The Emerging Environment-Economy Tradeoff

Doug Cocks
CSIRO Wildlife & Ecology

(Talk to Environment Institute of Australia annual conference, Hobart, Dec 1999)


Preparing today’s talk has been difficult. Not because I have nothing to say but because I have far too much to say and I have to pick out a sub-set of that information surfeit that will present reasonably coherently in 20 minutes.

The easy way out would be to stick to Plan A. Because of interest in a book which I had published in March---Future Makers, Future Takers: Life in Australia 2050---I have been getting invitations to speak to diverse groups around the country on the topic of Australia's possible futures. Plan A is a standard talk called Where might we be in 2050? and I spend my alloted 20 or 30 minutes sketching out five society-wide scenarios which I call polar scenarios. That is, while they are not off the planet, they are in unfamiliar territiory and, like the north and south poles, they are a long way apart from each other. Under Plan A my five scenarios are:

Then depending on whether I am talking to public servants, the tourism industry, the defence establishment or whatever, I top and tail the standard talk with some references to the special interests of the particular audience.

My difficulty with an audience of environmental practitioners and administrators and academics is that I am not an outsider here. Before I decided to become a human ecologist and future-gazer I spent 30 years being a resource scientist concerned with land use planning and environmental policy and management. This means, despite suffering an ongoing bout of environmental fatigue, I have lots of thoughts about the future of environmental quality in Australia which I would like to share with you.

So, I’ll flip over to Plan B. I’ll try to give you the flavour of my five scenarios in the absolute minimum time of ten minutes and then I’ll spend ten minutes talking about the future of environmental quality in Australia in the light of the possibilities identified by the five scenarios. And I wil preview my conclusion by saying that after writing this paper I felt I needed to add a sub-title to the title I gave the organisers: "Is there one? I’m not so sure."

Scenario 1: Struggling to cope

My first scenario, called Struggling to cope, is also my worst-case scenario.

Most modern societies have the the resilience to cope with small crises or even one or two large crises, but what happens when a complex society like ours, one full of long-chain dependencies, is clobbered with five or six major crises in the space of a few years? And, as Shakespeare knew, it can happen: 'When troubles come, they are not as single spies but in battalions'.

Take your pick from the following list of possibilities:

Under multiple shocks like these, a complex society runs a very high risk of quickly reverting to a much simpler form of organisation. In extreme cases we call this a social collapse. The symptoms of collapse include breakdown in law and order, pervasive fear in everyday life, declining life expectancy, loss of culture, civil and political rights, health and education services and basics like running water and sewerage. In a sentence, quality of life goes through the floor. For example, Kosovar society has just collapsed. In general terms, the only protection against a multiplicity of local shocks is to build up a capacity for rapid social learning and a store of flexible redundant capital, ready to wheel into action as needed.

I have an even-gloomier variation on the Struggling to cope scenario called Failing to cope. Here, one or more global-scale shocks precipitate rapid collapse in societies around the world, including Australia. Today's four horsemen of the Apocalypse are world war, pandemic disease, global economic meltdown and a sudden global climate shift, triggered perhaps by reversal of a major ocean current. All these possibilities are far from implausible in a highly-connected world where shocks propagate freely. The only protection we can take out against such globally destructive futures is active membership of the world community. We have to simultaneously dialogue to forestall such catastrophes and make plans on the assumption that catastrophe will not strike. Cosmic catastrophes that no amount of dialogue can prevent are also possible of course. Asteroid strikes and geomagnetic reversal are two examples. While global society could take measures to survive such challenges, that is not today's topic.

Scenario 2: Muddling down

I call my second scenario Muddling down. In this scenario, quality of life declines slowly under 'do nothing' governments which act only in response to extreme political pressure or it declines under gridlocked governments which, try as they might, find they can only take actions that do not offend major interest groups. Under this scenario, so much social energy is used up in arguing about who gets what that things just slowly stop working, they clog up; not just services and utilities and markets but framework institutions like parliament and the legal system. In a rapidly changing world like ours, a society that does little to adapt to changed circumstances stands to go into slow decline even if it is not exposed to major shocks. Under this scenario we possibly end up living in hovels and taking our goods to market in horse-drawn carts along disintegrating highways.

