Reimbursing the future: an evaluation of motivational, voluntary, price-based, property-right, and regulatory incentives for the conservation of biodiversity
Biodiversity Series, Paper No. 9
M.D. Young, N. Gunningham, J. Elix, J. Lambert, B. Howard, P. Grabosky and E. McCrone
CSIRO Division of Wildlife and Ecology, the Australian Centre for Environmental Law, and Community Solutions
Biodiversity Unit, Department of the Environment, Sport and Territories, 1996
ISBN 0 642 24429 4
Chapter 6: Design principles for policy instruments
Because market forces cannot be relied upon to protect biodiversity, pluralistic interventions are needed to respond to the complex bioecological, aesthetic, moral and social dimensions that are involved.250
The impact of the various instruments and mechanisms can be measured against a wide range of criteria. The literature on the most useful set to use varies from a simple focus on efficiency and equity to complex lists of 10 to 15 criteria.251 The OECD,252 for example, suggests that each instrument should be evaluated against five criteria: i) environmental effectiveness; ii) economic efficiency; iii) equity; iv) administrative feasibility and cost; and v) community acceptability.
Having regard to the irreversible nature of many biodiversity considerations, we replace environmental effectiveness with the notion of dependency or certainty in delivering biodiversity conservation and add precaution to the OECD's list. Because temporal dimensions are often overlooked in many policy discussions we also focus on the benefits of providing resource users with continuing and dynamic incentives for improvement. Consequently in this report, our guidelines and recommendations are evaluated against.253
- Economic efficiency – Having regard to implied and actual values, the chosen trade-off between production and conservation is achieved at least cost (productive efficiency) and so that no reassignment of property rights would improve production or biodiversity objectives without making some-one worse off (allocative efficiency);254
- Dynamic and continuing incentive – the mechanism used continues to encourage technical innovation, improvement of biodiversity beyond the official policy target; and automatically adapts to changing technology, prices and climatic conditions;
- Equity – no group of people, including future generations, is unfairly disadvantaged or favoured by the instrument's operation;
- Dependability or certainty – the instrument will deliver the desired biodiversity target, even when knowledge about likely responses is uncertain;
- Precaution – the instrument avoids the chance of serious or irreversible consequences especially when there is scientific uncertainty about outcome;
- Administrative feasibility and cost – monitoring and information costs are minimal (low information cost),255 government enforcement is cost effective, can be financed from available revenue and self enforcement is encouraged (low administrative cost), the instrument's requirements are simply explained (Communicative simplicity),256 and the decision-making processes associated with the instrument can be understood by all parties (transparency); and
- Community and political acceptability – the policy instruments motivate the community to ensure that biodiversity conservation objectives are achieved, are perceived as being legitimately formulated and delivered, adds to social harmony, are consistent with government commitments and attracts bipartisan support.
The range of instruments that have been suggested for biodiversity conservation is very large. They are described in detail in Appendix 1 and examined pragmatically in each of the case studies. Thus, in this chapter, rather than rehearsing the entire range of mechanisms available, we identify particular instrument options which have value in protecting biodiversity and focus on their merits in terms of the seven criteria we put forward.
The instruments we examine can be usefully classified under five major headings: motivational, educational and information instruments; voluntary instruments; property-right instruments; financial mechanisms and regulation. Although there may be some overlap between each category,258 this classification is nevertheless a useful one. It enables us to distinguish the most important features of different instrument types and the circumstances in which they can most appropriately be applied. It provides a map to guide us through the maze of different policy instruments and helps with the development of guidelines for the selection of the suite of instruments that must interact efficiently, equitably and dependably at any location.
Box 6.1 The Precautionary Principle and biodiversity
Australia's Inter-Governmental Agreement on the Environment (IGAE) states that:
"where there are threats of serious or irreversible environmental damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation. In the application of the Precautionary Principle, public and private decisions should be guided by:
- careful evaluation to avoid, wherever practicable, serious or irreversible damage to the environment; and
- an assessment of the risk-weighted consequences of various options."
Essentially, the Precautionary Principle offers administrators advice about how to act responsibly in the face of uncertainty and lack of full scientific knowledge. Under this Principle, policy makers are advised to use great care when authorising resource uses where the outcomes of that use cannot be predicted with confidence, where one or more of the possible outcomes could have extremely adverse implications for future generations, or where no known substitutes exist for the resource being used. All these considerations are common to the issue of biodiversity conservation and the ecologically sustained use of its attributes.
The Precautionary Principle does not mean that all developments with uncertain ecological impacts should not proceed, as that would be to forgo benefits for current and future generations without justification. But it does mean that all options need to be explored when considering a significant irreversible action of unpredictable future consequences.
Amongst other things, the precautionary principle suggests that standards should be set highest in areas where knowledge about ecological relationships and biodiversity values is weakest.
Source: Young, M.D. 1992.257
The provision of information is an essential prerequisite to economic efficiency, for only with adequate information can decision makers arrive at decisions that do not lead to unintended consequences. An ecotourism operator needs to know where endangered species are so that they are not loved to extinction. Similarly, a local council can only make appropriate development decisions if it is aware of the status of the ecosystems within its jurisdiction. If, for example, local councillors are told that their shire contains one of the last examples of a wetland ecosystem, their reaction is likely to be different to one where all wetland use is banned by a state government without explanation.
6.3.1 Information supply
Information supply is fundamentally important in changing attitudes and behaviours. Indeed, the literature suggests that a great deal of environmentally inappropriate behaviour arises not from perversity or selfishness, but rather from ignorance, and that the greater one's knowledge of environmental issues and/or action strategies, the greater one's tendency to engage in environmentally-responsible behaviours.259 This finding is entirely consistent with views expressed by many people in the community consultations, as described in chapter 3 above. Similarly, research-based management advice was identified as a major need in a survey of landholders and managers of remnant lowland native grassland.260 Programs such as Victoria's Land for Wildlife scheme already recognise the central role of information supply. In addition to assisting in the establishment of wildlife habitats and biodiversity corridors, Land for Wildlife produces a series of booklets for landowners which provide constructive advice on matters such as native vegetation management, wetlands and waterway management and weeds control.
Where informed resource users have a self-interest in protecting biodiversity, then information programs, appropriately designed, can bring about very substantial benefits. If, for example, eutrophication of a lake is due to farmers using more fertiliser than is necessary to maximise profits, it may only be necessary to bring this to their attention. Enlightened self interest may then be sufficient to solve, or at least reduce, the problem. This mechanism can also be effective for common-property resources such as a fishery. Fishers may learn that the continued use of a certain type of net will reduce stocks to such an extent that they would lose their livelihood. They may also be informed that they can increase profits by using exclusion devices that reduce bycatch and hence the cost of sorting their catch. Enlightened self interest may then be sufficient to encourage them to either find less damaging gear or voluntarily change their practices.
Central to the provision of information about the effects of different types of activity is research. The costs of research tend to be high for any individual and are consequently most efficiently conducted by scientists on behalf of the people involved. Some of the benefits of research are private or, at least, can be recovered efficiently through the sale of goods and services, whilst other benefits are of a "public good" nature. Recognising this, Australia has developed a series of research and development corporations to finance selected forms of research on the use of natural resources. Equitably, these corporations fund research partly from consolidated revenue and partly from levies on the producers who stand to benefit from the research. Research is usually most cost-effective when it is conducted by specialist organisations in association with landholders who have specialist expertise in local land management.
Education campaigns which seek to harness the enlightened self interest of resource users are likely to achieve significant success for similar reasons to those indicated in the examples just given concerning information supply.261 However, self-interest is not an essential prerequisite for effective educational programs. On the contrary, there is evidence that people are willing to take action and pay more for conservation when they have an improved understanding of what it is that is under threat and why it may be important – even when their own material interests are not improved by doing so.262 Policy must therefore take account of the fact that beliefs and values may be central influences on decision-making.263
The nature of both information-based and education campaigns and extension activities will necessarily differ with the nature of the problem, and with the target audience. In some contexts, federal and state governments may play a key role, for example, in disseminating information kits to schools Australia wide, and facilitating their use. In others, information specific to a particular local area or region is appropriate, and the appropriate dissemination agencies are likely to be local government and other area-specific bodies, which have both local knowledge and credibility, and a comparative advantage in distributing information at the local or regional level.
Of course, not all information and educational initiatives will be equally effective in contributing to biodiversity conservation. On the contrary, design will be very important, and programs for attitude change in particular must be consonant with the perceptions, knowledge and moral characteristics of the target audience.
6.3.4 Advertising, awards and devolution of responsibility
One powerful set of incentives, not well developed in the economics literature, is the potential of mechanisms that attempt to shift public perception and attitudes to biodiversity. These include the devolution of responsibility, advertising and the granting of awards to those who adopt best management practice. Examples of the latter include the National Landcare Award for Nature Conservation sponsored by Australian Nature Conservation Agency. Internationally, Alcoa has received a Global 500 – Roll of Honour for Environmental Achievement Award for its rehabilitation of jarrah forests in Western Australia.
There is evidence that prizes and awards can play an important role in raising awareness of biodiversity issues, and changing attitudes. Those who were consulted for this report were generally unenthusiastic about this option.264 Nevertheless, there is reason to believe that in cost-benefit terms, prizes and awards are worthwhile, given that they are usually very inexpensive to create and maintain yet have positive results.265 If they are developed at community, regional and national level (eg local winners go on to compete at regional level, regional winners compete at national level) such awards can engage the interest of substantial sections of the community, often gaining widespread (and free) publicity and serving to raise consciousness and influence motivation at minimal cost. Existing models in comparable areas, such as Tidy Towns, bear testimony to the considerable success that such programs can have.
The advantages of devolving responsibility for decision-making and implementation to regional and local level have already been examined, including the sense of ownership, of "learning by doing", and peer group pressure. Such participatory strategies. engender are reinforced by the publicity awards attract at very little administrative cost.
Finally, well defined advertising campaigns can fulfil a similar function, serving both to provide information and to influence attitudes and behaviour. However, it must be acknowledged that such campaigns have not always been successful, and that much depends on the tactics used (see Box 6.2).
Box 6.2 Bringing about attitude change
One of the principal means of bringing about attitude change is through education and the dissemination of information. As we have already noted, the emphasis of any campaign will depend upon the target group which the campaign is attempting to reach, but generally such initiatives should have as their objectives the following:
- increasing recognition of biodiversity loss as a most significant environmental problem, on a par with, for example air and water pollution;
- teaching basic scientific facts about biodiversity;
- communicating the fact that much biodiversity loss is a direct result of human action;
- informing and influencing the way the media reports biodiversity issues; and
- encouraging the concept of stewardship towards the land.
Studies of community attitudes towards conservation have suggested that most people concentrate upon its utilitarian and anthropocentric aspects. Thus, messages about habitat destruction and species loss should be specific and concrete to bring the problem home. They must relate to things people are familiar with and have positive feelings about; and they should include people as part of the equation.
Source: Peter D. Hart Research Associates Inc. and Belden and Russonello Research and Communications.267
6.3.5 Biodiversity audits
There is also some scope for developing new and innovative motivational strategies. One option is the introduction of the biodiversity audits.266 These would involve a small audit team containing scientific and other expertise and including respected members of the local community. Their role would be to assess the biodiversity significance of land in the area. The audit results would be published locally (and would include evaluations of a range of land and, by implication, land users, in the area). This would itself raise awareness of biodiversity issues particularly if audits, like State of the Environment Reports, were conducted periodically, thereby enabling comparisons of the biodiversity characteristics of land over a period of time. If audits were coupled with a system of prizes and awards, their capacity to raise consciousness and influence attitudes would be further advanced in a cost effective manner.
Efforts to change attitudes towards biodiversity conservation must seek to instil a sense of competence and control amongst members of the target group (psychologists refer to this as fostering a strong internal locus of control). The more that the target individuals see themselves as capable of achieving the goals of biodiversity conservation, the more receptive they will be to conservation oriented messages. It follows that successful award schemes and other programs must be able to demonstrate concrete, practical achievements to a target audience. That is, effective motivation requires teaching "how" as well as teaching "what" the basic message is.268
6.3.6 Assessing the role of motivational, information and educational strategies
Motivational approaches, including information and education, frequently repay substantial dividends in terms of influencing behaviour. In most circumstances they can be implemented at modest administrative cost, yet the evidence is they can have a substantial impact on attitudes, and on behaviour, even in circumstances where it is not in an individual's self interest to protect biodiversity. As such they are cost effective. They are also perceived by resources users as equitable (eg information is usually widely disseminated and nobody is disadvantaged by it), non-interventionist, socially acceptable, and encourage rather than coerce behavioural change. Where they provide information that harnesses self-interest, they are also financially attractive and self-enforcing, and provide continuing incentives for biodiversity conservation and sustainable use. Their main weakness is that they contain no precautionary elements and can not be depended upon to conserve biodiversity when there is a significant gap between private and social objectives.
A variety of instruments and mechanisms can be classified under this heading, their main characteristics being that they rely neither on coercion nor substantially on continuing financial incentives, but rather on voluntarism and self regulation. The most important categories follow.
