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Environmental Economics Research Paper No.3
Prepared by Deni Greene Consulting Services,
Australian Consumers Association and National Key Centre for Design, RMIT for the
Department of the Environment, Sport and Territories
© Commonwealth of Australia, 1996
ISBN 0 642 24869 9
Australians use large quantities of water in their homes and gardens. In most areas, this water is distributed by a water supply system and is treated to drinking water quality. This means that the more water used, the greater the environmental impact of dam construction and energy and chemicals used in water treatment. In addition, water used inside the home generally ends up in a sewage treatment system or stormwater system. The treatment of sewage requires energy, and all disposal results in environmental impacts on the receiving water body. Use of hot water requires further energy for heating, which results in additional environmental impacts.
Increasing the efficiency of water use means achieving the same desired outcomes, such as washing clothes, showering or having an enjoyable garden, while using less water.
The main indicators of change are per capita and total water consumption.
|Initiative||Lismore Rebates on Water Efficient Toilets and Showerheads|
|Initiator||Lismore City Council|
|Type of Initiative||Financial incentive|
|Description||Council conducted a trial incentives program, in which domestic customers were offered cash rebates up to half the purchase price of a water saving shower head or a 6/3 litre dual flush toilet. Maximum rebates were $30 for shower heads and $60 for toilets.
The trial followed the 1992 introduction of a new charging system for water. The new system includes a fixed or service charge related to the size of the water service and a charge per 1000 litres for all water consumed. The previous system was based on property value and a `free allowance' amounting to 400,000 litres annually for average domestic customers.
Advertising for the rebate program was designed to build on the awareness generated through the Water is Money campaign associated with the new billing system. The rebate trial was widely publicised. The total funds available for the project were $28,000, of which about $12,000 was required for administration, advertising and other costs, leaving about $16,000 available for rebates.
|Results of Initiative||Allocated funds for rebates were exhausted in exactly one month. Total sales for the trial period were 468 items for a total of 420 customers. It is noteworthy that many customers purchased a shower head and toilet, despite the fact that a rebate was only payable on one item. Others purchased two shower heads. Rebates averaged $35 per item, or $38 per customer. The number of customers obtaining rebates represented 4.6 percent of all domestic water customers, which is fairly exceptional for one month of sales of consumer goods. Even after rebates were no longer available, sales of efficient show-er heads and toilets were substantially higher than before the trial program. Sales of 6/3 toilets in the month following the trial were 209, compared to 154 in the month before the trial, and 300 during the rebate program. Sales of efficient shower heads were 154 in the month after the trial, 95 in the month before the trial, and 326 dur-ing the rebate program.
Water savings from the items purchased during the trial are estimated to be 13.2 million litres per year.Although substantial economies of scale could be gained on administrative costs for a larger rebate program, even this trial produced savings at a cost of 14 cents per 1000 litres for shower heads and 21 cents per 1000 litres for toilets, compared to a long run marginal cost of 80 cents per litre for augmenting supply with a new dam.
|Influences on Outcome||Extensive local promotion|
|Applicability||Applicable to other locations and to other types of products which produce beneficial environmental impacts.|
|Reference||White, S, Preferred Options, for T. Fiander and Associates (1994) Report on the Lismore Water Efficient Hardware Incentives Trial, Lismore City Council.|
|Initiative||Hunter Water Corporation's User-Pays Pricing|
|Location||Lower Hunter Region, NSW|
|Initiator||Hunter Water Board, now Hunter District Water Corporation|
|Type of Initiative||Economic instrument|
|Description||In 1982 Hunter District Water Board introduced a two-part tariff for its residential customers. The first part of the tariff consists of a fixed charge, independent of consumption, based on the service capacity provided; this is intended to cover the fixed costs of providing service. The second part involves a variable charge based on a charge per kilolitre of water consumed/sewage generated. Sewage generated is not metered but is considered to be half the water used. The initial fixed and variable charges did not reflect the respective cost elements in any precise way.|
|Results of Initiative||During the 1970s, water consumption gradually increased. In 1980, drought restrictions were imposed and consumption was reduced by 20 percent. Restrictions were removed in January 1982, and there was a slight upturn in consumption. After imposition of the user-pays tariff, average consumption declined by 10 percent in the first year, and another 10 percent in the second year. Over the nine years after its introduction, consumption was reduced by 30 percent against the trend that existed prior to the 1980–82 restrictions.