While Australians as individuals are richly talented we do seem to make heavy weather of reforming outdated institutions---perhaps for the very reason that those same institutions have been historically successful. It's all too easy to imagine a 'muddling down' future for Australia characterised by pragmatic, laggardly, kneejerk responses to emerging threats and opportunities; like a boiling frog that doesn't read his pocket thermometer. Even a society more flexible than ours is still like a giant oil tanker that takes ever so long to turn around. Think of how long it takes to replace a city's housing stock or to upgrade the Hume highway, not to mention changing the tax system; I mean really changing it.

Some of the big challenges already bearing down on us, apart from lagging institutions and declining oil reserves are soil salinisation and acidification, dysfunctional cities and a growing-ageing population. And each of these has its own web of issues. Remaking the cities, for example, involves consideration, inter alia, of:

On the population issue, many fail to realise that unless we are increasing real expenditures on education, communications, the legal system etc by at least one per cent a year (which is about the rate the population is growing) we are actually going backwards. While an ageing population may not be as problematic as many think, it will require substantial adjustments. An accumulation of small failures can squeeze a society as surely as the anaconda squeezed the family donkey in The Swiss Family Robinson.

OK, let me recapitulate. In my first scenario, Australian society collapses quickly because we're king-hit by a number of sizeable crises squashed into a relatively short time period. In my second scenario, we decline slowly, withering on the vine because we are incapable of recognising and decisively countering cumulating threats to our way of life. You might scoff at my first two scenarios, but never forget that just as there are a lot more extinct species than living ones, there are a lot more dead civilisations than living ones!

Chasing the rainbow

Let me turn now to three more-optimistic scenarios under the general heading of Chasing the Rainbow As we all know, there is a crock of gold at the end of the rainbow if you can only get there before the rain stops. What these three more- optimistic scenarios have in common is a presumption that we Australians are going to collectively and enthusiastically attempt to shape our own future; that we are going to try to be active future makers rather than passive future takers; and that our plan will be to search for and settle on some future-shaping strategy and stick with it for decades or more. Now that last presumption would never be realised of course. No society should or would stick rigidly to some master plan for decades, although Singapore has come close perhaps.

In creating these three proactive scenarios, I have tried to base them on three socio-political strategies that are as different as possible without being outside the square of political reality. For example, shocks and squeezes aside, it is difficult to see Australia being anything other than a capitalist society with a mixed economy and some semblance of democratic governance over the next 50 years. So I've built three candidate strategies compatible with that description around the ideas of self-regulated capitalism, managed capitalism and subordinated capitalism.

Strategies also need goals. As someone said, 'If you don't know where you're going, it doesn't matter which bus you catch'. I've picked three strategies which all have the same goal, namely high quality of life for most present and future Australians. What do I mean by quality of life? People with high quality of life are able to satisfy their higher needs for creative activity, esteem and participation in community life, as well as for basic needs such as food, shelter, and security.

I could have picked another national goal, economic or military power perhaps , or given each strategy a different goal; but I didn't. It's hard, and perhaps pointless, to compare strategies with different goals. While not pausing to defend my choice of quality of life as a hypothesised national goal I might note that most aspirations presented to the community as goals are much more readily interpretable as means rather than ends. I give you interest rates, inflation rates and the trade balance as examples.