6.4.1 Voluntary, incentive and community-assistance programs
In some countries, voluntary programmes – often linked with community groups – are favoured over other arrangements as a mechanism for conserving biodiversity on private property.269 Voluntary programs do not require any commitment to participation for any set period of time on the part of the landholder or resource user. Rather, program participation relies upon the enthusiasm and goodwill of the landholder or resource user, and withdrawal from a program only results in a cessation of assistance. For example, all states in Australia have programs to assist in the voluntary use of land for the protection of wildlife. Some of these, such as South Australia's Private Sanctuary Scheme and Queensland's Fauna Sanctuary scheme, carry no financial inducements at all. Although not specifically oriented towards biodiversity conservation, the Landcare program is another example of this approach. Landcare reflects a desire to restrict government intervention to ameliorate land degradation through the encouragement of voluntary activity and the provision of extension services. It provides opportunities for joint activities and community involvement by invoking a sense of responsibility for land conservation. Other examples of voluntary approaches include voluntary membership schemes coupled with active extension programs, "Friends of" groups and demonstration projects (which also have a strong motivational component), and the inclusion of wildlife in property management planning.270
Voluntary approaches have the advantage (for the community) of being non-interventionist and (for government) of having low ongoing administrative costs. Grants to facilitate specific projects are one example of such incentives. While these overlap with financial incentives, they are distinguishable in that the grant is intended to provide only partial financial support for the project, which still relies heavily on the voluntary efforts of the recipients for its successful completion. Well targeted, grants can have high multiplier effects (see Box 6.3). A particular advantage of grants is that they usually cover only a proportion of the total costs and, hence, avoid the moral hazard associated with management agreements where people have an incentive to falsify receipts and overstate expenditures.
Voluntary assistance mechanisms are characterised by the fact that they build community attitudes and have no ongoing performance requirements. Motivational incentives are reinforced. Their main problem is that they can be difficult to target and monitor without incurring high administrative costs. For this reason, voluntarism is particularly appropriate in circumstances where applicants manifestly have a genuine interest in protecting biodiversity and no interest in obtaining a financial concession for themselves. For example, it might be appropriate to entertain applications from voluntary bodies, such as field naturalist societies, but not from private land users. It may also have considerable value where monitoring costs are low. Generally, these costs are lowest for species protection plans, and in particular for those which are of short duration, establish conservation targets and involve few landholders.271
Box 6.3 Leveraging public expenditure through non-government organisations
Government grants to environmental organisations offer the government the opportunity to gain some leverage on their funding as a result of the conservation work done by the recipients. An analysis, for example, of the Grants to Voluntary Conservation Organisations programme (GVCO) run by Australia's Commonwealth Government shows just how much leverage the Government can obtain from its contributions.
By assuming that every dollar expended by Voluntary Conservation Organisations (VCOs) generated an equal conservation output, and estimating the value of the conservation work that could be attributed to the proportion of expenditure represented by GVCO grants, Henry and Olson calculated that for every dollar of GVCO expenditure in 1991, VCOs generated $3.22 to the conservation effort in Australia. As the GVCO program also raises community awareness and understanding of environmental and heritage issues, it is possible that this 3.22 multiplier is an underestimate.
Source: Henry and Olson, 1992.272
6.4.2 Voluntary standard-based incentives
Another simple incentive is to accredit people and businesses that meet prescribed standards. The standards are normally accompanied by codes of practice, which may be voluntary but can be particularly powerful in creating a sense of environmental awareness and influencing the behaviour of others. Dealing with one of the main threats to biodiversity – pollution – the Victorian Environment Protection Authority issue 'accredited licences' to companies that adopt an accredited environment management system (underpinned by licence fee reductions). An Australian National Ecotourism Accreditation Scheme is being developed by the Commonwealth Department of Tourism.273
The focus of voluntary standard-based incentives is on the efficient provision of information to consumers interested in biodiversity. Accreditation means that an enterprise only needs to be evaluated on a periodic basis and not by every consumer.274 Eco-tourist operators who meet a high standard, for example, can be accredited as having sufficient expertise to inform people about the area being visited. Other examples include eco labelling, which is intended to provide consumers with information about the environmental characteristics of particular products,275 and the use of agreed codes of practice and periodic audits being undertaken by Australia's cotton and sugar industries.
Accreditation provides operators with an incentive to enhance their knowledge base. It thus serves to maintain minimum experience and qualification standards, and arguably might establish a "performance standard." To use the example of eco-tourist operators; it would assure clients of the quality of the operator's services, of their ecological credentials, and in particular of their degree of expertise. However, in practice, these benefits are not easy for industry to obtain. The experience of licensing and accreditation in other professions, such as financial auditors, is that it provides only a partial solution to quality control issues, screening out those who are manifestly unqualified or who are guilty of egregious misconduct, but doing little to address more complex issues of quality and compliance. In the case of eco-tourism, the fact that the industry is relatively new, the absence of generally accepted professional standards or clear guidelines, and the difficulties of effective enforcement all mitigate against the successful implementation of an accreditation strategy.
On the other hand, accreditation mechanisms – administered either by the industry itself (self-regulation) or, to ensure independence, by government in conjunction with the industry (co-regulation) – can be implemented at little cost. Even if they operate imperfectly, they may still provide positive benefits by making information available in an efficient manner to people who conserve services and products derived from the attributes of biodiversity.
6.4.3 Assessing the role of voluntarism and self regulation
Self-regulation and voluntarism have the considerable virtues of low administrative costs (often minimal in the case of self regulation), high community acceptability and minimal equity implications. They also promote an ethic of custodianship of the land. However, none of these qualities are significant unless voluntarism and self-regulation are also dependable in delivering biodiversity conservation. Here, much will depend on the extent of the gap between the public interest in biodiversity protection and the private interests of land users. Generally, the less the gap the more dependable voluntary mechanisms will be. Even here, a regulatory safety net may be necessary to deal with the irrational or incompetent.
Where landowners perceive their own (short-term as well as long-term) self-interest as being to protect biodiversity, (ie where society's interest in protecting biodiversity and the land user's interest substantially coincide) self-regulation may be a cost-effective and appropriately non-interventionist strategy.
However in the large majority of circumstances, there is a considerable gap between the public interest in biodiversity conservation and the private interests of individual land users.276 For example, whereas many land users may identify with the soil conservation objectives of Landcare, their self interest in protecting biodiversity is not so readily apparent, at least in the short term. More commonly, there is a perceived tension between maximising the use of productive land and protecting remnant vegetation. While the preservation of such vegetation may arguably provide long term benefits to land users (acting as a windbreak, reducing salination etc) these benefits are less tangible and immediately realisable than the increase in short term productivity which remnant removal promises. For land users who are economically marginal, the evidence is that short-term production pay-offs are often perceived to outweigh possible longer term benefits of conservation, and this suggests a major limitation of self-regulation and other motivational-based approaches to biodiversity protection. History suggests that in these sorts of circumstances such strategies cannot be depended upon to conserve biodiversity without assistance from other mechanisms.277
In the case of biodiversity conservation, market failure is pervasive and results (inter alia) from externalities, the complete absence of markets for some aspects of biodiversity, and inadequately or incompletely defined property rights. Property-right mechanisms seek to compensate for, or reverse, market failure through mechanisms which make resource use opportunities consistent with social values. As with other market-based instruments, the aim "is to alter private costs and benefits so that an unaccounted costs (and benefits) can be "internalised" to ensure the desired environmental improvement"278. This can be done by either modifying property rights so that the market opportunities offered to individuals are different, or directly changing the costs of resource use via the use of charges, levies and taxation arrangements.
6.5.1 Exclusive-use rights
Economic theory suggests, controversially, that when people are granted an exclusive right to use and profit from a resource they have a greater incentive to conserve that resource and a lesser incentive to exploit it unsustainably. Examples include private parks, and rights to exclude people from areas of high value for recreation (see Appendix 1). Once a right or value is created, the owner has an incentive to maintain that value so that they can maximise the profits that accrue from selling that right. It conflicts, however, with the widespread Australian belief that biodiversity is owned collectively by society at large and held in trust for future generations. Nevertheless, such exclusive-right mechanisms can create a sense of custodianship which in itself may be sufficient to encourage the conservation of biodiversity. The challenge is to decide which areas can be transferred to exclusive private property and which must be managed via closely supervised government processes. In examining exclusive rights mechanisms, it is important to distinguish a right to use a resource as they wish from a right to the exclusive benefit from a resource.
Many farmers have exclusive rights (via state government trespass laws) to determine who may drive, camp and hunt on their property. In areas of high biodiversity, the ability to control access to natural resources can provide an incentive for investment in biodiversity conservation and to develop nature-based tourism. Our Top End case study, for example, provides several examples of pastoralists who are now charging people to camp on their property (see Appendix 2.7). Similar arrangements can be found in many national parks and resort developments.
Zimbabwe's CAMPFIRE program (Communal Areas Management Programme for Indigenous Resources) is perhaps the best known and most effective case of this "exclusive rights" approach to species protection. Under this program, local communities have been given the right to use wildlife as they wish. Some have developed game ranches that sell meat and hides, others safari opportunities that sell people the right to shoot a trophy, and others offer only the opportunity to view wildlife. The rights given, however, have been carefully designed – wildlife remain a community resource. The result has been a complete reversal of community attitudes to wildlife and the emergence of many innovative market arrangements.279 Generally, the people involved see wildlife as an asset worth preserving.
A particular case for an "exclusive rights" approach can be made in contexts where it can avoid the "tragedy of the commons". Where there are no private or narrowly defined communal rights to regulate the use of a resource, everyone has an incentive to exploit it as quickly and as much as possible. In these circumstances, experience has shown that allowing private ownership and commercial exploitation of certain species can be highly beneficial to their conservation, at least where transaction costs are not high.280
Equally important, however, are the social and ethical considerations which inform the debate over access to, and utilisation of, biodiversity. There are substantial limitations to the exclusive property-right approach. It is only likely to succeed under certain conditions; (eg habitat which has relatively low value in alternative uses); exclusive property can be expensive to established and to enforce; owners of wildlife need to be able to compete effectively with either poachers or manufacturers of synthetic substances.281
Furthermore, even in cases where this approach is likely to "succeed,"it may still have adverse side effects on populations as they are continuously selected for productivity. As indicated in the fishing case study, for example, fish farming leads to the selection of fish for high fecundancy and when these fish escape into the wild they can overwhelm native stocks. Finally, only flora and fauna that have commercial value can be protected under this approach. There is only a market for a very limited number of species and habitats and the majority of biodiversity conservation cannot be addressed in this way. Many aspects of biodiversity, such as genetic resources and ecosystem services, are public goods whose benefits are available to everyone and excluded from no-one with the consequence that they cannot be captured and marketed282 and as such, must be protected by other means. Today in most of Australia, exclusive "freehold" rights are constrained by many regulations and other instruments, so that those aspects left to pure market forces do not compromise other considerations.
6.5.2 Bioprospecting contracts
Bioprospecting contracts are a special form of exclusive right used to maintain equity and encourage people to maintain a resource in the hope that people will find an asset which can be marketed. They seek to make biodiversity protection the 'highest and best use' for a resource.
The most prominent biodiversity prospecting contract is a contract between Costa Rica's National Biodiversity Institute (INBio) and Merck and Co. Ltd., a large pharmaceutical firm. In 1991, Merck agreed to pay INBio US$1.135 million for the right to screen samples from INBio's biotic collection. If the screening results in a commercial application for Merck, INBio will share royalties on product sales. Under the agreement, a set amount of the direct payment (10%) to INBio and 50% of any royalties must be returned to conservation projects or national parks. An agreement similar to that of Merck/INBio has been negotiated in Australia. Astra Pharmaceuticals has paid the Queensland Pharmaceutical Research Institute so as to benefit from the Institute's screening process. The Institute hopes to share in any commercial benefits arising from the USA's National Cancer Institute's interest in a chemical from a Western Australian shrub which showed promise against Human Immune-deficiency Virus (HIV).283
More generally, the intellectual property regime could provide a mechanism for the equitable re-distribution of exclusive use rights between resource custodians and resource users such as bio-prospectors.284 An intellectual property right grants its recipient, for example a bio-prospector, with the exclusive right to utilise a biological resource in a commercially packaged form. To encourage biodiversity conservation by resource custodians, it has been suggested at the Commonwealth level that access to biodiversity should be made conditional upon the bio-prospector recognising the resource custodian's right to 'proportionate ownership' of the intellectual property pertaining to the commercial products developed from biological resources.285
Although this suggestion is in the spirit of the UNCED Convention on Biological Diversity, intellectual property-driven conservation models being currently proposed are technically difficult to achieve given current technologies and methods for the inventory and classification of organisms. There are also doubts as to whether the royalty returns from intellectual property derived from natural resources would be sufficiently high to amount to an economic incentive in favour of the preservation of biodiversity by resource custodians. Furthermore, the capacity of the intellectual property regime to encourage biodiversity preservation is limited by the traditional reluctance of the judiciary and the legislature to apply intellectual property principles to naturally occurring organisms. The intellectual property regime has traditionally been associated with the grant of exclusive use rights over inventions of a technical character. The regime is ill-adapted in its application to wild species as they exist in nature.286
Whereas the intellectual property regime concentrates upon the grant of exclusive use rights in biological resources in their commercially packaged form, an alternative method of encouraging biodiversity conservation might focus upon more rigorous regulation of access to those biological resources in their natural environment.287 In the bio-prospecting field, for example, access to genetic resources could be made conditional upon the bio-prospector agreeing to share a proportion of the commercial returns with the resource custodian.
