Revenue Law and
the Environmental Legal System
David W. Spain
[1996 / Part 2 of 2]
2(e) The Sustainable Market
....(i) The Nature of ôDevelopmentö
"Development" is something of a value judgment,
implying that the world is becoming better, but it takes a huge
variety of forms, from opening of new mines, factories and logging
coupes through urban and agricultural expansion to localized
clearing. There is no necessary connection between development and
either overall economic growth or environmental impact: sometimes it
may be both massive and environmentally benign (e.g., the computer
industry), or improve existing environmental impacts (e.g., by using
new technology, as in tertiary treatment of sewerage). Nor does an
increased GNP necessarily involve increased environmental impact, as
post-industrial growth in the non-tourist service sector evidences.
However, at this juncture of human evolution on Earth, "development"
tends to rest on an industrial and mechanized basis involving
resource extraction, consumption of fossil fuel and impact upon the
biosphere.
Sustainable development, as endorsed by the UN's 1987 Brundtland
report, must meet present needs without compromising future needs,
and so must be ecologically based. Any evolution of "sustainable
development" would best involve coherent, integrated parallel
improvement in economic sensitivity (to the value of externalities,
reflected in raw material and finished product pricing),
environmental monitoring (as to impacts, indicators and linkages),
and industrial techniques (technologies, processes, waste
treatment). Such parallel improvement, whilst encouraged to be
voluntary, should be underpinned by law.
....(ii) Low Impact, Low Demand
Sustainable Lifestyle
The only long-term solution is to minimize human impact upon the
environment by reducing demand and enabling it to be serviced
locally. It is possible to envisage techno-structured societies
(e.g., with permanent shelters connected with fibre-optic cabling
and using solar vehicles, natural energy sources and hydroponic
farming) which could eliminate vast swathes of non-point pollution,
but getting or evolving to such a state is another matter.
This must involve small scale, localized, co-operative and
basically self-sufficient local economies, but not communes.
The collapse of communism clearly evidences something the free,
voluntary commune movement in Australia (although largely derailed
and neutered by the dope-dole economy): individual liberty,
free enterprise and grassroots-co-operative (rather than
imposed-central) planning is the only viable way. Therefore,
intentional communities should be structured so as to combine the
best of both worlds, i.e. legally securing private property and
privacy whilst encouraging group sharing in appropriate, but tightly
regulated, ways. Loose structuring (eg as tenancies in common,
companies or co-operatives), even if an internal deed or the
Articles of Association assure members of some privacy and security,
are less preferable as legal structures since any privatization of
land holdings amounts to an illegal subdivision.
A sustainable civilization can be eventuated by the broadscale
permacultural planting of landscape (both urban and rural)
with useful vegetation (supplying food and materials outside the
cash economy), fostering work (especially on a part-time basis) in
the vicinity of domiciles, constructing autonomous buildings
(solar-oriented etc.), tapping natural energy, minimizing
transportation from or travel to distant places, improving mass
transportation, developing fuel-efficient and solar vehicles and
co-operative bulk distribution networks, the co-operative ownership
and use of major capital goods, provision of collective purification
plants, district credit unions and the decentralization of
government.
The collapse of communism underscores that such a civilization
should remain based in the free market, with individual land tenure
etc., but most probably with extensive use of community titled land
(wherein home areas are owned privately and extensive commons are
held for strongly defined and regulated purposes). Given that much
material infrastructure is already in place, such an adaptation
could be effected thanks to local cultural wealth and the
technological revolution (putting encyclop(dic information into
every home of the global village).
2(f) Triangulation
There can be no focus to this debate unless humanity sees its
existence in a humble and realistic perspective. Debate proving the
existence of an infinite consciousness and power, possessed moreover
of personality, occasioning creation is quite beyond the scope of
this paper. However, for present purposes, it would be well to
recognize that the magnitude, complexity, coherence and saturated
intelligence of creation, such being partially reflected in humans,
comes from quite beyond (and indeed spawns) both humanity and this
planet and its natural environment. Whatever may be the purpose or
utility (if any) of creation, the whole affair is far greater than
either humanity or nature. At the risk of being simplistic and
assertive, let us call that Beyond God.
Whilst possessed of freedom of spiritual choice and action, with
potency to destroy Earth's ecosphere many times over, humanity
cannot exist without air, food and water, and is bound into the
biospheric web. Humans are not just consumers signalling via the
market in isolation: humanity, their consumption and the market
depend upon, and are underpinned by, nature at every point.
The natural environment cannot be dismissed as irrelevant, or
even as a mere factor in production. Given the created and dependent
role of humanity, it would be dangerously arrogant to treat nature
as either more or less than an entity quite co-equal with humanity
and all its needs and desires. The bottom line must therefore be
that the natural environment must be treated as the third point of a
God-Man-Environment triangle, and the latter two entities are
partners with all the fiduciary duties that entails. Both
scientifically and morally, humanity has no mandate to make
presumptions of right to discount at the expense of Nature, its
equal partner in triangulation under God.
3. REGULATORY CHARACTERISTICS OF THE ENVIRONMENTAL LEGAL SYSTEM
3(a) Overview
Strategies to combat environmental externalities fall into two
camps, preventative and removalist. The former aim to minimize "structural"
demand and, by clean technology, the impact of outputs: these are
the most valid. The latter aim to dilute or neuter outputs and tend
rapidly to become complex, expensive and ineffectual. Dilution
policies prevailed until the early '70s when end-of-pipe
technologies began to become necessary, however these have failed by
far to be adequate, necessitating preventive measures.
REMOVALIST PREVENTATIVE -- Dilution -- End-of-Pipe --
Technological -- Structural -- Sewer Networks -- Sewage treatment --
Water recycling -- Dry processes -- High stack policy -- Fluid bed
-- Energy efficiency -- Demand policy -- Waste sites -- Incinerator
-- Recycling -- Packaging policy
Execution of environmental law, engaged to implement these
strategies, tends to fall into three policy camps, command and
control regulation [CCR] , facilitation of consensus, and
economic instruments for environmental purposes ["EIEPs"].
International practice and the debate regarding environmental policy
has been immensely diverse and concerned with broad strategies and
techniques of intervention (e.g., laissez-faire, regulation,
[aggressive] command and control, [conciliatory]
community-consensual, economic instrument) and has focused very
little upon analyzing comparative effectiveness let alone weighing
specific instruments.
3(b) Command and Control Regulation
CCR policies involve statutory prohibition of defined activity
without formal approval, usually in the form of non-tradable
licenses (of operators, processes and/or premises), which are
granted upon certain regulatory criteria being met and upon payment
of a fee (which usually just helps cover administration -- i.e. not
as a tool to abate impacts). Administrative instruments comprise
permits, mandatory or optional guidelines (eg on technology used and
emission volumes and standards), planning conditions and covenants.
If a successful prosecution is launched in respect of a breach,
fines may be substantial CCR is the basis for the vast majority of
environmental regulations in Australia.
Traditionally the common law, whilst recognizing some private
rights in the environment (actionable in nuisance or negligence) did
little to protect the public interest. Such protection as there is
has originated in legislation, usually in the nature of CCR, and
pecuniary constraints have been kept at a minimum, lest industry be
impeded and in the historical belief that dilution and dispersal of
pollution sufficed. Even so, some retardation of economic growth has
ensued from the early 1970's, substantially due to increased
protection of the environment by regulations controlling emission of
noxious wastes, installation of control devices and use of mandatory
technology (but also partly due to lower investment and higher
energy costs).
Conditions are invariably attached to the licenses, prescribing
standards of technology to be employed and acceptable volume and
concentration and timing of inputs or discharges. The maximum
permitted emission or effluent rate (measured at point of discharge)
may be scientifically geared by zoning to the ambient concentration
of pollution in the airshed or catchment adjacent to the discharge.
Usually any discharge within the licensed conditions is legal and
attracts neither penalty nor obligation to pay. Licensed discharges
aside, sometimes legislation does require the taking of all
reasonable measures (which presumably involves maintenance and use
of proper equipment) to minimize discharge.
The pollution levels stipulated or technological controls
required are based upon engineering standards: thus they curb
pollution regardless of cost or cost-benefit ratios and give no
inspiration to private initiatives. CCR licenses tend to require
specific, standardized dilution or end-of-pipe technologies and
neither emphasize prevention nor distinguish between the utility of
various industries. Whilst such standardized regulation may control
removal policies, it is inappropriate for preventive policies, which
require detailed and flexible insight into each aspect of industry.
Administrative regulation will tend to issue a license permitting
pollution at a specific level, without encouraging continual and
specific effort to lower that level. CCR licenses often presume that
local site dilution or dispersal is sufficient, and tend to ignore
resultant problems downwind or downstream, in sinks belonging to
another (or beyond any) jurisdiction: damage from pollution may be
indirect, or occur at such distances or gradually over such time
that proof of causation is difficult.
It smacks of "central planning" to promulgate
regulatory constriction of emissions, even to within preset targets,
since such targets are arbitrary and any setting and monitoring of
performance by regulation brings a host of inefficiencies. Amongst
these, and invariably comprised within a CCR scheme, are monitoring
and reporting costs, employment of inspectorates, difficulty in
ensuring equality, enforcement costs (especially expensive of
prosecution is involved, since onerous or even criminal standards of
proof may apply), proneness to corruption. etc. By collecting
pollution rentals via EIEPs reflecting free market pricing all of
these difficulties are overcome.
3(c) Facilitation of Consensus
Legislation cohering consensus policies stipulate a process by
which measures are regularly and ethically negotiated (between
bureaucrats and industry, perhaps with public input) on a
case-by-case basis. In this vein may be mentioned a variety of
co-operative measures such as state intervention (eg liming of
acidified lakes) and demand management (e.g., peak rate hikes).
Co-operative mutual restraint (which tends to become enshrined in
custom) may be the only efficient method of environmental safeguard
where the users are impoverished nomads (e.g., grazing vulnerable
rangelands) or where thinly-spread resources are exploited (e.g.,
extraction of timber), with complicated impacts (e.g., canopy and
habitat damage involved in cutting and snigging).
The comparative abundance of well-informed and active citizenry
in a modern democracy makes it dangerous for a government to impose
any policy or strategic plan without exposing the draft for public
comment: failure to take this course and sincerely listen can be
perceived as arrogant and excite voter backlash. Even so, it is the
developers and industrialists (unlike the unpaid, volunteer public)
who have the most time and money to devote to such negotiation,
and it is they who tend to have the ear of bureaucrats and
politicians. Thus, indigenous governmental intervention is quite
likely not only to fail to address pollution but indeed to engender
it: expensive high-stack smoke dispersal may achieved glorious blue
sky over urban areas, such that a myriad local voters happily return
the incumbent politician, but in reality the problem is merely
displaced and engenders acid rainfall elsewhere.