I am also assuming of course that the nation state called Australia will be around to manage itself for the next 50 years. Many commentators see national governments being reduced to impotence as globalisation proceeds. If I might add my definition of globalisation to the pile, it is the process under which once-separate societies are moving towards functioning as a single society, albeit one that is pretty chaotic and under-governed. Globalisation may be disturbing but it is certainly not mysterious. It is an accelerating expression of the same great forces that have moulded the world for the last 200 years---capitalism, technological change and the search for political emancipation. For those who believe in Kondratiev cycles, expansion of a global economy based on oil, chemicals, steel and consumer durables is coming to an end and, for the next fifty years, expansion will be achieved through growth in the information and biotechnology sectors, and perhaps through growth in the nanotechnology and advanced materials sectors.

The view I'm taking today, the alternative to the impotent-state view, is that national governments, particularly if they collaborate, will continue to be important agents of change and stability in a globalising world. I'm presuming that over the next fifty years Australia will remain a middle-ranking first-world power, making a small contribution to global governance while working out its own ways of responding to widespread domestic concerns about various obstacles to high quality of life. While there are other candidates, the four widely-recognised obstacles I will focus on here are environmental degradation, a shortage of social justice measured as life opportunities, deteriorating social relationships and a rate of economic growth which, depending on your viewpoint, is either too high or too low.

Scenario 3: Going for growth

I call my first rainbow-chasing scenario Going for Growth---economic growth. The basic belief behind this strategy is that we really have only one problem to solve if we want everyone to have high quality of life and, come 2050, be living in a society with good long-term survival prospects. That perceived problem is how to get the economy growing at a steady 3-4% year after year. The rationale behind this scenario is that if you achieve very high income per head---perhaps three times present levels---it will be possible to find the money to protect the environment and to eliminate poverty. As for the means to this end, the belief that goes easily with this scenario is that our best prospects for getting high economic growth lie in reducing the size of the government sector and the level of business regulation.

Scenario 4: Conservative development

Rainbow scenario number 2 is called Conservative Development and it's a first cousin to what has been called 'sustainable development' for some years now. Remember the wasted effort that went into developing a strategy for ecologically sustainable development in the ealy nineties? The basic perception behind this strategy is that if we want a good life for everybody come 2050 we have three big problems to solve first, none of which can be reliably solved by free markets. These challenges are to get solid economic growth, to manage environmental quality and to achieve social justice. Our only chance of surviving economically in a globalising world is to adopt interventionist industry policies derived from 'new growth' thinking; things like research subsidies and advanced education, to boost our knowledge-intensive exports. The conservative development strategy accepts that social welfare programs and active job-creation programs, funded through green taxes, resource taxes and wealth taxes, are needed to protect people from the roller coaster ride of globalisation. And that the main way to protect the environment is strong regulation of entrepreneurial activity---preferably through environmental and social impact assessment, but also through large government programs to directly protect ecosystems from people, weeds and feral animals. This is a 'tax and spend' strategy which has faith in the capacity of government to contribute strongly to solving the problems of low economic growth, unacceptable levels of life opportunities and poor environmental quality.

Scenario 5: Post-materialism

Rainbow-chasing scenario number 3 is called Post-Materialism and I'll spend a little longer on this one because it will appear stranger to most people than scenarios 3 and 4 which can be viewed as derived from either end of the current spectrum of political discourse.

Viewed as a strategy for managing the future, Post-Materialism starts from the two premises that economic growth is very much a mixed blessing and that pathological social relations are ever-diminishing people's quality of life. On the issue of environmental quality, this strategy sees our best efforts to date as puny relative to the size of problems that continue to get further and further out of hand. For example, a colleague and I once calculated that you would need to plant 12 bn trees in the Murray-Darling Basin to counter dryland salinisation. Post-materialism is a scenario of life in Australia after we reject a consumerism where most people want to buy ever-increasing quantities of goods and services, rather than take productivity gains in the form of leisure. These sorts of values are not a product of my fevered imagination. Political scientists have been recording their spread for years.

