It is not green fanaticism to suggest that harvesting of such forests should now cease entirely with [...]]]> About 99% of Victoria’s wet eucalytus old growth forest has been destroyed by logging and forest fire in what amounts to an ecological catastrophe. By-in-large the 450 year old forests have been irreversibly replaced by scrubby wattles.

It is not green fanaticism to suggest that harvesting of such forests should now cease entirely with an appropriate fire management regime put in place to manage the remnant remaining in the Healesville area. From an ecological viewpoint and from the perspective of conserving biodiversity a reasonable endowment of old growth forest should be conserved. It is pure nonsense to say – as official goveenment sources do – that forestry in Victoria is being managed ‘sustainably’.

 Most of Australia’s current population growth derives from its net positive migration intake.  This intake has proven controversial from the viewpoint of a [...]]]> I’ve spilt a lot of printers ink on this topic over the years. Here is a draft of some notes I prepared for a Productivity Commission meeting next week. Comments welcome.

 Most of Australia’s current population growth derives from its net positive migration intake.  This intake has proven controversial from the viewpoint of a number of environmental concerns – a major one being the adequacy of water supplies but there are also concerns with increasing congestion in cities and with increasing costs of providing infrastructure on city boundaries.   At the same time business groups, and particularly the housing industry, clamour for higher immigration to boost demand and to grow the economy (Clarke et al, 1990).  

These alternative views comprise two alternative extreme ways of looking at the relation between population size and the environment.  The first dates to the Reverend Thomas Malthus’s An Essay on the Principle of Population. This sees environmental resources – Malthus took specifically agricultural land – as common property.  With population increase, existing cultivated land must be more finely divided among the progeny who came to cultivate it. In the absence of technical progress, this division would reduce the productivity of labour on existing land and force cultivation onto land with lower agricultural productivity.  Both at the intensive and extensive margin, the result was lower labour productivity and lower incomes.  While Malthus focused on land his views apply to any common property resource subject to congestion externalities – fish populations, forests, water and biodiversity resources, congested roads or the right to pollute the atmosphere with CO₂.

Environmental resources can, alternatively, be viewed as assets that are private property subject to clear property rights.  With this extreme view, increased demand for use of resources by new people increases their value to the pre-existing people who own them.  This ‘market-broadening’ view sees the arrival of new people as increasing the value of assets held by the original people making them better-off.  Provided the new people who create these enhanced values judge their lives as worth living in the expanded society, the fact of extra people provides a Pareto improvement in social welfare. This is related to Adam Smith’s views in the early chapters of The Wealth of Nations on the ‘gains-from-trade’ achieved by increasing the extent of markets.  Although Smith did not expressly address the population issue he saw market broadening as a source of economic gains. Indeed from this perspective having access to extra people is precisely analogous to removing a barrier to trade such as a tariff.  Smith was mainly thinking too about trade in goods but his analysis applies today to owners of land and mineral assets, the rights to drive on private roads or, with privately-owned emission quotas, the right to pollute the atmosphere with CO₂.  

The Malthusian or common property view of the population-environment link clearly suggests restricting population size whereas the private property view suggests that such restrictions will reduce the welfare of both pre-existing and new people.

These alternative views of the connection between the environment and population clearly depend on the primary way new people gain their economic role in a society. Both of the extreme views cited are unrealistic. The common property perspective implicitly describes an idealised communist state where new arrivals gain an equal share of all environmental assets as a birth or arrival right – it might make most sense, if it makes sense at all, where land is the important environmental asset which must be shared among progeny in populations experiencing net growth. The private property view, on the other hand,  sees unambiguous property rights as potentially at least being imposed on all environmental assets – land, minerals, water, roads, the atmosphere and the right to pollute – in a type of libertarian nirvana.   New people must then buy – or be granted on the basis of a voluntary bequest – claims on environmental assets at prices that make acquisitions mutually advantageous to extra people in the population acting as buyers and the pre-existing asset owners.

