A good decision in a time of plague

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Could it be there is no ‘right’ decision, just a good process?

By David Salt

What’s the best decision to make in a time of plague? Close your borders? Isolate your citizenry? Ration supplies? Close schools? Scorch the landscape? (Actually, for our east coast, the forests have already all been scorched and it doesn’t seem to be slowing the rate of infection.)

Of course, versions of all these actions are being applied in different measures here and overseas in the face of COVID-19. We have all been impacted by these decisions and most of us have strong views on which decisions are good and which are bad. Indeed the ‘strength’ of those views is on clear view in the twitterverse and in the mass media, and at times that strength is verging on the hysterical.

I can say from my own family’s experience, we are scared.

There is no perfect

I think most fair minded people would acknowledge that no-one has the perfect solution (or even a near perfect solution). Every option is problematic. Each comes with difficult trade-offs including constraints on personal freedoms, social isolation and reduced access to important goods and services. For some (eg, the wealthy), these trade-offs are inconvenient but they’ll cope. For many they are life changing; and for some they are life threatening.

What’s more, given the complexity of the systems being managed here, there is enormous uncertainty about how different options will actually pan out.

Given all this, surely we should all be more passionate about the process by the which a decision is made rather than it’s ‘rightness’ – because there simply isn’t a ‘correct’ answer. Or, in other words, rightness is actually more about the process of making a decision rather than the decision itself.

Good decision making

What are the ingredients of a good decision-making process in a time of crisis?

Here are a few key elements: the process needs to make use of the best information (and experts) available; it must be transparent, fair and adaptive. Above all, the process needs to be trustworthy.

Trust is not a given, it’s earned. It’s difficult to build and is easily lost. However, if the process is genuinely well informed by the science – and is transparent, fair and adaptive – the trust bank is built on solid foundations and will continue standing regardless of tough operating conditions, setbacks, slip ups and sub-optimal decisions – all of which are a given in a time of plague and mass disruption.

So far our governments haven’t done too badly. They have acknowledged the gravity of the situation, been open about the medical expert advice they have been receiving and how it informs their decisions, and have made some massive resource commitments to bolster the economy and ecology of our society.

Yes our governments (state and federal) have made many slip ups and sub-optimal decisions including slow responses, ambiguous and contradictory messaging, and letting cruise ships unload in Sydney with zero vetting. Yes it’s been messy, and social media has been even more venomous and judgmental than usual. But society is still functioning, riots don’t appear likely and the general public is acknowledging the need for harsh restrictions in the face of an unprecedented threat. (I hate using the word ‘unprecedented’ but it really does apply here. However, every pandemic is unprecedented because each is different. The Spanish Flu pandemic may have been bigger – so far – but it was a different world 100 years ago.)

In any event, while our response hasn’t been perfect, I trust our system and I’d rather be in Australia at the moment than in the US or the UK. The US, in particular, looks to be headed for grief on a massive scale. And they have a leader who says this disturbance will be over in a fortnight.

Transparent, fair and adaptive

For trust to be sustained in our decision making we need to see what it is based on. It needs to be a transparent process. We live in an open society with a free press and a strong set of institutions to validate information and the manner in which the government hand out resources.

Authoritarian governments might find it easier to impose draconian measures to counter a plague but the lack of transparency in such places is also a recipe for a plague to take off. Such was the case with the birth of the COVID-19.

We have a strong belief that government resources should be used for the common good and that the most vulnerable in society are looked after. In a time of plague this is doubly important, something our elected leaders are all too aware of.

The ‘rule of law’ is a particularly important component of being ‘fair’. That is the rules and constraints applied to the community are applied to everyone without fear or favour, something that is ensured by transparency and strong institutions. ‘Exceptionalism’, the practice of making rules for others but believing you are the exception – will simply not be tolerated in a time of plague and politicians caught out doing it are essentially robbing from the trust bank. That’s one reason I’m glad I’m not in the US at the moment. Their leadership has raised exceptionalism to an art form.

Being adaptive – changing your strategy to adapt to changing circumstances – is less often spoken about when it comes to coping with a massive disturbance. I think that’s because our leaders want to convince the population that they have the answers and there is nothing to worry about. I think this was on show during our recent bushfire emergency.

