SMART.

Why does it matter? Let’s start with an example. Here is a non-SMART goal, taken from the business plan of an Australian environment program.

To increase the opportunities for short-term members or visitors to contribute to and partake in the protection and management of natural resources. 

This is not specific. Increase by how much? How is an ‘opportunity’ defined? What specifically is meant by protection? Protection of what? 

It is not measurable. Given that it’s not clear what an ‘opportunity’ is, or what ‘partaking’ involves, you could not quantify whether these things had been achieved. You may not be able to observe (and hence measure) whether people have had such opportunities, particularly if they don’t take them up.

It is not time-bound. Should the increase occur this year? Within a decade? Within the next century?

By contrast, here is a SMART goal taken from an INFFER project assessment:

To increase the groundcover on 20,000 hectares of bugwah duplex soils in the XXX region to 60% by 2020.

Clearly, this one is specific, measurable and time-bound.

lakeThese three parts of the acronym – S, M and T – are important for two reasons.

Firstly, the S and T parts determine the actions that will be needed to achieve the goal. If you change the specific outcomes being sought or the time frame, then the required actions will almost certainly change. If the goal is not specific enough, you can’t tell which actions are required.

Secondly, S, M and T determine whether it will be possible to monitor our success in achieving the goal. If we can’t monitor then we can’t evaluate the project and it makes it harder to learn from the project to improve our future projects.

The other two parts of the acronym – A and R – are important for quite different reasons. They relate to whether the project has been appropriately evaluated.  A goal could pass the S, M and T tests, but still not be achievable or relevant.

To be achievable, the goal must be feasible in several respects. It needs to be technically feasible – if we did the recommended physical actions, would we get the desired outcomes?

It needs to be feasible in a socio-economic sense. For example, if we are relying on an education program to deliver the intended outcome, would the education program result in sufficient behaviour change to reach 60% groundcover on 20,000 ha? It should not be assumed that it would achieve this result without consideration of the characteristics of the relevant landholders and of the required new practices and their challenges (social, practical and/or economic).

It needs to be financially feasible. Is the budget large enough to achieve the stated goal, given all of the costs involved. Often we observe that a project would be achievable but only if the budget was 10 times larger than it can reasonably be expected to be.

Finally, is the project relevant? Being an economist, I give this a particular slant – is the project actually worth doing? If you did a good quality ranking (another ‘R’ word) of the available projects, would this one be in the top group? This is by far the most challenging of the criteria, so not surprisingly it is very commonly not evaluated. But it should be. In Australia, our environmental budgets are tiny relative to our environmental problems, so it’s crucial to make sure that the projects that get funded are those that will provide the best environmental outcomes for the money.

The A and R criteria also have strong implications for how you should go about developing a SMART goal for a project. Once you understand the principles, it’s fairly simple to generate an SMT goal for a project, but the A and R require additional work. There can also be an interaction between the criteria. If you change the specific outcome that is to be pursued, its achievability and relevance can change completely. In our work on the Gippsland Lakes (Roberts et al., 2012), we looked at a wide variety of possible SMT goals. Some were relatively achievable and appeared relevant in terms of value for money. Others looked extremely hard to achieve, and extremely costly, offering terrible value for money and so scoring very low for relevance.

This discussion of A and R implies that you should not settle on the first SMT goal that comes forward. Instead, you should consider a variety of SMT goals to find those that are achievable, and to evaluate which of the achievable goals provide the best value for money. Assuming that you don’t have some sort of model to optimise the project, having a process that is a bit circular can be beneficial: you put forward a goal, define the project, evaluate it, and then go back and modify the goal or the project until you meet the achievability criterion at reasonable cost relative to the environmental benefits.

Further reading

Pannell, D.J., Roberts, A.M., Park, G., Alexander, J., Curatolo, A. and Marsh, S. (2012). Integrated assessment of public investment in land-use change to protect environmental assets in Australia, Land Use Policy 29(2): 377-387. Journal web site ♦ IDEAS page for this paper

Roberts, A.M. Pannell, D.J. Doole, G. and Vigiak, O. (2012). Agricultural land management strategies to reduce phosphorus loads in the Gippsland Lakes, Australia, Agricultural Systems 106(1): 11-22.    Journal web site here ♦ IDEAS page for this paper

256 – Attitudes to monetising environmental values

Putting dollar values on intangible environmental outcomes is probably the most controversial aspect of environmental economics. Is that why this information is not used more by environmental managers and decision makers? It turns out that the answer is no.