Neither of these extreme views is realistic for a host of reasons. The Malthusian view ignores the possibility of technical progress that increased the productivity of agricultural land in the face of enormous population increases. It also downplays the economic drivers of fertility that will mitigate its pessimistic implications. In the face of declining incomes parents will choose to have fewer children.  Gains-from-trade arguments on the other hand suppose all environmental externalities have been internalised by pricing or other policies when they are clearly not.   Indeed, such failures provide the rationale for modern environmental economics.   The gains-from-trade view does however does admit foresight as a determinant of migration-driven population increase as well as natural fertility.  Parents facing reduced returns to raising children – or migrants facing higher costs of getting established in a new society – face reduced incentives to add to or join a society.

The key institutional feature of modern economies relevant here is that they are mixed economies – a mix of both privately-owned assets including environmental assets and common property or public goods.  For the most part we have to buy land to grow crops or build houses on from land owners.  But travel on roads is for the most part unpriced as is (for the most part) the release of greenhouse gas emissions and other pollutions.  Resources such as water have property rights enforced on them but they are often underpriced and there are restrictions on the extent to which water can be traded among alternative types of users.  Biodiversity resources are often not marketed at all – indeed it is illegal to do so – for what are often seen to be ethical reasons.

I mention unpriced or underpriced resource assets and services but the same argument applies to the provision of a wide variety of publicly-provided goods – the social security system generally and specifically education and health services.  These can, in principle, be provided publicly or privately and the implications for desired population size depend on this choice.   The more unpriced environmental assets and the more public goods there are the greater is the potential for increased population to damage the welfare of the pre-existing population and to be immiserising.

Recognising this mix suggests a way of making judgements about the desired size of population relative to the environment.  Having extra people – whether they are migrants or the progeny of existing people – provides gains-from-trade between them and pre-existing people provided there are clear property rights on social resources in short supply.  To the extent that environmental resources or – publicly-provided goods – are inadequately priced these gains are replaced by the deadweight losses that are inflicted by environmental and other externalities. 

This suggests that restrictions on population become increasingly less important the more comprehensively use of the environment (and indeed the provision of health and other services) can be priced.   This means new people whether they are children of current people or new migrants must buy their way into a society on terms acceptable to current people. Environmental economics shows that we benefit from pricing such resources with or without population increase so pursuing such policies is ‘no regrets’ option. Moreover, in the presence of the option to increase population, the opportunity cost of not pricing increases because increased externalities will eventuate unless pricing is employed. If the choice instead is made not to price the environment but instead to restrict population, then society must forego the gains-from-trade associated with population increase. We are better off pricing the environment properly because gains arise from doing that directly but also because we can then better enjoy the gains from a possibly larger population.

This suggests a refocusing of the debate on the size of Australia’s population away from speculation about long-run population targeting – these are often irrelevant anyway given year-to-year variations in the immigration intake – to thinking about the sorts of environmental (and other) policies that should be put into place to help ensure that current citizens get benefits from the environment and to ensure future population increases will not immiserise us (Clarke, 2003).

Many straightforward environmental pricing policies have already been implemented in Australia and, compared to many other countries, the quality of the Australian environment is very good. I don’t agree with Don Henry (2011) that Australia’s track record has been that bad. The important pricing issues that do remain either involve complex distributional or transaction cost issues (congestion pricing road travel in major cities, pricing infrastructure on city boundaries), or involve complex issues of assigning values to non-marketed goods such as biodiversity and the environmental uses of water.  Unfortunately these are all population-sensitive environmental concerns.

Comprehensive pricing of the environment is difficult.  Environmental valuation issues raise questions about the usefulness of efficiency-based welfare economics in resolving issues of optimal population on standard utilitarian terms.  Assigning values to biodiversity, wilderness, the desire for space and partially developed landscapes involves assessing intensely subjective issues that reflect including ethical uncertainties.  Economic analysis only brings into focus a range of insights into how large our population should be from an environmental perspective.  