Such hubris is simply unacceptable in a time of plague. Our leaders need to acknowledge the enormous uncertainties facing us and have the humility to say they don’t have the answers and that we all make mistakes. Making mistakes is not a sin, not learning from them is.

This is where a brains trust of experts feeding into a transparent process of decision making is critical.

What decision will we make next week?

Have we done enough to counter this pandemic? Have we gone too far? It’s impossible to say. We’ll probably know in a month.

The only certainty is that more big decisions will need to be made in the coming days, and the situation will change significantly in the coming weeks. None of the decisions our leaders make will be perfect. I accept that. But, for the sake of my family and my society, may those decisions be transparent, fair and adaptive. If they’re not, my trust will wither.

And in a time of plague, trust is everything.

Image: Image by Stefan Keller from Pixabay

‘Practical Environmental Restoration’

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The new Government mantra (and more grist from the Estimates’ mill)

By Peter Burnett

The Senate held another round of its regular environmental estimates hearings and, once again, I thought I’d share with you what emerged. As I’ve said in the past, these hearings often contain valuable evidence on Government thinking and action.

The topics covered this time were mostly grist for the mill, but one item really stood out: the Government has become focused on something called ‘practical environmental restoration’? Heard of it? Neither had I.

Practical environmental restoration

The government has a bit of a thing about taking ‘practical’ action when it comes to the environment. This theme emerged as a way of contrasting the Coalition Government’s main climate initiative, the Emissions Reduction Fund, with the complexities of the previous Gillard Government’s carbon price (which Tony Abbott had labelled, confusingly but very successfully, as a tax).

And then there was the Government’s obsessive focus on the second-order environmental issue of plastic pollution while ignoring the first-order issue of climate change because this government is all about practical solutions.

In the last budget, brought down in the lead up to the 2019 election, the Government developed this ‘practical action’ theme further, introducing two new programs, an Environmental Restoration Fund ($100 million over four years) and a Communities Environment Program ($22.6 million in one year only).

Smells like a pork barrel

On the face of it, the Environmental Restoration Fund seems respectable. However, look a little closer one and it takes on the appearance of a pork barrel. With the fund established and an election called, the Government proceeded to make election commitments covering nearly 80% of the fund. According to a non-government Senator, some of the groups nominated as recipients knew nothing about the grants coming their way until contacted by someone from a Coalition Party.

With the government re-elected, these election commitments prevented the Environment Department from giving the standard advice about holding competitive grant rounds. It had no choice but to advise the Government to hold what officials described as a ‘closed, non-competitive’, funding round. This meant that the grant guidelines actually specified the recipients as the groups nominated in the Governments election commitments.

None of this is illegal, because various policy guidelines allow for standard procedures like competitive grant rounds to be overridden by election commitments. The theory is that the Government has a mandate to implement his commitments.

So it’s not a second ‘Sports-Rorts’ affair, with attendant allegations of illegality.

It is, however, a blatant case of pork barrelling, likely to lead to poor policy outcomes because the politicians have specified the grant amount, purpose and recipient without any public service or other expert advice.

With the environment in continual decline and a desperate need for restoration, this is another example of very poor governance.

School yard stuff

And the response of Minister Birmingham, the minister representing the Government at Estimates, to Opposition criticisms of the program? ‘I don’t have to sit here and accept hypocrisy from you. You made similar promises at the election.’

In other words, you are just as bad as us, so we can get away with this. At a time when trust in government is very low and the environment in significant decline, this is school yard stuff and a very sad state of affairs.

The Communities Environment Program is not much better. The fact that the program is limited to one year, immediately following at election, is unusual and strongly suggestive of the program being another pork barrel. The fact that the money is allocated to all MPs ($150,000 per electorate) allowing non-government MPs to access to the pork, is hardly a saving grace.

Again, this is bad policy. Small numbers of piecemeal local grants in a one-off program make no contribution to the big environmental issues that face the national government.

So what does ‘practical environmental restoration’ mean? Pork barrelling, obviously.

