Conservation strategies: a review

I was looking for something else and came upon this review I wrote for the CIS magazine Policy in its pre-Andrew Norton days.

I’m always surprised when I read old stuff. It’s never as I recall it. Always a bit better or worse than I thought. Anyway, I remember being a bit unhappy with this review when I wrote it, but on re-reading it, it seems OK to me. 

And since this was written in 1998 before this site became my ‘blog of record’ I thought I’d post it here FWIW.

Review: Conservation Strategies for New Zealand
edited by Peter Hartley
New Zealand Business Roundtable, Wellington, 1997, 526pp, NZ$39.95

This is a thoughtful, provocative and very interesting survey by the Tasman Institute of nature conservation strategies in New Zealand (and to a substantial extent Australia). The book provides a logical categorisation and presentation of issues with the first six major chapters presenting strong arguments in a range of different areas. Subsequent chapters on the structure and performance of the New Zealand Department of Conservation, Maori development and conservation policy and historic and cultural heritage were of less interest, partly because by that stage of the book, many of its major themes had been well worked.

The book is a powerful market-oriented polemic against the statist and conservation purism of much green politics. It benefits from a sound theoretical knowledge as well as broadly based practical knowledge of specific examples of market-oriented conservation in New Zealand and Australia (as well as some other countries especially the United States).

Particularly instructive sections include:

a section on sulphur-dioxide trading in the US (pp. 86-92)

a case study of the privately led restoration of Tiritiri Matangi Island in New Zealand (110-119)

a case study of a listed Australian conservation company Earth Sanctuaries Limited (321-335).

Each of these case studies together with a panoply of other (usually less extensive) studies and anecdotes illustrates in a very useful and thought provoking way the essential themes of the book. In particular:

market based instruments are likely to achieve their objectives much more efficiently than regulation,

voluntary action can often be superior to government regulation and management even where substantial free rider problems exist. This is because voluntary action is more likely to stimulate innovation, leadership and broadly based community knowledge, commitment and participation than direct government action.

conservation professionals are sometimes (too often?) reluctant to compromise and improvise where such measures might jeopardise the local ecological integrity of particular ecosystems. Where such compromises are necessary either because economic or ecological resources are limited the local population of a species might be sub-critical purism can worsen rather than improve environmental outcomes. For instance, conservation professionals might oppose the importation of some endangered species from one area because it contaminates local biodiversity, even when the alternative might be the likely local extinction of the species. Conversely, they can cling to pure conservation projects beyond the time when it is clear that they are losing viability and something else needs to be tried.

An important defect in the book goes both to its style and substance. It is unnecessarily tendentious in arguing for private sector conservation and against public sector activity. Thus the reader is never really confident that a balanced picture is being presented a picture in which the reader can have confidence in the expert making his case. Environmental policy generally is bedevilled by so many classic economic problems particularly externalities and the resulting free rider problems that the best solutions are likely to come from an intelligent mix of collective and privately motivated initiatives and co-ordination.

The book constantly rehearses ways in which the private sector can benefit the environment (even though at first glance one would not imagine it had the incentive to do so). This is a very useful antidote to a dominant theme in much green politics and the automatic assumption that whenever there is a problem something ought to be done (i.e. by governments). However, it is a long way from justifying a general bias against the public sector in favour of the private sector. For example, at one point the author comments that, were it not for the distortions introduced by the Department of Conservation, the private sector would probably have better research infrastructure than the Department on conservation matters. While the private sector might well be more efficient than the public sector in some areas of research, assertions of the more general kind made here ought to be accompanied with some carefully considered evidence if they are to be convincing.

This defect renders the book both less persuasive and less penetrating in its analysis. At one stage there is a brief discussion of the development going on at Philip Island (Victoria) to build an extensive seal observation infrastructure. Keen as ever to point out the advantages of private sector involvement which I for one do not need to be persuaded of the authors pass over what seem to me to be the most interesting policy questions. What kind of regulatory regime would optimise the private sector contribution? What is the appropriate mix of markets and regulation? Presumably some developments would be better than others. Private sector development of seal observation on Philip Island would be better done by Earth Sanctuaries Limited than Disney Corporation!

Chapter three attacks the Conservation Acts central requirement that government conservation agencies optimise the intrinsic value of their conservation assets. The chapter points out the ambiguities of this formulation but it is not wholly convincing that the idea of intrinsic value is unworkable. It is a vague notion to be sure. But then so is the test of reasonableness which our common law and statutes are shot through with.

