RMIT School of Global, Urban
and Social Sciences
Environmental Economics
Lecture 31 March 2015
The bush saved by the Warkworth decision
The different aspects of reality
Let
us imagine we have with us in the lecture theatre a tree. Let’s make it a
special tree.
Perhaps
the rarest eucalypt is Eucalyptus recurva - discovered in the 1980s and also
known as the Ice Age Gum or the Mongarlowe Mallee. It is a mallee, with many
stems sprouting from a single lignotuber (underground root ball). The species
is known from only four sites on the southern tablelands of NSW - three of the
sites having just a single individual, and the other having two. Some of
these five individuals are genetically identical.
The
oldest of these plants, near Windellama, south east of Goulburn, is considered
to be 13,000 years old and a relic of the ice age. It is probably the oldest
plant on Earth.
Because
of the plant's extreme rarity, the exact locations of each known specimen is a
closely guarded secret - although all are on private property.
There are
different ways of appreciating this tree. A physicist might be able to tell us
(although it would be hard) all the atoms and compounds which make up this
tree. A logger might be able to estimate the precise wood volume it would
yield, and an economist the value of that timber. A poet or artist might see in
the tree inspiration for art works. A botanist will be able to tell us some of
the things I’ve already mentioned – the species of the tree, and what is unique
about it. A zoologist to tell us what animals shelter in the tree, and perhaps
something of the relationship between animal life and the tree. The tree might
be a special meeting place – with a particular social importance. It might have
legal significance, and a lawyer can tell you what the rules are that protect
it. Or it might be in a water catchment, and have an important role in the
production of clean water – something the hydrologist can tell us about.
Each of these
perspectives is valid, but the reality of the tree cannot be reduced to any one
of them.
If we try to
reduce reality to one of its aspects, we lose a great deal. So a Freudian will
have a particular take on human relationships, but it would be a distortion to
think this is all there is. A behaviourist – same thing. A Marxist will see
things in terms of the relationship between the factors of production and the
production process, and this is a valuable insight – but it is only one aspect
of reality.
Barry Lopez, the
great nature writer, wrote this about our appreciation of land:
Whatever evaluation we finally make of a
stretch of land, however, no matter how profound or accurate, we will find it
inadequate. The land retains an identity of its own, still deeper and more
subtle than we can know. Our obligation toward it then becomes simple: to
approach with an uncalculating mind, with an attitude of regard. To try to
sense the range and variety of its expression— its weather and colors and
animals. To intend from the beginning to preserve some of the mystery within it
as a kind of wisdom to be experienced, not questioned. And to be alert for its
openings, for that moment when something sacred reveals itself within the
mundane, and you know the land knows you are there.
- Barry Lopez Arctic Dreams
Today we see the
economic aspect of life dominant in discourse. The slightest change in economic
indicators – the sharemarket index, the unemployment level, the inflation rate,
the value of the dollar – will be news.
According to the
Australian Accounting Standards ‘fair value’ is:
9.
… the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
But how do we
value our tree under that standard, when it is not allowed to be bought or
sold?
Let’s focus this
further. According to the Wildlife Act
1975 (Vic):
45 Acquiring etc. threatened
wildlife
(1) A person must not buy, sell, acquire,
receive, dispose of, keep, possess, control, breed, process, display, take
samples from or experiment on threatened wildlife.
Penalty: 240 penalty units or 24 months
imprisonment or both the fine and imprisonment and an additional penalty of 20
penalty units for every head of wildlife in respect of which an offence has
been committed.
Since it is an
offence to buy or sell threatened wildlife, it must follow that the price for
such wildlife in the fair market would be nil.
Therefore,
according to Australian accounting standards, protected wildlife has no value
at all.
Yet many people
in the community would regard it as having a value.
We are here
meeting two different ways of viewing the value of something in the world. How
is that paradigm divide to be bridged?
The Courts
We have a
Westminster system of government in Australia. Under this system, government is
divided into three arms – parliament, executive and judiciary.
The judicial arm
of the government comprises the courts.
Under the
doctrine of separation of powers, the three powers are the legislative power to
make laws; the executive power to carry out and enforce the laws; and the
judicial power to interpret laws and to judge whether they apply in individual cases.
In the paper
included in the course work, I have included a number of case studies of the
judicial process being used to silence community groups.
There are also
examples of the courts being used to make important advances in the law.
Mabo
In 1992 the High
Court delivered judgment in the Mabo case. This was a landmark decision which
recognized native title. The court found, contrary to previous decisions of
lower courts, that native title existed, and was based on the traditional
connection to or occupation of the land, and rejected the doctrine of terra nullius, which had fantasized that
Australia was empty and unoccupied when Europeans arrived and established
settlement here.
