Environmental impact assessment: is it efficient?

For anyone who's still interested, some more thoughts on whether it's worthwhile to carry out environmental impact assessment for large projects that make a relatively minor contribution to a large problem...

Following last week's discussion on EIA, I think it’s useful to look at the economics of EIA, that is, compare the economic costs and benefits of assessing projects, granting or refusing consent and imposing conditions.

The costs are:

• the cost of the assessment process: the cost to the project proponent of engaging consultants to do an initial assessment of the environmental impact and prepare an environmental impact assessment; the cost to government of considering the impacts, making its own enquiries where necessary and making a decision about consent and conditions; and the cost to third parties of informing themselves about impacts and making submissions to government.
  
• the cost to the proponent of the project being refused or the cost of taking extra measures to comply with conditions of consent.

The benefits are the reduction in external environmental costs imposed on the community by the proposed development. Those benefits arise either because (in extreme cases) the development is refused consent or because conditions are imposed which ameliorate negative impacts of the development.

EIA is therefore efficient from a cost-benefit point of view when the negative externalities that are removed because of conditions (or consent being refused) are greater than the cost to the proponent of complying with the conditions plus the cost to government, the proponent and other interested parties of going through the EIA process.

The benefits are therefore likely to outweigh the costs when the negative impacts of the development are easily identified and can be reduced at a reasonable cost. The EIA process for the bald hills windfarm (see my earlier post) was a classic case where the EIA process could have been efficient but where the decision in my opinion was not. The relevant environmental impacts were the impacts on the orange-bellied parrot and could be estimated as the death of one bird on average every 109 years. I don’t know the cost of the assessment process but the cost of the decision was very substantial: the Minister refused consent to a substantial and otherwise commercially viable energy development. Whether the benefits of that decision outweigh the costs can be debated but, as Harry Clarke has pointed out, the costs of the decision are certainly far higher than the costs of imposing conditions on the development that could have had a far greater benefit for the survival of the parrot: the parrot can be bred in captivity and returned successfully into the wild at a quite modest cost: one that the windfarm could certainly have afforded. This measure could quite cheaply have benefited the parrot population by two or three individuals per year. Compare that to an expensive decision that benefits the population by, on average, one individual every 109 years.

When the environmental impact that you’re worried about is greenhouse emissions from downstream use of a product, I doubt that EIA is an efficient way to attempt to reduce those impacts. First, as discussed last time, the impacts from this particular development are difficult to assess so the assessment process is likely to be difficult and costly. Secondly, the conditions that can be imposed are unlikely to deal with the problem. The only substantive way to reduce emissions from burning the coal from a mine is not to mine it (other than – perhaps - placing some conditions on how it’s processed to, say, reduce the fuel’s moisture content). So the only effective decision the government can make is to approve or not approve the mine. Conditions about how the fuel is used etc really need to be placed on the user of the fuel. As discussed yesterday, since power stations can source their coal from anywhere, it is questionable whether refusing consent for a mine would reduce greenhouse emissions in any case.

Cumulative impacts

A closely related issue is that of ‘cumulative impacts’. This is the ‘death by a thousand cuts’ problem: each development has only a small, possibly trivial, impact on its own but collectively the impact is serious. Assessment of each project on its own fails to protect us from these serious cumulative impacts.

The solution, according to the applicants in the Isaac Plains case, is that the ‘cumulative impacts’ contributed to by a proposed development should be considered by the decision-maker. As I’ve discussed before, this is the basis on which the federal Environment Minister made a decision earlier this year to refuse consent to a windfarm: it would have an impact on the orange-bellied parrot that is trivial on its own. But the impact, in combination with existing and under-construction windfarms, was so serious that the proposed development should be refused: enough was enough and the Minister had to draw a line somewhere.

I’m not sure about this. In principle, a project should be assessed on its own merits. You should compare the costs of this project with the benefits of this project and determine whether the project should go ahead or what conditions should be attached. It seems inappropriate to compare the costs of this project and others like it with the benefits of this project and others like it and then determine whether the project should go ahead or what conditions should be attached – it just seems to be asking the wrong question.

That said, the alternative is not particularly attractive either. Consider a threatened plant affected by development. There are 100 hectares of the plant left. A development proposes to clear 1 hectare of it for some modestly beneficial community infrastructure. The modest community benefits are deemed to outweigh the environmental costs (it’s only one hectare) so the development is approved. Similar developments are proposed again and again and the equation is the same. Imagine that soon there’s only 30 hectares left. Suddenly a project that will bring enormous benefits to the community is proposed but it will involve clearing 10 hectares: a third of the entire distribution of a now critically endangered species. The choice is now difficult: miss out on huge community benefits or push a species to the brink of extinction. Perhaps the choice could have been avoided if, earlier on when 100 hectares were still left, a decision had been made that the cumulative pressures on this plant were likely to be huge over the next few years and so only projects that had either very large benefits or negligible impacts on the plant would be considered.