Many people in the electorate who value conservation do have a strong sense that there are intrinsic environmental values. If they continue to think this, the Act will probably continue to reflect those thoughts. A more accommodating approach might find constructive ways of engaging with concepts of intrinsic value of pointing out their weaknesses and in so doing improving them rather than simply rejecting them. I often found myself in broad agreement with the authors value judgements on conservation. But this did not save me from a certain unease. Any general definition of the rationale of conservation if it is to be useful is unlikely to be without ambiguities.

Chapter six was for me the most exciting chapter of the book. The idea of net conservation value trades is highly subversive of much of the sentimentality and absolutism of green politics. (Net conservation value trades occur when some conservation goal is traded off for some higher value conservation goal. Thus, a government department might agree to mine site rehabilitation of a lower standard than otherwise required in return for conservation spending on the surrounding area which is of a higher conservation value.) Nothing like a healthy dose of the market to concentrate the mind and get people to really show you the colour of their money! The chapter discusses the likely environmental benefits which could flow from allowing environmental assets to simultaneously meet other needs, such as, for instance, low impact sustainable harvest of native timber.

Ultimately, however, even here the authors do not really engage with the other side. Net conservation value trades make sense, one would hope, even for environmentalists. But trading takes place in the context of negotiation and uncertainty of outcome is implicit in any negotiation. In such a circumstance value trades are almost always problematic. Who is to say that by refusing to trade off something (say very high quality mine site rehabilitation) one might nevertheless still get what was being offered in its stead (say further conservation expenditure on the environs of a mine)? The authors do not grapple with this problem.

I would have liked to see the brief chapter on historic and cultural heritage further developed. Today we focus almost entirely on the idea of preserving what we have by prohibiting or restricting change. I live in Port Melbourne where the streetscape has been frozen by restrictions on change to rows of lacklustre terrace bungalows. The hidden costs of this to owners and renters must be worth the construction costs of a Sydney Opera House or two. The demolition of a few terraces might allow us to make a heritage trade up to something like Hundertwassers House in Vienna. But, alas, the heritage agenda in this country is focussed on preserving what others have left us often even if it is mediocre rather than coming up with our own contributions to heritage.

The issue of greenhouse gas abatement (or more particularly carbon sequestration) does not seem to rate a mention. (I didnt read every word, but I had a pretty good look throughout the book and in the index). This is an extraordinary oversight given that carbon sequestration offers the potential for major private sector involvement in and funding for conservation.

Conservation Strategies for New Zealand is lively, interesting and best of all provocative. For my taste it is a little too provocative in one sense of that word. It is too belligerent. But it is also provocative in the best sense. It sets one thinking.

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15 years ago

” a case study of a listed Australian conservation company Earth Sanctuaries Limited (321-335).”

I’m not sure what the book says but I do know that Earth Sanctuaries was unable to run at a profit, even though mugs like me donated many thousands of dollars to it. Even Dr Walmsley, who founded Earth Sanctuaries, conceded that for-profit conservation will not work in Australia.

On the other hand private not-for-profit conservation organisations have thrived in recent years. We now have groups like Bush Heritage Australia, the Australian Wildlife Conservancy, Arid Recovery, Birds Australia and what’s left of the old Earth Sanctuaries together running several million hectares of private reserves and these are doing an enormous amount of good work. On top of that, thousands of individuals, such as myself, have bought land to preserve or restore conservation values. Accordingly I think private conservation activities must be worth at least as much as government activities.

15 years ago

Let me cut to the chase and propose the best constitutional marketplace(CM) I can think of that relies on price incentive rather than quantitative controls. Essentially all existing taxes, levies and duties(apart from excise on booze and fags perhaps)are replaced by the following four planks-

1. We tax carbon at the mine or well head (really CO2E taxing with no exemption for use in plastics manufacture, etc)
2. We tax all other resources from mining, quarrying, forestry, fishing and water use.
3. The private use of land is a resource and is taxed based upon land use from zero for natural state to a maximum for full artificial cover (ie buidings, bitumen and even dam cover or mine and quarrying disturbance.)
4. We rely on an annual nett wealth tax ANWT(life cycle adjusted)for top end redistribution with a specific exemption and franking credit. That exemption would be all wealth held as natural environment and a franking credit given for any expenditure on remediation(ie mines quarries or opening dams, etc) or for creation of natural environment( ie Walmsley’s Earth Sanctuaries and the like)

I’d argue most strongly that blueprint would produce an inexorable constitutional marketplace(CM) that would give true countervailing market power to the natural environment, both in terms of its protection and creation(a la Earth Sanctuaries) My challenge to you and the book’s authors is to better it, improve on it, or pick it to pieces(albeit I reserve the right to pull an ETS out of the drawer if required, after it’s been given a fair run)

I contend that CM wouldn’t require any Govt owned natural environment(national parks, etc), green subsidies, handouts for hybrids and solar to grid, etc, plastic shopping bag bans, container deposit legislation or any other Govt interference on behalf of the environment whatsoever. Furthermore it is the best third way approach to Ken Henry’s call for more wombats and less hairy nosed taxes. In that respect note-

– goodbye to the problem of measuring and taxing income with its 10000 pages of tax act that has now degenerated into ‘give us a ring and we’ll tell you if we like it’ or chase you to Jersey, Cayman islands, Swiss banks, etc, etc.

