Managing Australia's Natural Resources in the 21st Century

Doug Cocks


Many people are interested in but confused by Australia's bitter public debates about protecting versus using natural resources. I travel under the colours of neither side; my pennant is olive rather than green or brown.

My intention today is to clarify the terms of debate between entrepreneurs in the primary industries and preservationists, a convenient name for those concerned, quote, `with the preservation of environmental and amenity values', unquote.

Entrepreneurs want the use of the country's natural resources to produce profits, jobs and export dollars. Tourism, mining, farming, forestry and fishing, are the main primary or resource-based industries and the natural resources they depend on (let's call them industrial natural resources) include soils, water, landscapes, trees, rangeland and fish stocks.

Preservationists, starting from a concern for people's physical and spiritual health, want particular natural resources called amenity resources to remain as undamaged as possible. That is, to remain free of pollution residues, and without premature exhaustion, loss of function, or outright destruction. Lists of amenity resources include air for breathing, water for drinking, ecosystems for marvelling at and landscapes for playing in.

So, Nature provides amenity resources and industrial resources. Note the overlap between my examples of each. It is important to the argument. Conflicts between entrepreneurs and preservationists arise, largely, because the entrepreneurs' industrial resources are simultaneously the preservationists' amenity resources.

The preservationists' foremost concern is that entrepreneurial activities damage amenity resources. The entrepreneurs' foremost concern is that lobbying by preservationists triggers the locking up of resources or the imposition of taxes, charges and regulations which make industrial resources less profitable to exploit.

An example. The Murray River is irrigation water for Mildura farmers but drinking water for Adelaideans; impounding upstream water for irrigation commonly leads to less and saltier drinking water downstream. Even when an industrial resource is not directly part of the preservationists' environment - on-farm topsoil is an example - the way in which entrepreneurs use that resource can still affect amenity resources. For example, sediment produced by soil erosion reduces the number of fish that anglers catch.

If the ambit claim of preservationists is zero damage to amenity resources, what is it for entrepreneurs? It's that all industrial natural resources should be available through the market place to the highest bidder and that any damage to amenity resources associated with their industrial use need only be self-regulated.

Suppose that extreme preservationists, let's call them ecological fundamentalists, got their way. Australians would be forced back into an Aboriginal-style hunter-gatherer society and about 15 million of us would be surplus to requirements.

What if the more rabid entrepreneurs of the resource-based industries, let's call them economic fundamentalists, got their way? There is no reason to suppose that the damage to amenity and industrial resources which has characterised Australia's last two hundred years would then slow down. We might well enjoy an initial development boom in exports and profits but, at some stage, the primary industries would no longer be able to live on their declining natural capital and amenity resources would be truly buggered; a wasteland of pollution and genetically impoverished ecosystems.

Yes, really. All development requires energy and all energy use produces residues which pollute natural systems. The simple Malthusian view of pollution is that unless pollution per unit of output can be reduced at a faster rate than total output is increasing, the limited assimilative capacity of natural pollution sinks (airsheds, watersheds) must eventually be over-taxed and air and water quality further reduced.

Both economic and ecological fundamentalists are dangerous. It is up to the rest of us to keep them in line while trying to make the strategic decisions and develop the material and social technologies which will allow the resource-based industries to prosper (goal 1) and the quality of amenity resources to be largely maintained (goal 2).

Remember, even with active diversification, Australia's major export industries in 2020 will be mining, agriculture and tourism.

Catastrophes aside (they do lurk), there are grounds for wary optimism that we can and will progress towards both wealth and amenity goals.

As a bonus, there is room for a few so-called win-win programs which will help both primary industry profits and amenity levels; protecting fish nurseries in estuaries and mangroves is an example.

But, more generally, development, meaning here the expansion of output from the resource-based industries, is a one-way street. We cannot travel down it without losing something in the way of irreplaceable amenity resources and without permanently decreasing the range of future possibilities for using what's left. There are no free trips, no refunds.

The umbrella task in natural resource management is to decide how far and fast to travel down this one-way street while developing strategies and technologies which will allow us to improve the tradeoff rate between amenity costs and economic benefits.

I will put it in parable form. If amenity costs are the `fuel' which propels the primary industries `engine', we have to (a) decide how much fuel to put in the tank and (b) see if we can improve fuel consumption.

In that parable, driving slowly qualifies as conservative development. Let me move on to some driving hints or principles of conservative development.