6.5.3 Individually transferable property-right mechanisms
Recognition of the above problems with standard licence, lease and permit systems has led to growing interest in the use of individually transferable property-right mechanisms. Individually transferable property-right mechanisms are well suited to the management of many threats to biodiversity and to the harvest of attributes of biodiversity where the goal is to find a mechanism to keep economic activity within limits set by periodically reviewed management plans. Well designed, their main advantage is that they force administrations to set targets for threats to biodiversity. To date, however, their use has been controversial, because many of the systems implemented have not built in mechanisms that enable the rights to be modified as circumstances change and insufficient attention has been given to the regulatory and institutional arrangements necessary to make them effective.288
They are more dependable than levies and charges because they use institutional mechanisms to work out the optimal trade-off between use and conservation and then market mechanisms to determine how to achieve that trade-off. An added advantage is that any structural adjustment necessary to reduce the threat is achieved through the sale of rights from one person to another. This means that those who give up their rights are compensated by those who continue to use them. Consequently, they tend to be more equitable than other pricing mechanisms. The structural adjustment necessary to conserve biodiversity also occurs at less administrative cost than mechanisms that require changes to be negotiated individually by administrators with each permit holder. In the case of estuary pollution, for example, one option is to use a community or co-management structure to determine the maximum annual quantity of pollutants that may be put into the estuary and how frequently this maximum should be revised. Having done this, industry can then be given shares in this allowable waste stream and be encouraged to use or trade them as they see fit. The result is an efficient and equitable attainment of an objective necessary to conserve biodiversity in a manner that imposes least cost on industry.289
Transferable property-right mechanisms can be used to build bottom-up industry and community-initiated processes. This is particularly important in the case of resources where there is immense uncertainty about ecological relationships. In such situations, community-based decision making processes can be used to ensure that users collectively understand the issues and are prepared to enforce the decisions taken. For this to occur, the benefits associated with the risks taken must be internalised. Thus, fishers can be encouraged to close an overfished fishery by guaranteeing those in it a proportional share of any future harvest and the right to decide when this will be taken. Similarly, the Western Australian wheatbelt case study identifies the possibility of using tradeable vegetation obligation as a means to simultaneously reduce dryland salinity and improve biodiversity values, in a cost-effective manner and with a high degree of community involvement. The mechanism is financially attractive and based on trade-offs between current and future profit opportunities. Careful attention should be paid to the design of the institutional arrangements used to periodically revise any conditions that attach to the property rights where the goal is to find a mechanism to keep economic activity within limits set by periodically reviewed management plans. Box 6.4 summarises a new property-right system being introduced in New South Wales.
Although there are demonstrable benefits of transferable property rights in respect of fisheries (where one can trade equivalent units) these benefits may not translate readily to other aspects of biodiversity conservation. For example, a fundamental problem with transferable tradeable tree clearing permits (arising, for instance, from a government policy of limiting the proportion of vegetation cleared, but not specifying precisely which land it applied to) is that:
there is not necessarily any equivalence between the damage caused by clearing in one area and clearing in another... As its name implies, biodiversity does not have the common currency contemplated by a uniform tax or trade in equivalents.290
Box 6.4 Individual Transferable Quotas: the New South Wales fishery share system
Simple Individual Transferable Quotas (ITQ) systems can be criticised because they neither foster a long-term outlook among quota holders nor recognise the interdependence of many fish populations. Systems equally need to be sufficiently flexible to allow review and modification according to biological and economic (equity) requirements. Ideally, they should also remove the incentive to fish for quota and encourage an adaptive approach to management as new information becomes available. Introduced under the New South Wales Fisheries Management Act 1994, the NSW scheme introduces several refinements to the ITQ system.
NSW fisheries involve over 100 species of fish in some 15 fisheries. Fishers are to be given shares in each fishery and, in the future, all transactions will be linked to the number of shares held by each fisher. The scheme is based on a mixed input-output control system. All restrictions on boat size, for example, are linked to the number of shares held and, for key species, individually transferable annual quotas are issued in proportion to the number of shares held. Whenever it is deemed appropriate to quota another species, the new quota is allocated in proportion to the number of shares held so that there is no incentive to fish for quota. Input conditions, which resemble a lease condition, are attached to shares and revised along with a management plan every five years. If participants in the fishery agree, fishers can be given the choice of rolling over to the new management plan as soon as it is finalised or, alternatively, dropping through at a later stage with a loss of 15 per cent of shares.
Shares are mortgageable so that their value in maximised. Transaction costs are minimised via a dual property right system that enables allocations to move from one share holding to another. To increase compliance, penalties are expressed in the form of the number of shares that have to be surrendered for various offences. Coupled with the requirement for fishers to hold a minimum number of shares, this means that each fisher's shareholding acts like a security deposit and, because of the mortgage arrangement, financiers have an incentive to encourage compliance.
Administrative costs are recovered via a series of administrative charges. A "return to the community" is provided for via either the annual tender of a proportion of each share holding ,or a tax on the estimated value of the annual catch. The former system has the advantage that it forces the rapid emergence of a mature market, makes the value of each fishery transparent, allows ready entry and expansion and makes it difficult for monopolies and oligopolies to form.
Source: Adapted from Young. M.D. (1995) "The design of fishing right systems: The NSW experience." Paper to the ABARE Outlook Conference, Canberra.
Covenants (and, in the American terminology, easements as well) are instruments which restrict a landowner's ability to exercise particular rights over their property; for example, they can be used to prohibit the clearance of natural vegetation, or to preserve an area which supports certain types of wildlife. Generally speaking, easements allow someone other than the owner to use a resource, whilst covenants prevent the owner from acting in certain ways, but the legal distinction between the two concepts is a matter of some technicality and is not important for present purposes. In Australia, conservation covenants like the South Australian Heritage Agreements are often used to prevent land clearing (see Box 6.5).
While property rights based, most covenants and easements might be classed as voluntary, in that they arise as a result of contracts voluntarily entered into between land users and either NGOs or government. More commonly, the inducement to enter into such agreements is a payment made directly to the landholder.
Easements and covenants can be for a fixed term, or they can operate in perpetuity, binding any successors in title as well as the original landholder. They have the advantage of securing benefits without paying the cost of outright purchase or incurring the maintenance costs of the land itself. Accordingly, they are cheaper for the government institution (or private organisation) involved.
Because they are negotiated on an individual basis, covenants present the opportunity for careful targeting. The experience of a number of countries suggests that covenants and easements offer considerable scope for the "establishment of buffer zones, wildlife corridors and protected area management"291 although the costs of monitoring and enforcing compliance must be weighed against these benefits. As indicated in the Western Australian wheat-belt case study, easements are particularly cost effective when the areas needing special protection are fragmented and the main requirement is to prevent an action such as clearing.
The acquisition of conservation covenants need not be the sole domain of government and could be extended to non-government organisations. For this to occur routinely, however, most states would need to enact legislation to enable non-government organisations to acquire a conservation easement and when default occurs enter into possession of the land in a manner similar to the practice used by first mortgagees when faced by a loan whose payments are in default. The effectiveness and potential of non-government organisations in using these mechanisms would be further enhanced if transactions of this nature are exempt from sales tax and, as such activity is in the public interest, registered at no cost to them.292
Another and different role for conservation easements, is in creating opportunities for people to enjoy biodiversity. This is particularly important in areas where any person entering an area is judged to be trespassing. In an attempt to overcome this problem, the government in the United Kingdom, under its Wildlife and Countryside Act 1981, acquires rights for the public to walk on private land. In special circumstances this mechanism could provide an efficient and effective means to develop nature-based and ecotourism in Australia.
Box 6.5 Examples of covenants and easements in Australia
In South Australia, Heritage Agreements are available to landholders who want to better care for native vegetation (they also apply to coastal waters). The Agreements are, in effect, conservation easements registered on the land title and thus binding on succeeding landholders. There are now 750 Heritage Agreements registered, covering about 420,000 ha, with another 150 agreements to be finalised by 1995/96 which will take the total area covered up to 600,000 ha (encompassing 20 per cent of native vegetation within the state agricultural regions). It has been noted that there are difficulties in servicing 750 agreements scattered over large areas and furthermore, the measures require a large financial commitment over a long period of time. In cases where land managers are hostile, there is also difficulty in achieving land manager ownership and responsibility for ongoing maintenance.
The Conservation Covenant Program in Victoria is an example of statutory covenants whereby entry into the agreements is voluntary. The covenant is registered on title and binds all future owners. In contrast with many other schemes, the program is administered by a private trust known as the Victorian Conservation Trust. The aims of the program are to conserve areas on private land which are ecologically significant, of natural beauty or of historic interest, and to conserve wildlife and native plants. A total of 309 covenants covering 10,000 ha have been approved. Conservation covenants are increasingly being used to achieve negotiated planning solutions in rural areas to secure nature conservation values while allowing higher density land use. The Trust considers this to be an effective program that is steadily gaining popularity, however, acceptance by mainstream farmers has been slow. The Trust intends to address this issue by means of publicity and educational materials directed specifically at farmers, and through building more flexibility into the covenant program to better accommodate the diversity of nature conservation and land management concerns on farming land.
Source: See Appendix 1.
6.5.5 Management agreements
One of the simplest forms of a conditional use right is a contractual arrangement, or management agreement, whereby landholders are reimbursed for the incremental cost of providing non-marketable biodiversity services and the capital costs associated with building fences necessary to conserve biodiversity. The normal mechanism used is one whereby landholders are offered the opportunity to agree, in return for a payment, to contribute to the maintenance of biodiversity not expected of that person's market competitors. This could involve a legally binding contract entered into for a period of time, under which a land user agrees to refrain from certain activities and to undertake other activities in return for reimbursement. Thus, a farmer might be reimbursed for the cost of removing weeds from a unique area, or a non-government organisation for the cost of reclaiming a degraded area. An example of this is found in the UK's Environmentally Sensitive Areas scheme, where payment is made at a set level per hectare or per unit of work done by all landholders who enter into a standard contract. These contracts are usually of a duration of five years to twenty years.
As illustrated by our agricultural and wet tropics case studies, management agreements fulfil a crucial role, given that while bans and clearance controls serve to halt existing degradation, they do not achieve ongoing protection in semi natural systems, nor can they be modified to do so.293 In these circumstances, invasion by feral animals, lack of appropriate fire management, land degradation, and a host of other threats, may gradually erode the biodiversity value of the land unless there is some positive incentive to protect against these threats.
The need for ongoing protection is particularly compelling in respect of remnants on private land, because these are frequently small, and, as a result, need more intensive care than more substantial areas.294 The case for direct payment in exchange for agreements to manage the land in these circumstances is a compelling one. As Farrier points out: "Management agreements harness the knowledge and expertise of private land users and give both incentives and greater ownership of the issue to those who already have an ongoing relationship with the land."295 Such "off reserve" management utilising the existing capacities of private land users may, for these reasons, be a cost-effective alternative to protecting biodiversity "on reserve" where government resources are rarely adequate or fully effective.296 In Europe, a number of schemes involving payment for biodiversity management exist, financed either through the Common Agricultural Policy arrangements or through national sources.297
Management agreements have the virtues of being financially attractive, flexible, cooperative and non-intrusive (where voluntary) and easily targeted. Their most obvious limitation is their high administrative cost. To be effective, they also require some periodic oversight, auditing or other forms of supervision on the part of government.298 Since the distance between properties subject to such agreements may be substantial, and some agreements may need to be tailored to the individual circumstances of land and land users, administrative costs will be significant. However, means may be available to mitigate these costs by transferring part of the oversight role to local communities. Experience in the United States of America has shown that one of the most efficient ways of encouraging the efficient use of management agreements is through the provision of taxation arrangements that encourage non-government organisations to become involved in this activity.299
Management agreements as a "stand alone" mechanism are subject to a serious limitation, namely that such arrangements need to be periodically renegotiated, and at each renegotiation the person involved has an opportunity to hold the benefits of their work for ransom. An agreement to pay for the cost of fencing a unique habitat and keeping it free of weeds, domestic and feral animals is of little value to society if, at the end of a ten year period, the fenced land is cleared. Accordingly, while management agreements "buy time", they do not provide or promise permanent conservation. Consequently, to achieve dependability, the most effective management agreements are underpinned by a conservation covenant designed to protect biodiversity in the longer term. For example, a conservation covenant attached to the land title, negotiated in conjunction with the management agreement, could require the existing landholder and all subsequent landholders to neither damage nor threaten to damage that habitat.300 Significantly, there is no reason why the positive covenant (to manage) cannot run with the land.