-goodbye interest rate deductibility, negative gearing, capital gains tax holidays and that housing affordability externality, as well as that incentive to gear that has produced the current GFC

-taxation is neutral whether you use resources for private, business, cahritable or religious use

-With stamp duties and capital gains taxes gone, capital is totally free to find its best use in this new green incentivised economy (ie no frictional losses)

-no need for a FIRB or any concern about foreign ownership of resources(transfer pricing) and land as they will pay the resource taxing like local owners

– no need for competitive international reductions in company tax and with no company tax there is an incentive to headquarter in a jurisdictionally safe haven on the Asia pacific rim

-no disincentives to employing labour like payroll and income tax

-with massively incentivised private Walsmley Earth Sanctuaries springing up everywhere, which marginalised group currently will not be ‘sorry’ to see a massive increase in demand for what skills they do have?

Better that, improve on it or pick it to pieces. That’s true market green for you that works every minute of every hour of every day of….

15 years ago

Not to mention the Pitjatjantjara Earth Sanctuaries Ltd, The Wadeye Earth Sanctuaries Ltd, The Palm Island….

15 years ago

While your all scratching your heads at that simple, market based, third way CM (and feel free to ask me to elucidate on anything you’re unsure about)that gives true countervailing market power to wombats, at the same time as ridding ourselves of so many hairy nosed taxes, I’ll wander about critiquing some of the current CM, left greens seem to be so fond of.

I was reminded how facile current greenism has become when I visited the nephew and niece’s family last weekend in Prospect(Adelaide). There they were with friends engaged on a working bee laying out a series of raised vege garden beds so I chipped in. They had purchased the used sleepers, bags of gypsum clay breaker, cow manure, sandy loam and bales of pea-straw for mulch, so we all beavered away with the kids running about excitedly. While chatting away I discovered the latest in left green largesse. Do you know the SA Govt give a $50 subsidy for mulch as do the concerned burghers of mid inner city Prospect Council? The burghers even give you a $20 subsidy for a worm farm. All you have to do is apply and some public servant employed for the purpose will process your application and reimburse the appropriate amounts. Now Nic Gruen and I in busines, even without our economics degrees, could tell you instantly the administration costs far outweigh that green feelgood. It’s the same admin costs left/greens want a Royal Commission into every time the banks charge some poor battler for overdrawing their account, yet they’ll advocate and defend that moral feelgood, middle class pork in the streets. That is the tip of the iceberg of a rapidly bloating mountain of moral feelgood that flies in the face of any rational opportunity cost analysis. Basically, plenty more where that came from folks!

At the other end of the spectrum, Rudd hands out $45mill or so to Mr Watanabe of Toyota for his hybrids, if he can remember that’s what it’s for. Now I’ve already shown how for the $20k+ price difference in the budget Prius and the wife’s Mitsubishi Colt, taking account of their 4.4L/100km cf 5.6L/100km fuel economies and driving 160000km over 10yrs, the Colt owner could have a 2KW solar to grid system and the consequent savings in coal fired power(black coal not our burnable dirt) would negate TWICE the carbon footprint of the Prius. Ah well PMs, company execs and doctors wives need to feel good about themselves posing around in ‘their’ Priuses. Never mind Mr and Mrs Observa, to get you to invest that $20k+ of resources into solar you saved by sensibly buying the Colt, you can have $9500 of subsidy and RECs and other power consumers can pay you a mandated 44c/kwhr(instead of the peak summer 24c you all pay now) in order for it to stack up. OK, if you insist on giving me a 10% after tax, riskless return, count me in green moral feelgooders.

Wall to wall Labour and you’d expect some real action on the MDB at last, from these champions of the environment. Essentially the science is telling us its water has been overcommitted by about 40% of long term average flows at present and at last look it took about 1800L of water to produce a dollars worth of rice and you’d expect cotton and flood pasture returns to be similar. Notice how a 10c/kl resource tax on water would probably wipe out that false profitability based on poor social costing now. Never mind, carry on business as usual, buy back a few headline water entitlements and SA can dam the river at Wellington, let the lower lakes go and start building a 50ML/yr desal plant at a cost of $2.50-$3.00/Kl and around 1kg of CO2 for every litre of water by some simple arithmetic. That sort of opportunity cost was dwarfed by the good burghers of my Holdfast Bay Council, when they added rainwater tanks and pumps to my Civic Centre last year, to feed the toilets at a cost I calculated at around $11/kl. No matter, give away subsidies to private householders where the opportunity cost is probably double that without those economies of scale. Subsidies for CF light bulbs and shower heads, solar hot water, insulation, green appliances, etc, etc. On and on it goes from the great bottomless pit of opportunity costless, middle class pork and feelgood. Plenty more where that came from eh battlers and working families?

