Category Archives: Politics

285 – The collapse of North Atlantic Cod

Humanity has a terrible track record when it comes to managing fisheries. There are many examples where over-fishing has led to the collapse of a fish population. One of the most spectacular collapses was the cod fishery in the north-west Atlantic.

Prior to the 1950s, cod had been fished off Canada for hundreds of years without any major decline in fish stocks. From the 1950s, fishing technologies improved and people got greedy.

“The decline began with the arrival of large factory stern trawlers in the late 1950s and the exploitation rate increased dramatically as these vessels were able to harvest cod offshore in winter months and at places where they were never previously caught,” (Grafton et al., 2009).

The numbers of cod caught by Canadian firms skyrocketed in the 1960s, crashed in the 1970s, recovered slightly in the 1980s and crashed to close to zero in the early 1990s.

cod_graph

http://www.grida.no/

The importance of the fishery to local economies in eastern Canada meant that their government was reluctant to take strong action to reduce fishing effort until it was too late. Right to the end, the government failed to respond as dramatically as it should have.

In 1992 they set a quota for cod catch that was more than the total amount caught the previous year. However, this quota was a foolish fantasy. By this stage the fish stock had been reduced to about one percent of what it was before the over-fishing started – there were almost no fish left that could practically be caught. So despite the quota, the government decided to impose a complete moratorium on cod fishing for two years, and since then the catch has been minimal compared to historic levels.

Ironically, the government’s delays in taking strong action were meant to benefit fishers, but this backfired terribly, resulting in huge job losses. The cod fishery had supported jobs for around 35,000 fishers and fish plant workers, although it should never have been that high, of course.

The dramatic reduction in fishing since 1992 has allowed cod stocks to recover a bit, but they remain very scarce compared to their earlier levels. In 2013 there were 10,500 tonnes of Atlantic Cod caught off eastern Canada, about 1% of the peak catch of 810,000 tonnes in 1968.

The loss of a dominant large fish from the marine ecosystem of the north-west Atlantic has had big flow-on effects, resulting in what ecologists call a “trophic cascade”, meaning that the populations of species lower down the food chain are dramatically altered.

codWe learn from our mistakes, if we’re sensible. In a few countries, fisheries management has improved significantly since the cod disaster. For example, New Zealand and Australia are relatively good at it compared to most countries. But globally, we are continuing to over-fish, to our own detriment. According to a 2008 report by the World Bank, “the difference between the potential and actual net economic benefits from marine fisheries is in the order of $50 billion per year – equivalent to more than half the value of the global seafood trade.” And “If fish stocks were rebuilt, the current marine catch could be achieved with approximately half of the current global fishing effort.”

Even in Australia there is more that we could do to secure our fish stocks in the long term. For example, Grafton et al. (2006) find that marine reserves where fishing is banned (Marine National Parks in our current parlance in Australia) can provide financial benefits to fishers in the long run, largely by accelerating the recovery of fish stocks in surrounding waters following an unexpected decline or “shock” (e.g. due to an environmental factor, or poor management).

If a Marine National Park is in place, fishers miss out on fishing in the reserve areas, but in the long run they are likely to be better off due to increased resilience, unless the frequency of shocks is really low.

Grafton et al. (2009) showed that a sizable no-take marine reserve in the north-west Atlantic (e.g. covering 40% of the total cod population) would have prevented the catastrophic crash in cod numbers, and would have been highly beneficial to fishers. However, the current review of zoning in our marine reserve system in Australia seems to be shaping up to reduce the planned area of Marine National Parks. I don’t think that would be in anybody’s interest.

Further reading

Grafton, R.Q., Kompas, T. and Van Ha, P. (2006). The Economic Payoffs from Marine Reserves: Resource Rents in a Stochastic Environment, The Economic Record 82(259), 469-480. Journal web site ♦ Ideas page

Grafton, R.Q., Kompas, T. and Van Ha, P. (2009). Cod today and none tomorrow: the economic value of a marine reserve, Land Economics 85(3), 454-469. Journal web site ♦ Ideas page

World Bank (2008). The Sunken Billions. The Economic Justification for Fisheries Reform. The World Bank. Washington D.C. Summary here

283 – Whose environmental values matter?