What does this scenario involve? On the economic front, the challenge facing a post-materialist society would be to see if it could slow economic growth to a crawl without shutting down the economy or spinning it into recession. Putting a cap, an upper limit, on total energy use and on the use of virgin raw materials would be a fundamental medium-term objective under this strategy. The reasoning here is that energy throughput is strongly correlated with both economic growth and environmental impact. Another objective would be the introduction of a regional land use planning system with real teeth to control all aspects of land and resource use at a region-wide scale, not just on a case by case basis. For tackling the issue of social justice, the main policy would be to narrow the spread of incomes in the community by raising the lowest incomes and lowering the highest incomes.

But Post-Materialism includes much more than slowing growth, narrowing income gaps, making regional environmental plans and dejouling and dematerialising the economy. As well as confronting the three problems of excessive economic growth, poor environmental quality and social injustice, the Post-Materialism strategy recognises the need to strenuously tackle the fourth problem of sociopathy or social fragmentation if most Australians are to enjoy high quality of life by 2050. A fragmenting society is not easily defined by a single characteristic but, to a large extent, it's one where more and more people believe that they are not needed and not wanted and behave accordingly. The symptoms of a fragmented society include alienation, crime, dissociation, anomie, conflict and mistrust. In a healthy society, people feel secure, wanted, useful, empowered, and able to grow.

Advocates of a post-materialism strategy argue that dealing with social fragmentation requires nothing less than a change in the deep structure of society, that is, in the distribution and use of decision-making power in organisations, institutions and social groupings. Clearly we are talking about a strategy that would take decades to implement.

The most dramatic change under a power-sharing scenario would be on the political front, where a post-materialist strategy would centre on creating a new tier of about 30 regional governments somewhere in size between state and local government. Simultaneously, there would be a disempowering of state governments on the grounds that they are too big to be sensitive to the people they are supposed to serve and too remote to allow people to participate in political life. Of course, even though they are lead in the saddlebags, you couldn't really get rid of the States could you. I mean, what about the Sheffield Shield competition and State of Origin matches?

On the industrial front, a post-materialist strategy would encourage worker ownership, industrial democracy and what are called stakeholder organisations, ie companies that have a sense of responsibility to the world, the environment and the community as well as to the shareholders. The education system would actively socialise children to appreciate the value of balancing competitive individualism with collaborative co-operative behaviour. The single word that best sums up the post-materialist remedy for social fragmentation is 'participation'.

Scenario outcomes

Normally, in my standard talk, I pause here to imagine a best-case and worst- case outcome under my three rainbow-chasing scernarios. Today I will focus more narrowly on the future of environmental quality in light of the assertion that while a precise unfolding of any one of my five scenarios would be surprising in the extreme, it would be quite unsurprising if Australia's future were to be some mix, although in what proportions I cannot guess, of the five scenarios I have painted.

Whatever scenario-mix eventuates, it is likely to involve a collection of processes and activities customarily seen as contributing to loss of environmental quality. That list includes, inter alia, population growth and redistribution, increasing consumption of energy and materials, imperfect waste and residue disposal technologies and the intensification and extensification of primary and secondary industries. Collectively, these processes, even as they generate benefits for some, (a) consume, (b) ration, (c) degrade and (d) pollute natural resources, normally meaning water, air, biodiversity and earth materials resources. This is what I mean by loss of environmental quality in the context of today’s talk.

The inescapable central fact here is that (nearly) all economic growth requires growth in energy use (Fig 1) 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. Unfortunately, under a market economy losses in environmental quality arise, largely, as externalities and are unlikely to be ameliorated by market forces alone. That is, markets would seem to have a limited capability for aggregating individual preferences for improved environmental quality into an effective demand.

The implication is that while economic growth might well be high under a ‘Going for Growth’ strategy of self-regulated capitalism, environmental quality, prima facie, stands to be low.

Conversely, under an interventionist strategy of Conservative Development, growth may well be curtailed somewhat but various mechanisms for managing environmental quality will be in place. These include market enhancement and correction mechanisms (eg carbon credit markets) as well as direct regulation of immigration and hence population, pollution, energy use and land use. In principle, some possible economic growth is being exchanged for improved environmental quality.