Don Henry’s (2011) remarks deal with ‘planning’ approaches to dealing with environmental concerns rather than market mechanisms. These might make practical sense in situations where social valuations are unclear and where achieving clarity over objectives is a problem.  But many key environmental concerns arising when population increases can be best dealt using market mechanisms.  Infrastructure levies effectively limit growth of unwarranted urban sprawl. Correctly pricing traffic congestion reduces both low-value vehicle journeys in cities and the propensity of cities to sprawl unnecessarily because transport is underpriced.  Don Henry mentions the reduction in water use that has been driven in our cities by means of water supply restrictions during the recent drought but, as a long-term measure, the correct pricing of urban water supplies will achieve these same sorts of objectives at much lower cost.

Economics does not provide all the answers but it provides some.   The key lesson of economics is that what matters most is not population numbers but what people who live in Australia can do. It is difficult to provide a logical calculus that suggests how many people should live in Australia but much easier to set in place environmental policies that ensure extra people provide advantage rather than disadvantage.   If Australian environments do become poor that is not a consequence of excessive immigration but of poor environmental policy.

References

H. Clarke, A.H. Chisholm, G.W. Edwards & J.O.S. Kennedy, Immigration, Population Growth and the Environment, Bureau of Immigration Research, Melbourne 1990.

H. Clarke, “Should Australia Target Its Population Size?,” Economic Papers, 22, 1, 2003, 24-35.

H. Clarke & Y-K. Ng, “Immigration and Economic Welfare: Resource and Environmental Aspects”, The Economic Record 1993, 259-273.

Don Henry, “Sustainable Population: Just “Better Management” of Growth or Something More Far Reaching”, mimeographed, 2011.

The environmental tax – which will levy fees [...]]]> China is set to levy a range of charges on various types of pollutants over the next 5 years.  It is expected to be announced soon in the next 5-year plan – by far the greenest five-year plan in China’s modern history once renewable resource investments are included.

The environmental tax – which will levy fees according to discharges of SO2, sewage and other contaminants (including perhaps CO2).

 The use of transparency as an environmental policy tool in China has particular interest for the US given the stumbling block of verifiability on Chinese carbon emissions reductions at [...]]]> I enjoyed reading Barbara Finamore’s piece on transparency in environmental regulation in China which I posted earlier.   This is a partial and somewhat shorter re-post.

 The use of transparency as an environmental policy tool in China has particular interest for the US given the stumbling block of verifiability on Chinese carbon emissions reductions at the Copenhagen meetings.  Indeed the current climate finance meetings in Geneva which seek to establish a $200b Green Fund to help developing countries address climate change sees the US continuing to hold out unless developing countries agree to allow monitoring and verification of their carbon emission cuts.

Finamore’s article, however, primarily deals with transparency as a way of advancing local Chinese environmental goals.

The idea is to catalogue environmental performance and to use open information mechanisms to drive better environmental outcomes. Historically the first application was the Toxics Release Inventory (“TRI”), established by the US in 1986 after the Union Carbide chemical accident in Bhopal. In the past decade, signatories to the Aarhus Convention ratified open information as a tool for environmental protection and created the Protocol on Pollutant Release and Transfer Registers to the Aarhus Convention, which established rules for TRI-like systems in signatory countries.

China sees open information as a way of bringing various stakeholders –members of the public and businesses – into environmental protection efforts and to improve the quality of information needed for environmental targeting. Environmental transparency can also assist overextended environmental agencies.

On May 1, 2008, China’s first national regulation on freedom of information went into effect. The Open Government Information Regulations (“OGI Regulations”) was driven by the view that greater transparency will benefit economic development, curb corruption, improve government performance and improve people’s lives.

China’s Ministry of Environmental Protection (“MEP”) has been an enthusiastic adopter of disclosure as a regulatory tool. It was the first ministry to promulgate implementing measures for national OGI Regulations and issued environmental information regulations on the same day as the OGI Regulations. These regulations, called Measures for Environmental Information Disclosure (For Trial Implementation) (“Environmental Information Measures”), set forth environmental information disclosure obligations for environmental protection departments and certain enterprises throughout China.