Although management agreements are usually regarded as market-based incentives and accordingly as voluntary, it may be desirable to add a regulatory arrangement in some circumstances. As Farrier points out:
we cannot afford to leave the choice of areas to be protected to the whims of the marketplace, and particularly to those prepared to hold out for ever larger sums. Ecosystems cut across property boundaries. By refusing to cooperate, one person with a strategic land holding can effectively destroy a wildlife corridor or leave a destructive gap in a buffer zone. A regulatory fall back position, as an alternative to an outright purchase of the land, is even more inevitable where the land in question is core area.301
6.5.6 Offset arrangements
An alternative to the direct use of property-right mechanisms is the introduction of off-set arrangements. Under these arrangements, industry is given the choice between off-setting the damage they cause or paying an authority to do it on their behalf. In the case of wetlands, for example, a developer may be asked to either pay for the cost of reclaiming a wetland whose environmental services are equivalent to those to be lost, or pay a local council to do this on the developer's behalf. Off setting arrangements with regards to wetlands – known as wetlands mitigation – has been a prominent part of American environment policy for over two decades now,302 but grave doubts are held by many as to their value as a means of wetlands protection.303
It has been argued that such means are simply ecologically ineffective, because of insufficient knowledge about the science of creating or restoring wetlands. For example, a study carried out in 1985 found that of 32 wetland creation projects carried out in Virginia, only 9 had been evaluated as successful. Even if successful, mitigation efforts can result in fragmented segments of wetlands of far less richness and diversity than the areas which they are intended to replace. Others have criticised the administrative framework used to oversee mitigation projects, claiming that inadequate resourcing has meant that project plans are often not carried out at all or, if they are implemented, are not monitored or maintained.304
There have been some moves to address these regulatory problems with increased use of mitigation banking – which requires the restoration or creation to be performed in advance of the proposed loss305 – but this does not address the issue of whether such mitigation is ecologically viable. The overall conclusion is that, at least in the forms used so far, wetland mitigation schemes are not a dependable means of conserving biodiversity.
6.5.7 Leasing and licensing
In many situations, the simple allocation of exclusive property rights is insufficient to conserve biodiversity in association with the production of marketable goods and services. There are several reasons for this. Firstly, some attributes of biodiversity have little current commercial value but high public value and, hence, are unlikely to be valued highly by people who use resources associated with them. Native vegetation on land of value for crop production is one example. The flow of water to a wetland such as that observed in the Macquarie Marsh case study is another. A second reason is that some species do not grow at a rate fast enough to make their conservation profitable. When the rate of growth is less than the real interest rate, the profit maximising strategy is to harvest the species until it is either extinct or the last few are too expensive to find.306 A third reason is when the actions of one person have adverse effects on biodiversity in another location. For example, both water pollution and salination are often the product of inappropriate land-use practices in a different location.
In all of the above situations, one traditional mechanism used by governments is to issue licences, leases and permits to use natural resources. Examples explored in the case studies undertaken in this report include licences to shoot kangaroos, pollution permits, licences to collect native plants and leases to graze rangelands. In their simplest form, these permits combine economic opportunity with a series of restrictions in the form of conditions tailored to a specific location – as such, they have some characteristics of regulation as well as of property rights. Their prime administrative advantage is that they give administrations a periodic opportunity to review progress and use conditions. As such they are probably the main mechanism used to control activity that has site specific implications for biodiversity. In theory, a high degree of dependability is offered. In practice, unless careful attention is given to institutional arrangements, administrators are easily captured by licence and permit holders with the consequence that official objectives are poorly achieved. They are, however, a mechanism used routinely by private enterprise and, in countries where non-government is actively involved in biodiversity conservation, by these organisations. In the United Kingdom, for example, the National Trust owns large amounts of land that are leased to private individuals on terms designed to give priority to wildlife conservation.307
Often criticised for their failure to conserve biodiversity, licences, leases and permit systems are being closely scrutinised for mechanisms that increase their enforceability, and give administrations and resource users dynamic and continuing incentives to maintain biodiversity values and increase the efficiency of resource uses.
A problem with many existing systems is that all the pressure for change is placed on new licence holders and not those whose current licence conditions are fixed. Another is a failure to allocate rights and conditions on an ecosystem basis so that the total impact of all licences is kept within sustainable limits.
6.5.8 Assessing the role of property-right mechanisms
As with motivational and voluntary mechanisms, property-right mechanisms offer a powerful means to encourage people to conserve biodiversity and limit its use to that which is sustainable. They do this by either constraining or expanding the opportunities available to resource users. Where markets for these rights can be created, often change can be achieved with less cost to society and with greater equity than is achievable under other mechanisms. Property-right mechanisms also have the advantage that they can be tailored to site specific problems in an administratively efficient manner. Experience with the effectiveness of these mechanisms however, is mixed. As illustrated in our rangeland case study, for example, the leasing mechanisms used to try to protect biodiversity on leased pastoral lands are far from perfect. In particular, the effectiveness of property-right mechanisms is dependent upon the capacity of the institutional mechanisms used to develop, review and enforce them.
Property-right mechanisms influence prices indirectly by changing the cost of certain activities and preventing others. In most policy areas, governments also influence prices directly via charges, levies, transaction arrangements and users fees. Conceptually, such mechanisms could be used to control most threats to biodiversity but, in practice, this is rarely done. The reasons for this are that they can not be depended upon to protect biodiversity in an efficient manner because markets assume reversibility, or at least the presence of good substitutes, and because it is administratively impossible to tune these instruments to cope with the diversity of problems found at each location and then adapt them through time. Nevertheless, in selected circumstances, pricing mechanisms do have a significant role in revealing the cost of preventing and controlling adverse impacts on biodiversity.
Unfortunately, all mechanisms available for the conservation of biodiversity, including regulatory mechanisms, cost money. Thus a second role for market-based instruments is to raise the revenue in an equitable manner. A third role is to act as a circuit breaker in shifting community norms about, and attitudes to, biodiversity conservation.
6.6.1 Performance bonds
One alternative, which can be used when the arrangement is likely to be transitional, is a performance bond. These entail the user lodging a specified amount of money with the regulating authority, which would be returned to the user at the end of a specified period, but forfeited to the regulatory authority in the event of breach by the user. The most obvious example would be a performance bond lodged by a mining company which undertakes to rehabilitate land used for mining once an operation is complete. In the event that the company fails to adequately restore the land and its biodiversity, all or part of the bond would be forfeited and deployed for remediation purposes. Performance bonds are equally applicable to pollution reduction and effluent control programs and might be extended to forestry and fisheries. They are socially acceptable,308 administratively simple and cost effective, and incorporate both the "polluter pays" and the precautionary principles, but are only appropriate to address temporary threats, as in the example above.
6.6.2 Charges, levies and use fees
It can be argued that resource use will be most efficient if people pay for the conservation of biodiversity in proportion to the benefits they receive from such conservation. Moreover, wherever possible, and whenever a product is sold, pricing mechanisms should be used to pass the costs of conserving biodiversity and ensuring its sustained use on to those who benefit from it. One obvious area where some costs can be passed onto users are those associated with the provision of services to nature-based tourism and the cost of protecting biodiversity from them.
The main mechanism used to collect money from those who use biodiversity are charges, levies and use fees. These can be used both as a means to ration use so that it is kept within sustainable limits, and to finance research, management and protection. They can also be used as a means to raise government revenue.
It is now a widely accepted principle that the users of any service should pay for the costs of providing that service to them. When users have to pay for a service, such as monitoring and pollution prevention, they soon develop a strong interest in the amount of money being spent and the cost of services supplied. Links between management and resource users are strengthened. Political pressure for the administering authority to reduce costs emerges. Cost recovery is now being applied routinely in many industries.
For biodiversity policy the opportunities presented by use charges, user fees and levies are substantial. For example, there are some 2 million visitors per annum to the Wet Tropics World Heritage Area – if charged $5 per head, these tourists would produce revenue of $10 million per annum. Revenue of this nature could do much to offset the cost of preventing damage to this resource and, through research, improving its value. On equity and efficiency grounds, it could be argued that greater consistency between states and regions could be justified. As indicated in Appendix 1, the current array of pricing mechanisms is wide and inconsistent.309
In choosing between the available mechanisms, consideration of collection costs is important. Collection costs can be reduced by moving the collection point upstream – for example, from tourists to tourist operators and resort owners, as is done in the Great Barrier Reef. Boat licence fees and recreational fishing licences offer similar mechanisms to recover the costs of monitoring and enforcing compliance with regulations. An additional issue, identified in the Kangaroo Island case study and Chapter 5, is the impact of transport development and utility suppliers like the telecommunications industry on remnants of native vegetation found on roadsides and along railways. Both maintenance and development of these resources pose major implications for Australia's remaining biodiversity, especially for systems and species not yet represented in the nation's protected area network. An equitable and efficient means of addressing these threats would be a very small levy on the maintenance, construction and expansion of the transport and utility systems. Introduction of a levy, as small as 0.01%, would act both as a circuit breaker that would shift industry and community attitudes and finance the activity necessary to maintain valuable remnants. The mechanism would be most efficient if industry could obtain credits against the levy for expenditure on off-setting resources, such as the acquisition of conservation easements on land adjoining roadsides and the restoration of important corridors.310
As indicated above, the cost of administering and enforcing compliance with biodiversity conservation requirements and the collection of charges and levies is likely to be influenced substantially by the attitudes of the individuals being levied.311 If there is strong support for the system, then both collection and enforcement costs will be less. One mechanism often used to increase acceptance of charges and levies is to give those whose incomes are affected by the charge or levy a say in determining how the resultant money is spent. Alternatively, a government can promise to commit the money collected to a cause. Known as hypothecation, this mechanism is used to underscore the point that communities should contribute directly to the financing of programs that improve the environment. For example, it is widely accepted that local government should be free to spend the rates it collects. When introduced, resource management authorities integrate financial instruments with the instruments available to them.
The converse view, supported by treasury departments, is that as social and economic needs change, hypothecation arrangements ultimately result in the inefficient allocation of revenue as priorities can not be redirected. Moreover, communities become dependent upon these allocations in a manner that makes review and revision administratively difficult. Hypothecation arrangements also make organisations less accountable to the community as the budget formulation and approval processes are not transparent to the wider community. Nevertheless, mechanisms that retain local control of money raised to offset the costs of biodiversity conservation provide a powerful means to increase local acceptance of a program, to empower local communities and to reduce enforcement costs. Moreover, our consultation forums indicate wide acceptance and support for such mechanisms. Where the issue is one of cost recovery by making users and beneficiaries pay for the costs of providing services to them, there is little conflict between the community and treasury departments on hypothecation. In fact, they usually do not define this as hypothecation. The Commonwealth Department of Finance, for example, has argued that "effective application of cost recovery principles can also have a number of additional benefits, including increased feelings of community ownership and involvement in management of an area, local employment generation and education and information about the impacts of activities... and the costs of providing adequate protection."312
6.6.4 Tax instruments
From a tax perspective, biodiversity conservation can be assisted through two mechanisms. The first, already covered, is by making greater economic use of its attributes. When this occurs, expenditure on biodiversity maintenance is tax deductible because it is expenditure made in the course of earning income. Use of the attributes of biodiversity also shifts the nature of threats faced. The West Australian wheatbelt case study identifies the role of significant returns available from activities like wildflower production and brushwood production on some farms. Such activity increases willingness for people to retain native vegetation. At the same time, however, it creates new incentives for this vegetation to be manipulated in ways that maximise production rather than biodiversity objectives.
Taxation mechanisms can also be used as a mechanism to change the cost of undertaking various activities, and are already used as a means to close the gap between social and private values. Expenditure on land degradation control under approved management plans is fully deductible in the year of expenditure and when involving capital items need not be depreciated (see Appendix 1). One opportunity worthy of careful evaluation is the extension of these mechanisms to include approved work on nearby land which may not be used for productive purposes where only actual costs, not labour, would be deductible.
Taxation mechanisms can also work against biodiversity conservation by encouraging people to develop resources rather than conserve. Indeed, a significant proportion of Australia's native vegetation was lost through taxation concessions which encouraged land clearing in the 1950s, '60s and '70s. Almost all of these, however, have now been removed.
Taxation mechanisms can also be used as a means to encourage people to contribute to national objectives. Under present taxation arrangements, cash donations to approved organisations are tax deductible. Donations of land are tax deductible but only under very restrictive conditions. In contrast with the USA, donations of conservation covenants to an approved organisation are not tax deductible. A 20% rebate on the cost of restoring buildings and structures on a prescribed heritage list is available provided prior approval is obtained from the Minister for Communication and the Arts. The argument for these taxation incentives is that, because they establish an entitlement, people are encouraged to pursue such opportunities without having to prepare submission to and obtain permission from the bureaucracy. They also encourage altruistic behaviour and where there is a national commitment to achieving an objective, like biodiversity conservation, the objective is likely to be achieved at much less cost to government than would be the case if government departments managed all biodiversity conservation of this nature themselves. In short, taxation mechanisms of this kind can provide efficient, dynamic and continuing incentives for improvement in areas that involve non-market considerations of national importance. They are one of the main mechanisms used to motivate and resource non-government organisations in a manner that enables them to search for and identify opportunities where these organisations can operate in more cost-effective manner than government.