It is difficult to do this when approving individual projects though. At which stage do you decide that although the benefits of this project exceed the costs of this project, you’ll nevertheless reject the project because, if projects like this keeping being approved, in a couple of years we’ll reach a stage where it’s too costly to approve any more?

The cumulative impacts problem is a big one and EIA is one way of dealing with it. A better way in my opinion is to deal with it at more strategically: either through planning law (eg, zoning certain areas to protect threatened species so that these conflicts don’t emerge) or economic instruments (providing economic incentives to protect and rehabilitate threatened species sites).

And those instruments are a discussion for another day...

Save the whales

The International Whaling Commission wrapped up yesterday and Vincenze and Harry Clarke have good pieces on the issues behind the debate.

Climate change litigation in Australia

Last post I presented the factual scenario underlying a Federal Court decision that was handed down last week. To recap, the federal government is empowered by the Environment Protection and Biodiversity Conservation Act to consider the environmental effect of proposed developments. Specifically, it is required to consider whether a proposed development is likely to have a significant impact on a matter of national environmental significance (which includes world heritage areas among others – see my EPBC Act primer).

Two coal mines were proposed in Northern Queensland, near a World Heritage area containing rainforests and coral reefs. The coal mined from these new mines is mostly intended to be exported and its burning will create annual greenhouse emissions equivalent to one-quarter of Australia’s current annual emissions. Emissions lead to climate change which are predicted to have a devastating impact on tropical rainforests and coral reefs in Australia.

Blake Dawson Waldron has a good summary of what is not a terribly well-written judgment. The applicant in the case argued:

• the Minister’s delegate had not properly considered the ‘downstream’ indirect impacts, ie, damage from climate change from emissions from burning the coal;
• the delegate had not applied the precautionary principle; and
• the delegate had not properly assessed the ‘cumulative impacts’ of coal mining.

As far as I can tell from the judgment, the judge decided that:

• the delegate had considered downstream impacts and he probably didn’t have to anyway;
  
• the precautionary principle isn’t relevant to this decision;
  
• the delegate was not required to look at the cumulative impacts.

Today I’d like to make a few comments and observations about the role of environmental impact assessment (EIA). Tomorrow I’ll look a the economic efficiency of EIA, the use of the precautionary principle and how to look at cumulative impacts.

Environmental impact assessment

As an environmental lawyer, one of the reasons I’m so interested in economic instruments for environmental policy is that environmental law (and traditional environmental impact assessment) does a pretty lousy job at resolving environmental conflicts in many cases. Often it’s just not the right tool.

The reason is that most resource and environmental conflicts involve many players - many sources of a problem, many people affected by those sources: many potential winners and losers. Environmental impact assessment tends to work well when there's one big project that has one or two big impacts that are well defined and understood.

Should governments assess the environmental impacts of projects before approving them? Well, sometimes. Should it assess the greenhouse implications of proposed developments? I’m less sure.

Consider the analytical process of assessing the environmental impact of greenhouse emissions from the burning of coal produced at a proposed coal mine. It’s extremely difficult. What additional emissions will be produced because of this mine? It’s hard to say. If the coal is to be exported, presumably it is to satisfy existing demand. It’s quite likely that the coal burnt would simply have been sourced from some other supplier. If the proposed mine is very large, it’s possible that the additional supply could reduce the world market price of coal, encouraging more to be burnt. But the world market for coal is enormous.

What impact will those additional emissions have on global climate change? What impact will any such increased climate change have on Australia?

Look, it’s not hard to draw conclusions that burning coal produces disproportionately large greenhouse emissions that aggravate climate change causing harm to environments in Australia and around the world, and that burning coal should therefore be discouraged. But the role project-by-project environmental impact assessment is to examine the environmental impact of a particular project. It’s relatively easy to examine impacts on a local environment from a new coal mine, but it’s extremely difficult to examine impacts (locally or globally) from downstream greenhouse gas emissions.

Does that mean we should ignore greenhouse emissions when assessing large projects of this nature? No. But I think we should do it modestly. And it may be that coal mines are not a good target. If it was coal-fired power station, it would be a little different. We could compare its emissions to alternative projects: If we refuse consent to a new coal-fired power station would a lower-emission gas-fired station be built instead? That’s a relevant consideration. We could examine the technology it uses and its likely emissions compared with other new plants being built. We could place conditions on it that require cost-effective measures to be undertaken to reduce its emissions or perhaps even offset them.

It may be that the government can and should consider some of these measures with a coal mine. But it’s more difficult to say 'what is the impact of this project?'.