Higher consuming customers reduced use by the largest amount, 60 percent. Middle range consumers reduced by 15 percent, and lower range consumers, except for those below 100 kilolitres per year, held roughly constant. Customers below 100 kilolitres show a significant increase in consumption, but this is considered to be attributable to the use of more accurate water meters. Elasticity of water consumption has therefore been found to be highest at high consumption (-0.70); low at average consumption (-0.20), and very inelastic at low consumption (-0.05). This implies a residential consumption of around 400 kilolitres if water is not charged for, which is about the range discovered by a survey of country towns around Newcastle that did not have a user-pays tariff.
|Influences on Outcome||Unknown|
|Applicability||Applicable to other locations and to other types of services.|
Broad, P.A., Hunter Water Corporation (1992) The `User- P a y s ' Principle: How its Introduction Can Prepare Service Providers for a Competitive Service Environment. A Case Study by the Hunter Water Corporation.
Recreation patterns of Australians and people in other industrialised countries differ markedly from those of people in less developed countries. Recreation in Australia is much more likely to entail travel by car or plane, often to distant locations, and to involve use of equipment, some of which may be motorised. Because of the ease of travel, relatively large numbers of people may vacation in fragile natural areas. Both the mode of recreation and the location in which it occurs may result in environmental impacts. The use of energy for travel and use of motorised boats, snowmobiles or other equipment causes air pollution and greenhouse gas emissions. Other aspects of travel consume resources, whose production results in a range of environmental impacts. Activities in natural areas may result in damage to water quality and to the flora and fauna of the area.
The aim of initiatives associated with recreation is to provide the same level of enjoyment from recreation with lessened impact on resource consumption and the environment.
Indicators of change are fuel used or distance traveled for vacations, water quality in streams and other water bodies in recreation areas, and other site-specific indicators of reduced impact.
|Initiative||Minimising Discharge of Sewage from Boats|
|Location||Gippsland Lakes, Victoria|
|Initiator||Environmental Protection Authority, Victoria|
|Type of Initiative||Education; provision of infrastructure proposed|
|Description||Victorian EPA has taken steps to address concerns about pollution from recreational boats in the Gippsland Lakes, particularly in popular overnighting locations. In cooperation with the boating community, it has developed a code of practice. The code provides design criteria for on-board sewage holding tanks and portable toilets. The provisions related to holding tanks will not become applicable until onshore pumpout facilities are available. The code states that compliance with it is voluntary, but if it fails to prevent the discharge of sewage from boats into the Lakes, the introduction of regulations would be considered.
Government undertook to fund installation and operation of the on-shore pump out facilities at four existing fuel jetties ($102,515 installation and $34,600 annual operating costs for four stations). Remote facilities would be served by a service boat that also sold groceries, ice, and newspapers. The EPA is requesting local governments to require, as part of planning approval, the installation of pump out stations by developers of new large scale marina developments.
|Results of Initiative||Government failed to provide funds in the 1994–95 or 1995–96 bud-get for costs of installing and operating pump out facilities. Until these facilities are installed, the requirements in the code of practice regarding holding tanks are not operative. There has not yet been any change in practices.|
|Influences on Outcome||Lack of Government commitment, i.e., failure to fund facilities.|
|Applicability||Voluntary codes of practice are applicable to other locations and to other types of activities.
It is perhaps worth noting that New South Wales has adopted a different approach to the problem of sewage from boats. Three years ago, NSW adopted legislation prohibiting discharge of sewage from boats into Sydney Harbour and other waterways and required all boats with toilets to be fitted with holding tanks. The Government funded three pump out stations in Sydney Harbour, and spent substantial effort on education and materials and activities. All operators of marinas with greater than nine berths were required to install pump out facilities for their customers, although they could charge for use of these facilities.
As the legislation was adopted without community consultation, there was some initial resistance from boat owners in Sydney. In response to this, the NSWGovernment funded operation of a mobile service boat for two years. This subsidy has ended, and a private operation is being undertaken. The legislation has been welcomed in other parts of the state.
|Reference||Environmental Protection Authority (Victoria) (1993) Code of Practice. Installation and Operation of On-Board Sewage Holding Facilities for Boats on the Gippsland Lakes.