The first such principle is to think very carefully before destroying things which we can never recover. This means using social technologies such as land use planning, project impact assessment and enlightened cost-benefit analysis to select minimally damaging sites and technologies for development projects. The Great Barrier Reef Marine Park is our best example of what can be achieved in balancing production and protection; key regions which are crying out for similar sorts of planning include the Kimberleys, the high country, the Central Australian Ranges and Cape York.

Principle 2 is to continue developing cost-cutting material technologies, those which reduce the quantities of resources and energy needed to produce a unit of output; in parable terms, to improve `fuel' consumption.

Biotechnologies and information technologies are likely to have most impact on primary industry profits. Improvements in transport and energy technologies and infrastructure will also be important. Australia is very good at producing new technologies for primary production and processing and we will have to stay that way because the real prices of our commodity exports are unlikely to rise.

Over the past 50 years numerous technologies have been developed which allow us to produce the same output from less imput. The trouble is that we do not use less input. Because of population growth, declining terms of trade and so on, we invariably use technology to produce much more output with the same input. Thus, technology has not been able to fulfil its promise of allowing pressure on natural resources and environments to be reduced.

The downside of technological change is that it commonly produces job losses and social disruption. As of now, we have little skill or enthusiasm for assessing these impacts in advance and attempting to ameliorate them.

Social technologies is a collective term to cover all those bright ideas which help people to interact more equitably and efficiently. Principle 3 for seeking conservative development is to make good use of existing social technologies while learning how to design new ones, particularly for improving market signals and for balancing competing interest group demands.

Existing social technologies for resource management include environmental impact assessment, technology assessment, risk assessment, land use planning and that old favourite, cost-benefit analysis.

All of these have a place in decision making, and people should know about them, but none must be allowed to assume delphic authority because all have major limitations, conceptually or in terms of their extended data requirements.

Remember too that no social technologies can reconcile the values of a deep ecologist and a Hugh Morgan; they can clarify possibilities for compromise though and help legitimise the eventual inescapably-political decisions.

Making good decisions, even with the help of the best available social technologies, will remain hard work, somewhat boring and unlikely to be notably successful. There are no short cuts to conservative development.

What are the prospects for new social technologies? Promising candidates include new forms of resource use rights, such as transferable water rights for irrigators. New types of taxes and charges on polluters, degraders and destroyers are also being thought about. Natural resource accounting is the developing art of working out what to charge.

Another idea is that periodically reviewed leases, allocated through competitive bidding are a better system than outright ownership for making natural resources available to entrepreneurs. Responsible resource users are entitled to leases long enough to expect to make normal profits and the community is entitled to levy resource rent tax on super-normal profits.

Principle 4 in the conservative development driver's manual states that intelligent trial-and-error has to be society's basic strategy for improving things.

Our society needs to energetically identify, prioritise and respond to diverse and changing issues in an experimental and learning way; building on successes and moving away from failures. For example, if we want to work out how to control pressure on dwindling fish stocks we should be trying different combinations of regulations and resource rights in different fisheries.

There are two major problems with such proactive social learning. One is that our pluralistic society is highly confrontationist and nobody likes admitting to errors even though these are the basis for most learning. The other is that we do not seem to be able to muster the social energy which will allow us to experiment with and compare different approaches to a problem.

Notwithstanding, the role of government is central in a learning society. Taxes mobilise the funds which allow us to try different solutions to problems and pick the best.

Provided we can accept that government has an important role to play in resource management, we can design collective strategies for those important goals which markets cannot consciously seek.

The paramount example of an important strategic decision is what we do about controlling population growth. We need more people in this country like we need a poke in the eye with a burnt stick but there is no time to develop that scholarly thesis here. Suffice to say that the idea of sharply reduced immigration is becoming increasingly respectable.

In conclusion, it is all too easy to paint a gloomy scenario of resource management in Australia fifty years hence. It would include declining living standards, massive damage to industrial and amenity resources, Greenhouse-induced social disruption and debilitating social bitterness between the ever-richer and the ever-poorer.

But a cheerful scenario is also plausible. Here we foresee:-

. a stable population living long, healthy, self-fulfilling lives

. a strong economy based on a high-volume low-damage tourist industry and on technologically innovative primary industries processing and exporting minerals, food and fibre

. a rich suite of social technologies for adjusting opportunities and cost-price signals for entrepreneurs in the public interest

. amenity resources protected by an upward shift in the community's idea of the acceptable tradeoff rate between development benefits and amenity costs.

The next century is going to be a difficult one. By making haste slowly though, by vigorously thinking about and experimenting with our resource-use options, it should be possible to muddle through to an acceptable mix of conventional and amenity wealth.