One of my pet issues is how to decide which the environment projects should receive public funding. One of the factors influencing this decision is (or should be) the importance or value of the environmental outcomes that would be delivered. But whose judgements about importance or values should be taken into account?

There are at least three groups whose values might be influential:

  1. Environmental experts.
  2. The general public.
  3. Politicians.

Environmental experts, such as ecologists, are crucial to decisions about environmental investments. We need their advice about threats to environmental assets, and about the effectiveness of different ways of managing them. However, they often also provide advice on priorities, which are, at least implicitly, value judgements. In my observation, many environmental scientists don’t appreciate how much of their own preferences and values they are injecting into this advice. This matters because studies have shown that the preferences of environmental experts are often rather different from the preferences of the general public (e.g. Seymour et al. 2011; Rogers 2013). The experts tend to be greener, and they emphasise factors that don’t matter as much to others.

seagrassThe general public’s views about the relative importance of different environmental outcomes should be considered because (a) they pay the bills and (b) this is a democracy. The way that economists tend to approach Benefit: Cost Analysis implies that values expressed by the general public are the only values that should matter in these decisions. I don’t agree with that because, like many environmental scientists, I think that the ignorance of the general public is an important consideration. For example, people may feel that sea grass is not very important, but only because they are unaware of its contributions as a source of food and shelter for many marine organisms, or of its roles in stabilising the sea floor and maintaining water quality. Basing decisions on people’s expressed values could result in outcomes that they themselves are not happy with. At least some in the community are aware of their ignorance and feel that their own views are not sufficient to base decisions on (e.g. Clark et al. 2000).

Finally, there are politicians. Ministers have more influence than anybody else in the determination of environmental decisions. In principle, their decisions should reflect community preferences and expert advice, and sometimes they do. However, their own preferences and values also impinge. For example, this was starkly evident in the Abbott government’s decision making about climate change.

Although environmental values are crucial to sound public decision making, there is no clear-cut “correct” way to combine the values of these various groups. Somehow we need to factor in the preferences of the general public, but also account for the greater knowledge of experts, even though we know that their personal values may be different. (Politicians’ views should not matter in principle but inevitably will in practice.)

The INFFER framework (Pannell et al. 2012 – www.inffer.com.au) embodies a particular way to combine public and expert input when prioritising environmental projects. It’s not the only option, of course, but it does work quite well at bringing the values discussion to the surface.

Further reading

Clark, J., J. Burgess, and C. M. Harrison. 2000. I Struggled with this Money Business: Respondents’ Perspectives on Contingent Valuation. Ecological Economics 33 (1), 45–62. Journal web site

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

Rogers, A.A. (2013). Public and expert preference divergence: Evidence from a choice experiment of marine reserves in Australia, Land Economics 89(2), 346-370. Journal web site

Seymour, E., Curtis, A., Pannell, D.J., Roberts, A. and Allan, C. (2011). Same river, different values and why it matters, Ecological Management and Restoration 12(3), 207-213. Journal web site

280 – Lomborg at UWA

The news of Bjorn Lomborg establishing the “Australian Consensus Centre” at the University of Western Australia has generated plenty of media attention and much discussion within the University.

Some people within UWA are concerned about the University becoming associated with such a controversial and divisive figure. They are worried about the University’s reputation, and about the perception that his work is scientifically flawed.

There has also been commentary on the fact that the Australian Government could find $4 million for this initiative at a time when government funding in general (and university funding in particular) is under such great pressure.

I had no idea that the UWA arrangement was in prospect until Lomborg dropped in to meet me briefly the day before it was announced a couple of weeks ago. I had not had any contact with him in the past. I found him to be very personable and he asked sensible and genuine questions about environmental issues in Australia.

I have been aware of Lomborg’s work since his 2001 book The Skeptical Environmentalist (TSE), with its message that many environmental problems are not as bad as we’d been led to believe, and some are getting better. I’ve also been interested in his writings on climate policy, and his more-recent initiative, the Copenhagen Consensus, which sets out to prioritise a set of major international policies. The latter will be adapted for a new set of policies in the UWA initiative.

tseAll three of these areas of work have generated controversy and criticism. I’ve read many of the critics, particularly in the early days of TSE when the criticism was raging.