 The enactment of the OGI Regulations and the Environmental Information Measures in 2008 arose from more than a decade of local experimentation with government disclosure and open environmental information. China has incrementally instituted various forms of environmental disclosure at both the central and provincial level since the late 1990s: 

• In 1998, a pilot – the GreenWatch Program – was instituted in Jiangsu Province with guidance from the World Bank. It established ratings for factory environmental performance. The State Environmental Protection Agency (“SEPA”), the predecessor to the Ministry of Environmental Protection, subsequently issued non-mandatory guidance encouraging nationwide implementation of this rating system – where implemented, this has helped identify polluting enterprises in different provinces.
• Since 2002, more than 30 provinces and municipalities in China have enacted “open government information” legislation.
• The 2003 Clean Production Promotion Law (and the related 2004 Interim Measures on Clean Production Audits) required key polluting enterprises to disclose information about emissions and other environmental data. This was the first law to require disclosure of factory-level pollution for many facilities.
• The 2003 Environmental Impact Assessment Law (and the related 2006 Measures on Public Participation in Environmental Impact Assessment) required partial public disclosure of Environmental Impact Assessment (“EIA”) documents.
• In 2005, a key State Council document, entitled the Decision on Implementing Scientific Development Outlook and Enhancing Environmental Protection, which set forth guiding principles on environmental protection, stressed the importance of environmental information disclosure, public supervisory mechanisms, and disclosure of enterprise violations of environmental standards, among other things.

The Environmental Information Measures of 2008 built on these experiments. They require environmental protection bureaus to disclose environmental information and to respond to public requests for such. In addition, the regulations require enterprises whose emissions exceed national or local emission standards to disclose pollution information.

Under the Environmental Information Measures, environmental protection departments at all levels must disclose information concerning:

• Environmental statistics and environmental investigative information;
• Allocation of total emission quotas of major pollutants and their implementation;
• Issuance of pollutant emission permits;
• Acceptance of EIA documents for construction projects and the examination and approval status of the EIA documents;
• Collection of pollutant emission fees and amounts paid by polluters;
• Letters, calls and complaints from the public about environmental issues;
• Environmental administrative penalties, administrative reconsideration, administrative lawsuits and enforcement of administrative compulsory measures;
• Lists of heavily polluting enterprises, enterprises that have caused serious environmental pollution accidents, and enterprises refusing o enforce environmental administrative penalty decisions.

Environmental protection departments must respond to requests for information within 15 working days. These obligations are subject to exceptions such as state and commercial secrets and personal privacy.  If applicants believe the administrative agency has failed to fulfil its obligations they may report it to a higher-level administrative agency. If applicants believe the administrative agency has infringed their lawful rights and interests, they may apply for administrative reconsideration or file an administrative lawsuit.

These legal requirements regarding disclosure of environmental information are a step forward. However, the key lies in how effectively measures are implemented.

The NRDC partnered with the Institute of Public & Environmental Affairs (“IPE”), a Chinese research institute, to track the progress of implementing the Environmental Information Measures since they became effective in 2008.  NRDC and IPE studied 113 municipal environmental protection departments to assess progress in implementing regulations. After the first year of implementation, they found average compliance levels were low. Nonetheless, some cities performed well. The study also uncovered innovative practices in disclosure that can serve as a model for underperforming cities.

Different cities are meeting their disclosure requirements differently.

Ningbo, in Zhejiang province, ranked highest in terms of overall performance on disclosure. In 2008, Ningbo disclosed more than 600 documents regarding environmental enforcement and enterprise violation records on its website. Ningbo released all environmental complaints filed in sufficient detail and included the status of each complaint. In response to citizen concerns about emissions from area factories, the environmental protection bureau in Ningbo’s Zhenhai district took steps to improve transparency, including releasing information on emissions of 5 pollutants not currently covered by any standards, establishing a public information display that lists monthly emissions data alongside the applicable standards, working with enterprises to improve monitoring, and holding quarterly briefings to respond to questions from residents and news media. Zhenhai’s environmental officials noted that although these efforts increased their work, they helped resolve concerns from citizens at an early stage so as to avoid conflicts and increased the level of trust between citizens and government.