One argument against these mechanisms is that, when not channelled through a well developed non-government organisation or screening mechanism, they are prone to taxation rorts. Another argument is that they establish an open-ended entitlement which is not constrained by a budget restriction, with the consequence that these mechanisms could compromise other national objectives in a non-transparent manner. Furthermore, they are not targeted unless associated with an instrument such as a heritage agreement.
6.6.5 Removing perverse incentives and overcoming market failures
So far all that has been suggested refers to the use of incentive mechanisms whose operation on biodiversity objectives is direct. In addition, biodiversity conservation can be enhanced by indirect means, especially the removal of perverse incentives. Generally, such a mechanism is efficient because it addresses an underlying cause of a problem. A perverse incentive is any incentive that induces behaviour that results in loss of biodiversity or creates a threat to biodiversity conservation.313 Often perverse incentives occur because the government has intervened in the market to secure social or economic ends, without fully understanding or considering their implications for biodiversity conservation.
The OECD lists administered resource prices, output pricing, irrigation subsidies, below cost timber pricing, subsidised crop insurance, and agricultural support programs, as examples of government intervention that causes perverse incentives.314 Within Australia, price support for the sugar industry is still significant. Similarly, irrigation water and access to native forest timber is often supplied at prices that do not recover the full costs of supply.315 All these so called perverse policy effects have adverse affects on biodiversity values.
However, care is necessary when perverse incentives are removed, because removal of incentives such as price support which encourages clearing of unique habitats, can create opposition to the entire notion of conserving biodiversity. From the perspective of a producer, the removal of perverse incentives as a means to improve biodiversity often has negative connotations. Transitional payments have a role to play in maintaining equity, gaining acceptance of the need to remove the perverse incentive, and maintaining a positive community attitude to the conservation of biodiversity.
6.6.6 Land tax and local government rate rebates
Submissions to the Project Team, our community consultations and government policy all reveal considerable interest in land tax and local government rebate schemes.316 Most Australian rating systems are based on "unimproved capital value", which is assessed generally by deducting the value of improvements necessary to maximise its profitable use from the market value of an area of land. It is argued – correctly – that this approach provides a perverse incentive for people to clear land, particularly if (as in New South Wales) farmland is rated at a lower level than land kept for nature conservation purposes. There is a qualification, however, which must be appreciated. In any state where clearing controls are in place, a valuer should assess, as the market does, the probability of obtaining permission to clear an area of land, and the nature of any restrictions on vegetation clearance that attach to the land title. Thus, the degree to which land valuation and rating systems provide perverse incentives to clear land depends upon:
- whether or not the state or local government has clearing controls in place;
- whether or not the valuation methods used are really "smoothed averages", or take account of the degree of vegetation on each property, and
- whether or not valuation data bases are organised in a manner that draws the presence or absence of a conservation covenant on a title to the attention of the valuer.
Generally, solutions built upon information that first remove underlying causes of problems tend to be more efficient, and more dependable over the long run, than those that address symptoms. Thus, the perverse effects of rating systems on vegetation clearance will be most efficiently reduced by recording the presence of conservation covenants and easements in land valuation data files, and indicating on land valuation notices that the valuation has been adjusted to account for this restriction. Where rating systems assume that land has been cleared (which most do) there is also a strong case for either revising the valuation system or offering a rebate for land that has not been cleared, but requiring the value of that rebate over the last say, 10 years, whenever that land is cleared. As an incentive to encourage people to voluntarily enter into conservation covenants, local and state governments could advertise that land valuation records will be adjusted, with appropriate credits, when a conservation covenant is signed. If the formula used to allocate local government grants was adjusted to account for this, then local governments would have a financially-attractive incentive to pursue such an approach.
Rate rebates can also be used as important circuit-breaking mechanisms. In 1994, for example, the City of Greater Bendigo introduced a 100% "salinity" rebate for land within a high groundwater recharge area that is withdrawn from production and replanted to trees or perennial pasture. The work must be certified by a Council Officer. In the case of trees the rebate is for 10 years and in the case of perennial pasture only for one year.317
A related approach to redressing the effect of perverse incentives and market imperfections is cross-compliance: the provision of support for one objective being made subject to prior compliance with another. Cross-compliance can occur at both the administrative level and the level of the resource user. At the administrative level, it is implemented by only making program money available, for example, to states that agree to implement a strategy. The approach builds consistency between national and state or local government objectives for biodiversity conservation. Stepwise entry mechanisms that give graded entitlement depending upon the degree of participation are possible.
At the level of the resource user, cross-compliance has been applied in the USA to deter farmers from converting wetlands to agricultural use. In Australia it has been suggested that the provision of drought relief should similarly be made conditional on meeting specified biodiversity objectives. Our community consultations did not indicate any enthusiasm for this option, and indeed there was significant resistance to it on the part of land users. On the other hand, it is a demonstrably cost-effective way of establishing congruency among biodiversity, production and social welfare objectives when perverse incentives can not be removed. Adequate designation, monitoring and enforcement of provisions is an essential part of any effective cross-compliance provision and the costs of doing this need careful consideration. Moreover, producers argue that cross-compliance increases application costs. These application costs can be reduced by linking them to an accreditation program. A farmer, for example, may be able to obtain a grade one sustainability criterion that is only available to land holders who are maintaining biodiversity values, are not degrading their soils, are trained in the use of agricultural chemicals and so on. This single grade one sustainability accreditation could entitle them to participate in all government programs without further application.
A special example of cross-compliance is the introduction of preferential treatment for changes in property rights that give preferential development opportunities to people who conserve biodiversity. Nambucca Shire Council, for example, has been trying to grant more favourable sub-division rights to landholders who agree to place a conservation covenant to protect native vegetation on the sub-divided land. Such mechanisms would be most effective if a mechanism existed that enabled the shire to take out a conservation covenant over the sub-divided blocks in the same way as the state government can. Using this approach the cost of acquiring a conservation covenant is minimal and because of the covenant make any regulatory controls on clearing more dependable.
6.6.8 Conditional grants and payments
As with all government activities, it is necessary to make use of instruments which seek to conserve biodiversity as efficiently as possible. Consequently, it is common for governments to make grants and payments on the condition that certain practices are followed, and in the event of breach, that the money be at least reimbursed. The reasons for doing this are obvious, but in recent years there has been a growing interest in the extension of this principle to one that leverages payments made for other purposes via the use of cross-compliance mechanisms.318 From a social viewpoint, the result is a more efficient outcome as it reduces the impact of the perverse policy effects mentioned earlier. Resource users, however, tend to dislike such arrangements as it makes it harder for them to qualify for assistance.
6.6.9 Assessing the role of financial mechanisms
In theory, the virtues of financial mechanisms are their ability to: influence behaviour through price signals without the need for direct intervention in the affairs of individuals; encourage individuals to seek out the most cost effective (and often innovative) solutions to a problem; decentralise decision making to individuals who often have better information on how to solve a problem than State or Commonwealth government authorities; reduce the government's enforcement costs as well as the resource user's compliance costs; and to give resource users an ongoing incentive to develop better environmental approaches. Whether, in practice, these mechanisms necessarily demonstrate these virtues is less clear, because of the lack of empirical evidence. Since relatively few financial incentives have been implemented in the biodiversity policy area, and most of these only recently, we have very little experience of how they actually work. Significantly, even a very recent and comprehensive OECD report on this issue has been unable to reach any general conclusions about the effectiveness, efficiency, equity implications, acceptability or administrative implications of market-based instruments.319
The extent to which property-right and pricing mechanisms can make a positive contribution to biodiversity conservation is likely to depend substantially on the particular contexts in which they are applied,320 the threats to which they are addressed,321 and the particular attributes of individual instruments.322
There are nevertheless some generalisations that can usefully be made about the role of market-based and property-right approaches and about their relationship with regulatory strategies. In terms of cost-effectiveness or economic efficiency, market-based incentives, appropriately designed, are likely to be substantially superior to regulatory controls. This is because "regulatory instruments require the central authority to determine the best course of action, whereas economic instruments decentralise much of the decision-making to the single farm or household, which typically has better information for determining the appropriate individual response to given economic conditions... In addition, market instruments provide cost incentives to adopt... 'alternative' resource inputs and processes, or to develop such improvements with time".323
Financial (and property-right) incentives that work on price have a further particular advantage over command and control mechanisms that tend to be "targeted" on specific outcomes. As the OECD has pointed out:
biodiversity is arguably different as an environmental and economic resource because its fate depends on many decisions made in many different economic sectors. That is, it is pervasive to the economic system, being affected by land and water use decisions, by pollution and by economic activity generally. As such, biodiversity conservation policies must themselves be pervasive, ie. they must be capable of filtering through the entire economic system.324
All other things being equal, our consultations indicate that market-based approaches are less intrusive, more cooperative and can be designed to be financially attractive. However, contrary to claims made in some of the earlier literature, they are not self-enforcing and may involve considerable control costs.325
Indeed, one recent study concluded that "there is no reason to expect that the administrative costs of economic instruments are generally lower than those of regulatory instruments."326 It must also be acknowledged that market-based and property-right instruments are not generally well understood, and perhaps for this reason, do not rate highly in terms of community acceptance.327
Market-based approaches may also be less appropriate than regulation in addressing two key characteristics of biodiversity. These are first, that biodiversity loss is often irreversible, and second, that ecosystems have limits and if stressed beyond those limits, they will collapse.328 We explore the implications of this issue more fully in Chapter 7 below.
In contrast to market-based incentives, regulation directly seeks to control or restrict environmentally damaging activities, mandating the reduction or restriction of activities identified as harmful. As such it is much more prescriptive. The main regulatory instruments are well known and include zoning, land-use restrictions, standards and bans. Some licences and quotas are regulatory instruments.
Regulation is often referred to as a "command and control" approach because of the presence of a direct "control" mechanism such as a fine, licence revocation or other penalty for contravention. This approach is commonly criticised by some for being inefficient, unnecessarily intrusive and unduly expensive to administer. In practice, they observe that regulations prevent innovation and stop people from searching for new, more efficient ways to use a resource.
However, although regulatory incentives often lack the flexibility and efficiencies associated with market-based approaches, they are perceived as being more certain (provided there is adequate monitoring and enforcement). This may be crucial, particularly where irreversible loss is a prospect. At the general level, regulations also provide an efficient means to deal with forms of irrational behaviour that cannot be dealt with in an efficient manner through the use of voluntary, property-right and financial incentives. If all but one Ecotourism operator are complying with a voluntary code of practice, then regulation to stop the recalcitrant offender might offer the most efficient way of protecting biodiversity at least administrative cost.329
Another point which should be noted in relation to regulation is the taxation considerations which would necessarily accompany any move to eliminate particular regulatory measures. Any expenditure required by regulation is automatically defined as an expense incurred in the course of deriving taxable income and is thus tax deductible.330 Voluntary expenditure on activities not associated with the production of income are not deductible.
6.7.1 Regulations restricting resource use
Regulations are preferred by some administrators who believe they can be depended upon to stop actions.331 Sometimes governments do not act quickly enough to control adverse biodiversity loss before serious loss is imminent. In such situations, the most dependable short term approach may be direct regulation in the form of a ban or moratorium on the threatening activity, although even this approach has its limitations.332
Such regulation usually involves restrictions on land use, typically in the form of a prohibition on clearing or on clearing in particular circumstances.333 Since landholders have traditionally had a right to use their land largely as they please, such restrictions serve to respecify property rights-in effect amounting to a transfer of use rights from the landholder to the state. Regulations restricting land use can take a number of forms, these include:
- mandatory restrictions on land use without compensation,
- mandatory restrictions on land use with compensation in a transition period,
- mandatory restrictions on land use with ongoing compensation.
An example of b) is the South Australian native vegetation program, set out in the Native Vegetation Act 1985, (repealed in 1991) which has made a considerable contribution to biodiversity conservation. This legislative program (in conjunction with heritage agreements discussed in Box 6.5 in this chapter) prohibited clearance without consent and established an Authority to make decisions on applications to clear. Initially all those who were refused consent to clear were entitled to compensation, in return for acceptance of a Heritage Agreement. However, this legislative entitlement was repealed in 1991 and replaced with an arrangement where incremental costs will be compensated only where this is judged to be over and above that expected of all South Australian farmers. In effect, the opportunity for compensation was removed as the implied property right had changed. Transitional compensation schemes of this type are a way to ease the short term financial burdens of regulations, speed up the process of structural adjustment, satisfy equity considerations and achieve short term political acceptance. They have the additional advantage that they retain a financially attractive and positive element to the regulatory environment.