In a rough-and-ready sort of a way then the Conservative Development strategy and the Going for Growth strategies represent extreme points on a growth-environment tradeoff curve. In principle, we coud follow either strategy or something in between., depending on the relative value assigned to growth and environment .

Which way will we jump? Will we try to make an explicit choice? Or will we just muddle along, this being the style that seems to come most naturally to Australian society? Environmental quality has come and gone as an issue in recent years. While it is an issue that regularly scores well in polls to identify public perceptions of matters for concern it is not high on any political agendas. This is evidenced by the fact that both main parties fought the last federal election with barely a mention of the environment during campaigning. Another example of this loss of profile was the Australia Unlimited conference organised by The Australian newspaper in May this year. It was a showcase for elite opinion on how we should manage our future as a society and economy. It revealed general support for a strategy of trying to clamber aboard the globalisation train before it accelerated but managed to avoid mentioning the environment except in passing.

This indifference in the corridors of power may reflect a view abroad that we can safely turn our attention from the environment to other pressing problems because governments have already implemented a number of environmental programs addressing issues ranging from biodiversity and landcare to air and water quality. But that is not the picture that emerged at a series of expert workshops on Environmental Futures run by the Division of Wildlife and Ecology in late 1995. One general conclusion from the soil experts present there is that prospects for soil and landscape quality are grim, not only in the agricultural and inland areas but in coastal and urban areas as well. Prospects for future air quality are not so uniformly grim. Improvements in inland and farming areas are foreseeable---but not in coastal and urban areas. The experts' best-case scenario for water quality is that quality might hold up in urban and inland areas but not in farming, coastal and marine areas. As for biodiversity, it is difficult, the experts say, to see anything other than further decline in and around the big cities and in the coastal/marine zone. Biological controls for weeds and feral animals and the cessation of clearing offer some hope of improving biodiversity in the farming and inland areas. But if these improvement do not eventuate the outlook remains bleak.

These gloomy prognoses for coming decades by people who study environmental issues professionally assume that Australian society continues to muddle along in 'business as usual' mode. But even if we did decide to make a major effort to manage environmental quality, as in a Conservative Development strategy, would we be successful? To clear the decks, I am assuming we can overcome our widespread fear of losing our competitiveness under globalisation, a fear which expresses itself as a reluctance to accept any increases in production costs associated with improved environmental management.

However, even with the best of interventionist intentions, I am doubtful, for several reasons, about our capacity to significntly improve environmental quality in coming decades.

One reason is the ‘catch-up’ problem. That is, new environmental issues are emerging regularly (eg particulates as air pollutants) and we are responding slowly. And few environmental issues ever get off the agenda once they get on. Meanwhile, old issues continue to grow. For example, 5.1% of agricultural land is curently affected by acidifications problems and this is projected to rise to 9.2% in time (National Natural Resource Management Policy, pers,comm.).

Another is that we just do not really know with any confidence what to do about many environmental problems---dryland salinity and various weeds are good examples.

A third reason is that the resources required to tackle major environmental problems with any hope of success are huge relative to the size of government budgets. I mentioned the size of the re-afforestation task earlier. That is just one example of why the wide range of government-backed environmental programs that have been established over the last 20 years can give a misleading impression. Most are just very, very small relative to the size of the problems they address.


I am forced to conclude that whereever we operate along the tradeoff curve joining the Economic Growth and Conservative Development strategies, environmental quality stands to decline. A new way of thinking about the problem of maintaining environmental quality is needed. Whether the germ of such a paradigm shift lies in the third of my rainbow-chasing strategies, Post-Materialism, I do not have time to explore today.

Fig 1: Comparison of primary enery consumption (PJ) and GDP (in 1989-90 dollars) (from Cocks 1999)