The difficulty with using project approval to carry out this function is it’s just not very efficient. Hundreds of developments are referred to the federal government each month. Should proponents detail greenhouse emissions for each project and suggest measures to minimise them? Well it’s certainly arguable that they should.

But much more efficient is simply to price greenhouse emissions appropriately, via a carbon tax or emissions trading scheme. Give developers and incentive to reduce emissions themselves. Let them come up with ways to reduce emissions, rather than the government imposing them as conditions.

Of course, this argument is a little trite. It’s all very well to advocate pricing mechanisms, but we don’t have them yet. Isn’t environmental assessment of emissions better than nothing, which is our current alternative? Well yes, I’ll certainly admit that – and that’s why environmentalists are bringing cases like this one. But it’s far from perfect.

What do you think?

Should government project approvals consider greenhouse emissions?

I’m interested in getting readers’ thoughts on the following scenario:

Two coal mines are proposed in Northern Queensland, near a World Heritage area containing rainforests and coral reefs. The coal mined from these new mines is mostly intended to be exported and its burning will create annual greenhouse emissions equivalent to one-quarter of Australia’s current annual emissions. Emissions lead to climate change which are predicted to have a devastating impact on tropical rainforests and coral reefs in Australia.

The federal government is empowered to consider the environmental effect of proposed developments. Specifically, it is required to consider whether a proposed development is likely to have a significant impact on a matter of national environmental significance (which includes world heritage areas among others – see my EPBC Act primer).

Should the government consider the possible environmental impact of emissions from the burning of coal mined from these projects? More generally, should governments be approving or not approving very large coal mines and similar projects based on their greenhouse emissions (or emissions from use of the products they produce)?

The Australian Federal Court on Thursday handed down its decision on this in Wildlife Preservation Society of Queensland v Minister for the Environment. ABC online and Sydney Morning Herald have reports on the decision. The decision itself isn’t very illuminating but I think the issues behind it are fascinating and important.

I’ll give you some of my thoughts in the next couple of days, but I’d really appreciate any of your thoughts in the meantime.

Climate change: the jury is still out?!

I’ve been thinking lately about the disconnect between the available climate science, which strongly indicates that global warming is happening and is dangerous, and the many people who still believe and proclaim that global warming is an environmentalist conspiracy.

The Washington Post recently had an excellent article about the public’s relationship with the science of global warming – it’s a long one but definitely worth a read. And it’s a common theme at the RealClimate climate science blog.

Obviously there’s a lot of reasons (Vincenze suggests a few) but I just want to look at one today: the incentives many people have to engineer – or at least overstate – conflict.

Imagine you’re a climate scientist. Lucky you: you’re an expert in one of the most important fields for the future of this planet. But there are thousands of other scientists just like you and you want to stand out and be known and respected for your ideas. You’re 99% sure that global warming is happening and likely to get worse – because 99% of the data you’ve seen and papers you’ve read point in that direction. But you think there’s a 1% chance that everyone’s wrong. Isn’t it your duty to test the majority thinking? If it is true, it will stand up to some scrutiny. And maybe - just maybe - it’s all wrong. Or at least a bit wrong. You could be boring and go along with everyone else. You could be one of the many faces at a climate conference. Or you could be controversial. And interesting. Maybe a little infamous even. And have journalists seek out your unorthodox views. And maybe be the person getting flown to those conferences to give the wacky dissenting talk.

Now imagine you’re a journalist. You’re writing a story about climate science. You want to be accurate but you also need to be entertaining. So you want some conflict. You also want to be balanced. You could interview two climate scientists from the 99.9% that agree that global warming is a serious threat. That’s a bit dull. Or you could interview one scientist from the majority and one wacky contrarian. That will spice things up. And you’re being balanced by getting all the opposing viewpoints, right?

Now imagine you’re a government Minister. You could accept and publicise the global warming threat. You could introduce measures that will cost taxpayers and industry to reduce a danger that will mostly affect people who haven’t yet been born or live in other countries. Or you could downplay the global warming threat and suggest that the jury is still out. After all, it’s irresponsible to hit taxpayers and industry when we’re not even totally, absolutely 100% certain that there’s even a problem, right? Then you could reduce taxes and spend your revenue on more popular things like new roads.

Now imagine you’re having dinner with some friends. They’re all blah blah-ing about climate change. "It’s so important". It’s so terrible". It’s so boring. You could just go along with them all and nod seriously. Or you could liven things up a bit. You could point out that while everyone’s talking about ice caps melting, snowfall has increased in central Antarctica over the past decade. You could mention that everyone was worried about global cooling in the 1970s. You could make insightful sociological observations: environmental worries are a lot like fashion – it’s a constant obsession but the environmental fad of the day is always changing.