Sadly lacking in this modern public debate is broadscale
agreement upon basic values and don(es upon which, like the home
keys of a typist, the firm, sustainable infrastructure of a
modern, viable civilization can be built. The old certainties of
feudalism, empire and Bible have dissipated, the promises of
Communism have proved a delusion, and even the civilizing influence
of liberalism is sliding into valueless nihilism and that of
socialism into bankruptcy. Site Revenue alone constitutes an
Archimedean point, an objective, rational, bedrock epistemological
methodology, resolving this dilemma (of efficiently maximizing
freedom yet retaining civilization).
Policy-making in Australia has become a slow, inefficient and
convoluted process (in all areas, not just environmental), largely
because government has difficulty cohering rationality amongst a
plurality of formative factors and obtaining necessary support
amongst the prolific interest groups and self-serving professional
organizations spawned by the prevalent welfare state / managed
economy ethos. The resulting frustrations lead to the adoption of
ever-changing policies attempting to twist and bargain amongst the
impediments. Arguably, a great range of concerns in which government
has been forced or trapped to meddle (e.g., personal health and
housing, income support and even the status of the national economy)
would look after themselves were a truly fair free enterprise system
to prevail. Consequently, western democratic governments have become
dependent upon (and largely held hostage to) groups, over whom the
government has little control, who can manipulate public opinion,
play one party off against another, or influence appearances in such
critical areas as apparent capacity capably to manage inflation and
employment.
The expanded role of local and state governments, the
incorporation of "technical professionals" into the
policy-making process, and the broadscale emergence of unprecedented
altruistic interest groups (such as environmental organizations)
following the social/ethical changes of the 1960's, have multiplied
the complexity and tension in the lobbying web and the manufacture
of new demands on government. Some of the pressure groups that have
arisen have been reluctant to work within the traditional channels
of influencing policy formation and have shown preference for direct
action, grassroots participation and decentralization, which are
inherently not amenable to central control but which have all
enjoyed increasing legitimacy and viability. The resulting diverse
complexities and frustrations have further fragmented, stymied and
stagnated the condensation of policy and even the traditional unity
of party ideology, and have increased the difficulties encountered
by governments in implementing policy with support from the
governed. Ministers, Cabinet, Parliament and parties must face and
comprehend the complexity and tensions of the new public choice
process which has developed, and align with the cultural and
structural reality of a society containing many influential and
important interest groups. The establishment of a vast array of
research bureaux associated with various Commonwealth departments
has added to policy drift and stagnation, and these should be
repositioned and rationalized to streamline policy formulation.
Governmental departments must identify and identify with those
interest groups which are relevant to their policy areas.
Interaction with groups must be integrated with the strategic policy
making process of each department. This will allow information to be
shared and identify emerging issues and opinions.
Traditional liberalism sees government as the neutral enhancer
and maximizer of the many competing want-regarding goods flourishing
in a pluralist society. It thus purports a neutral perspective and
dismisses "monist" Aristotelian values as being
paternalist or totalitarian, virtuously endorsing instead the
mumbo-jumbo of cost-benefit analysis as constituting a neutral
process for accommodating competing pluralist desires. As
unemployment, alienation and anomie flourish, as liberalism slides
into amoral nihilism, we are beginning to harvest the bitter fruit
of this undisciplined valuelessness.
There is a need to modify the existing policy-making machinery so
as to ground the authority of the traditional political bodies.
Interest groups must be encouraged to put the national interest
(even if as broadly or loosely viewed) before their own sectional
concerns and to ensure that their participation in the policy-making
process is clearly consistent with it. If guided by long-term
rationality, the public must abandon knee-jerk resistance to green
taxes, despite them having the potential to greatly raise the price
of food, fuel and travel. Despite the temporary dominance of
conservative politics and a materialist, developmentalist ethic,
greed is not integral to human nature, any more than that humanity
is destined to dominate nature or that western industrialism defines
progress.
It must be accepted as rational and autonomous, and indeed
essential for the viability of democracy (given the impossibility of
broadscale citizenry all personally comprehending authoritative
judgments and their scientific bases) politically to accept the
weight of expert opinion. Current conventions and practices are
inadequate to comprehend and deal with interest groups: it is
essential to establish greater communication between policy
analysts, advisers and lobbyists (especially peak groups), and to
allow the input of information and opinions from these groups in
policy formation. It is only by forging across the entire complex
spectrum of interests a broad, unifying umbrella of consistent,
inter-disciplinary rationality that all their thinking and
motivation can be blended into a unifying national purposiveness.
The deliberate avoidance and suppression, by academics, politicians
and big business, for over a century now, of debate on the Site
Revenue issue, is a sad reflection on the realistic viability of
consensual policies.
3(d) Economic Instruments For Environmental Purposes [EIEPs]
....(i) Overview
EIEPs take various forms and may be imposed at various times and
stages. EIEPs include emission and effluent charges levied upon
end-of-pipe discharges, charges for the treatment or disposal of
waste, specific product charges, royalties payable upon extraction
of raw resources, specific environment taxes, tradable pollution
rights, tradable resource rights, compulsory deposit/refunds,
performance bonds and subsidies.
EIEPs supply incentive, stimulate RandD and promote "allocative
advantage" (hence enhancing optimal Pareto-efficiency) by
encouraging profit-hungry polluters, of their own volition and by
innovative thinking, to focus upon how marginal may be their
abatement costs, and to work diligently on constraining their
externalities. This may be achieved by minimizing at-source use of
raw material, employing sophisticated technology and generally
constraining and internalizing pollution. Incentive is economized
rather than dictated by regulation: firms are left free continuously
and permanently to research and implement their own improvements (to
raw material, recycling, treatment etc.) limiting pollution. The
most efficient will survive and a production quota will be emplaced
structurally rather than by direct regulation. The cost of
externality constraint is thus shifted from the public to the
market. Far less bureaucracy is required and the emphasis moves from
clean-up to prevention.
EIEPs thus force changes in retail pricing and affect demand,
thereby (if wisely based) eventuating sustainable practices in a way
that requires neither aggressive policing of constipated diktats nor
impossibly expensive prosecution of criminal charges (often, sadly,
in reactionary courts). EIEPs are consistent and automatic in their
operation, and are not susceptible to momentary political whims and
witch-hunts or the discretions of bureaucrats: by attacking problems
at source they can redress State failure. Only by adoption and
application of appropriate economic instruments is it possible to
avoid central planning and State control, and to retain the free
market as the sole determinant of what is produced and developed.
Whilst EIEPs may be designed as a mere, minor redistributive
device only to recoup some administration and monitoring costs, this
should never be the limit of their function: they have an
environmental rather than fiscal motivation. The most effective
EIEPs exist where a maximum harvest or assimilable discharge is set
by independent scientists and the rights to quotas are auctioned
annually, with all proceeds being applied to administration and
thereafter earmarked for remedial works and research benefiting the
relevant industry. It matters not whether the environmental impacts
addressed be due to direct activity (both primary e.g., mining and
secondary waste emissions) or consequential (e.g., via
ozone-depleting substances). EIEPs should never be used simply as a
device to raise funds for general revenue, even where the relevant
proportion of general revenue is then spent on sundry environmental
objectives. Rather, EIEPs should (from a perspective which is
objective, intergenerational and non-speciesist) always attempt to
balance environmental externalities by seeking to affect behaviour
affecting the environment, using market forces rather CCR. Even if
the base data for calculation is comparatively rough and ready,
EIEPs are efficient compared to direct controls, which require
inspection, testing, gathering of evidence, prosecution and thus
extensive costs and lengthy delays.
EIEPs are cheaper to administer than CCR and have the benefit of
flexibility and enabling industry restructuring, however EIEPs are
not a complete alternative to CCR and must co-exist alongside it.
Whilst the modern neo-liberal market orientation, engendered by the
death of communism, increasingly endorses EIEPs, regulation remains
inevitable given the complexity of rationally valuing and charging a
multitude of pollutants. EIEPs may be useless, and CCRs remain
essential, where environmental externalities are a small percentage
of overall costs. Thus, without an overall "carbon" tax on
fuels and other mobile-source pollutants (e.g., NO2 and lead), only
regulation can force catalytic converters and unleaded fuel. Under
economic instruments alone, it may remain profitable for a firm to
only remove 25% of a pollutant whereas a desirable and achievable
level of removal is 50%. Whilst CCRs tend to be more inflexible,
inefficient and costly to administer than EIEPs, poorly designed or
administered EIEPs are no better.
Economic instruments are unpopular with industry (which does not
want to pay). Various types of EIEPs, e.g., those imposing "carbon
taxes" upon fossil fuel emissions, are often claimed to be
unacceptably inequitable because they would impact small, battling
people who have to drive to work, operate trucks or rely upon
products grown, hauled and stored using fuels. EIEPs are also
unpopular with some environmentalists, who fear industry would just
pay rather than clean up, or who see EIEPs as some sort of sale
of the environment. There is a danger that the community will, in a
rather shallow and reactive fashion, interpret EIEPs as creating
pollution rights or selling the environment.
There is no doubt that being forced to account financially for
external environmental impacts will drive up the cost of products,
possibly causing major constriction in demand as the costs are
passed on, and will rein in both consumption and industrialists'
profits. This outcome is unavoidable if there is to be proper
accounting for the true costs of production. It is irrelevant that
industrialists would prefer to retain free pollution rights (perhaps
under some maximum cap), or at most conform to some regulatory
regime requiring adherence to specific maxima of toxicity or certain
minima of annual percentage reductions. There is no time to bargain
over unrequited environmental impacts, the market will have to sort
out its new stasis, and the inherently-inefficient regulatory regime
has no role as a core tool. No doubt substantial dislocation will be
inflicted by adjustment of the unsustainable high-consumption,
high-pollution lifestyle now dominant for a (mere) century in the
industrialized world, but this must be faced and done to enable a
sustainable planet.
Originally, "polluter pays" principles were endorsed,
e.g. by the OECD in 1975, not for environmental reasons so much as
to foster free trade by preventing subsidization of pollution
abatement from general revenue. The 1987 Brundtland Report endorsed
economic instruments as promoting cleaner technologies: indeed, this
even spurs new economic growth and employment in fresh sectors.