It should be noted that the use of clearing controls under the planning system is focussed principally on restricting inappropriate use rather than promoting appropriate management. As Farrier334 notes, to "this extent, it is ill-adapted to providing the two-pronged strategy of retention and management needed to address the issue of biodiversity protection." For this reason, as we argue in Chapter 7, clearing controls should be seen as one component of an overall regulatory mix rather than as a complete solution in their own right.335
Of course, there are a number of regulatory measures which are available to protect biodiversity in addition to clearance prohibitions. Perhaps the most obvious example is endangered species legislation, a range of which is currently used by most states and the Commonwealth. This type of legislation commonly prohibits the taking of protected fauna without a licence. Traditional forms of endangered species legislation have commonly been criticised for being inadequate, partly because they concentrated upon only one threat to biodiversity, and only dealt with the destruction of known, listed species, rather than going to the roots of the problem: ecosystem and habitat protection. While these limitations to this type of legislation have been well documented,336 they could at least be mitigated by improving the design of this type of legislation.
One approach which could improve the operation of endangered species protection is for the legislation to list all species which are not protected, rather than to provide an enormous list of species which are subject to the legislation. A more extreme approach is taken by the German Nature Conservation Act, which was amended in 1986 to prohibit the killing, injuring, capturing or intentional disturbing of any wild animal.337 These formulation have two principal advantages; firstly, they make education about responsibilities under the law much easier and secondly, they encompass the precautionary principle, by protecting even unknown species. Another interesting approach to addressing the issue of public education has been taken by the Swiss jurisdiction of Vaud, where a short list of the rarest and most spectacular species is widely disseminated, with the more complete list being available for interested parties.338
Another recent improvement to endangered species legislation is that made in the 1991 amendments to the NSW National Parks and Wildlife Act 1974, which included in the Act's definition of "taking" the "significant modification of the habitat of the fauna which is likely to adversely affect its essential behavioural patterns." This definition has substantially expanded the categories of behaviour which could now require permission to avoid contravention of the Act,339 although until the introduction of State Environment Planning Policy 46 in August 1995, administrative practice served largely to neutralise its impact.340 The existence of such potentially wide ranging prohibition could also prompt the creation of voluntary management plans in an effort to pre-empt violation of the law.
A more proactive role for regulation is provided by compulsory environmental impact assessment plans. Again there are varying models of this type currently in use around Australia. For example, the Commonwealth Environmental Protection (Impact of Proposals) Act 1974 (Administrative Procedures) states that if any proposed action by the Commonwealth government, a Commonwealth public body or a private developer who requires Commonwealth approval has significant environmental effects , the Minister for the Environment can require the proponent to prepare an environmental impact statement (EIS) or a public environment report, which is essentially a less rigorous version of an EIS. The preparation and release of an EIS essentially opens the development in question to public scrutiny and consideration, and thus puts environmental considerations on the agenda for federal government development plans. In practice, there are very few circumstances where an EIS is required.341
If a development is not deemed to have significant environmental effects, whether the consideration of environmental factors is required will depend upon the terms of the particular legislation under which the development is authorised.
As stated above, the Commonwealth legislation is limited to regulating its own bodies, and developments which require planning consent from federal bodies. Thus federal regulation is complemented with state requirements. In NSW, for example, an environmental impact assessment must be prepared for any development which is designated as covered by an environmental planning instrument – such as a State Environmental Planning Policy or Regional of Local Environmental Policy – which requires consent to be obtained.
Another form of regulation is a right of acquisition of land. As noted earlier in this chapter, this traditional method of protection has a number of difficulties – it restricts the productive use of resources, it is administratively costly and it does not deal adequately with the problems of ongoing management – but it can still be useful as a last resort form of protection. A related approach is the retention of a right of first refusal on land being sold. This system exists in France, where landholders in specially designated areas must notify the government of any intended sale and no purchase can be finalised until the government has declined their pre emption right.342
Their is also a role for regulation in the monitoring of industries which are particularly reliant upon biodiversity. This is particularly important in relatively new industries such as eco tourism, and the commercial growing and sale of wildflowers.
Finally, there are of course many other areas of the law which already deal extensively with the protection of biodiversity. These include the control of introduced species which is regulated by both federal quarantine laws and state laws concerning the transportation of native animals across state borders and away from their natural habitat, the control of pesticide use and vermin control generally, the issuing of mining licences, and the control of air, land and water pollution. An example of the extensive and essential role of regulation in the area of biodiversity is provided in Box 6.6, which provides a brief survey of some of the legislation in force in Victoria which is directed in some part towards the conservation of biological resources.
Box 6.6 Victorian examples of the use of regulation to control biodiversity
Crown Land (Reserves) Act 1978: provides for reservation of crown land and controls over Miners Rights or Exploration licences (as defined in the Mines Act 1958).
Extractive Industries Act 1966: controls quarrying activities and provides for Department of Conservation and Natural Resources input into lease conditions.
Flora and Fauna Guarantee Act 1988: provides for listing of endangered species, nomination of its critical habitat, permits for collection of the species and requires the production of an Action Statement.
Forest Act 1958: provides for fire protection and vegetation removal in State forest.
Land Conservation Act 1970: provides for the determination of uses and reservation of reserves.
Lands Act 1958: provides for general administration of public land.
Minerals Resources Development Act 1990: provides for regulation and control of exploration and mining.
Planning and Environment Act 1987: provides for conditions of access, permit to quarry, conditions on development and public input into any development.
Vermin and Noxious Weeds Act 1958: provides for control of vermin and noxious weeds on public and private land.
6.7.2 Precautionary mechanisms
Direct regulations can play a particularly vital role in preventing and eliminating those actions which under present arrangements could result in losses that are either totally irreversible or only irreversible at unacceptably high costs. In such situations, the conventional approach is to recommend that a safer minimum standard be set. For biodiversity conservation, however, we often don't know what the safe minimum standard is. Indeed, for a significant number of areas in Australia, that point may have been passed, and now the need is for species recovery plans and rehabilitation of ecosystems.
Faced by uncertainty and the need for dependability, regulations can contribute to biodiversity by signalling where precaution is necessary (see Box 6.7). The recently introduced Western Australian and New South Wales clearing controls provide examples of the approach. In each case a precautionary regulation requires people to obtain a clearing permit before they clear significant areas of vegetation. In Western Australia two precautionary standards are then set. In each local government area where less than 20% of native vegetation remains, the onus is on the proponent to demonstrate why clearing should be allowed to proceed. Each farm is subject to a similar precautionary standard. Underpinning such mechanisms are absolute standards that are not to be compromised, such as those found in the Commonwealth's Endangered Species Protection Act 1992. The Act requires that species, ecological communities and threatening processes listed under this act be managed under very strict procedures which, for example, require recovery plans for listed species and communities. Together these mechanisms seek to build a "safety net" designed to preventing and exclude actions that destroy biodiversity values.
Where there is a possibility that a development might have irreversible consequences for biodiversity, the Precautionary Principle would suggest that the onus is on the proponent to demonstrate that this is not the case (see Box 6.7). In the land clearance examples listed above, the prohibition, however, is not absolute. Consistent with the precautionary principle, permission to clear native vegetation can still be obtained providing the proponent shows that clearance will not have unacceptable effects on the environment or biodiversity values. The onus of proof is shifted from the government to the proponent. These precautionary standards provide a second function of indicating areas where expenditure on recovery and rehabilitation might be justified. Recognition of these characteristics, coupled with recognition of the importance of seeking dynamic and continuing improvement, suggests that periodic review of these precautionary regulations and standards is necessary to ensure that they are set at appropriate levels. This is particularly important, for most decisions to permit further biodiversity loss decreases the margin of safety left in the system. Regulatory mechanisms that are not reviewed periodically are unlikely to be dependable.
Box 6.7 Precautionary mechanisms and biodiversity conservation
In the 1950s, the concept of setting safe minimum standards was developed as a means to prevent physical changes that would be uneconomical to halt or reverse. The goal was "essentially an increase in the flexibility of society."343 Applied to biodiversity, the concept implies strict avoidance of actions that may lead to the extinction of a species. Exceptions would only occur when the cost of avoiding extinction are intolerably large, or when other social objectives must take precedence. With biodiversity, however, there is a problem. We do not know where the thresholds of reversibility are. Consequently, the concept of precaution is being superimposed on top of the safe minimum standard in the form of precautionary regulations and precautionary standards.
Arguments for the precautionary mechanisms include:
- the precautionary mechanisms offer a pragmatic means to protect biodiversity whilst allowing most economic development to proceed;
- failure of the market place to include biodiversity values means that, unless precautionary mechanisms are used, the market will trade off "too much" biodiversity in the pursuit of profit;
- precautionary mechanisms shift the burden of proof to the proponents of a project so that they have an incentive to find an efficient manner to demonstrate that the project is very unlikely to have unacceptable consequences (the cost of not proceeding has to be "intolerable" rather than merely "substantial"); and
- precautionary mechanisms protect biodiversity from the adverse effects of perverse markets, policy failures and institutional failures.
Precautionary mechanisms, however, carry their own risks
- society is largely ignorant about the future value of biodiversity and what costs will prove intolerable to them with a consequence that we may save "too much" biodiversity rather than too little biodiversity;
- the precautionary mechanisms trades off biodiversity conservation against overall economic efficiency objectives, with the consequence that some actions (projects), which in retrospect would have been desirable, may be abandoned;
- the costs of enforcing precautionary mechanisms are not borne equally by all members of society;
- precautionary mechanisms build in rigid institutional structures that are difficult to dismantle;
- precautionary mechanisms make it easier for governments to retain perverse policies, which should be abandoned.
Source: Adapted from Barbier et al, 1994344
6.7.3 Assessing regulatory incentives
Regulation is commonly criticised for being an inefficient means of protecting the environment, for being unnecessarily intrusive, unnecessarily expensive and for being socially unacceptable to those being regulated. Moreover, regulatory instruments may be inequitable, and are slow to respond to new information. They can also build a sense of false security. Nevertheless, they do play an important role in making expenditure on the non-market dimensions of biodiversity conservation tax deductible.
Notwithstanding these shortcomings, regulations have a particular role to play when biodiversity loss has proceeded to the extent that further net loss poses threats judged to be unacceptable. As indicated above, in these circumstances they provide an essential safety net in a way that other instruments may not.
In principle, regulation's strength in these circumstances is the certainty it provides, particularly where it takes the form of direct bans on destructive activity, supported by sanctions. In practice, regulation combined with license exceptions does not lead to certainty.345 Even without the licensing exception, it is true that there will remain a temptation to cheat, particularly where breaches are not transparent.346 How strong this temptation will be, and how likely people are to succumb to it, will depend in part on the perceived legitimacy of the regulation (reinforcing the need for education and motivation) and, in part, on the likelihood of detection and severity of sanctions (see Box 6.5).
Notwithstanding these constraints, regulation coupled with the moral force of law, will in general provide greater assurance of compliance (certainty) than market-based incentives. For example, it may be desirable to legislatively outlaw discharges of extremely hazardous substances, rather than seek to curtail their use through tradeable permits or emissions charges, the outcome of which is far less certain. The regulatory approach is particularly efficient in stopping actions which need to be prevented or excluded totally347 – obvious examples include bans on the shooting of endangered species and dumping of toxic waste in a national park. However, it must be acknowledged that for political reasons, it is only rarely that legislation is enacted in this form. More commonly, exceptions are permitted under license, thereby undermining the "certainty" rationale.
As with other incentives, the relative effectiveness of regulation is likely to be context specific. For example, regulation reinforced by sanctions cannot serve to achieve biodiversity maintenance on privately managed semi-natural systems.
As Bowers demonstrates, "where maintaining biodiversity requires people to perform actions that are not economic, sanctions will not in general work since primary operators (farmers or foresters who work the land) are likely to respond by abandoning management altogether."348
In contrast, when the aim to preserve a natural system and prevent use a regulatory sanction may be much more effective, given that regulation does not require any change of land but merely seeks to preserve the status quo. Because land-use change usually "cannot be brought about by doing nothing, the landholder ... cannot frustrate the intentions of the controlling authority by passive resistance"349, and defiance can be both identified and punished by law. However, even here it must be acknowledged that some positive management will be necessary to protect biodiversity from feral animals and other threats, and that for reasons stated above, management agreements can achieve such protection in a way that regulation alone cannot.
Box 6.8 Designing regulations to deal with the recalcitrant few
Five general guidelines apply to the use of penalties in a regulatory setting:
First, if the regulatory objectives and the means with which to achieve them do not appear reasonable then restrictions, requirements, or prohibitions which appear arbitrary or ill-conceived, are likely to engender resistance on the part of potential regulatees. Bardach and Kagan350 refer to an "organised culture of resistance" which can be provoked by apparent regulatory unreasonableness. For example, in our Macquarie Marshes case study, a culture of resistance has been created by water use regulations that prohibit farmers from irrigating native pastures (see Appendix 3.2).
Second, if the application of negative sanctions in individual cases does not appear fair then sanctioning which is perceived by the individual target as unfairly imposed can inspire defiance and future non-compliance.351 The legitimacy of a regulatory process will depend on the extent to which it is perceived as fair and even handed.
Third, compliance will be higher if negative sanctions are imposed in a graduated fashion, only after financially-attractive incentives and persuasion have been tried and have failed. Ayres and Braithwaite352 refer to this as "responsive regulation", and caution against regulatory overkill. They argue that negative sanctions should be carefully calibrated according to the wrongdoer's previous track record of compliance, the nature of the immediate offence, and the apparent willingness of the offender to prevent a recurrence.