 In an earlier Pannell Discussion (PD175), I observed that people in environmental organisations and agencies are sometimes resistant to using information from “non-market valuation” research on the monetary-equivalent values of environmental benefits, especially the more intangible benefits. Despite a lot of research, and quite concerted promotion of the approaches by some researchers, they remain under-utilised. I suggested a list of 12 reasons why some people who should be interested in this information don’t use it.

Subsequently, a team of us decided to investigate which of these reasons were most important in reality. Some of the results were quite surprising.

We surveyed Australian researchers who use these techniques and interviewed Australian environmental managers and policy makers who could benefit from using the results. (For shorthand I’ll refer to environmental managers and policy makers as ‘decision makers’).

From both groups, we confirmed our initial perception that monetised environmental values are not used by decision makers very commonly. Where they are used, it is mainly to justify an established position or decision. They are almost never used to inform decision making.

We asked both groups why they thought this was. Interestingly, the perceptions of the two groups were strikingly different.

The researchers thought that the main reasons were (1) that decision makers have concerns about the limitations or validity of non-market valuation techniques, or (2) that decision makers have philosophical objections to assigning monetary values to the environment.

bushwalkOn the other hand, from the interviews with decision makers we learnt that the main reason for non-use was lack of awareness or knowledge. Most could not name a single non-market valuation technique, and only about a third had ever been exposed to valuation results in the course of making environmental decisions. Overall, the level of awareness was much too low for concerns about validity to be a significant factor. You can’t have concerns about something you don’t know about!

Another important issue raised by decision makers was lack of time and resources. The concern with time reflects that management and policy decisions are often made with unseemly haste and without undertaking rigorous analysis. They shouldn’t be, but they are, so the time and resources needed to seek out this sort of information just aren’t available.

A third issue that stood out was a general opposition to the use of economic studies by some people, rather than opposition to non-market values in particular. Here is a quote that highlights the problem: “People within the environment agency, and that’s quite senior people, just laugh at us when we say we could use economics to advise on these things. When they laugh, they actually do laugh.

The issues identified by researchers were mentioned by some decision makers, but they were far from being the main explanations for under-use.

In their focus on validity, it seems like many of the researchers were projecting their experiences in the research world onto environmental decision makers, without realising how different the two worlds are. Some of the researchers were rather naïve about how environmental decision makers obtain their information, expecting that publication in peer-reviewed journals could be an effective way of communicating research results to decision makers!

Going back to my original Pannell Discussion on this, I see that I identified all of the key factors except one – the most important one! I hadn’t realised that simple lack of awareness was the biggest barrier.

During the interviews, we found that when we explained the idea of non-market valuation to the decision makers, many of them were quite positive about it. Whether they’d actually use it in practice if they knew more about it is an open question, but can’t be ruled out.

Further reading

Rogers, A.A., Kragt, M.E., Gibson, F.L., Burton, M.P., Petersen, E.H., and Pannell, D.J. (2013). Non-market valuation: usage and impacts in environmental policy and management in Australia,  Australian Journal of Agricultural and Resource Economics (forthcoming). Journal web page ♦ Pre-publication version at IDEAS

255 – Science communication: The Matrix

Here is a wonderful example of how to communicate a fairly dry scientific concept in a way that is clear, engaging and entertaining.

It’s a video created by Don Driscoll, an ecologist from the Australian National University (and a co-member with me and others of the Environmental Decisions Group). The topic is “the matrix” – the areas that surround patches of remnant native vegetation. You mightn’t think this sounds like a promising way to spend four minutes of your time, but check it out. I think you’ll enjoy it.

Don’s done a wonderful job. He created it on his kitchen table at home over the course of a couple of weeks, to the consternation of his family! Because it’s an animation, it required a lot of painstaking work to put it together. Just as impressive, though, is the creativity that went into the story line and the script. If the topic was a bit more sexy, I reckon it would go viral. Look out Psy.

Watch it at YouTube here, or click below.