Whilst EIEPs are endorsed by IGAE and Agenda 21, existing Australian
practice is small in scope, scattered and in its infancy, with only
a few innovative examples (some legislative, others administrative):
they deserve much expansion if behaviour is to be influenced and
externalities neutralized. The Commonwealth has extensive relevant
powers, e.g., by special purpose grants, under the taxation power
and under the Corporations power.
....(ii) Discharge Fees: A charge
per unit of effluent/emission may be levied. Any externality should
be monitored at the point of discharge: thereafter, environments
have radically different absorption abilities. Charges in themselves
may be arbitrary sums which go into general revenue (or into subsidy
schemes) and do not necessarily either prescribe standards or
stipulate a process: they simply impose a levy on discharges and
leave choice of technology and quantum of output up to the polluter.
However, they may be on a flexible scale (geared to volume and
content) so as to further encourage improvements (by abatement
technology, etc.) or punish abuses, and when applied in this way are
preferable to CCR since they involve less bureaucracy, are cheaper
to operate, encourage industry to discipline itself and internalize
wastes, are anticipatory and foster flexibility (as to what measures
to adopt) and innovation (in the exploration of new ones).
Proportional non-compliance fees are penalty payments (often on a
sliding scale) payable in respect of emissions and effluents at
above prescribed limits. They are economic instruments, unlike fixed
penalties imposed for breaching a prescribed limit, but are
difficult to monitor and enforce and, if imposed, should always be
directly earmarked for expenditure upon related remedial work. It is
difficult bureaucratically to set the charge at that exact rate
which constrains discharge without suffocating the industry, and
care must be taken lest inconsistent charges between States enable
locational advantages which upset commercial competitiveness.
Queensland, New South Wales and South Australia all license
emissions to air and effluent discharges, but the fees are at a
fixed rate (which may, however, be tiered according to scale) and
are, in most instances, not load-based. Exceptions exist as regards
fees, geared to impact level, as per a regulatory schedule, for
various types (faecal, metallic, chemical, thermal etc.), point
discharges into tidal waters in South Australia, and as regards the
biochemical oxygen demand [BOD], grease, acidity,
alkalinity, metallic etc. content of various classes of trade
effluent discharges in Sydney. At present, with the exception of
these two examples (which encourage improving quality and lowering
quantity of effluent), discharge fees imposed in Australia appear to
have little incentive effect and just pay for administration.
....(iii) Treatment Fees
Solid wastes (domestic and industrial) are usually collected by
local councils as a flat rate service geared to covering collection
and dumping costs: this does nothing to minimize waste, but optional
or variable user charges encourage random dumping. Some councils
encourage recycling, and in NSW a State subsidy is paid to councils
per tonne of recycled material. In all instances, EIEPs applied as
charges to neutralize or remediate externalities are an appropriate
revenue instrument within the environmental system.
Brisbane's medical wastes are incinerated at high temperature by
a private operator; solvents are collected and treated (@ about $350
per 100-lt. drum) and recycled via distillation. Hazardous wastes
(acids, caustics, pesticides, and heavy metals) are collected by the
Brisbane City Council and treated at Willawong by reduction,
chemical-fixing and micro-encapsulation in antonine clay and cement,
the resultant non-leachate solid being buried in double-lined,
stable landfill upon State government land near Myles. Used tyres
are shredded and buried in landfill pending development of useful
technologies. The cost for treatment of pesticides is $6.90 per
litre ($6,900 per cubic metre), and for treatment of heavy metals is
$0.25 per litre. No advanced technologies are being used in
Queensland.
Effluent wastes in Australia are also usually collected and
processed by local authorities using the sewerage system. Cost
structures are well established and cater for specific trade wastes
(e.g., starch and BOD contents). In the more advanced works,
tertiary treatment is effected such that the resultant product is
environmentally neutral or even (as with fertilizers) actively
useful. It is necessary for discharge fees to be combined with CCR
(for instance, formally licensing certain trade effluents or
forbidding discharge of intractable wastes).
In absolute terms, however, it is a matter for the free market
whether or not relevant facilities are provided by private
enterprise or (and in any event, in default thereof) collectively
(e.g., by state government instrumentality or by local authorities).
In the event that this field is opened for free enterprise, to
facilitate competition easements for waste disposal should be "in
gross" and dedicated to that public purpose, with the owners of
conduits statutorily bound to make them (or a proportion of their
flow) available for rental, at a reasonable market price, by
competing processors.
....(iv) Environment Taxes and User
Fees
Some councils and authorities (e.g., water boards) impose (upon
households, rather like a poll-tax) special levies earmarked for
precise environment enhancement programmes. Similarly, landing and
takeoff charges (geared to the noise level of specific aircraft)
could be imposed and applied to sound-proof affected buildings.
EIEPs in the form of 'user pays' charges covering management and
disposal costs exist in Australia for municipal garbage and sewerage
treatment, and for trade waste disposal via the sewerage system.
User fees are charged for entry to some national parks and the Great
Barrier Reef area, thus being potentially an effective instrument
for reducing congestion and degradation. In practice, the fees
rarely cover administrative costs. Some local authorities impose "green
levies", applied by at about 1% of rates, for purchase of open
space.
A major example is Sydney's Special Environment Levy, designed
and introduced (after massive public consultation and support) in
1989 @ $80 per household, so as to raise $485m over 5 years, to meet
upfront costs of new infrastructure needed to combat the pollution
and eutrophication of beaches, estuaries and rivers which manifested
in the late 1980s. Part of this fund was applied to monitoring,
modelling and community education, but the bulk was applied to new
infrastructural works which enhanced stormwater and odour control
and enabled recycling (into fertilizer) of some 50% sludge, raising
to 83% the level returned to beneficial use and reducing ocean
outfall from 58% to 17%. James, op. cit., pp 43- 48. Those who
benefit from such programmes may be "free riders" who did
not pay the levy. Thus, those who live near rivers and beaches east
and north of Sydney may have benefited greatly thanks to levies upon
the vast bulk of households in the south and west. Free Riding would
not be possible in a Site Revenue society: such an inequity would be
remedied by collection of the higher site revenue accruing to the
favoured localities.
....(v) Product Charges
Product charges are imposed on specific products so as to
curtail, or force some accounting for, their use. Such charges may
often be differential (eg upon fossil fuels according to sulphur
content, as in Europe, or upon new paper but not recycled paper, as
in Australia). Prime candidates for such charges, given pollution of
inland waters in Australia, are detergents and fertilizers, however
imposition would have to be by the Commonwealth (to avoid interstate
supply) and blanket imposition may impact unfairly against
efficient, non-polluting operators.
Water supplied below true cost, fostering profligate use, should
be paid for by consumers at a realistic price reflecting the real
cost of its catchment, storage, reticulation and administration.
Frequently, in Australia, the price (domestic) water authorities
charge is geared to the value of the property serviced: this may
achieve a crude income redistribution, but is quite irrational.
Historically, provision of cheap water has been seen by politicians
as a community service obligation, and fears are held regarding the
equitable effects (upon low income groups etc.) of charging full
price. Such subsidies are achieved, however, at environmental cost,
and full recovery on a "user pays" basis is the only
simple, bedrock foundation. Recycled water (purified effluent) may
be supplied for certain agricultural and recreational (e.g., golf
course) applications.
A good Australian example regards ozone-depleting substances
(CFCs, halons etc.). Under the Commonwealth legislation various
ozone-depleting substances are scheduled and their import, use etc.
curtailed and charged at a rate per kilogram, but (in the event) the
need for expensive licensing and high penalties and charge-rates was
superseded by industry accepting the challenge and voluntarily using
alternative products (such as HCFCs).
....(vi) Tradable Pollution Rights ["TPRs"]
TPRs are founded in a belief that the public has property rights
in the environment, and involves the State issuing at a fixed price
(or pursuant to tender), or auctioning, a fixed number of rights to
pollute, up to a set level [quotas]. TPRs have the potential
to protect environment without extensive costs. No TPRs exist in
Australia except (via "grandfathering" i.e. free
allocation pro rata to existing polluters) as regards salinity
discharges to/ water diversion from the Murray/Darling rivers.
Whilst an improvement upon common law myopia, this approach can
be severely defective in that (a) setting the quotas is relatively
arbitrary, (b) the polluters' bids are unlikely to reflect general
community preferences, or option and existence and bequest values
(so the approach is inherently anthropocentric); (c) bureaucratic
valuing of the quotas is an imprecise, "rubbery" exercise;
(d) the community is ill-informed and apathetic, often in no
position to discern and value different sources and types of
pollution, and (e) the revenue is not necessarily ear-tagged.
To found a meaningful system of TPRs, quotas should be issued
only by independent authorities, upon a strictly scientific basis,
in respect of specific water bodies and airsheds once their
assimilative capacity is ascertained. The issue must be pursuant to
annual tender or public auction and in no instance should be by way
of grandfathering. Grandfathering (a common practice in the USA)
sanctifies the "rights" of existing polluters, imposes an
impediment to new polluters and, immediately prior to allocations,
fosters maximization of pollution so as to attain a higher quota.
Auctioning quotas can go some way towards avoiding the very high
costs of otherwise attempting to define and enforce property rights
in the environment. Given the cap on quantum of pollution on the one
hand and the polluter's need to maintain sufficient market profit on
the other, the total price at which polluters bid will tend to
settle at the dollar value the community places on the environment
destroyed.
TPRs should be issued on a locality-specific basis and for a
limited period only (say one year): they should invariably be
tradable (and buy-back permitted), so as to encourage their
collection by the most efficient and profitable industries, or their
purchase and destruction by conservationists or the State, although
the thinness of the market may swell transaction costs and distort
pricing. TPRs are both effective and efficient, since polluters will
maximize abatement to lower bid costs. TRRs will not work well on
their own where there is no profit to be made from the per se. Thus,
disposal of intractable wastes, such as PCBs or compounds of
mercury, is not profitable as an isolated operation. This
necessarily involves CCRs forbidding any disposal or storage of such
wastes other than for the purpose of immediate disposal via best
practice.
....(vii) Tradable Resource Rights [TRRs]
As with waste disposal, quotas for resource extraction (eg for
fishing, forestry and water) must be set by independent authorities
upon a scientific basis, so as to reflect Optimum Sustainable Yield
["OSY"], whilst preserving Safe Minimum Stock ["SMS"].
Unfortunately, given political pressures, TRRs are usually issued by
grandfathering and for lengthy periods (albeit on occasion subject
to centrally-imposed quotas), rather than being auctioned annually
for full value. It would be better to "bite the bullet"
and foist an initial, major one-off capital cost (in the form of TRR
bidding costs) upon resource extractors and allow their recovery via
the market price mechanism thereafter, despite heavy "social
equity" impacts on impoverished consumers. In this connection,
corporatization and privatization of government utilities (e.g.,
water and irrigation boards) may be the only way to enable realistic
pricing free of political pressures. Public support for such moves
can be won where proceeds are applied to manifestly effective
environmental works.