Meltzer, D. (1995) Sewage Disposal from Boats.
Meltzer, D., Victorian EPA, Gippsland (1995), personal communication.
Brix-Nielson, L., NSW Waterways Authority (1995) personal communication.
|Initiative||Tasmanian Minimum Impact Bushwalking Campaign|
|Date||on-going since summer of 1985–86|
|Initiator||Tasmanian Department of Parks, Wildlife and Heritage|
|Type of Initiative||Education, regulation|
|Description||A Minimal Impact Bushwalking campaign is being conducted to combat the environmental impacts caused by increasing numbers of walkers visiting Tasmanian National Parks. The campaign's messages are burial of human waste and carrying out of rubbish, use of fuel stoves instead of campfires, where and how to walk, `no trace' camping, not feeding wildlife, and avoiding use of detergents or soap in waterways. A variety of written materials was developed, including pamphlets, a video, posters, and a teacher's kit, as well as articles for the media. These were supplemented by information provision by rangers. Materials were assessed using qualitative market research techniques and widely distributed to organisations that provide information to bushwalkers.|
|Results of Initiative||Prior to inception of the campaign, up to half of all walkers on the Overland track in Cradle Mountain-Lake St. Clair National Park reportedly got sick from gastroenteritis. Since the campaign began, with its message about burying human wastes away from campsites and watercourses, there have been no outbreaks of gastroenteritis.
The impact on building campfires was surveyed over four years. In 1986, 70 percent of campers on the alpine end of the Overland track. After a campaign in which signs were posted saying Fuel Stove-Only Area, and rangers recommended use of stoves, the numbers of campers who said they had campfires on some nights declined to 47 percent in 1986, 27 percent in 1988, and 9 percent in 1989. In areas where less camper education was carried out, only minor or no behaviour shifts were found. The education campaign was supplemented by regulatory measures in 1989; in specified Fuel Stove Only areas, people can be fined up to $5000 for lighting a fire.
Improvements in camper practices occurred with respect to other issues, including carrying out rubbish, staying on tracks in tracked area, avoidance of damage to soil and vegetation at campsites, and elimination of soap and detergent use.
Officers responsible for the campaign have found that interstate and new bushwalkers readily accept the requirements placed on them; long time users of the areas are initially somewhat resistant to changes in longstanding practices.
|Influences on Outcome||World Heritage Area status reinforces message that the area is worth protection.|
|Applicability||Applicable and being applied in many other natural areas.|
|Reference||O'Loughlin, T. (1993) Walk Softly, In Hall, C. and McArthur, S, editors, Heritage Management in New Zealand and Australia, Visitor management, interpretation, and marketing, Auckland, Oxford University Press.
Rheinberger, B., Parks and Wildlife Service, Tasmania (1995), personal communication.
Superannuation funds are the fastest growing source of investment capital and will soon be, if they are not already, the largest source. The way in which people invest for their retirement will dramatically affect the economy as a whole. In the United States and the United Kingdom, consumers are recognising they can achieve their aim of retirement security while investing in companies or institutions whose environmental or ethical aims they support. Companies which want to attract such investors are motivated to change aspects of their operations that might discourage investment.
The aim of 'green' or ethical investment is to influence the way industry performs.
The only indicator of ethical investment is the amount of money invested in self-declared ethical funds or through investment advisors specialising in such investments.
|Initiative||Investment in Green Superannuation Funds|
|Initiator||Non-government organisations, private sector|
|Type of Initiative||Financial products|
|Description||A number of organisations and companies are now offering superannuation funds which specify that their money will be invested in ethical or environmentally responsible ways. Several investment advisers are also offering services based around this form of investment.|
|Results of Initiative||About $45 million is currently invested in ethical or green funds in Australia. This is obviously a tiny percentage of invested funds, but interest in ethical and targeted investment is growing. It is much more widespread in the United States and the United Kingdom.|
|Influences on Outcome||Declarations like the recent announcement of the Uniting Church that it will reconsider its investments in BHP because of that company's action on the OK Tedi mine could have a significant impact on investments in ethical investments. If the Uniting Church actually proceeds to change its investments and publicises its action, this would substantially increase the credibility of ethical investment.|
|Applicability||Many individuals and organisations could be motivated to invest their money in line with their ethical and environmental principles so long as their financial objectives are also achieved. Wi t h increased understanding and credibility, such funds could become much larger and more widespread, as they are overseas.|
|Reference||Carpenter, J. , S&B Investments (1995), personal communication.