Grist for the mill

To finish, some quick ‘grist for the mill’ themes from Estimates:

  • There was the usual manoeuvering in which the Greens asked the Bureau of Meteorology questions designed to elicit strong statements about the severity of climate change, while One Nation asked questions directed to showing that the Bureau was cooking the books.
  • The Opposition was in pursuit of Warren Entsch, the Government’s backbench Reef Envoy: why was he so focused on single use plastics in the marine environment when it is such a small component of marine waste?
  • There were the expected questions concerning the impact of bushfires on threatened species. In short, the Government has convened an expert panel and the Threatened Species Committee is reviewing conservational advice and recovery plans, but it really is too early to have much data from bushfire-affected areas.
  • Opposition and Green senators are still pursuing Minister Angus Taylor’s alleged intervention in a compliance investigation concerning his brother’s farm in southern New South Wales. Officials advised, yet again, that this long-running investigation remains incomplete.
  • Senator Matt Canavan, formerly Resources Minister and now on the back bench, asked about climate change as an issue in environmental assessments under the EPBC Act. He is clearly concerned that an environmental assessment for a large oil and gas project off the coast of WA, requires the proponent to assess the impact (if any) of greenhouse gases (including scope 3 emissions) on features such as the Great Barrier Reef, which lie on the other side of the country.
  • While on the topic of environmental assessments, officials revealed that the Environment Department had received some funding for extra environmental assessment staff under the government ‘congestion-busting’ initiative. This reverses the trend over the last few years of regular staffing reductions in this area. It’s ironic that governments cause the problem through general cuts (the so-called ‘efficiency dividend’, then ‘fix’ the resulting ‘congestion’!
  • Senators pressed the government on it’s electric vehicle strategy, due out in mid 2020, particularly given pre-election comments by the Prime Minister and other ministers about electric vehicles putting an end to the weekend. Perhaps rehearsing the lines that will be used to explain these pre-election comments away when the Government starts to promote electric vehicles in its forthcoming ‘Technology Roadmap’. Minister Birmingham made it clear that the electric vehicle market was ‘obviously one that is adapting in terms of the technical specifications’ and that ‘the electric vehicle strategy will no doubt take into account how those technical specifications are evolving.’

Image: Image by Clker-Free-Vector-Images from Pixabay

The zero sum game – from biodiversity to emissions

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A game for mugs or a magic pudding that just keeps giving?

By David Salt

Zero net emissions by 2050! It’s the goal proclaimed by many countries around the world*, and it’s aimed at stemming the tide of climate change.

Zero net emissions is the recipe for enabling business as usual (ie, strong economic growth) while supposedly dealing with the externalities resulting from business as usual (ie, civilisation-ending climate change).

And it’s a political winner because governments aren’t targeting specific economic sectors (ie, the fossil fuel industry). Indeed, this far away from 2050, they aren’t being pegged down by too many specifics on how it will be achieved. The generic solution, implicitly and explicitly rolled out everytime, is that technology will save the day.

The magic in the pudding

So where is the magic that drives this ‘zero-net’ proposition? It’s in the ‘net’ bit. This framing means you don’t have to be ‘zero’ in your emissions in any specific activity, like burning coal if that’s what tickles your fancy.

But you do have to be zero in your cumulative effort. If you produce carbon emissions in one area then you need to do something somewhere else that removes that carbon so the cumulative impact (the net effect) is zero.

How do you remove carbon from the atmosphere? The traditional way has been to plant trees or do existing activities in ways that emit less carbon, a good example being using renewable energy instead of fossil fuel energy.

It works as a political solution because it means you don’t have to explicitly say who is going to bear the burden of reducing their emissions. At some point, however, someone, somewhere is going to have to change their behaviour – after all, sustainability bites!

Experience so far with zero sum policy games suggests they are tricky to establish and easy to work around (ie, cheat).

Offset this

What, you weren’t aware of other zero-sum games? They’re actually quite popular and one place where it’s really taking off is in the arena of biodiversity conservation. The name of this specific game is called biodiversity offsetting.

When it comes to any economic activity with impacts on biodiversity there are many rules and regulations to prevent the loss of species and ecosystems.

To begin with, the proposer of a new economic development must demonstrate their proposal isn’t adversely impacting any native species or ecosystems. If it does, the developer is required to state what they will do about it to remove that impact.

Indeed, developers are expected to apply a mitigation hierarchy to their proposal (see the South Australian Government for an example) in which they need to show how they will first:
1. avoid the negative impacts of their development but doing it in a different way. But if there is still impact, they need to then demonstrate how they will
2. minimise the size of the impact of the development; and then
3. restore the area to make up for the impact.