TRRs effectively allow (a) the determination of biospherical
capacity to supply raw materials wastes or biomass (b) public
accountability for the economic value of the resource thus
privatized and (c) economic efficiency employed in patterns of
harvesting and consumption. TRRs are relatively common in Australia
and relate to water extraction (from inland streams) and forestry
and fishing quotas.
The quotas must be allotted by tender, or publicly auctioned, and
entitle the holder to exploit the resource. In no instance should
TRRs be donated via grandfathering: one of the most grotesque
examples of this is the US practice of issuing irrigation rights
drawn on rivers and aquifers at the unrequited expense of both
aborigines and environment. Eventually, given free competition (and
at least cost), the price bid for TRRs will reach a stasis balancing
community demand for the relevant goods and employment with an
objective, conservative scientific assessment of maximum sustainable
impact. Presumably, so long as the auctions are held annually
thereby ensuring sensitive ongoing adjustment, this equation will
involve no intergenerational downside.
The proceeds of such auction (after payment of bare overheads as
regards scientific studies, monitoring and enforcement) must be
exclusively earmarked to ameliorating the specific impacts
resulting. Thus, for instance, the surplus after administering
auction and monitoring of forestry activity must be applied
exclusively to reafforestation.
TRRs must remain tradable, so as to concentrate tenure in the
most efficient operators and high-value industries, or State
buy-back and purchase by conservationists for the purpose of
deliberate non-use. However there is a need for central registration
and approval of trades lest impacts concentrate unwisely in specific
areas or monopolies result. Sometimes a quota is reduced by a fixed
percentage upon approval of a trade, so as to gradually lessen
demands on the resource and constrain "sleepers" who hold
onto grandfathered rights pending a profitable speculative sale.
As regards water rights, at common law there was unrestricted
entitlement to divert riparian flow, but with the advent of
restrictive legislation diversion required a license (for say 15
years) tied to specific land. The modern concept of Tradable Water
Entitlements ["TWEs"] breaks this tie, enabling (subject
to approval by the authority, mortgagees etc., and barring
compulsory retention of a certain domestic and stock minimum)
temporary or permanent transfer of entitlements. After reserving a
scientific proportion for environmental sustenance, licenses (for
volumes from the balance geared to land size) are allocated upon
request, with payment only of an administrative fee: there is no
attempt to fix and collect true market price for the resource thus
privately diverted. Allocation (by virtual donation) of valuable
water licenses simply on the basis of land area owned no doubt
kowtows to the pass( common law ethos, thus creating minimal "establishment"
political waves, but (although enabling trading which promotes
efficient and productive uses -- e.g., away from salinated areas) in
doing so largely abdicates any rational accountability for the
environmental and public cost of the resource thus privately
allotted. However, in some instances, new supplies of water have
been publicly auctioned, reaching as much as $775 per megalitre.
Certain fishing quotas (e.g., for bluefin tuna, abalones, pearls)
are allocated, and subsequently monitored on landing, once the total
allowable catch is scientifically assessed, but allocation is on the
basis of capital invested and catch history: not public auction.
Problems of "high-grading" ensue, as fishermen reject
smaller fish (which may fatally weaken or die) and concentrate on
maximizing quality of their quota. Wildfish quotas have enabled
stock regeneration and one major effect of has been to foster
mariculture (fish farming).
....(viii) Deposit Refunds
Deposit refunds, although once common in Australia, ceased with
the advent of disposable containers, which brought public costs in
littering, collection, landfill etc. Only in South Australia is
there express legislation imposing a substantial deposit, of 10-20
cents, upon containers. Whilst this imposes a substantial (labour)
cost upon industry, it has wide public acceptance and fosters major
incentive for collection and return, resulting in high (over 90%)
glass and can recycling rates, well above levels in other states.
This requirement should be adopted nationally and extended to
batteries (especially car batteries), tyres and car bodies. Whilst
redeemed deposits (over $1m in SA) may accrue as free working
capital for brewers, there are precedents for such being directed
into a public trust fund for environmental rehabilitation.
....(ix) Performance bonds
Performance bonds may be imposed by local or specialist approval
authorities to ensure compliance with development conditions (e.g.,
as regards limits to permitted vegetation clearance, revegetation,
siltation traps), under mining legislation to ensure rehabilitation
(thereby minimizing dust and leachate), or effluent control. Bonds
tend to ensure self-regulation and voluntary compliance. On the
downside, such bonds can easily become inadequate, they may tend to
be imposed at a flat rate without factoring in site-specific
rehabilitation costs, and they can tie up developers' capital at a
time it is needed most (although this may be substantially
circumvented using bank guarantees or insurances).
....(x) Subsidies for Non-Pollution
Subsidies are payments from general revenue which either pay
polluters to cease polluting, or assist them to purchase equipment
which curtails pollution. Subsidies are very suspect as an EIEPs
since (a) they tacitly admit a polluter's right to pollute; (b) they
actually encourage polluting behaviour (so that the polluter can
bludge more subsidy), (c) they shift the onus of initiative from the
polluter to the public, thereby (d) crippling focussed motivation
and lateral thinking and curtailing innovation), (e) they prompt
over-investment and (f) they involve inherent legislative time-lags,
and insofar as they underwrite specific sorts of existing
technology, they fail to keep abreast of new advances. If
case-specific outputs are strictly measured and taxed there should
be no question of actively subsidizing polluters who take steps to
improve output: their steps bring their own reward.
Economic instruments should never take the form of subsidies for
better technology: this move should be left to the economic choice
of each industry. The instruments should simply collect the set
charge per unit of resource used or pollutant emitted, without
discretion for exemptions. Despite the demands of lobbyists, the
consumption of gas water or electricity in bulk, land clearing, the
dredging of harbours and the draining of aquifers should never be
subsidized, but should only be permitted on the basis of full user
pays. Bounties should, however, be payable for positive
externalities, such as retention of forested landscape for visual
amenity and air-scubbing.
....(xi) Empirical Case Studies:
Actual Economic Instruments
Economic instruments (albeit comparatively insignificant and
trivial) have been used to control water pollution in France and
Netherlands since 1970 and in Germany since 1981. Detailed analysis
and comparison of the empirical effects flowing from imposts at
source on water pollution by organic (c.f. heavy metal) wastes in
various European countries establishes that these tools, when under
the control of politically-independent authorities, operated
dynamically to actually change behaviour an foster environmental,
economic and technological advances.
In Germany (and the USA) regulation is essentially by "command
and control": it stipulates use of a certain level of
technology and specifies standards for licensed volumes of organic
discharge. An effluent charge is levied, but only to pay for
monitoring the command system. In Denmark no effluent charge is
applied. In France, independent authorities fix and collect a levy
upon organic discharges, and this is earmarked towards (partial,
subsidized) remedial measures (e.g., sewerage, dephosphoration and
denitrification plants). The Netherlands is similar, save that its
levies are set at a higher rate to fund a "closed system"
-- i.e., covering the cost of remediation and its administration,
without subsidies: this eventuates in user fees being set higher.
Skou concludes that reductions in discharges are markedly better in
the Netherlands than in the comparison countries, especially
Denmark, and that this has been achieved at less cost. By forcing
industry to internally solve their pollution problems, public
responsibilities and costs are reduced.
It is the countries with the greatest industrial productivity
which generate both (a) the heaviest pollution problems and (b) the
wealth with which to address same. National policy style and the
calibre of pertinent institutions may well greatly affect "ecological
modernization" and environmental outcomes. Various studies
indicate that this is so. It is said that countries with relatively
successful economic and labour market policies also tend to have
relatively successful environmental policies, and Japan is cited as
an example of this exemplary trend, however the Japan's purity is
dubious: the polluting industries have simply been translocated into
Korea and Taiwan! In 1974 Japan introduced a levy on SO2 emissions,
designed to raise pensions for pollution victims. This stimulated
scrubber technology and in the next decade such emissions reduced
drastically to 7 kg per capita (cf. 84 kg. per capita in USA),
although much such industry was displaced to Korea and Taiwan.
4. SITE REVENUE -- GENERAL
4(a) Introductory
Only the application of labour, aided by capital (in the form of
buildings, tools, machinery etc.), to land, can produce wealth.
There are no other factors in production. In this context the term
land must be widely defined to mean the entire surface of
the globe (whether covered by land or water) and all that is above
or below them in the form of raw resources, atmosphere and
wave-lengths in the ethers. In all free enterprise societies private
monopolies to tenure of defined portions of the land [sites]
are granted by law to individuals. This is essential for security
and productivity, however fundamental economic distortion is
inevitable if the market value of than monopoly is privatized rather
than socialized.
In a Site Revenue society the annual rental value of
privately-occupied sites (ignoring improvements upon them) would
constitute the sole source of public finance. Sites held by elements
of the Crown, churches, charities etc. would not be exempt. No other
imposts of any kind would be collected, including taxes (upon
income, sales, goods and services, payroll etc.) and duties (e.g.
stamp, death and import duties). Against a background of high
unemployment and environmental abuse, taxes on labour or earnings
should be eliminated and replaced by site revenue.
There would be no facility for governmental deficit financing and
highly inflationary borrowings, selfishly creating burdens for
generations yet unborn: governments, like individuals and
corporations, would be constrained to live within their budget. Nor,
as a general rule, would the public sector be involved in business:
government should only do what private enterprise cannot do, and to
the extent that government provides goods and services, user would
pay.
This system is sometimes called "the Single Tax", but
erroneously. The revenue collected is really a payment for services
(i.e. locational advantage to monopolists over sites) provided by
the community: it is not a tax at all; nor is it a "rental"
since the fee simple remains with the citizen.
The price of a site is the transfer consideration it commands in
the free market, ignoring all improvements to it but in the light of
its natural attributes and location amidst surrounding services,
community demand and development. The annual rental value of a site
is the sum which would be offered, upon the free market, for the
right to occupy it (disregarding visible improvements) for one year,
with a perpetual option to renew that tenure. The Nett Annual Value
["NAV"] of a site is its annual rental-value inclusive of
improvements. NAV forms the rating base in the UK, much of the USA
and some Australian States, and is a severe disincentive to making
improvements, thus fostering inner-city decay.