Dreyfus, S. (1994) Money and Morals. An ethical investment buying guide, Soft Technology, Number 50.
Money Management/ASSIRT performance tables.
The Study Team has used the information obtained in its analysis of initiatives to make an assess-ment of the level of success of each initiative, along with a judgment about probable reasons for success or failure. These evaluations are shown in Table 3.
Table 3. Evaluation of Selected Initiatives
|Initiative||Level of Success||Reason for Success or Failure|
Changing Transport Patterns
Altering the Mode of Travel
|Encouraging Public Transport Use in North Sydney||high||no choice|
|Perth Northern Suburbs Transit System alternative||high||quality of service; desirable|
|$200 Levy on Sydney Car Park Spaces||nil||avoidable|
|Adelaide Northeast (O-Bahn) Busway||moderate||improved amenity (speed of travel)|
|Bicycle Victoria, Ride to Work Campaign||low||loss of amenity|
|Car Pooling Pilot Program, Royal Automobile Club of Victoria (RACV)||low||little gain for participants|
|Shellharbour Trial of Computerised Bus Demand Management System||low||no advertising; high cost; impractical|
Changing Fuels and Vehicles
|Increased excise tax on leaded petrol||high||point of sale price information in context of high awareness of benefit|
|Introduction of Natural Gas Buses in Sydney, Adelaide and other cities||moderate||consumer has no choice|
|National Average Fuel Consumption Targets||nil||voluntary agreement between government and industry — no incentive|
Changing Urban Form and Development
|Australian Model Code for Residential Development (AMCORD)||low||insufficient incentives for developers; resistance of neighbours|
Improving Energy Efficiency
|Leichhardt Council, Development Control Plan 17||high||no choice; improved knowledge, moral support; bandwagon effect|
|South East Queensland Electricity Board Rebates for Energy Efficient Homes||nil||poor targeting; low cost benefit|
|Energy Rating Labelling of Electrical Appliances||moderate||point of sale consumer impact; broad market influence on manufacturers because mandatory|
|Queensland Grants for Installation of Solar Water Heaters||high||high cost-benefit; removal of price barrier, removal of hassle|
Reducing the Impact of Food Production
|Sale of Organic Food||low||benefit uncertain|
Reducing Consumption of Harmful Chemicals
|Albury Phosphorus Awareness and Reduction Campaign||high||good education; high awareness; point of sale impact|
|Regulations for Ozone-Depleting Substances||high||no choice for consumers; alternatives cheaper for manufacturers|
Reducing Resources Used in Consumer Products
|Marketing of Recycled and Unbleached Paper Products||moderate||media publicity, public education|
|National Recycling Plan Targets||low||voluntary for manufacturers; not aimed at consumers; not monitored; not a market initiative|
|Queensland Tyre Recycling Program||moderate||mandatory aspect, incentives, but not as good as possible because no consumer involvement/orientation|
|Recycle Maroochy Program||high||incentive to act; education at point of activity; incentives to conform|
|Melbourne Pay-by-Weight Waste Minimisation Trial||nil||failure of equipment, negative effect|
|Ban on Recyclables in Rubbish||high||mandatory, threat, education|
Increasing the Efficiency of Water Use
|Lismore Rebates on Water Efficient Toilets and Showerheads||high||incentive to act, education, media|
|Hunter Water Corporation's User-Pays Pricing||high||incentive to act, education, media|
Reducing the Impact of Recreation on Natural Resources
|Minimising Discharge of Sewage from Boats, Gippsland Lakes||nil||no incentive, problematic to comply|
|Tasmanian Minimum Impact Bushwalking Campaign||high||media, education combined with regulatory action|
Investing in Sustainability
|Investment in Green Superannuation Funds||very low||investor has mixed motives; no independent information to reassure|