 Weihai, a city in Shandong province, captures real-time monitoring data for key enterprises and water treatment plants across the city, and discloses a monitoring database that provides daily reports with hourly data. The frequency of this reporting is the highest in the country.

 Wuhan, a city located in Hubei province in central China, created a website that provides the public with searchable emissions data for a given day or time period. The public can choose a point source, and then select the pollutant to be tracked. In addition, the website also provides real-time video of the waste treatment facilities, discharge pipes, or emission stacks at certain sites.

 Fuzhou, in Fujian province, set up an online “Call Center” database that allows the public to make various information requests to the Mayor. The website will post the public inquiry and the results will be handled by the corresponding department. The public can search the information by time, type of appeal, and processing status.

Hefei, a city in Anhui province, in response to our request for information, publicized on its website a list of enterprises in violation of rules and standards during September 2008 and provided related links so that the list could be accessed by the public.

Members of the public now make information requests on Environmental Information Measures. For instance, a Shanghai lawyer sought government information regarding the polluted Huai River. The lawyer contacted the provincial environmental protection bureaus in Henan and Anhui provinces to retrieve the names of the enterprises that were polluting the river. The lawyer succeeded in obtaining information, and is considering litigation against those factories violating environmental regulations.

The yearly reports that environmental authorities are required to prepare regarding their open government information work for the previous year provide information on the information requests received. At the central level, the MEP received 72 requests for information in 2009, mainly concerning EIA, environmental monitoring data, and environmental laws and regulations.

Obstacles to Greater Compliance. The responsiveness of environmental protection bureaus to public information requests and their proactive disclosure of environmental information vary. There are three obstacles to compliance: a lack of capacity, vagueness of regulations and  insufficient accountability for government officials.

(1) Many lower level officials do not understand or are unaware of regulations and are ill-equipped to collect information needed. There is an opportunity to improve disclosure through training and education.

 (2) There is a lack of clarity regarding the scope of disclosure as well as the permissible exceptions, such as commercial secrets, personal privacy and state secrets. In November 2009, the Supreme People’s Court (“SPC”) issued a draft judicial interpretation to clarify regulations and solicited public comment. MEP can also help clarify the scope of information disclosure by developing implementation guidelines for the Environmental Information Measures as soon as possible.

(3) Local officials are not consistently held accountable for failing to comply with disclosure obligations. However, there have been a few cases in which refusals to disclose were successfully appealed. In addition, there have been efforts to hold officials accountable for their performance in meeting their information disclosure responsibilities.

While China is still at the earliest stages of implementing its landmark OGI Regulations and Environmental Information Measures, but these have the potential to be transformative.

Conclusions.  The trend in China toward ever-greater openness in the environmental realm will continue. This needs to become an effective not only a legal set of requirements.

The trend will continue because transparency is an effective tool for solving environmental challenges.  It makes local communities and members of the public allies in enforcing environmental regulations. It facilitates efforts by corporate purchasers to “green” their supply chains in China, to meet consumer demand for cleaner, healthier products, to limit loans to serious polluters and promotes demands by local people for cleaner communities.

Transparency has also been utilized in the energy sector to promote implementation of China’s climate change and energy efficiency effort. China has disclosed the performance of provinces against their interim energy intensity targets in an effort to drive greater competition among jurisdictions. It has begun to develop carbon exchanges and other efforts to monetize greenhouse gas reduction efforts, but these efforts will be hampered if the business community and the public do not believe they have access to quality information. Greater transparency has the potential to spur competition among companies within China to perform better than their peers in meeting government energy targets.