Pannell Discussions

No. 99, 14 May 2007

Environmental policy: Canada vs Australia

This article highlights some of the similarities and differences between Australia and Canada in environmental policy, and speculates about reasons for the differences.

I spent six months in Canada in 1995 and have been back (more briefly) a couple of times since. It is a place where I can feel very much at home, although I must admit the weather can be a challenge, as it was when I visited Guelph last month.

In the area of environmental policy, Canada and Australia have a number of similarities, but also some differences. I reflected on some of each recently while reading a new article titled "Reflections on Environmental Policy in Canada" by Vic Adamowicz in the Canadian Journal of Agricultural Economics.

Similarities

Broadly speaking, in both countries there has been relatively weak enforcement of environmental regulations, particularly in the past. There is a preference for negotiation, and voluntary compliance, rather than application of standards.

Much of the responsibility for environmental policy lies with provincial/state governments, who tend to each do their own thing to some extent. National environmental programs attempt to influence what happens at the provincial/state level.

Benefit Cost Analysis is rarely used to inform decisions about policy or on-ground interventions. There are strong policy agencies concerned with economics and finance but, with some exceptions, the environmental agencies tend to place little emphasis on economics.

There is a need for greater capacity in the design and application of economic policy instruments for environmental issues.

A lot of the funding under environmental programs relating to agriculture is not particularly targeted.

Differences

Australia's history with the Landcare program has no real parallel in Canada. Landcare has probably raised awareness of environmental issues among Australian farmers to a higher level than exists in Canada, although I suspect that the difference in actual responsiveness to environmental issues is much less than the difference in awareness.

Canada has made much less use of markets, in particular for water. Australia does use markets for water up to a point, although there is plenty of scope for their more extensive use.

Australia has made greater use of economic policy instruments for land and water conservation. This is perhaps due to the efforts of a few passionate and articulate individuals, who blazed a trail with pilot programs like BushTender and EcoTender. Presumably, it was their influence that led to the Market-Based Instruments Pilot Program that has operated under the National Action Plan for Salinity and Water Quality. Arguably, the enthusiasm by policy makers for economic instruments in Australia has sometimes even been excessive (Pannell 2001), in contrast to the indifference that is apparent in Canada.

I shared a draft of this piece with Vic, and one of his responses was to wonder why the above differences have occurred. He speculated that some may be due to real differences in the scarcity of resources. For example, much of Canada has water resources to an extent that Australians can hardly imagine. According to Wikipedia Canada has more than 31,000 lakes with surface areas of at least 3 square km, and for four of its largest provinces, the area of water is at least 10% of the area of land! On the Australian mainland, outside the tropics, the number of large permanent fresh lakes is tiny - a mere handful. Most of the lakes we do have are salt lakes, man-made lakes or coastal lakes and lagoons. Perhaps this difference in water abundance has prompted Australian policy makers to be more innovative and adventurous.

On the other hand, it may just be about people: the persuasiveness of individuals, the capacities of agencies, different levels of familiarity with alternatives, or different tendencies towards policy inertia. It might be interesting to probe the reasons further.

Whatever the reasons, given the broad similarities in culture and institutions, there would seem to be good potential for us to learn from each others successes and failures in environmental policy. On the other hand, perhaps I am being too optimistic - we sometimes seem to have trouble learning from our own successes and failures.

David Pannell, The University of Western Australia, David.Pannell@uwa.edu.au

Further Reading

Adamowicz, W. (2007). Reflections on Environmental Policy in Canada, Canadian Journal of Agricultural Economics 55: 1-13.

Pannell, D.J. (2001). Harry Potter and the pendulums of perpetual motion: Economic policy instruments for environmental management, Connections: Farm, Food and Resource Issues 1: 3-8.* http://www.agrifood.info/connections/summer_2001/Pannell.html (39K)

p.s. 16 May 2007.

From Alfons Weersink, University of Guelph:

A couple of thoughts on the reasons for the similarities and differences in environmental policy between our two countries;

a) I agree with Vic regarding relative scarcity as the driver for the use of economic instruments. Markets have been used in Australia primarily for water allocation until recently and this is not a major concern in Canada except in southern Alberta (where there are limited markets).

Vic's point is consistent with the Demsetz (1967) American Economic Review paper, as pointed out to me by Brady Deaton. Demsetz claims property rights develop to internalize externalities when the gains of doing so are larger than the costs. These economic values will change over time. He gives some neat examples on the establishment of property rights by Indians in parts of North America after the commercial fur trade developed. In contrast, Indians in the US southwest did not establish private hunting grounds since the externality was not worth taking into account given the wandering nature of their hunted animals and that there was no animal of commercial importance like the beaver.

b) I think another reason is the lack of clear, distinct environmental problem attributable to agriculture or affecting agriculture. We do not have an issue like salinity that is a compelling call to action. As a result, we get wishy-washy, feel-good voluntary cost-share initiatives that very much fit your vegemite analogy. However, it is interesting to note the increasing acceptance of tradable permits as a potential means to address Kyoto. The public wants the government to act and given the economic costs, market instruments like pollution trading may become reality.

c) Despite these reasons, I also think you cannot underestimate the role of individuals in defining the nature of environmental policy for agriculture. I don't think we have had those individuals [advocating from an economics perspective] in Canada.

 

From Anna Ridley, Department of Primary Industries, Victoria

I agree with Vic's and your reasons regarding scarcity of resources (water and vegetation/biodiversity) and also passionate/strong individuals.  A few other issues, I suspect, are also (a) the location of a strong advocate (Gary Stoneham) in a state-based agency that has the capacity to make the policy change, (b) population density, and (c) compatibility with past programs.

(a) The Australian state of Victoria has strong programs of economic instruments (EcoTender, River Tender, etc.) largely due to the zeal of Stoneham et al., but also probably because he worked for state agencies (Department of Primary Industries and Department of Sustainability and Environment) that can have a big influence with or without the national Government getting involved in this area.

(b) Victoria is much more highly populated than many other parts of Australia and probably parts of Canada [not southern Ontario - DP]. High population means people are more acutely aware of pressure on environment. Western Australia [which has lagged behind Victoria in the use of economic instruments for the environment - DP] has more biodiversity hotspots but fewer people live near them.

(c) Acceptance of the concept has presumably been helped because it is consistent with the volunteerism ethic of Landcare.


Pannell Discussions are brief pieces on issues and ideas in economics, science, the environment, natural resource management, politics, agriculture and whatever else.

98.  Agricultural research for the poor  30 Apr 2007

100. A jolly good fellow  28 May 2007

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