If the full annual site rental is collected, all unearned
increments (including, but not limited to, betterment) to the price
of the site are recouped by the community. The price paid upon
transfer of any site should equate with the market value of the
improvements upon it. If the price exceeds that value then it
contains an element of capitalized locational advantage and the site
revenue is inadequate, whilst any shortfall indicates that the site
revenue fixed for that location is excessive. The price of bare
sites (which, after all, were given to, not made by, humanity)
should be zero to any transferee willing to pay the annual
assessment: improvements alone would provide collateral security to
mortgagees.
Site Revenue does exist, in a limited form, in the collection of
rates based exclusively upon unimproved or site values in Queensland
and New South Wales. Numerous Commissions of Enquiry have endorsed
this system, however it has been adulterated by inequitable and
regressive "minimum rate" imposts and (since 1971) by
Commonwealth allotment of some 2% on income tax for distribution
amongst local authorities (which allotment constitutes some 15% of
their income and is increasingly made as "tied grants").
Federally, the Land Tax Act, enacted in 1910 but repealed by Prime
Minister Menzies in 1952, was a limited Site Revenue measure,
collecting 5% of the unimproved capital value.
4(b) Assessment and Collection Mechanisms
It is simple to assess the annual rental-value of sites once
expert valuers continuously observe the conditions of site transfer
throughout the entire broad economy. In a Site Revenue economy,
legislation would require details of all prices and rentals of sites
to be reported and publicly displayed (thereby preventing graft), at
local government level, upon cadastral maps marking the dimensions
and boundaries of every site and the position of significant
variables.
The Site Revenue would be collected at local government level
(which should preferably be granted constitutional recognition) and
remitted to higher levels of government in negotiated proportions.
The process should be co-ordinated under a Commonwealth
Valuer-General, with the State Valuers-General as deputies. Valuers
would distinguish how much the price or rental a site commands is
due to the improvements upon it and how much to the locational value
of the site itself. They would declare the annual site value
applying to each site, but in doing so would be performing as
scrutineers and analysers (rather than manipulators and dictators)
of free market forces. The annual assessment would be payable by the
proprietor of each site just as rates are at present. The debt would
constitute a charge against the title and could be amortized for
payment after death.
Ultimately, each valuation of a site's annual rental value must
be justifiable as compared to similar sites locally and nationally.
Local data must be continuously cross-checked against information
from brokers, auctions, the press, advertisements, land developer's
brochures and advice from banks and finance agencies. An assessor,
studying the flux of prices for sales and leases across an area and
amassing, digesting and swapping data concerning them, will be able
to establish approximate "benchmark" values for particular
types and sizes of sites in particular zonings. This "benchmark"
must then, with caution, be "fine tuned" in the light of
conditioning variables and each site's relevant improvements. If the
correct site revenue is being collected, sites should be transferred
for the value of improvements alone. After a few years of
high-quality valuation, as publicly displayed, annual rental-values
in areas would be well known and established such that any
alteration of them would be clearly and evidently traceable to the
direct influence of fresh, known variables.
4(c) Broad Economic Effects
The argument is conclusive that Site Revenue is a simple yet
sovereign remedy for most of the economic ills of our time,
including excessively-big government, rich-poor gap, unemployment,
inflation, currency fluctuations, unjust enrichment, high interest
rates and planning distortions.
Human life and civilization cannot exist without the use of land.
Communism has failed all over the globe and it will not be tried
again: it is clear that legally-assured, community-endorsed private
monopoly over specific sites (whether the use be agricultural,
residential, commercial, industrial, etc.) is equally fundamental to
human welfare.
Sites exist upon land, upon certain locations in the sea (e.g.
moorings, oyster leases) and in the air (highrise buildings, flight
paths, transmission wavelengths). They were given by Creation, not
made by humanity (land reclamation partially aside), and there is no
moral or rational basis for assertion of private ownership over them
as if they were chattels created by labour. Sites are a limited
community resource essential for survival and civilization and
economic sanity is impossible unless the community, having granted
private monopoly over them, collects the full site revenue in return".
Site Revenue constitutes the only logical and ethical source of
public finance.
Throughout the CANZEUS countries, indeed since Tudor times,
holding charges on land have been relatively mild and proprietors
can hold tracts out of use pending sale at a price increased by the
resultant artificial scarcity. This facilitates a vicious circle
maximizing imbalance in land ownership and a rich-poor gap.
Site Revenue provides a severe disincentive to owning more land
than one has to. Since the annual rental value collected reflects
the "highest and best use" to which the market could put
that site (rather than its "actual" use), Site Revenue
forces optimum development and usage of, and ends speculation in,
sites, assists liquidity and enhances efficient resource allocation.
Unjust enrichment from "exploiting the ecosphere", "locational
advantage" and "capital gains" become impossible,
since the rental-value is collected and land-price is destroyed.
The expectation of pocketing the unearned increment in land
prices is bad economically, since it diverts investment from
productive enterprise, fosters inflation, encourages the holding of
land off the market, and (despite popular illusion) does little to
create employment or enable "trickle down" of wealth.
Artificial escalation in land price diminishes the ability of site
purchasers to spend on consumer goods, thereby adversely impacting
across the economy, depressing activity and employment, spreading
dissatisfaction and a "get rich quick" attitude, and
sparking unrest over wages and political extremism.
Since Site Revenue destroys most forms of speculation, so the
only feasible investment for capital would be in productive
enterprise. The ever-increasing efficiency of society would threaten
a continual albeit slight depreciation in the worth of money so that
those with savings would be only too glad to preserve its value and
to lend it without interest. Since money is properly only a medium
of exchange, not a good in itself which a citizen can responsibly
hold out of circulation, economic health demands that it be
circulated via expenditure or loan.
Site Revenue meets all the criteria of a good tax: it is visible
and intelligible, has a high revenue potential, is economic and
effective to collect, and does nothing to distort the market. Sites
are essential and immovable and their supply is fixed, so collection
of Site Revenue cannot warp either demand or supply (as it does with
non-natural goods or services). "Tax capital and you drive it
away; tax land and you drive it into use".
Logically the Site Revenue fund would be more than adequate to
pay for a modern government. Since (a) human civilization depends
upon its citizens having secure private title to land, so (b) the
monopoly thus granted will possess a certain value fixed by, and
reflecting, the nature of that civilization therefore (c), the
annual collection of that value will suffice to fund public
infrastructure for the civilization.
Since a healthy civilization is unlikely to enter retrograde
decline, one would expect the site revenue fund to at least equal
the sum of all present taxation (which is at the expense of site
revenue), plus all unearned increments privately appropriated, plus
all interest payments.
Instead of doing the simple, intelligent thing, governments
worldwide (caught and distorted in the grip of vested interests)
impose a welter of complex, counter-productive and inefficient
taxes, upon earnings, economic activity, and even employment. At
least they have, for the time being, ceased to tax windows and date
palms.
Reduction of site-price to zero, and the release of impediments
upon initiative, enterprise and productivity, would mean that
everyone willing to work with hand or brain would have easy access
to a site, even if only for subsistence farming or as a base for
part-time work. Workers, without mortgages and with ready access to
their own sites, would be in a natural, strong position against
capital, which would no longer (thanks to its command of sites) be
able to force wages down to subsistence level. Small business would
be freed from a plethora of taxes and red tape.
With the high cost of land and the burden of tariffs removed,
farmers would have more capital available for environmentally safe
farming. Conservation zonings and environmental protection laws
would apply to prevent destructive exploitation of sites, and
polluters of the atmosphere would pay (via e.g. a fuel tax) for its
cleansing by vegetation. With land easily available to every farmer,
so absentee owners (especially giant corporations) would find it
hard and expensive to obtain labourers and managers. Agricultural
land would tend to be owned by those who actually farmed it.
Downturns in world commodity markets would lower the demand for, and
hence the annual rental value of, rural land affected.
Farmers would no longer be able to hand on a property of certain
capital worth (beyond that of its improvements) to their children,
but, on the other hand, those children would not need to buy land
when they struck out on their own.
Homebuilders would have easy access to sites, without being
mortgaged for life, and there would be a boom in the building
industry. Payment of Site Revenue could not be wholly passed on to
tenants because (a) destruction of land "price" would make
it much easier for folk to buy their own site and (b) landlords
would be so keen to keep rental sites occupied that there would be
strong competition for tenants.
4(d) Specific Planning Effects
Site Revenue would eliminate self-interested, secret and corrupt
planning pressures, benefit government finances and reduce premature
development.
Allowing speculators to retain a sizeable proportion of unearned
increment (including elements of betterment) encourages their
purchase of land suitable for various kinds of development and their
holding same out of the market until prices escalate. This is a
legalized fraud upon the community, whose needs and public works
have driven up demand for sites.
By forcing the release of unused or underutilized sites and their
optimum development, and by removing imposts on labour, undeveloped
and degenerated sites would be improved, increasing the base value
of total sites. It is illogical to fear over-stimulation of growth
since major capital expenditure is unlikely without solid market
research: moreover, it is the present system of speculation which
forces excessive development. Developmental pressure would be
reduced upon marginal land and urban sprawl and ribbon development
would be constrained by the natural synergistic economies of spatial
agglomeration, which foster efficient and shared infra-structures,
broad choice, specialization, competition, social contact and
communication.
Thus, a Site Revenue society would develop organically from a
healthy economic basis, lessening the need for planning but not
rendering it redundant since a major and responsible supervisory
role would remain so as to preserve heritage pieces, protect public
assets (e.g. CBD theatre areas) from commercial pressures, safeguard
open space and environmental reserves, and constrain urban sprawl.
There is a need to combine the freedom of entrepreneurial vigour
with the broad responsibility of planning control.
There is no problem for site revenue with downzoning: the
purchaser of undeveloped land zoned residential should pay nil (but
incur site revenue liabilities). There is unlikely to be unfair or
unpredictable loss if land is downzoned to agricultural or
environment protection: true developmental potential (return on
rents etc.) is cut, but so is the site revenue payable. The only
exception would be where worsenment actually diminishes the value of
improvements to land, and in such an instance compensation should be
paid.
4(e) Site Revenue and the Environment
....(i) Overview
Site Revenue would be inherently beneficial to the environment,
removing profiteering in its developmental value and
encouraging the widespread low-impact, low-demand lifestyle so
necessary for a sustainable civilization and avoidance of war.
Landowners would be inspired to beautify and improve their
properties without fear of penalty and public expenditure upon
habitat preserves and national parks would be viable in order to
profitably augment the site value of benefited areas. No concern
need be held that sites would be abused (strip-mined etc.) provided
that normal CCR were in place and a range of appropriate EIEPs were
applied.