Fourth, compliance will be higher if recalcitrant offenders are penalised severely and publicly so that the effectiveness and the attractiveness of less interventionist and more financially attractive instruments is maximised.
Fifth, in some circumstances where community values favour the protection of biodiversity, then other alternatives may be available. In particular, "it may be possible to shame wrongdoers into compliance, perhaps by publicising their wrongdoing or forcing them to appear in court".353 One example of this approach can be found in South Australia where those caught breaching recreational fishing regulations have their names published in a magazine that is distributed free throughout the state.
This chapter has illustrated the principles to be used in bringing together the merits of different policy instruments and financing mechanisms. The principles are:
- when assessing the success of individual mechanisms for conservation, regard should be had to their economic efficiency, encouragement of incentive, equity, dependability, adherence to precautionary principles, administrative feasibility and acceptability to both the community and government;
- education and the supply of accurate information are vital for any biodiversity conservation program, as they facilitate informed economic decision making and are important in changing attitudes and behaviour;
- further biodiversity-related research and education have a clear role in providing the information necessary to make biodiversity conservation a matter of enlightened self interest;
- voluntary measures have the advantages of being non-interventionist, promoting positive attitudes towards biodiversity conservation and of having low ongoing administrative costs, but cannot be relied upon in isolation to provide adequate conservation levels;
- exclusive-use rights can be an effective means of protecting certain attributes of biodiversity, although these methods may not be appropriate for those aspects of biodiversity protection that cannot be marketed;
- transferable property-right mechanisms offer an efficient means to combine market and regulatory mechanisms;
- property-right mechanisms in general may be an appropriate mechanism in circumstances which require the tailoring of measures to site specific problems in an administratively efficient manner;
- there is scope for invoking the polluter-pays and user pays principles in specified circumstances;
- by fully specifying property-rights in terms of their exclusivity, duration and transferability, many costs can be internalised;
- financial mechanisms such as conditional grants and tax concessions can be a non-interventionist means of encouraging innovation and providing ongoing incentives;
- biodiversity conservation can also be enhanced by indirect means, especially the removal of perverse incentives;
- mechanisms that retain local control of money raised to offset the costs of biodiversity conservation, provide a powerful means to increase local acceptance of a program, to empower local communities and reduce enforcement costs;
- precautionary regulations and mechanisms provide an efficient means of making other mechanisms more effective; and regulations should be used as a way to provide certainty and prevent irreversible loss, but they also need to be joined with positive mechanisms, such as management agreements, which ensure ongoing conservation.
250. Hill, S.B. and Dale, A. (1995) Biodiversity conservation: Developing a research and policy agenda for Canada.' Department of Natural Resource Sciences, McGill University, Ste-Anne-de-Bellevue, Quebec. Unpublished manuscript.
251. See Stavins, R.N. (1990) Innovative policies for sustainable development in the 1990s: Economic incentives for environmental protection. Background Paper No. 1. Workshop on the Economics of Sustainable Development, Environmental Protection Agency, Washington, DC.; Common, M. (1990) 'Policy instrument choice.' In Moving towards global sustainability: Policies and implications for Australia. Centre for Resource and Environmental Studies, Australian National University, Canberra; and Bohm, P. and Russell, C.S. (1985) Comparative analysis of alternative policy instruments.' In Kneese, A.V. and Sweeny, J.L. (eds) Handbook of natural resource and energy economics: Volume 1. North Holland, Amsterdam, pp. 395-460.
252. OECD (1991) Environmental policy: How to apply economic instruments. Paris, 6.
253. They are drawn from Young, M.D. (1992). Sustainable investment and resource use: Equity, environmental integrity and economic efficiency. Man and the Biosphere series. Parthenon Carnforth and UNESCO Paris; and also Australian Manufacturing Council (1993/94) Best practice environmental regulation. Melbourne.
254. This is a Pareto definition of allocative efficiency. The alternative, less restrictive definition of allocative efficiency is the Kaldor-Hicks version – Hypothetically, if those who gain from a proposal could fully compensate those who lose and still be better off, then the proposed change is efficient. In this framework we regard this less restrictive definition as a trade-off between equity and efficiency.
255. Complex highly technical schemes that require large amounts of information, complex monitoring or many minor decisions are to be avoided.
256. Stakeholders can obtain information about the instrument easily and find the instruments effects easy to explain to others.
257. Young, M.D. (1993) For our children's children: Some practical implications of inter-generational equity and the precautionary principle. Resource Assessment Commission Occasional Publication No. 6.
258. For example, an eco-tourist accreditation scheme and associated codes of practice might classified primarily as voluntary/self regulatory in character. Yet it might also be underpinned by an element of government regulation (if government, rather than industry, administers the scheme), and contain motivational components (educating tourists on biodiversity) and market-based incentives (those with accreditation gain a competitive advantage).
259. Hines, J.; Hungerford H. and Tomera A. (1987) 'Analysis and synthesis of research on environmental behaviour: a meta-analysis.' Journal of Environmental Education 18(2):1-8.
260. Gilfedder, L. and Kirkpatrick, J.B. (1995) A Survey of landholder attitudes and intentions towards the long term conservation of native lowland grasslands. Report to the Grasslands Ecology Unit, Australian Nature Conservation Agency, Canberra.
261. Gill, M. and Associates (1993) Community perspectives on biological diversity: A qualitative report. Mimeo Report to CSIRO.
262. There are many available examples of altruism in this area, the setting up of land conservation trusts by private environmental organisations being but one. See also the examples cited in the section on voluntary incentives below.
263. Goodin R.E. (1992) Motivating political morality. Blackwell Press, Massachusetts.
264. See chapter 3.
265. For example, UNEP has established a recognition award for conservation incentives – the Global 500 Roll of Honour for Environmental Achievement – which carries no monetary prize at all. See further Preece, N.; van Oosterzee, P. and James, D. (1995b) Biodiversity and Ecotourism: Strategy for integration. Draft Report for the Biodiversity Unit. Department of Environment, Sport and Territories, Darwin; and Grabosky, P (1993) Rewards and incentives as regulatory instruments. Working Paper Number 13. Administration Compliance and Governability Program, Research School of Social Sciences, Australian National University.
266. This idea is developed in Sutton, P. (1995) Developing a method for biodiversity auditing. Green Innovations, Melbourne. Recommendation 61 of the ESD Manufacturing Working Group states that ANZECC "establish a national project to prepare a generic methodology for conducting audits of impacts on biodiversity and ecological integrity". Ecologically Sustainable Development Working Groups (1991) Final report – Executive summaries. Australian Government Publishing Service, Canberra.
267. Peter D. Hart Research Associates Inc. (1995) 'Strategic recommendations for a communications campaign on biodiversity.' Belden and Russonello Research and Communications (1995) Communicating Biodiversity: Focus Group Research Findings. Undated.
268. McGuire, W. (1985) 'Attitudes and attitude change.' In Lindzey, G. (ed) The handbook of social psychology 3rd ed, Vol. II. Random House, New York, pp233-347. See also Zimbardo, P. and Lieppe, M.R. (1991) The psychology of attitude change and social influence. Temple University, Philadelphia; and Makeswaran, D. and Meyers-Levy, J. (1990) 'The influence of message framing and issue involvement.' Journal of Marketing Research 27:361-67.
269. See OECD (1996) Making markets work for biological diversity: The role of economic incentives measures. OECD, Paris. (In press).
270. See further Bennet, A.F. (1995) 'Conservation and management on private land – facing the challenge.' In Bennett, A.; Backhouse, G. and Clark, T. (eds) People and nature conservation: Perspectives on private land use and endangered species recovery. Surrey Beatty and Sons, Chipping Norton, p122 and references cited therein.
271. Crosthwaite, J. (1995) 'A review of potential financial incentives to achieve nature conservation goals on private land.' In Bennett, A.; Backhouse, G. and Clark, T. (eds) People and nature conservation: Perspectives on private land use and endangered species recovery. Surrey Beatty and Sons, Chipping Norton.
272. Henry, D. and Olson, A. (1992) A review of Commonwealth grants to voluntary conservation organisations. Prepared for the Commonwealth Minister for Arts, Sport, the Environment, Tourism and Territories.
273. Manidis Roberts Consultants (1994) An investigation into a National Ecotourism Accreditation Scheme, Department of Tourism, Canberra.
274. Grabosky, P.N. (1994) 'Green markets: Environmental regulation by the private sector.' Law and Policy 16(4):419-448.
275. Dawson, S. and Gunningham, N. (1995) Greening the supermarket shelves: Regulation of green labelling in Australia. Australian Centre for Environmental Law Working Paper, ANU Canberra and Grodsky, J.A (1995) 'Certified green: The law and future of environmental labelling.' Yale Journal on Regulation 10:147.
276. The basic problem derives from the fact that private landholders (or indeed other private users of resources) commonly lack any economic incentive to take account of the social costs of their actions. That is, we encounter a classic externalities problem where the direct benefits of biodiversity loss (eg increased agricultural production from clearing land) go to individual property owners, whereas the costs (in terms of loss of species, ecosystems, genetic resources and other potential uses) fall on society at large. In collective terms, the problem is that the impact of one landholder clearing their land will make little impact on the overall problem, nor will this individual decision influence the behaviour of other landholders. Accordingly, each landholder will be tempted to take advantage of the willingness of others to protect the environment while continuing to despoil it themselves. See Olson, M. (1965) The Logic of Collective Action. Harvard University Press, Cambridge, MA.
277. See for example Pace, A.C. (1980) 'Self regulation and codes of practice.' In Journal of Business Law 24; Braithwaite, J. and Fisse, B. (1987) 'Regulation and the costs of corporate crime.' In Shearing and Stenning (eds) Private policing. Sage Publications, Beverley Hills.
279. Barbier, E.B. (1992) 'Community-based development in Africa.' In Swanson, T.M. and Barbier, E.B.; Economics for the Wilds. Island Press, Washington D.C.
280. M't Sas-Rolfes (1994) 'Trade in endangered species: Is it a option?' Economic Affairs 14(3):2.
281. OECD (1995) Making markets work for biological diversity: The role of economic incentives measures. OECD, Paris. (In press).
282. See Eckersley, R. (1993) 'Rationalising the environment: How much am I bid?' In Rees, S.; Rodley, G and Stilwell, F.; Beyond the market: Alternatives to economic rationalisation. Pluto Press, Leichardt, NSW, p245 and Aylward, B.A. (1992) 'Appropriating the value of wildlife and wetlands.' In Swanson, T.M and Barbier, E.B. (eds) Economy for the Wilds. Earthscan, London, p34.
283. The Western Australian Conservation and Land Management Act 1993 was amended so as to allow the patenting of unmanipulated naturally occurring organisms, however the Parliamentary Committee reviewing the Bill recommended the formation of a Select Committee to investigate the issue and the issue has also been examined by the World Intellectual Property Organisation. See Appendix 1.
284. Arguably, the real issue is who has (and should have) property rights to the genetic material itself? The argument is that this should be the state rather than individual landholders.
285. Prepared for the Coordination Committee on Science and Technology, March, AGPS, Canberra, p16.
286. For further discussion, see Old, K. (1994) Utilisation and conservation of Australian plant genetic resources: The role of monopoly privilege. Honours Thesis submitted to the Faculty of Law, Australian National University, October 1994; also Gollin, M. A. (1993) 'An intellectual property rights framework for biodiversity prospecting.' In Reid, W.V.; Laird, S.A.; Meyer, C.A.; Gamez, R.; Sittenfeld, A.; Janzen, D.H.; Gollin, M.A. and Juma, C. (1993) Biodiversity prospecting: Using genetic resources for sustainable development. World Resources Institute, USA; Instituto Nacional de Biodiversidad, Costa Rica; Rainforest Alliance, USA; African Centre for Technology Studies, Kenya.
287. See further Jones, J. and Farrier, D. (1995) 'Access to Australia's genetic resources.' Paper delivered to Environmental Treaties Conference, Darwin, July 1995.
288. Young M.D. and McCay, B. (1995) Building equity, stewardship and resilience into market-based property-right systems. World Bank, Washington D.C. Forthcoming.
289. Young M.D. and McCay, B. (1995) Building equity, stewardship and resilience into market-based property-right systems. World Bank, Washington D.C. Forthcoming.
290. OECD (1996) Making markets work for biological diversity: The role of economic incentives measures. OECD, Paris. (In press). Farrier, D. (1995) 'Policy instruments for conserving biodiversity on private land.' In Bradstock, J. (ed) Conserving biodiversity: Threats and solutions. Surrey Beatty and Sons, Chipping Norton. Forthcoming.
291. OECD (1996) Making markets work for biological diversity: The role of economic incentives measures. OECD, Paris. (In press).
292. See further the discussion of the Nature Conservancy in the USA in Farrier, D. (1995) 'Conserving biodiversity on private land.' Harvard Environmental Law Review 19(2):304-405.
