Friday, 2 October 2015

Environmental Economics

photograph by the late Ern Mainka

Lecture to the RMIT School of Global, Urban and Social Sciences

31 March 2015

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 tree on Earth.

Because of the tree’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 level, the unemployment level, the inflation rate, the value of the dollar - is the subject of 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.
-       AASB Standard ‘Fair Value Measurement’ September 2011.

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 language 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.


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.

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 the decision to the Land and Environment Court.

The appeal raised questions of biological diversity, of noise and dust, and social impacts. However, 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 New South Wales and Commonwealth governments standing to benefit the most.

This kind of analysis had never been questioned by environmentalists in a case of this kind. The argument had been that the other losses were worth more.

At this point the opponents of the mine changed the game. They called economist Richard Denniss, the executive director of the Australia Institute, who pulled apart their 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 weigh and balance 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 New South Wales government has responded to the Warkworth decision by introducing amendments to 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. This is a very dangerous course, because many of these factors – like the endangered wildlife example – do not readily reduce themselves to a dollar value.

I think this is a dangerous course because it condemns you 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, than we concede the option with the greatest money value wins.

I think I would still like to protect our natural environment, even in the face of arguments that we could make more money destroying it.

I also think 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 clear party 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.

At the same time, 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 which 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. The new document refers to “Pachamama” the indigenous Earth mother figure. In Spanish it is called la Ley de los Derechos de Madre Tierra – the Law of the Rights of Mother Earth[2].

Much of the 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. Then 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.

Protecting the environment calls forth 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 to be 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.

Sunday, 12 April 2015

An Inclusive Australia

Keynote Address to the Law Council of Australia’s Immigration Law Conference

20 March 2015

On 20 March 2015 I delivered the keynote address to the Law Council of Australia's Immigration Law Conference. Earlier that day Malcolm Fraser died.

This is an appropriate forum in which to pay tribute to Malcolm Fraser, as I’m sure many have before me today.

This of course is not the time for a comprehensive tribute, but he leaves a proud legacy in relation to immigration and refugees and human rights.

He was formidable if he opposed you. When I first met him, it was in the context of doing research for a film into his position on the Franklin Dam dispute. At one point, not liking some of the thrust of the conversation, he brought in his stenographer to take down everything that was said. There was no way he was not going to control what happened in that meeting.

He was a whirlwind of generosity if he was onside. I dealt with him repeatedly on human rights issues. He was generous with his time when young people from Liberty Victoria and other human rights groups wanted to interview him or seek his counsel. 

He would not be silenced on refugees, on human rights, on the rule of law – and on immigration.

He showed great dignity and moral compass in dealing with the slide to the right of the Liberal Party, the party he had served for so long, including as its leader, and eventually he left.

Australia will miss his clear, consistent and statesmanlike voice.

Following through on an initiative of the Whitlam government, it was Malcolm Fraser who saw the passage of the first Aboriginal land rights legislation through the parliament of Australia. And so it is appropriate that we now acknowledge the Wurundjeri people of the Kulin nation, the traditional owners of the land on which we meet, and pay our respects to their elders past and present.

In 1827 the two Misses Daulby conducted their Seminary for the Daughters of Gentlefolk, near Liverpool. Ellen Turner, just 15 years old, was a pupil. Her father had amassed a considerable fortune, and one day she would inherit.

Mr Wakefield, then 30 and a widower, sent his servant, Edward Thevenot, to the school with a message to the Misses Daulby, that Ellen Turner’s mother had become paralysed and wished to see her daughter immediately. The Misses Daulby allowed their pupil to leave with Thevenot, who was a stranger.

He took young Ellen to see Wakefield at a hotel in Manchester. Wakefield told her that her father’s business had collapsed, and that he would take her to Carlisle, where her father had fled to escape his creditors.

On the way he told her that the banks had agreed that if Ellen married straight away, her father’s fortune would be saved. Wakefield’s brother joined them and claimed Ellen’s father had agreed to the marriage.

The were married at Gretna Green. Ellen then said she wanted to see her father, but Wakefield said he had a meeting in Paris he could not postpone, and took her across the channel.

The Misses Daulby became concerned when their charge did not return, and the alarm was raised.

The British Foreign Secretary issued a warrant for the arrest of Wakefield. The relatives caught up with the couple in Calais, and despite Wakefield’s protestations that she was his lawful wife and could not be taken away without his permission, French authorities allowed her to go with her family.

The marriage was annulled by parliament.

Wakefield was charged with felonious abduction and unlawful marriage. The trial was a sensation, attended daily by fainting ladies and a series of outlandish witnesses.

Wakefield was sentenced to 3 years' jail – which he served in Newgate Prison.