....(ii) Beautification
In a Site Revenue society no speculative gain could possibly
accrue to tenure of sites. All holders of sites would have to pay
the annual rental accruing to them. There would thus a severe
disincentive to owning more land than one could directly manage
productively in the face of competition, for failure to do so
efficiently would lead to enforcement of the accrued site revenue
debt against the improvements of some (if need be, all) of the sites
held, and loss of them. It is to be expected that a great deal of
under-utilized land, at present held as a hedge against inflation or
for speculative reasons, or reliant upon employment of others for
whom no viable alternative exists, would come on the market --
available to anyone willing to work productively -- at a price
equivalent to the value of improvements upon it.
Whilst employment of labour and rental to tenants would remain,
the marked trend (especially in residential, commercial and rural
zones) would be towards individuals -- sometimes writ large as
corporations -- owning and managing their own properties. There
would be a general tendency towards tenure of highly-improved small
holdings, developed and operated carefully to maximum economic
advantage. With an enormous tightening of State welfare benefits,
this would soak up the vast pool of welfare dependents, especially
the unemployed, into a new class of low-impact, low-demand
self-managing settler. This class would basically equate with the
traditional peasant class, however at this turn of the spiral it
would be politically free, able to live well with only part-time
labour in the cash economy, and blessed with all the advantages of
the information age.
This structure of independence and proprietorship would instill
the powerful motivation of personal interest and responsibility,
inspiring settlers to improve the quality and viability of the
holding so as to enhance its long-term, reliable productivity with a
view to handing it on to the next generation. Site Revenue
encourages site-holders to improve and beautify their holding,
whether it be urban or rural, by appropriate landscaping and
conservation measures. Caring is natural to those with a real stake
in their environments. Those who do care and improve their holding
incur no extra revenue obligations, since the annual site value is
calculated against the average, unimproved land of that locality.
Those who do not improve their sites will be less able to compete
for tenants.
Site Revenue would force maximum utilization of holdings and
would end tenure of sites for speculative reasons. This would
release masses of land onto the market, especially at marginal
locations (e.g. desert fringes). This land could be obtained cheaply
by the community and dedicated as national parks (preferably with
broad inter-linking swathes), or as local beauty-spots, which would
bear no Site Revenue obligations.
Public policy encourages farming of marginal land, and hence
agricultural sprawl, by allowing urbanization of fertile land (and,
even worse, allowing individuals to pocket unearned windfall profits
for doing so); rating unused (or under-used) land, often held for
speculative purposes, at the same rate as productive land;
subsidizing the dumping or destruction of surpluses (not an
Australian sin); and artificially facilitating the spread of
preferred crops at expense elsewhere (e.g., permitting irrigation of
cotton at the expense of waters needed to reinvigorate or flush
river systems). The quest for unearned increments to land value is
the driving force behind excessive sprawl of all kinds, urban,
agricultural and industrial, and in the instance of agricultural
land replaces the genuine steward with an unnatural class of
absentee owner who cannot work the land personally and so employs
others to do so using the "efficient" perversion of
monocultural, inorganic chemical farming.
The prospect of a windfall increase in land value operates as a
standing invitation to ædevelopö land by seeking approval
for a change of use -- regardless of whether the proposed
development is genuinely needed. Which means that, irrespective of
its environmental significance, or the need to maintain some clear
demarcation between town and country and curb the environmentally
destructive process of urban sprawl, all land becomes vulnerable to
entrepreneurial initiatives.
War (especially nuclear) wastes and damages the environment and is
caused by nationalistic land-hunger, resource-grabbing and
governmental direction of citizen disgruntlement away from home
economic problems (e.g. boom and slump, unemployment, rich-poor gap)
which are invariably occasioned by land monopoly Site Revenue
prevents private profiteering out of raw resources, diminishes
central government and national boundaries and founds economic
stability upon rock. It is, therefore, the indicated remedy against
war.
....(iii) Site Bounties
In some instances, particularly forestry, growing of the resource
has extensive side-benefits, such as enhancing the visual amenity of
other sites (hence increasing their locational value and site
revenue), enabling photosynthesis of CO2 and (in other than conifer
plantations) supplying wildlife habitat.
Landowners rarely receive any economic incentive to preserve
treecover or natural habitat. On the contrary, in Australia, for
many years Crown leases required active land clearing. Usually the
most profitable (economically) use of rural land requires clearance
of vegetation to facilitate grazing or agriculture. Despite the
possibility of differential rating being available under Australian
legislation, no local authorities in fact give rates reductions for
preservation of habitat, even where the land is dedicated (and its
title encumbered ) as a Nature Refuge. Nor is dedication for habitat
preservation considered to be a charity for which stamp duty relief
is available. Overseas, there are exceptions: commercial woodlots in
the UK are rated at 1/3 their assumed income were they unimproved
pasture.
Under an environmentally-sensitive Site Revenue system, assessors
of site values should be mindful to give credit where credit is due.
Thus, if a voluntary (and perhaps commercially sacrificial)
beautification or preservation of one site increases the value of
others, then a ônegative rentalö or bounty should accrue,
in much the same way as domestic solar generators achieving a nett
input to the electricity grid receive payment.
Herein lies a mechanism for rendering equity to those developing
nations which yet retain extensive natural vegetation. Rather than
economically encourage or force them to cut it down, rather they
should receive (out of levies collected in respect of atmospheric
externalities) continuous bounties from developed, atmospheric
polluting nations in respect of the contribution to homeostasis
thereby contributed. Those nations who preserve habitat benefiting
fauna would also receive bounties in respect thereof, payable from
the national and global trust fund comprising 50% of all income in
respect of licenses to extract raw resources.
....(iv) Site Degradation
Critics sometimes allege that, when subjected to a Site Revenue
system, rural landowners would respond by over-exploiting their land
so as to pay, or be able to pay. This allegation is hypocritical and
unfounded. It is the existing high price of land and interest rates
(both of which are ended by Site Revenue) which already make
landowners over-exploit their soils. Moreover, in a Site Revenue
society protective environmental laws would remain in force and
enable community interference in any illicit mining (e.g. of
topsoil), poisoning, timber-harvesting, clearing or erosion.
Furthermore, the amount of Site Revenue payable is determined by
market forces (not government edict) according to the average
financial return possible from land in a locality. If there is a
drought, bushfire, downturn in pertinent commodity prices etc. then
the local market will reflect this with decreased annual site
values. Usually, the amount due would be less than that extracted
under present taxation systems.
Finally, a site-holder who degrades his land would eventually
find it failing to provide adequate income for the annual revenue
requirements (which would reflect general landforms locally and be
assessed according to the previous, unexploited, legitimate status
of the site). Such a one would eventually lose greatly, for the
degraded site could not be transferred for the value of its
improvements.
....(v) Site Revenue, Resource
Extraction and Externalities
In a Site Revenue civilization resources could no longer be
exploited cheaply for private gain. Factored into site revenue would
necessarily be royalties upon resource extraction and impact levies
upon pollution. These aspects are dealt with below.
4(f) Political Realities
Site Revenue is a completely viable solution for economic and
planning ills. It is neither "communist" nor "capitalist",
but it has never been wholly implemented, and in fact has been
deliberately repressed from public debate by vested interests for
over a century. Partial collection of the unearned increment was a
salient theme during the formative years of ALP politics in the
1890's, indeed its total collection was ALP policy in South
Australia until 1905, but worker-wavering over the viability of free
trade and political pandering to the middle class saw the
introduction of "thresholds" and its gradual demise until
in 1964 the concept was removed "by subterfuge" without
debate from the ALP policy reprint.
Sadly, established and vested interests "dwell upon the
heights" across the globe and everywhere beat back reason and
decency so as to buttress the parasitic, profiteering privilege of
the powerful. Site monopolies are everywhere granted without
community collection of site revenue. The result is to capitalize
community-generated locational advantages as "land price"
and "profit" in the pockets of the "proprietors".
This beats the masses into landlessness (or lifelong enslavement to
mortgagees) and strips them of employment. Lulled by the "bread
and circuses" of welfare and television, the masses,
poorly-educated and preoccupied with survival, stumble along stunned
by the enormity of the "problem".
All the most powerful sectors of society are against Site
Revenue. Politicians dislike it because it decentralizes power and
promotes natural peace, harmony and equality, thus ending the
divisions upon which they feed: yet political manipulation of
monetarism will never address the fundamentals of economic malaise.
The rich and financiers, who control the media and manipulate
politicians, dislike it because it ends two of the three bases for
their wealth (the third is enabled by legislative interference with
"morality") -- to wit pocketing the unearned increments
from land monopoly (including resource exploitation) and the ability
to command interest rates (which is a spin-off thereof). Trade
Unionists are against Site Revenue because an independent workforce
and an even distribution of capital would destroy their empire. The
Middle Classes, struggling to maintain a decent living, are scared
to endorse the concept because it appears to threaten that "capitalized
land price" which forms the backbone of their apparent assets.
The voluntarily unemployed hate the concept because it will force
them to think, work and take responsibility for their own lives.
These elements will combine in unsubstantiated assertion to
shallowly dismiss Site Revenue as "crackpot Utopianism".
5. STRUCTURE and OPERATION OF ECONOMIC INSTRUMENTS FOR
ENVIRONMENTAL PURPOSES
5(a) Overview
In order to avoid problems of State failure, EIEPS must be
administered by independent authorities. The quantum of revenue
collected should, wherever possible, be set by public tender or
auction, but a minimal reserve must be set to prevent industry abuse
(by collusion or monopoly) and to as to protect existence and
bequest values. Different concerns arise where the impact is by way
of point or non-point pollution, or via extract of a renewable or a
non-renewable resource. All EIEP revenue should be earmarked and
applied in work pertinent to redressing or ameliorating the relevant
impact or extraction.
5(b) Independent Authorities
All monitoring and planning should be conducted by independent
specialist authorities, each constituted as a self-financing
corporation with the State as sole shareholder. The boards of the
authorities must reflect all "players" but, albeit
containing political/bureaucratic, concerned citizen and industry
representatives, must be dominated by academics. Only in this way
can the boards be guided by scientific and intellectual objectivity
(responsible, of course, to peer criticism), free of economic
distortions, extremist warping and political pressure. Authorities
should be established in every field where development impacts
environment. These fields would include forestry, fisheries,
agriculture, irrigation, grazing, native fauna, native flora,
organic waste disposal, hazardous waste disposal, non-replaceable
resource extraction etc.
The constitution and mix of the boards should be defined by
statute and, aside from the minority political/bureaucratic
nominees, all appointees should be elected by their respective
constituencies (ie learned academies and societies and industry
federations), not nominated politically. Board members should be
paid appropriately and should have the fiduciary duties of company
directors. Each authority must be independently audited and supply a
detailed public report, annually.