Once this
decision was made, parliamentary legislation to deal with the uncertainties
which then arose was necessary – but the courts took the lead.
In 1996, the High
Court extended the Mabo doctrine when it delivered the Wik decision, which held
that the grant of a pastoral lease did not confer rights of exclusive possession,
and would not necessarily extinguish native title.
This prompted the
Howard government to introduce legislation which significantly wound back
native title.
The Warkworth Case
IN 2010 Warkworth
Mining Limited – a subsidiary of Rio Tinto – sought to extend its mining
operations near Bulga in the Hunter Valley. The proposal involved clearing 766
hectares of endangered ecological communities, remove an entire ridge, and
undertake extensive open cut coal mining, which was to continue to 2031.
The NSW Minister
approved the application on 3 February 2012.
The local
residents then appealed to the Land and Environment Court.
The appeal raised
questions of biological diversity, of noise and dust, and social impacts. Against
this, Warkworth argued that huge economic benefits would flow if the mine
proceeded.
So far, this is a
familiar scenario – two different types of argument, in different spheres,
never quite meeting each other.
The economic
benefits of the extension as projected in the Rio Tinto’s two economic
assessments were huge: an input-output analysis (I-O analysis) put the figure at an additional $16.8 billion in
output and 44,675 jobs in the Hunter Region (where jobs are defined as lasting
for one year full-time) as compared to the base case.
A cost benefit
analysis (CBA) concluded that the
total net production benefit would be in the order of $1.97 billion, with
Warkworth, its shareholders and the NSW and Commonwealth governments standing
to benefit the most.
This kind of
analysis had never been questioned by environmentalists in a case like this.
The argument had been that the other losses were worth more.
At this point the
opponents changed the game. They called economist Richard Denniss, the
executive director of the Australia Institute, who pulled apart Warkworth’s
analysis.
In the end the NSWLEC,
relying on the expert evidence from Richard Denniss, determined that neither
the I-O analysis nor the CBA adequately considered the principles of
ecologically sustainable development, and severely criticised both economic
models on their methodologies. Preston CJ concluded that both models were, at
best, only a means of bringing to attention some
of the relevant environmental, social and economic matters a decision-maker
must consider when determining whether or not a project should be approved.
He rejected the
application to extend the mine. The NSW government and Rio Tinto appealed to
the Court of Appeal in NSW. That appeal was dismissed. The mine will not go
ahead.
The NSW
government responded to the Warkworth decision by amending the State
Environment Planning Policy 2007 (SEPP)
such that economic benefits – employment generation, expenditure, and royalties
– must now be the principal consideration where mining developments are
concerned.
But even this
would not have saved the Warkworth mine – Rio Tinto had no credible evidence of
the economic benefits they trumpeted.
Should we value the other factors?
Some groups have
spent significant sums trying to place a dollar value on the loss of amenity
and loss of biodiversity from developments of this kind.
While this can
help insert the environment into the discourse of economics, and for that
reason can make an economically-focused polity take notice, this is a dangerous
course because it condemns us to argue only in dollar terms – when often we
really want to uphold some values which are not readily measured in money.
So for example,
the ACF have embarked on large projects to place an economic value on some
natural assets – such as the Hattah Lakes, forests, and the like.
If we carry out
this sort of study, the figures may or may not provide a greater money value to
the protected asset than for any proposed development using that asset. If we
are to use the higher value to argue that a development should not go ahead,
are we not also conceding that if there is a lower money value for the national
park or forest or alpine meadow left as it is than for any given development, then
the option with the greatest money value wins.
I would still
like to protect our natural environment, even in the face of arguments that we
could make more money destroying it.
Also, there are
many in the community who simply will not believe the figures that we come up
with for the value of these things in money terms – for their value is
essentially not something reducible to mere finance.
How do we put a
figure on love? On justice? On peace? On human rights? Any attempt to do so
will be very flawed, and yet we all believe these things are valuable – even
though war can generate economic activity, injustice and exploitation in violation
of human rights can bring great profit, and most would give a great deal of
money not to have Gina Rinehart’s family misery.
Courts often have
real difficulty dealing with environmental issues, largely because there is no
party to the proceedings who can advocate the interests of the Earth.
Should nature have its own legal rights?
If we only value
things that can be exchanged for money, we will fail to value many things which
are of importance.