The Mr Wakefield in question was Edward Gibbon Wakefield, and while he was in prison, surrounded by convicts waiting to be taken to Botany Bay, he began agitating for settlement in South Australia. He wrote a series of fictitious letters as if from the evil colony of Sydney, and devised a radical social experiment outlined in A Proposed National Society, for the Cure and Prevention of Pauperism, by Means of Systematic Colonisation.

He planned to select the most capable of the poor, sell them cheap land in the new colony, and build a model society.

‘The object,’ he wrote ‘is not to place a scattered and half-barbarous colony on the coast of New Holland, but to establish a wealthy civilised society.’

Here he was, a convict, telling the world how to create a civilised society.

RobertTorrens – now famous for the system of land title he gave us - took on Wakefield’s theories. He proclaimed that South Australia’s favourable climate would allow opium to be grown for the Chinese trade.

Wakefield was eventually shut out of the South Australian venture, but he was later involved in the settlement of New Zealand, and went on to have a long and successful career in parliament.

His initiative led to the landing of the first European settlers in what was to become Adelaide in July 1836 – at a place they called ‘Port Misery’.

They were the first economic migrants to South Australia. They had been preceded by settlers landing in what is now Melbourne less than a year earlier – also economic migrants.

Australia since then has had a mixed record in the field of social justice.

When the nation federated, the first legislation enacted was the Immigration Restriction Act – which of course instituted the White Australia Policy.

In the course of his Second Reading Speech, the Australian Attorney-General, Alfred Deakin, discussed the Commonwealth’s powers in this area, and went on to say:
We have power to deal with people of any and every race within our borders, except the Aboriginal inhabitants of the continent, who remain under the custody of the states. There is that single exception of a dying race; and if they be a dying race, let us hope that in their last hours they will be able to recognise not simply the justice, but the generosity of the treatment which the white race, who are dispossessing them and entering into their heritage, are according them.
Australia helped pioneer so many social advances:  the 8 hour day, free universal education, women’s suffrage,  the basic wage.

In the 1930s and 40s some Australians championed the cause of Jewish refugees from Europe - in the face of the prejudice of those who said they were a threat to our national security, they were communists, they were Germans.

In 1948 it was an Australian Minister, Dr Evatt, who presided over the passage of the Universal Declaration of Human Rights in the United Nations.Today we are the only western nation not to have enshrined its principles in our laws.

Australia was a signatory to the Refugee Convention in 1951, but today our government routinely acts in contravention of the obligations we have undertaken - as the relevant UN authorities have repeatedly ruled.

Today we have become enmeshed in confusion in dealing with some aspects of immigration – especially asylum seekers.

Border protection – the rhetoric of border protection is entirely misplaced. In the middle ages, when a person sought sanctuary from the church, no one said they threatened the church’s borders. By coming here to seek asylum, refugees do not threaten our borders – they invoke their protection. They seek the protection of our jurisdiction. The border protection paradigm has opened the way to a military response to a humanitarian problem. The use of the military to deal with this issue shows that our appreciation of the nature of the issue has become deranged.

But of course there is a threat to our borders. It is from politicians who have excised large areas of our nation from the normal oversight of the courts. That is a real threat to Australia’s jurisdictional limits.

ASIO assessments – many of you would have more first hand experience of this than I do, but there are several people detained by virtue of adverse ASIO assessments, unable to know why, or to realistically challenge the facts or judgments which give rise to that assessment. Some have now been held for years. This includes their children.

If a person in power can make a decision which takes away a person’s liberty, and there is no adequate mechanism for answering the decision so that it can be independently assessed, we have lost the rule of law, and have replaced it with the rule of the decision-maker’s whim.

Our nation has never come to terms with the dispossession of the indigenous inhabitants to the land. No wonder we are uneasy about newcomers. Until we come to terms with the past, and deal with this in a way that makes these wrongs right, we will continue to come up against a deep-seated guilt, which in turn drives its own fear. This is what underlies so much of our debate about asylum seekers and immigration more generally.

Malcolm Fraser had a vision for an Australia which was not held in thrall by the white Australia policy or any other racist paradigm. When Vietnamese boat people were coming to Australia, he arranged for refugees to be brought directly to Australia from refugee camps, so they did not have to risk the journey. He showed leadership by providing repeated reassurance to the nation that we Australians could handle this. It was a remarkable contribution to the wellbeing of our country.

He promoted multiculturalism, and spoke out on the rights of asylum seekers, most recently criticising the government for its intemperate attacks on the Human Rights Commissioner.

I hope we may strive for an enlightened Australia -  a nation which has come to terms with its past by reconciling with our indigenous community, a nation which lives up to its international obligations in relation to human rights and refugees, a nation inclusive of all sections within the community.