293. Negative sanctions cannot be modified to require ongoing management. If it is not economic for land users to maintain biodiversity (the very reason sanctions are contemplated) they may respond by abandoning management altogether or behave, at best, as poor and reluctant custodians. See further Bowers J. (1994) Incentives and mechanisms for biodiversity: Observations and issues. CSIRO Division of Wildlife and Ecology Canberra, p13 and Farrier, D. (1995) 'Conserving biodiversity on private land.' Harvard Environmental Law Review 19(2):304-405.
294. Botlain, D.B. (1990) Discordant Harmonies. Oxford University Press, New York, pp 195-6.
295. Farrier, D. (1995) 'Implementing in-situ conservation.' Paper delivered to Environmental Treaties Conference, Darwin, July 1995, p13.
296. See Wallace, K.L. and Moore, S.A. (1987) 'Management of remnant bushland for nature conservation in agricultural areas of South-Western Australia - operational and planning perspectives.' In Saunders, D.A.; Arnold, G.W.; Burbidge, A.A. and Hopkins, A.J.M. (eds) Nature conservation: The role of remnants of native vegetation. Surrey Beatty and Sons, Chipping Norton, NSW, p259.
297. See further Bowers J. (1994) Incentives and mechanisms for biodiversity: Observations and issues. CSIRO Division of Wildlife and Ecology Canberra, p14. See also Land Use Consultants (1994) Countryside Schemes and Nature Conservation. London, UK.
298. See further, Hopkins J.M. and Saunders D.A. (1987) 'Ecological studies as a basis for management.' In Saunders, D.A.; Arnold, G.W.; Burbidge, A.A. and Hopkins, A.J.M. (eds) Nature conservation: The role of remnants of native vegetation. Surrey Beatty and Sons, Chipping Norton, NSW, p15.
299. In the USA non-government initiated management agreements are encouraged by the provision of both taxation and death duty provisions. This makes direct comparison difficult.
300. See, for example National Parks and Wildlife Act 1974 (NSW) s69C. The use of this mechanism, which binds later purchasers of the land, has so far been very limited.
301. Farrier, D. (1995) 'Implementing in-situ conservation.' Paper delivered to Environmental Treaties Conference, Darwin, July 1995, p18.
302. White House Office on Environmental Policy (1993) Protecting America's Wetlands: A fair, flexible and effective approach. Washington DC.
303. See further Farrier, D. (1995) 'Conserving biodiversity on private land.' Harvard Environmental Law Review 19(2):304-405.
304. Silverstein, J. (1994) 'Taking Wetlands to the bank: The role of wetland mitigation banking in a comprehensive approach to wetlands protection.' Boston College Environmental Affairs Law Review 22:129.
305. Silverstein, J. (1994) 'Taking Wetlands to the bank: The role of wetland mitigation banking in a comprehensive approach to wetlands protection.' Boston College Environmental Affairs Law Review 22:129.
306. Clark, C.W. (1976) Mathematical bioeconomics: The optimal management of renewable resources. Wiley Interscience, New York.
307. Hodge, I. (1991) 'Incentive policies and the rural environment.' Journal of Rural Studies 7:373-84. Hodge, I. (1991) 'Incentive policies and the rural environment.' Journal of Rural Studies 7:373-84.
308. See James, D. (1993) Using economic instruments for meeting environmental objectives: Australia's experience. Department of the Environment, Sport and Territories, Canberra.
309. See also Tasmanian Department of Treasury and Finance (1994) Submission to the Park Entry Fee System Review Panel. Hobart, May 1994.
310. Jacobs, M. (1992) Environmental economics, decision rights and the countryside: A discussion paper for the Countryside Commission. C.A.G. Management Consultants, London.
311. Green, G. and Lal, P. (1993) Charging users of the Great Barrier Reef: A report to the Great Barrier Marine Park Authority. Australian Bureau of Agricultural and Resource Economics, Canberra.
312. Department of Finance (1994) Submission to HORSCERA Inquiry into management arrangements for inscribed World Heritage Areas. Canberra.
313. McNeely, J.A. (1988) Economics and biological diversity: Developing and using economic incentives to conserve biological resources. IUCN, Gland, Switzerland.
314. OECD (1994c) Economic incentives for the conservation of biodiversity: Conceptual framework and guidelines for case studies. Group on Economic and Environment Policy Integration. Expert Group on Economic Aspects of Biodiversity, Paris.
315. See, for example, the 1994 Report of the Working Group on Water Resource Policy to the Council of Australian Governments. Mimeo, Canberra.
316. A joint review into rating and conservation sponsored by the Municipal Association of Victoria and the Department of Conservation and Natural Resources, is due for release and may influence the adoption of rating measures for on-farm conservation in Victoria (Vic. Dept. of Conservation and Natural Resources 1994c). See also USE Consultants and AGC Woodward Clyde (1993) Differential rating for ecologically sustainable development. Municipal Association of Victoria, Melbourne.
317. Anon. (1994) 'Rate rebate scheme for the revegetation of high groundwater recharge areas in the City of Greater Bendigo.' Loddon-Campaspe Regional Planning Authority.
318. However, the opportunities here are far less than in the US, because there is less financial support for agriculture in Australia.
319. The report concluded: "It is, in general very difficult to assess the ex post economic and environmental effectiveness and merits of economic incentives relative to alternative policy instruments. Such evaluations are not often undertaken by governments of OECD countries... The fact that "biodiversity policy" is relatively new in most OECD countries makes ex post assessment... all the more difficult." See OECD (1996) Making markets work for biological diversity: The role of economic incentives measures. OECD, Paris. (In press).
320. Compare, for example, commercialisation of wildlife, performance bonds and tradeable permits, discussed in the preceding section.
321. For example, instruments which are appropriate to address pollution may work very differently when applied to other threats to biodiversity.
322. For example, management agreements coupled with reimbursement can fulfil a particular function (for which regulation or other instruments are no substitute). Similarly, some property rights mechanisms have the distinctive characteristic of providing the land user with an incentive to protect the environment, and in doing so encourage positive custodianships of biodiversity and support for biodiversity objectives.
323. Barbier, E.B.; Burgess, J.C. and Folke, C. (1994) Paradise lost? The ecological economics of biodiversity. Earthscan Publications Ltd, London, p182.
324. OECD (1996) Making markets work for biological diversity: The role of economic incentives measures. OECD, Paris. (In press).
325. Bowers J. (1994) Incentives and mechanisms for biodiversity: Observations and issues. CSIRO Division of Wildlife and Ecology Canberra, p9.
326. Lohman, L.S. (1994) 'Economic incentives in environmental policy: Why are there white ravens?' In Opschoor, H. and Turner, K. (eds) Economic Incentives and Environmental Policies: Principles and Practice. Kluwer Academic Publishers, Dordrecht., p22.
327. See Chapter 3 above.
328. Perrings, C. and Pearce, D. (1994) 'Threshold effects and incentives for the conservation of biodiversity.' Environmental and Resource Economics 4:13-28.
329. The danger in applying voluntary and regulatory resources in tandem is that the latter overwhelms or effectively negates the value of the former. However, in carefully designed systems this may be avoided either by an enforcement strategy that only escalates to invoking the regulatory sanctions where voluntary resources fail, or whereby those who are demonstrably responsible are entrusted to regulate themselves under voluntary codes, leaving regulators free to focus on the irresponsible (cf Victoria's Accredited Licensing system for pollution control.)
330. Thus, for example, the mining industry can claim the full cost of restoring an area after its extractive operations are completed because they are required by law and licence conditions to do this.
331. See Turner, K and Opschoor, H. (1994) 'Environmental economics and environmental policy instruments: Introduction and overview.' In Opschoor, H. and Turner, K. (eds) Economic Incentives and Environmental Policies: Principles and Practice. Kluwer Academic Publishers, Dordrecht. However, note the danger in practice of regulatory capture and of agencies which routinely apply exemptions to prohibitory regulations.
332. See Chapter 7 below.
333. In the past this commonly included a "licensing" exemption, which substantially diluted the impact and effectiveness of such resources. More recent approaches are much more strict. For example, in NSW, Environmental Planning Policy 46, which was gazetted on 10 August 1995, follows the conventional approach of a general prohibition on clearance of native vegetation with individualised exemptions. However, it then goes to great lengths to ensure that the grant of development is the exception rather than the rule.
334. Farrier, D. (1995) 'Policy instruments for conserving biodiversity on private land.' In Bradstock, J. (ed) Conserving biodiversity: Threats and solutions. Surrey Beatty and Sons, Chipping Norton. Forthcoming. See also Farrier, D. (1995) 'Conserving biodiversity on private land.' Harvard Environmental Law Review 19(2):304-405.
335. On the related area of land degradation, John Bradsen has made proposals which in some respects has similar characteristics. He suggests a four stage process involving (i) land utilisation determinations which broadly decide the use to which land should be put (ii) land use planning which identifies areas having common land characteristics or problems and which establishes guidelines as the basis for (iii), which is land use management. This involves application of specified principles within a given area to particular land. Finally, he argues the need for effective enforcement. See Bradsen, J. (1987) 'Legal issues and institutional constraints.' In Chisholm, A. and Dumsday, R. (eds) Land degradation: Problems and policies. Cambridge University Press, Cambridge, pp161-163.
336. See further Dixon, N. (1994) 'Protection of endangered species – how will Australia cope?' Environmental and Planning Law Journal 11(1):6 at 6; and Bradsen, J. (1992) 'Biodiversity legislation: species, vegetation, habitat.' Environment Planning and Law Journal 9(6):175-180.
337. de Klemm, C. and Shine, C. (1993) Biological diversity conservation and the law: Legal mechanisms for conserving species and ecosystems. The World Conservation Union (IUCN), Gland, Switzerland, p84.
338. de Klemm, C. and Shine, C. (1993) Biological diversity conservation and the law: Legal mechanisms for conserving species and ecosystems. The World Conservation Union (IUCN), Gland, Switzerland, p85.
339. See further Squillace, M. (1995) 'An American perspective on environmental impact assessment in Australia.' Columbia Journal of Environmental Law 20(1):43-119.
340. See Prest, J. (1995) 'Licensed to kill: A study of the interpretation of the endangered species protection legislation in NSW.' A Paper presented at the 2nd Annual ACEL Defending the Environment Conference, Adelaide, 20-21 May.
341. The 1995 changes to the Administrative Procedures, which make it easier for the Minister to avoid sending development plans to the Department of the Environment should also be noted.
342. de Klemm, C. and Shine, C. (1993) Biological diversity conservation and the law: Legal mechanisms for conserving species and ecosystems. The World Conservation Union (IUCN), Gland, Switzerland, p169.
343. Ciriacy-Wantrup, S.V. (1968) Resource conservation: Economics and policies. University of California Press, Berkeley, p253.
344. Adapted from Barbier, E.B.; Burgess, J.C. and Folke, C. (1994) Paradise lost? The ecological economics of biodiversity. Earthscan Publications Ltd, London, p.174-175. Barbier, Burgess and Folke developed a box similar to this arguing for safe minimum standards. In this report we suggest that an ecologically sustainable society sets both precautionary and safe minimum standards. The role of a precautionary standard is to signal that further development should only proceed after very thorough evaluation of possible adverse consequences and in recognition of the fact that the standard may not be safe. The South Australian Native Vegetation Act 1991 is an excellent example of the precautionary principle at work.
345. On the contrary, the experience under New South Wales endangered species legislation, at least until the issue of State Environmental Planning Policy 46 in August 1995, was that licences were very commonly granted, thereby defeating the biodiversity aims of the legislation to a significant extent.
346. For example, a ban on clearing is likely to be more effective than a ban on killing endangered species because the administrative costs of monitoring clearing are lower than those of watching the fate of a species. The American experience is that when an endangered species is present, the maxim "shoot, shovel and shut up" still prevails despite regulation.
347. Perrings, C. and Pearce, D. (1994) Threshold effects and incentives for the conservation of biodiversity. Environmental and Resource Economics. 4: 13-28
348. Bowers J. (1994) Incentives and mechanisms for biodiversity: Observations and issues. CSIRO Division of Wildlife and Ecology Canberra, p13.
349. Bowers J. (1994) Incentives and mechanisms for biodiversity: Observations and issues. CSIRO Division of Wildlife and Ecology Canberra, p14.
350. Bardach, E and Kagan, R.A. (1982) Going by the book: The problem of regulatory unreasonableness. Temple University Press, Philadelphia.
351. Sherman, L. (1993) 'Defiance deterrence and irrelevance: A theory of the criminal sanction'. Journal of Research in Crime and Delinquency 30:445-473; and Tyler, T. (1990) Why people obey the law. Yale University Press, New Haven.
352. Ayres, I. and Braithwaite, J. (1992) Responsive regulation: Transcending the deregulation debate. Oxford University Press, Oxford.
353.Hopkins, A. (1995) Making Safety Work. Allen and Unwin, Sydney, p 24. Shaming should be carefully delivered and followed by restorative reintegration; indiscriminate stigmatisation can be counter productive. See Braithwaite, J. (1989) Crime, Shame and Reintegration. Cambridge University Press, New York.