However, if the developer can’t avoid, minimise or restore the impact they create, they can now offset the damage of the development by doing something good for the environment somewhere else. If you clear a stand of native trees over here for a shopping centre, you might offset this impact by planting the same species of tree somewhere nearby.

The aim is to achieve ‘no net loss of biodiversity’ over time. See, it’s a zero-sum policy game.

The trouble is, in many places it’s been seen by developers as a green light for development and has resulted in many perverse outcomes.

A green light for decline?

For starters, many developers don’t even bother with the mitigation hierarchy (because avoiding, minimising and restoring all cost considerable resources and regulators often don’t check to see whether the impact can be mitigated) and jump straight to some form of offset proposal. But proposing offsets for developments are usually quite complex and there’s a lot of research around to show they often don’t actually offset the impacts of the development (in space or time).

In some cases, the development impact is on something that is irreplaceable like the potential loss of threatened species. In these situations it’s impossible to offset the potential loss and the development should be blocked. Instead, the developer is sometimes asked to do something that might be ‘equivalent’ to a direct offset, like contributing money to an education awareness program that may help save the species. Such indirect offsets are not actually offsets at all but they do give cover for economic development to proceed.

The overall outcome is that while there is a goal of no net loss of biodiversity, biodiversity is lost anyway. Around the world we are seeing a mass extinction event taking place and biodiversity offsetting does not seem to be making any difference.

The devil is in the detail

The lesson here is that great care needs to be applied to the establishment of any zero sum policy game. It needs to be transparent, accountable and enforceable. And it cannot be applied merely as cover for business as usual to proceed without any checks and balances.

Economic activity that generates positive carbon emissions (ie, above zero) needs to be accountable for matching these emissions with activities elsewhere that generate negative carbon emissions (ie, activities that remove carbon).

Governments oversee this process and need to establish robust and transparent frameworks that keep track of these activities and their emissions, and report this tracking in a clear and simple way so everyone has faith in the system. To sustain this faith, the monitoring and measurement will need to be independent of government; something along the lines of what Zali Stegall recommended in her climate bill.

A lot of thought will need to go into how you trade emissions across time (eg, savings emissions today to pay for extra emissions in the future) and space (eg, buying emissions savings from another country for an emission heavy activity in our own backyard).

While the law surrounding such net zero policies will be enacted at the national level, it’s likely this game will involve the trading of positive and negative emissions between countries so the net zero frameworks will need to operate with agreed international norms.

The System of Environmental-Economic Accounts is one existing framework that might help with all of these issues.

Maybe net zero emissions is a policy pathway that might engage opposing political forces, something that efforts to date have failed to do. However, to transform the call for zero net emissions by 2050 into workable and effective policy, much effort will need to go into creating intuitions that will hold governments to account and prevent them from fudging the figures.

Image: the cover of the UN Emissions Gap Report for 2019

*According to the UN Emissions Gap Report for 2019, most emissions — 78%— come from the top 20 economies, the G20. Of these, only five had pledged to long-term zero net targets (and this did not include the three big emitters: China, the US and India). Around 70 countries worldwide have made pledges of being carbon neutral by 2050.

Insensible on coal

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Why climate change policy is such a challenge for Australian politics

By Peter Burnett

As I write this, our national Treasurer Josh Frydenberg is mocking his Opposition counterpart as some sort of guru-seeking hippy for daring to suggest that Australia might adopt New Zealand’s idea of a ‘well-being budget’.

This is just the latest example of our very low level of Australian policy debate: the ‘well-being budget’ is a serious attempt to address the well-known limitations of GDP (basically national income) as a measure of ‘progress’. It is particularly relevant to environmental issues and deserves a considered debate. Perhaps I’ll write about it in another blog.

It’s easy to despair over the shallow debate involving the environment, particularly when the state of our environment has started biting us in ways that are, to deploy once again this summer’s most overused word, unprecedented.

Is political agreement on a rational and proportionate environmental policy even possible? I thought I would look at this question by focusing on the troublesome issue of coal and climate change.