Now imagine you’re concerned about climate change. You want to find out more and you want to do your bit. You read the newspaper and notice that the two scientists interviewed disagree on whether it’s happening and how bad it will be. You watch the news and notice the politicians disagree on whether it’s happening and what if anything to do about it. You go to dinner with your friends and one of them makes some interesting arguments about Antarctica getting snowier and environmental worries always being there and never amounting to anything. You weigh up the information you have and – well, the debate seems pretty evenly balanced – doesn’t it? It seems like the jury is still out.

'An Inconvenient Truth' coming to Australia

Al Gore's film about global warming, An Inconvenient Truth, has made quite a splash in the States and will be screening in Australia.

It's showing this weekend as part of the Sydney Film Festival and then at the Melbourne and Brisbane Film Festivals. In Sydney it's showing at the State Theatre on Saturday 10 June at 12:10pm. More details here. (I'll miss it as I'm in Canberra this weekend).

Its general release is unfortunately not scheduled until 14 September. (Why are we still four months behind other countries for cinema releases?)

Another environmental film showing at the Sydney Film Festival is The Last Valley, a doco about the struggle to save the last old-growth rainforest in East Gippsland, told from the point of view of protestors and loggers. Sounds interesting and the director will be there for a question session afterwards. Check it out on Wednesday 21 June at 5 pm at the State Theatre.


Update 9/11/06: I saw the film and my thoughts are here: An Inconvenient Truth: My thoughts

"Killers for conservation"

Earlier this year I wrote about the new trials to allow hunting of feral animals in NSW State Forests. Yesterday I watched a report on the Sunday program looking at the trials so far. The full transcript is on the show's website.

It was a fairly balanced piece, considering the reporter started (in a 'by the way' kind of manner) with the following disclosures:

These men are part of a campaign being waged in more than 100 state forests across NSW. The targets are carefully selected, no native fauna will die today, but ferals are fair game. These men are killers for conservation... Robbie Lynn manages this territory for the Game Council... Lynn and I go back thirty years. As teenagers we hunted pigs, rabbits, foxes and kangaroo, anything we could get our sights on. The places we roamed back then are now all but closed to shooting, such is the poor image of the hunter... There are now 1000 hunters who are venturing into the forest for the first time. Our groups are townies. Kym’s a vision editor for the Sunday program, Larry’s a landscape gardener and Dick owns his own business...

The program played up the political elements of hunters vs greens, the hunters-as-tourists angle and the safety issues. But it didn't delve very far into what I think are some of the crucial issues: Do hunters actually assist with the feral problem? What other activities are restricted when forests are closed for hunting?

My impression is that allowing hunters into forests will have extremely modest benefits. According to the program:

there is still another [feral pig] for every man woman and child in Australia [ie, about 20 million]. Here in the safe haven of state forests, there are 18 million wild cats and countless dogs, deer and foxes. Conservation hunting is the latest tactic in a battle to control these booming populations...

Robbie Lynn: "they’re going to have to do a few trips and start working hard before they get a good result, but we’ve got 31 forests and it’s only been open 8 weeks I think and there’s been over 50 pigs shot through the forest so far"...

After three days in Nundle our hunters have each spent more than $300 in the town on accommodation and food. It’s been modest return in hunting terms, a pig, a few foxes, some rabbits.

Clearly hunting is going to have very little impact on the feral problem. One of the farmers interviewed has a property adjoining a State Forest and summed it up:

Shooting is probably the least effective form of broad scale control that we have. But saying that, it’s better than nothing. Probably one step above no control. It will have an impact but it will not have a major impact on the overall population, but it will help.

Given the minor benefits it brings, I think the questions we need to consider are:

• Is there any net conservation benefit at all? Hunting reduces numbers slightly, but land managers have commented that it interferes with other more strategic control measures (eg, it disperses animals). Some environmentalists suspect that if hunters can't find ferals they'll shoot native animals instead and there are reports of hunters bringing ferals into forests in order to hunt them. (It's irrelevant now but of course most of these animals were brought into the country by hunters in the first place - which puts hunting as the solution in an interesting light).
• What other activities are displaced by allowing hunting in forests? I understand that the forest is closed during hunting (for obvious safety reasons) meaning that other recreational activities such as fishing, walking, etc are not available. What is the cost of that?
• Given that the conservation benefit is limited at best and there are costs on other users of the forests, should we admit that this is a recreational activity, not a conservation activity, and charge hunting fees or auction hunting permits - the revenue from which could be used for feral control activities that are actually effective?
• Given the limited benefits, the costs and the risks to safety, should we allow it at all?

Update - further info

• The Game Council's information page on hunting in NSW State Forests. (Does anyone know of any good sources for the arguments from the other side?)
• Federal Department of Environment and Heritage report on options for managing feral pigs.
• The Pest Animal Control Co-operative Research Centre has lots of information at feral.org.au, including a report on management of feral animals.