Well if by now, like me, some of you are having some uneasy qualms about that bottomless pit of resources and opportunity costs, a bit like some Asian savers at present, no matter, the experts in these things can simply create some carbon credits and associated offset derivatives and place them all in the hands of those other experts in global financial derivatives trading. Apparently that will cut the dreaded CO2 emissions by 5% by whenever we can manage to organise it, with appropriate rent-seeking exemptions naturally and leave it all in their capable and experienced hands.

Now compare all that with my recipe for the environment and the battlers. Never before in their darkest hour did they need a new level playing field, market based CM to protect them from the rape and plunder they’re getting from their feelgood, moral posing elites at present. Where are their elites at present? Busying themselves with worms.

15 years ago

Always enjoy your big picture solutions Obs, even down to the subjective value judgments a la doctors’ wives and green moral feelgooders. Is Ken Henry open to submissions? Ah bugger it send him your CM proposal anyway, but IMHO do it on a dot point basis, no wombat analogies, no quarter to global derivatives trading.
Cross post to everywhere relevant. You can bet the big end of town are in his ear.

15 years ago

Well pablo perhaps Ken Henry does have a good appreciation of wombats and hairy nosed taxes. I suppose I’m really talking about an overall concept design, rather than a full set of blueprints and architectural specifications here. It’s a bit like the new parliament house where someone comes up with the overall concept and then a plethora of architects, engineers and tradeys get down to the nitty gritty of making it all happen. We’re pretty good at that, going way back to that first pyramid, which we now know wasn’t built by slave compulsion, but free men on a clear and common mission. We can only imagine the learn curve they went through on that first pyramid, before getting it down pat and notice in my conceptual CM, I haven’t said what tax emphasis would be placed on any of those 4 basic planks. No individual could possibly know that and it would inevitably be a political process of making it up and adjusting it to circumstances and tolerance for rate of change as we went along. Nevertheless it should be a great pyramid worthy of building for all to admire and emulate. Besides, if not us who then? I haven’t seen too much in the way of great pyramid builders elsewhere other than pyramid scheme builders.

Our current CM is a bit like the old parliament house, that had outlived its usefulness and was groaning at the seams. Oh there was a certain nostalgia and comfort zone in the old girl, but basically you can’t put lipstick on a pig and wearing lots of green lipstick still won’t disguise pink pigs with their snouts in the trough. If I’m cynical about that I’m not cynical about the capacity of Australians to listen to complex issues and reasoned argument and then act upon it against all nay and doomsayers. Their ability to embrace the GST reform of the ubiquitous WST should have taught us all that. Whilst it was relatively minor reform in the big scheme of things here, they ate that for entree with barely a hiccup and seemed to me to be asking what’s for mains? The question is what are they going to be served up?

I guess that’s my main conceptual meal for the chefs here. A third way, level playing field, constitutional marketplace that’s clearly enunciated and understood by all. It can’t be based on compulsion or the divine whims of elected chefs. That’s a recipe for disaster with every jumped up cook chucking in their own particular prediliction for a dozen different herbs and spices. Besides this new green cuisine can’t possibly live up to the expectations of its iron chefs as we’ve already seen. Sooner or later someone will leak Al Gore’s electricity bill, or some clever journo will do some thermal imaging of the British Enviro Ministers townhouse to demonstrate their do as I say rather than do as I do and the taste for their fare will wane accordingly. We have to have a CM based on carefully constructed price signals that bear equally on all, but allow us a certain freedom to go about our business under its overarching hand on the ladle. Under my CM if you tread lightly on natural resources then tax falls lightly on you but tread heavily and there’s a drip into your jugular. You are completely free to build wealth up to a certain agreed point, whereupon you have to pay the social tithe that allowed you to do so, unless you hold that wealth in the form of natural environment for the benefit of us all now and for future generations. Philanthropy and charity are all very fine, but as Walmesly found, in the long run his dream of creating and nurturing natural environment had a snowball’s chance in hell of surviving a CM that had no countervailing market power to oppose its utilisation and destruction. It’s a fundamental mistake to know the value of something and yet not know how to price it accordingly. That’s a mistake the environment can no longer afford.