I split the criticisms into two types: identification of errors of fact and criticisms of what he does with the facts (interpretations and judgements). There were some errors of fact in TSE, but not as many as claimed. In my judgement, many of the claimed errors were misinterpretations, misunderstandings or misrepresentations by the critics, quoting him out of context, highlighting trivial issues, and so on. People who didn’t like his conclusions went out of their way to find the smallest hint of an error and blow it up. There is a web site called Lomborg Errors, which includes numerous so-called errors from TSE, but when I read it I was singularly unconvinced by many of them. In fact I found myself laughing out loud at some of them. Given the huge scope of the book, the number of significant, genuine errors is remarkable small, really, and they don’t change the general message of the book. But the myth of there being numerous serious errors got well established, and is accepted as received wisdom by many.

I didn’t agree with everything in TSE. Some parts were less convincing, and it seemed too optimistic to me in some respects. These were generally not errors of fact, but differences in judgement about what they implied or what should be done about them.

Lomborg has faced plenty of disagreement about his policy recommendations, particularly in relation to climate change. He argues that the political barriers to pricing carbon at a price level that will achieve the desired outcomes are so great that we may as well not bother with it. Instead he advocates a large public investment in development of new technologies, such as for renewable energy. This position is obviously at odds with most people who are concerned about climate change, but my own view is that his pessimism about the politics is justified (reinforced by the messages coming out of India recently) and that the technology route is likely to be the only approach with any real chance of averting serious climate change. I’ve written about this here.  Interestingly, his position is not that of a climate sceptic/denier, although he is sometimes characterised as being one.

Looking around the web, I see some scientists arguing that climate change will be greater and more costly than Lomborg has concluded in his climate book, often coupled with attribution of dubious motivations and associations. Perhaps he has made errors here and underplayed some potential outcomes – I haven’t taken the time to evaluate the claims. Nevertheless, even if he has, it doesn’t affect the logic behind his recommended policy approach.

The Copenhagen Consensus work, a version of which he will bring to UWA, is somewhat different in nature. His contribution is to set up and manage the process, bring people together and publicise the results. The judgements made in the process are not his judgements, but those of panels of people (usually senior economists) responding to evidence and cases put by commissioned experts. The focus is on identifying priorities for policy action. From a set of defined policies, which are the ones that are likely to have the greatest benefits for mankind? The explicit focus on prioritisation is critical, but is often missed by people advocating for a particular policy.

The controversy here arises because carbon-pricing policies consistently come out as being much lower in priority than other things like improving childhood nutrition in developing countries and fighting infectious diseases. In my view, this result isn’t a surprise, considering the likely benefits, feasibility, time lags and costs of the options. But it adds to the impression that Lomborg is a climate “contrarian”, even though the results are not actually generated by him.

Some have argued that the concept of prioritising these policies is wrong – we should just implement them all. I think that’s very naïve. It’s not how the world works. None of the policies being evaluated is currently in place. It’s a huge, difficult, risky task to try to get a major new policy adopted, especially when international agreements are needed. Governments have to carefully prioritise how to spend their financial resources and their political capital.

It’s very interesting that Vice Chancellor Paul Johnson has signed up to the University hosting this new centre. He must have anticipated that there would be controversy. I think it’s positive that the University hasn’t been scared off. A university is a good place to do work that challenges people to think differently.

Overall, if it can sufficiently avoid the taint of politics (which might be tricky), I think the initiative could make a worthwhile and interesting contribution to the policy debate in Australia. But also there will no doubt be aspersions cast against Lomborg and UWA.

274 – Tokenistic policies

Many government actions are tokenistic. They are too small to really make a difference, but they are pursued anyway. Why do governments do this, and how do they get away with it without provoking public anger?

Listening to ABC Radio National’s breakfast program this week, I heard an interesting interview with Professor Hugh White from the Strategic and Defence Studies Centre at the Australian National University. He was arguing that the current response to the IS threat in Syria and Iraq is too small and constrained to achieve any significant impact on the progress of IS.

“If you find yourself, as I think we do today, undertaking military operations without making them big enough to give yourself a reasonable chance of success, you’re just going through the motions and you’re better off not doing it.”

“Going through the motions doesn’t make strategic sense and I don’t think it makes moral sense either.”

jetWhat struck me about this argument was its similarity to my own argument about some environmental investments by governments. Starting with dryland salinity, I argued that our investment was spread too thinly across too many investments for any of them to be successful. Reinforcing this, the Australian National Audit office concluded that the level of change in land management in well-monitored cases was about one percent of the level needed to achieve stated targets.