A tough challenge even in an ideal policy world

Our quality of life has been built on fossil fuels. In Australia, one fossil fuel in particular, coal, has supported our lifestyle not only by providing most of the energy needed for electricity production, but also by serving as a ‘top three’ export-earner.

So, phasing out coal presents a double policy challenge.

It is common to reflect on the fact that climate change requires concerted global action. Yet it is uncommon to reflect on the system behind the international approach to orchestrating such action.

The underlying problem is one of too many people consuming too much stuff, most of which generates greenhouse gases, one way or another. This is a problem tailor-made for economics, a discipline often defined as the study of efficient allocation of scarce resources.

If we had asked economists rather than diplomats to come up with a solution, they would have told us that getting consumption down to sustainable levels is all a matter of ‘getting the prices right’ and that if ‘stuff’ produces too much greenhouse gas, the answer is to put up the price of ‘stuff’, in proportion to the amount of gas it generates.

In an ideal world, then, we would have ended up with a uniform global carbon tax, with the rate set at just the right level to disincentivise the production of excessive greenhouse gases. Problem solved.

The realpolitik of the Climate Change Convention

However, the real world is not built around economic theory. It’s based on nation states and their absolute sovereignty. International diplomacy is a parliament of equals, but with no overarching government to enforce the rules.

As a result, when countries agree on international action, they tend to do so by agreeing to regulate only what goes on inside their own borders, relying on other countries to implement their own corresponding regulation but usually without any means of making them do so.

With climate change, this system of each nation focusing on their own back yard leads to a system where by countries regulate domestic emissions not just from consumption, but also from production. Mixed models such as this tend to produce anomalies.

For example, resource-rich countries such as Australia are advantaged in comparison to manufacturing countries such as China. Emissions from manufactured goods such as tools and furniture will be counted mostly in the country in which they are produced, increasing export prices if carbon is priced, while emissions from natural resources such as coal are (mostly) accounted for in the country in which they are consumed, with little effect on export prices under a carbon price.

What’s more, if we did reduce coal exports by restricting new mines, any emission reductions would not count towards our international targets. This leaves us with an unbalanced incentive to promote coal mining, but only for export.

Just make the best of it?

Okay, so the model is less than ideal but it is not likely to change. So, despite its flaws, can we extract policy success (ie climate change mitigation) from the existing system?

If we stay focused on the outcomes rather than the inputs, as any good policy should, the answer is a qualified ‘yes’. Under this approach we’d be targeting greenhouse gas reductions and not coal specifically, even though coal is a major source of greenhouse gases.

In the case of coal we would still need to phase-out domestic use, although we could be technology agnostic and pursue emissions reduction generally rather than reduced coal consumption specifically. We would also want to reduce emissions reductions from coal mining, but again the measures could be industry-blind and not directed at mining specifically.

On the other hand, we would not target emissions reduction from coal exports, because these emissions would count towards the targets of our customers rather than ourselves. Nevertheless, because it is essential for the planet that we get out of coal on a global basis, we would need to work towards the adoption of increasingly ambitious targets and regimes internationally.

Success here would have the incidental effect of reducing demand for coal, including our own exports.

Is this feasible?

Even though we wouldn’t be targeting coal or exports, this approach would remain a hard sell domestically. Despite the double policy virtues of good prospects of climate mitigation success and compliance with the letter and spirit of international agreements, the politics would still be tough.

Domestic environment groups have managed to demonise not just the consumption of coal, but its production. They have done this for their own reasons, in part because domestic place-based campaigns are what they do best: the environment movement was built on them.

On the other hand, coal-producing regions would not be appeased just because we weren’t targeting coal directly. We’d still be taking action internationally that would harm the coal industry. Jobs would still be under threat and transition programs would still be needed.

So action on coal, or more accurately, action on emissions including those from coal, is politically feasible, but hardly attractive. The best policy path available barely dents the political risk and pain.

The conundrum with coal is the same as that posed by climate change more generally: would you like a moderate dose of pain now or a much bigger and tougher dose of pain delivered to your children? At this point in time it seems we are happy to pass the burden to our children.

Image: Then Treasurer (now PM) Scott Morrison holds up a chunk of coal in Parliament in 2017. “This is coal,” he said mockingly to the Opposition. “Don’t be scared. It won’t hurt you.”