All planning and approval decisions must be taken out of the
corruptible hands of malleable, vote-prone elected bodies
(especially local councils) and given to independent authorities.
Due endorsement by relevant authorities (eg of the native fauna and
agricultural authorities to urban expansion) should be required
before any development proceeds. An appeal process (activated by any
developer, authority or objector) against any approval or refusal
thereof should be available to a Tribunal, of Supreme Court rank,
consisting of two relevant specialists and one judge.
Authorities should neither be too big nor too small: they should
be organized on an appropriate regional basis which enables
specialist knowledge and personal contact. However, it may often be
appropriate to require reporting to and monitoring by an
inter-regional authority (and even these by a global authority).
Each authority should be totally responsible for administration
and planning within its area of responsibility. All monitoring,
information and planning it conducts and collates in order to
enhance its predictive capability, together with its defined Safe
Minimum Standard [SMS] and hence Maximum Sustainable Yield [MSY]
quota of biostock available for annual harvesting, resource
extraction permitted or polluting licenses tolerable, should be
public and transparent. An express statutory duty should be to
educate and inform the public, regularly and (via specialist
circulating lecturers) at every educational level from kindergarten
up, regarding the use and conservation of its stock and the threats
and pressures thereon.
Each authority would usually maintain substantial insurances in
the event of unforeseen disasters for which they are responsible
(e.g., collapse of core stock, unforeseen collateral impacts on
other species, or external disaster against which there is
responsibility to guard, such as bushfire, disease-penetration or
oil-spill). Each authority (and, subject to the usual law, its
directors personally) should be liable to peak industry groups
should it neglect its core statutory duty to bona fide, using
best-available knowledge, assess and monitor SMS. Whilst the setting
of reduced quotas might inflate scarcity prices and might indicate
poor analysis and projection, the authority should incur no
liability in that regard.
Each authority should be responsible to organize, publicize and
conduct a regular auction for sale of harvesting rights over the
forthcoming quota, such quota being the excess stock available for
exploitation without impacting SMS. The authority should calculate
and pre-publish the reserve price at which the quota (or parts
thereof) is offered. There should be no calculation of "optimal"
prices -- the price bid should be a matter for the free market,
having full awareness as to the authority's researches, the quota
limits and harvesting conditions. Quotas should be transferable,
whether or not at profit, to any approved and qualified transferee.
Quotas may be auctioned subject to conditions (e.g., of
reforestation, rehabilitation measures, or stock protection using
constraints on net types and by-catches), and the timing or pulsing
of harvest may be defined to maximize yield but avert impacts on
breeding. The proceeds of auctions must cover the cost of each
authority's entire operations and the cost of any remedial works it
adopts. Any surplus must be held in trust against future need and
applied to build up capital or knowledge for exploitation of
lower-grade resources or invested in secure commercial ventures.
It is a regular, steady, permanent sustainable yield which must
be calculated, without any permission for depletion on the basis
that future restraints will allow regeneration.
5(c) Calculation of Charges
....(i) Introductory
The aim of all EIEP charges should be to collect at source, and
(where possible and appropriate) apply directly in mitigation, such
revenue as, by balancing of the Pareto efficiencies or effect of
such mitigation, totally neutralizes the externality. No discounting
of whatever kind (e.g., by freeloading upon natural cleansing or out
of concern for employment or poor folks budgets)
should be permitted. This approach totally depoliticizes the
environmental debate.
All point pollution, of whatever kind, should be 100% neutralized
at end-of-pipe using available new technologies, and the cost
thereof borne by the polluter. Pollution prevention saves the high
cost of regulation and of possible remediation (with massive costs
of cleanup and health bills), but zero pollution is not technically
or economically possible across all sources everywhere. All
non-point pollution, whilst by definition not immediately capable of
neutralization, should be constrained by the level of EIEP charge
and, in the longer term, addressed by remediation. For example,
levies should be placed on fossil fuels at point of sale, with
payment made using Smart Card technology which reflects attenuating
capital devices installed, and all proceeds should be applied to
carbon sequestration via afforestation.
All renewable resources (forests, fish) should be managed by
independent authorities charged to assess the Safe Minimum Stock [SMS]
of species involved and the Maximum Sustainable Yield [MSY]
available for public auction or tender each year. All non-renewable
resource extraction should be administered by responsible
independent authorities operating on a continual 1000-year budget.
Available quotas for each year (or over 5-10 year periods as may be
practicable given infrastructural commitments), such quotas
reflecting market demand as against known economically-extractable
reserves, should be made available for public auction annually. No
special consideration, other than repayment of disbursements plus
appropriate bonuses or royalties, should be extended to finders.
....(ii) Target of the Charge
As a general rule the rental should be collected from the
polluter (ie the manufacturer or industrialist), not directly from
the ultimate consumer. This approach is more efficient given economy
of scale in monitoring and collection. Inevitably the rental will be
passed on to the beneficiary. In some instances, where there is a
tight and well-monitored distribution system (eg liquid fossil
fuels), it may be appropriate and easy to collect the rental at the
pump from the ultimate consumer. Using "Smart-Card" EFTPOS
payment, such user-specific collection could facilitate
individualized "fine tuning" geared to installation of
extra control devices, such as catalytic converters.
A discretion to allow delays must be distinguished from the
implementation of pollution rentals by stages. Firms, their capital
structures and employment patterns have all evolved on the
presumption of unrequited externalities. The sudden collection of
rental in respect of those externalities might breed avoidable
chaos. It is essential, however, that the entire scheme be
implemented firmly and swiftly, and the time permitted should not
exceed three years, with an extra one-third of the rental being
collected annually.
....(iii) Discounting
Discounting argues, from an anthropocentric perspective,
that existing humanity has a right to pollute, for various reasons,
and/or may do so at the expense of future generations. The
supporting arguments are:
Homeostasis: Humanity is entitled to pollute at whatever rate
bio-geo-chemical homeostasis, via the oceans and vegetation, manages
to cleanse our wastes. The natural environment has considerable
ability to transport and diffuse wastes and to transform them
chemically or by radionuclide decay: thus, to a certain extent,
bio-geo-chemical homeostasis can maintain an equilibrium in the face
of pollution ["the Gaia hypothesis"]. For instance (a)
approximately half of global CO2 is sequestrated by oceanic and
vegetative processes and (b) with increased planetary warmth oceanic
plankton produces excess dimethylsulphide, which in turn increases
cloud cover, reflecting heat back into space and allowing the planet
to cool. Environmental toxicology has some ability to monitor the
self-purifying, accomodative or assimilative capacity of any
specific environment. Some immediate environments (e.g. fast rivers,
tidal oceans, windy skies) may be more resilient and robust that
others, but often at the expense of some distant sink which, due to
its vastness, may take a long time to accumulate and gradually
register but which suddenly erupt or collapse in a "non-linear
break point".
It would be foolish, however, to push homeostasis too far. Modern
impacts are complicated and integrative, frustrating analysis and
designation of responsibility and engendering impacts elsewhere, and
their rate is unprecedented. Amongst other things, modern impacts
have occasioned the greatest rate of species extinction since the
age of the dinosaurs, tripled the concentration of methane in
ice-cores and eaten a hole in the stratospheric ozone layer enabling
entry of ultraviolet light which kills plankton. There is evidence
that increased CO2 concentrations, whilst acting as a fertilizer for
photosynthesis, is speeding up vegetative respiration, stressing
plants (especially in Arctic and tundra areas).
The precautionary principle says "where there is a threat of
significant reduction or loss of biological diversity, lack of full
scientific certainty should not be used as a reason for postponing
measures to avoid or minimize such a threat". Biological
diversity is expressly endorsed by IGAE. In other words, be cautious
in the face of scientific uncertainty --- or, if you don't know the
results for sure, don't do it. This is especially wise since human
society is becoming more specialized and dependent (eg upon
mechanized production of genetically-narrow food from artificially
fertilized land), and so is losing resilience against substantial
climatic or environmental change.
Substitution, New Discovery and Technological Fixes: Those
wishing forthwith to expropriate or decimate environmental capital
frequently assert that future humanity is bound to develop
substitute alternative materials, discover more resources or develop
technological fixes, thereby redressing any erroneous impacts made
now. Thus they may say "decimation of wild fish stocks is fine
since compressed krill and farmed fish will replace them", or "if
we run out of superalloys for turbine blades, we can will develop
ceramics" or "burn up the fossil fuel, inventive humanity
will find a substitute", or build out and mine the fertile
land, let it salinate and erode: we will grow the planet's food
using highrise hydroponics.
Aside from the paucity of moral and existence values inherent in
such assertions, their sheer inadequacy is staggering. Such reliance
gambles heavily both on the asserted substitutes eventuating and on
the biosphere accommodating the resulting chain reactions. Even the
most sophisticated scientific analyses can be fatally flawed. These
justifications are empty. We know for sure that future generations
will have the same need for clean food, air and water as we do:
there is no rational reason for assuming that science will come up
with some technological "fix" to pollution, toxicity,
salination etc. Indeed, it is rational to do everything possible to
avert a known risk: prudent risk-aversion and the precautionary
principle urge maintenance of the present biospherical balance.
Social Discounting: This argues that economic benefits
(employment etc.) and social benefits (e.g. low income earners being
able to afford extensive consumer goods and fuels) offset and
justify environmental degradation. Taking the argument at its best,
the nature and quality of those goods and services would have to be
objectively scrutinized. For years, millions of styrofoam hamburger
boxed were manufactured using ozone-depleting substances: the fact a
good is commonly used, convenient or in high demand is not decisive
in itself.
This argument betrays a "1950's cowboy" mentality,
where neoclassical economics prevailed and the environment still
appeared to be available for endless exploitation. The social
discounting argument should not be entertained at all.
Environmental health is logically prior, paramount, a sine qua non,
and both the jobs market and regions must adapt to facilitate it.
Given a clear and even playing field wherein pollution rentals will
be collected inexorably, the free market will adapt (as it has -- in
the face of dire predictions -- when tariffs were lowered, child
labour abolished, compulsory safety standards set etc.), especially
with the assistance of governmental overview and retraining schemes.
The total macro-economic burden of pollution rentals would be
negligible.
It adds endless dimensions of political favouritism, complexity
and bureaucratism, and is inappropriate, for government to grant
rebates, allow delays, embark on remedial measures, or otherwise
manipulate pollution on the ground that they would raise prices and
diminish consumption of relevant goods, thereby causing unemployment
or even blight regional prosperity. No favouritism should be shown
to old equipment or slow-growing industries.