More recently, I’ve been researching other aspects of water quality (nutrients and sediment) and there too governments tend to hugely under-fund projects. For example, funding to protect the Gippsland Lakes in Victoria from nutrient and sediment pollution is around 2% of the level that would be needed to achieve the official target of a 40% reduction. (See PD210)

One question is, why do governments do this? The reasons probably vary from case to case, but I think there are two main factors. The first is, to be seen to be doing something. At least in some cases, the government realises that the funding allocated is woefully inadequate, but they proceed with the policy anyway because they think there is electoral advantage in being seen to be doing something, rather than nothing. So this is a cynical political motive.

In other cases, I think the reason is ignorance, combined with a lack of evidence and analysis in the policy-development phase, combined with a tendency towards excessive optimism about the effectiveness of a proposed policy (PD213). That was the problem with the salinity policy. Lots of people thought it was a good idea to have a policy to combat such a prominent national problem, but very few people had enough knowledge of the science and economics of salinity to recognise that the policy was badly misconceived and would achieve little. The policy approach adopted was an evolution of earlier programs (the National Landcare Program and the Natural Heritage Trust) rather than one designed after careful analysis of what it would really take to substantially reduce the impacts of salinity.

This second reason is, perhaps, less offensive than raw cynical politics, but it’s still terrible.

Another interesting question is, how do they get away with it? Why is there not more public anger directed at these politically motivated or ill-conceived policies? Here are some possibilities.

Complexity. The issues I’ve talked about are complex and multi-faceted. It can be difficult even for experts to work out what policy response would be most effective. Most people lack the expertise to judge whether any particular policy response will be effective. They don’t have the time or inclination to learn enough to make those judgements. They therefore trust governments to do what they say they are doing.

Time lags. For some of these issues, the effects of current management would not be felt for some time – years or even decades in the future. By then, it’s hard to make the connection back to policies that were put in place previously, and judge whether they made a positive difference.

Intractability. Some of these problems could be solved but only at exorbitant expense, while others can’t be solved at all in any practical sense. I suspect that governments sometimes recognise this and then implement the least costly policy they think they can get away with politically.

Communication challenges. I was interested that, in her interview with Hugh White, the program’s host Fran Kelly did not pursue questions about the tokenistic nature of the policy, focusing instead on other issues. Perhaps she felt the argument was too complex or subtle to be comprehended by people eating their Weet Bix. Or perhaps she herself didn’t recognise its significance.

Sometimes an underfunded policy does explode into political controversy because of its ineffectiveness, but usually they don’t. Normally, they drift along, spending money and going nowhere much. They might receive an adverse review from some government committee or inquiry, but governments tend not to respond substantively to those sorts of reviews if they think they can get away with it.

Overall, policy tokenism is an understandable but regrettable aspect of our system of democratic government. It is hard to combat, but sometimes can be changed by outside pressure, either from the public or from vocal expert commentators.

Further reading

Pannell, D.J. and Roberts, A.M. (2010). The National Action Plan for Salinity and Water Quality: A retrospective assessment, Australian Journal of Agricultural and Resource Economics 54(4): 437-456. Journal web site here ♦ 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

267 – Budget 2014 and the environment

Last week’s budget included funding cuts to many areas of government, and the environment certainly was one of the areas to suffer. There were some new initiatives, but they were outweighed by what was taken away. 

The most substantial environmental initiative in the budget is the Emissions Reduction Fund (ERF), a key part of the government’s election promise of a Direct Action climate policy. The headline commitment is A$2.55 billion, although spending in the next three years will be only A$300 million, A$355 million and A$417 million – 30% less than the amounts announced by Environment Minister Greg Hunt as recently as November last year.

The ERF is intended to replace the carbon tax, which is expected to raise more than A$7 billion in 2013-14. It is no secret that economists generally don’t support this policy change, viewing it as a move from a relatively efficient to a relatively inefficient mechanism that will worsen the deficit.

volunteersAnother of the key initiatives also amounts to give and take. There is A$525 million over four years for the Green Army (another election promise), which will undertake a range of environmental work. But this is almost fully offset by cuts of A$484 million over five years to the Caring for our Country programme and Landcare, now merged into a new National Landcare Programme.