If the only
measure of global good is the rights and welfare of our species, we have an
inadequate standard. The countervailing considerations of prosperity from
selling coal or from felling trees or from releasing dangerous chemicals may be
all too readily utilized against the benefit of the Earth. Human wellbeing will
have short term and long term perspectives. How do we decide which is more
important? We can call for intergenerational equity – not leaving a mess for
our children and grandchildren – but when they are not yet able to actively
advocate their interests, this may not be sufficient when realpolitik interposes.
Today I believe
it has become essential that our human rights discourse be informed by
recognition of the rights of the Earth itself.
In fact, many
countries[1]
have begun to institute laws that give fundamental protection to the
environment.
France has a
Charter for the Environment, which was incorporated in the constitution in
2005. It is a significant document. Article 1 reads:
Art 1 – Each person has the right
to live in a balanced environment which shows due respect for health.
It is still
focused on the rights of humans, but it contains strong provisions of a kind we
do not enjoy in Australia.
But Ecuador – a
comparatively small Latin American country only slightly larger than Victoria
and with a population of 15 million – has altered the entire international
debate. In 2008 the people of Ecuador by an overwhelming 63% majority, voted
for a new constitution - the first in the world to comprehensively recognise
ecosystem rights and nature rights:
Nature or Pachamama, where life is reproduced and exists, has the right to exist, persist, maintain and regenerate its vital cycles, structure, functions and its processes in evolution.
Every person, people, community or nationality, will be able to demand the recognitions of rights for nature before the public organisms.
Much of the
motivation for this came from widespread outrage at Chevron dumping millions of
tonnes of toxic waste into the Amazon as part of its mining operations. In Spanish
the new document is called la ley de los
derechos de Madre Tierra – the law of the rights of mother earth[2].
It refers to “Pachamama” the indigenous Earth mother figure.
Key thinking
for this new constitution was done by the local indigenous community and NGOs.
The process was remarkably rapid – from beginning work on this constitution to
its passage took about 18 months.
Chevron reacted
strongly. Its lobbyist told Newsweek:
The ultimate issue here is Ecuador has mistreated a U.S. company. We can't let little countries screw around with big companies like this - companies that have made big investments around the world.
It did not end
there. Neighbouring Bolivia’s first indigenous president, Evo Morales,
announced his country would follow suit with “The Law of Mother Earth” based on
the indigenous belief that all the inhabitants of nature are created equal. As
President Morales put it:
Either capitalism dies, or Mother Earth dies. We choose Pachamama,or death.
Bolivia’s Law of Mother Earth was passed on 22
April 2011. Other nations, such as Nepal, have expressed interest in following
suit.
The law in
Australia has frequently failed the environment. I think some bold vision is
necessary. Legal recognition of the rights of Mother Earth would be a great
step forward.
Our tree can be
appreciated in different ways from the perspective of different disciplines.
And so if we are to protect the environment we must draw on all the different
aspects of human civilization – amongst other things, philosophy, art, science,
religion, architecture, economics and the law. It is for us, as humans who
build our civilization, to ensure that each aspect values the things which we
consider important.
[1] eg S 24 of the Constitution of South Africa (a right to have the environment
protected), Article 24 of the Basic Law
(ie the Constitution) of Germany (guarantee to the rights of animals), and
UNESCO’s Earth Charter
[2] The relevant provisions are as
follows:
Rights for Nature
Art. 1. Nature or Pachamama, where life is reproduced and exists,
has the right to exist, persist, maintain and regenerate its vital cycles,
structure, functions and its processes in evolution.
Every person, people, community or
nationality, will be able to demand the recognitions of rights for nature
before the public organisms. The
application and interpretation of these rights will follow the related
principles established in the Constitution.
The State will motivate natural and
juridical persons as well as collectives to protect nature; it will promote
respect towards all the elements that form an ecosystem.
Art. 2. Nature has the right to an integral restoration. This
integral restoration is independent of the obligation on natural and juridical
persons or the State to indemnify the people and the collectives that depend on
the natural systems.
In the cases of severe or permanent
environmental impact, including the ones caused by the exploitation on non
renewable natural resources, the State will establish the most efficient
mechanisms for the restoration, and will adopt the adequate measures to
eliminate or mitigate the harmful environmental consequences.
Art. 3. The State will apply precaution and restriction
measures in all the activities that can lead to the extinction of species, the
destruction of the ecosystems or the permanent alteration of the natural
cycles.
The introduction of organisms and
organic and inorganic material that can alter in a definitive way the national
genetic patrimony is prohibited.
Art. 4. The persons, people, communities and nationalities will have
the right to benefit from the environment and form natural wealth that
will allow well-being.
The environmental services cannot be
appropriated; its production, provision, use and exploitation, will be
regulated by the State.