Of the A$1 billion over four years that remains in the merged programme, some is tied to other election commitments, such as a nature corridor in Western Sydney (A$7.5 million), a Whale and Dolphin Protection Plan (A$2 million), and the 20 Million Trees programme (A$50 million).

These changes amount to a substantial cut in funding to Australia’s 50 regional natural resource management bodies – a fate they also suffered after the last change of government in 2007.

On the face of it, the budget looks to have delivered on an election promise to safeguard Australia’s most iconic environmental asset, the Great Barrier Reef, with a new Reef Trust set to provide A$40 million over four years.

But while this sounds respectable, it is a very small percentage of the amount needed to achieve existing targets for the reef. It is also partly offset by a A$2.8 million cut (over four years) to the Great Barrier Reef Marine Park Authority.

There are lots more cuts too. The 4900 staff employed in the environment portfolio will be reduced by 300, although that is fewer than might have been feared.

Then there are numerous cuts to existing programs. The most affected areas, predictably, are those related to climate change, including carbon storage, renewable energy and alternative fuels. The Australian Renewable Energy Agency is to be wound up, saving A$1.3 billion over five years starting in 2017-18. Funding of A$1 billion remains to support existing projects. 

Another large saving is a A$459 million cut to the Carbon Capture and Storage Flagship Programme, also commencing in 2017-18.

Climate Spectator has confirmed that an earlier promise of A$500 million for a One Million Solar Roofs program has been quietly dropped. Similarly, there is no sign of the promised A$50 million for Solar Schools, and the promised Solar Towns program has been dramatically scaled down, from A$50 million to A$2.1 million.

Biodiesel and ethanol will both be subject to increasing excise rates, growing to 50% of the “energy content equivalent tax rate” (the scale by which fuels are taxed according to how much energy they contain) by 2021. This will reduce the incentive for people to prioritise these fuels over fossil fuels.

Meanwhile, there are various cuts to fuel efficiency and green technology measures, including:

  • The National Low Emissions Coal Initiative (A$17 million)
  • The Clean Technology Programme (A$45 million)
  • The National Greenhouse and Energy Reporting Scheme (A$2 million)
  • The Ethanol Production Grants program (A$120 million over six years)
  • Grants to support algal synthesis and biofuels (A$5 million)
  • The Cleaner Fuels Grants Scheme
  • Water and science

Water is also a target for cuts, with the abolition of the National Water Commission (A$21 million over four years) and savings of A$408 million in the Sustainable Rural Water Use and Infrastructure progam, leaving that program with A$4.5 billion over 10 years.

These savings include reduced funding for water buyback, with the government prioritising water recovery through infrastructure projects. In this, the government has chosen to prioritise a highly inefficient method to generate water, in response to political pressure from the agriculture sector. As with the changes to climate policy, this policy conflicts with the government’s aim to be seen as a sound economic manager.

Environmental research funding will probably be affected by cuts to CSIRO (A$111 million), the Cooperative Research Centre program (A$80 million) and the Australian Research Council (A$75 million). It will definitely be affected by cuts to the National Environmental Research Program (A$21 million), the Office of Water Science (A$10 million) and the Australian Institute of Marine Science (A$8 million).

Finally, the decision to resume indexation of the fuel excise will have an incidental effect on the environment. One cannot help being struck by the irony of this measure being introduced by a government that was so highly critical of the carbon tax and the burden it places on the community.

The initial cost of this change will be relatively minor (A$280 million in 2014-15), but it will grow rapidly year by year (to A$1.85 billion by 2017-18). Before long, its annual cost may exceed that of Australia’s carbon pricing arrangements, depending on how prices change in Europe’s carbon market, which the previous government had signed up to.

Not that I’m being critical of the decision to index the fuel excise. As well as generating revenue, it will reintroduce at least some of the incentive to reduce fossil fuel consumption that will be lost if the Senate approves the government’s plan to dismantle the carbon pricing system.

That point aside, it is not a good budget for the environment – but then that was expected. In relative terms, the environment probably hasn’t been hit any harder than other areas like health and education.

A version of this article was first published in The Conversation on 14 May 2014.

I did an interview on ABC Radio National (Bush Telegraph program) on 16 May 2014 about Landcare and the Budget. You can listen to it here. (My bit starts about half way through the item.)