Priority for Instant Satisfaction; Offsets for Future Wealth:
Liberal and nihilist extremists will argue that satisfying instant
impatience deserves priority: there is a right to "socially
discount" the current capitalized value of future impacts. The
usual discount rate is geared to interest rates and at 5% a current
value now of say $1000 to save a tree would be notionally discounted
to a present value of $87 to have it there for oneself 50 years
hence. To designate that $87 as being what it is worth now to some
other person yet unborn is an indefensible subjectivist imposition
which constricts human life to a series of discrete acts of material
consumption and betrays the reality of human identity through time.
As regards biological stocks (fish, timber etc.) it is sometimes
asserted that any discount rate is appropriate so long as it enables
operators' profits to match returns on human capital. Thus, if cash
investment is earning 10% p.a. then a fishing fleet, after payment
of all overheads (including labour) and allowance for depreciation,
should be allowed to take so much fish as earns it 10% pa on its
capital. This approach, besides ignoring existence and bequest
values, puts the cart before the horse and is ridiculously
illogical whilst ever returns on cash investment inadequately
reflect environmental externalities. This approach can only lead to
the disastrous destruction or decimation of whole species (e.g.,
toheroa shellfish, the New Zealand moa, humpback whales or as
approached being the case with bluefin tuna and Atlantic cod).
Besides, significant external benefits, both to other symbiotic
species and to humanity (eg in the provision of unexpected medicinal
sources or in ecotourism) is frequently associated with conservation
of stocks of natural capital. Ultimately, any concoction of "economically
efficient discount rates" as justifying destruction or
decimation of any natural stock is a stupid and incestuous exercise.
If existence and bequest values are heavily discounted then, from
a crude anthropocentric "efficiency" point of view, it may
be "economic" to extinguish a particular biological stock
(e.g., whales) and convert the meat-oil-bone proceeds into human
capital (e.g., money hence machinery) from which higher dollar
yields can be created than if we had bothered to let the whales
still swim around.
It is also argued future increases in wealth will marginalize
downsides imposed by prior generations, yet, quite apart from the
moral problem of international wealth disparity, it is irrational
(given depletion of non-renewable resources and climate change) to
presume that future generations will be wealthier that present ones.
....(iv) Purpose of Reserve
Benchmarks
There is little need for administering authorities to fix reserve
benchmarks (prices which bidders must reach before any contract is
effected) where quotas for exploitation or extraction of renewable
or non-renewable resources are being opened for tender or auctioned.
Such quotas would usually, by definition, be subject to intense
market demand. However, there is some possibility of industries
(e.g., loggers) colluding to keep bids low.
The situation is very different if rights to pollute are being
auctioned. In that instance, polluting industries would have strong
temptation to collude. To guard against abuse, authorities should
set benchmarks, below which the quota will not issue, which reflect
the known economic cost of remediating each specific externality.
Thus, if the known cost of sequestering carbon by afforestation is
$100 per tonne of CO2, then that should be the minimum acceptable
bid or tender per quota to pollute atmosphere with that volume of
that gas. Whilst initially methods of testing for pollutants and for
stipulating the rentals payable in respect of them will be "rough
and ready" (as are most taxes, duties and imposts at present
anyway), fine-tuning will evolve over time.
(d) Assessment of EIEPS for Point Pollution
....(i) The Nature of Point
Pollution
Sources of pollution may be fixed point, in that they can be
directly traced to a specific orifice (eg smokestack or sewage
outfall), or non-point (e.g., urban smog, acid rain, eutrophication
of rivers and lakes, or leakage of nitrification of groundwater).
The former are comparatively easy to quantify and investigate. The
latter can only be dissected and controlled by tracing back to fixed
sources (eg automobile exhausts, smokestacks, detergents and
fertilizers).
....(ii) Difficulties in Monitoring
and Assessing Point Pollution
Many and complex difficulties arise in measuring both the quantum
and the impact from the vast multiplicity of pollutants and sources
which exist, and this remains true even where those sources are
fixed points. Indicators of the quantity and intensity of pollution
will be affected by the time and method of monitoring and a host of
site-specific factors (water temperature, tidal conditions, rate of
river flow, rate and direction of wind). Major practical
difficulties arise in monitoring some types of pollution, such as
the amount of heavy metal in the continuous discharge of an
industrial facility into a bay or river. The impacts of identical
industrial inputs and outputs may vary since catalytic converters or
scrubbers reduce the toxicity of exhausts and electrostatic dust
collectors and screens can precipitate particulate wastes.
Despite all of this, reasonably accurate assessment of releases
to the environment can be estimated. There area range of tools
available, such as deriving the knowledge from the quantum of raw
material input, averaging random samples and extrapolating from
known details for equivalent operations. As an added precaution,
heavy fines should always be stipulated should random sampling
evidence breach of maximum licensed discharge toxicities.
....(iii) Categories of Wastes
Wastes are either industrial (hazardous or non-hazardous) or
municipal, the latter being generated at about 0.7 tonnes per person
annually in western societies.
The greatest complexity cuts in with a wide array of specific and
technical industrial pollutants. Whilst these are often of enormous
potency and substantial in themselves, to maintain perspective it
should be stressed that this entire sector is responsible for only
some 10% of CO2 emissions: it is, however, responsible for almost
the entirety of general greenhouse gases. The assessment of
pollutants from this sector involves specific scientific calculation
on a case-by-case basis, having regard to the potency and life of
the pollutant and the ameliorative processes available. Even where
the bulk of pollution from a particular source can be monitored at a
point, and despite installation of recovery systems (drying rooms,
scrubbers, discharge stacks), there are bound to be fugitive gas
emissions leaking from joints and valves, volatization from open
vessels, evaporation from paints cleaners and solvents, escape of
distillation fractions, washings from containers and pipes, spills,
sweepings, discard of spent catalysts and distribution via
stormwater.
Wastes will be hazardous when they are toxic, flammable,
explosive, infective or corrosive. They will be intractable when
they cannot be readily neutralized or destroyed by processing. The
more serious industrial wastes, which are often inorganic, are
unsuitable for disposal via municipal refuse and sewerage systems
and require specialist removal, storage, processing, destruction or
-- more usually, unfortunately -- simple dumping in a way which,
hopefully, will not leak into the biosphere or leach into
groundwater. At present dumping fees fall short of true impacts
because governments are afraid of driving business away or creating
unemployment.
The potency of such wastes can lead to illness, chromosomal
aberrations, genetic damage, birth defects or even death. No
chemical should be released for public sale without security being
provided by its manufacturers and by patentor/guarantors, and
without approval by an independent and professional public authority
(completely funded and insured by applicants' fees). In the event of
a successful claim for damages (eg thalidomide), or upon any banning
of a product (e.g., DDT, chlordane, halogens), the relevant patent
should be voided without compensation, damages awarded should be
paid and all stocks held by the public should be redeemed at cost
price, by equal contribution (1/3 each) of those parties.
....(iv) Neutralization of
Non-Hazardous Wastes
A broad range of non-hazardous solid and liquid wastes are already
collected and dealt with by local authorities using municipal or
trade refuse collection systems, or via the sewerage system. The
cost of collecting, sorting and recycling such wastes, and the
comparative efficiency of various methods, is well recorded in the
books of local authorities and is already collected, via local
rates, on a flat-fee basis, since a strict user-pays basis (geared
to volume) might encourage illegal dumping. A variety of acts permit
such charging. Basic scientific indicators of pollution (such as the
biochemical oxygen demand ["BOD"] of material -- e.g.,
starches -- suspended in trade effluent) can enable reasonably
accurate assessment of processing costs.
At present most municipal waste, perhaps after some
extraction for recycling, is landfilled or incinerated, but fill
sites are unpopular and incineration pollutes. Most organic wastes
(papers, foodstuffs, sewerage, starches and oils) can be remediated
by composting, oxygenation and settling.
....(v) Neutralization of Hazardous
Wastes
Various biological, chemical and thermal treatments exist to
enable the minimization or even elimination of toxicity from all but
the most intractable hazardous wastes. Indeed, in many instances the
resultant sludges can be recycled or used in some way. These
processes involve substantial costs: facilities for the
transportation and disposal of hazardous wastes especially are
complex and expensive. As regards hazardous wastes, strict CCRs
should always control their production, use, transportation and
disposal. Such CCRs should require total neutralization of the
wastes (not mere fixing in landfills), with competitive private
operators providing the relevant services and the polluter bearing
full market costs.
Approximately half of industrial waste, including such major
sectors as spent solvents and oils (some 70%) and used tyres, is
combustible. In itself, this can create large quantities of
dangerous atmospheric pollution, however there are methods of
incineration which avoid this outcome. The co-firing of hazardous
wastes (of all known kinds) with the standard primary fuel (coal and
waste oil) in high temperature (2000+oC) cement kilns (which are
lined with special brick and have a highly turbulent combustion zone
with long retention time), ensures 99.9 destruction. Such co-firing
can also take place with combustible refuse-derived fuel ["RDF"]:
RDF could replace 15-20% of kiln fuel at minimal capital cost. By
using existing cement kiln structures, the cost of constructing
specialist incineration plants is entirely avoided, although there
would be need to install reception bays, testing labs and amended
injection procedures. The resultant gases and particulate dusts can
be effectively scrubbed by electrostatic precipitators and baghouse
filters, whilst the heavy (metal) residues are trapped in recyclable
clinker ash. Alkaline limestone traps SO2 emissions. In this way,
both the energy and chemical values of all the wastes are recovered.
There is no significant change in particulate or toxic emission,
with such wastes being 99.9% destroyed or fixed in clinker.
Unfortunately, utilization of this potential is at present unlikely
in Australia for no greater reason than manufacturer reluctance to
deal with potential adverse public reaction and perceived adverse
effects on the quality of the product (i.e. cement): there are no
technical impediments.
Combustion of coal and smelting emit many gasses, especially
sulphuric and nitric oxides. These can be collected by scrubbing,
producing stocks of acid, but the process is more expensive than the
end-product is valuable. Scrubbing must therefore be enforced by
regulation lest smog and acid rain result. Fly-ash, an end-product
of coal-burning recovered in huge amounts by electrostatic
precipitators in the stacks of industrial furnaces, can be mixed
with acids to form a hard, impermeable substance suitable for long
term storage and potentially mineable for certain low-grade ores.
Another method of hazardous waste disposal is by admixture in
supercritical water, ie water at 374+oC and under a pressure of 22.1
m.pa. All gases and organic compounds, as well as some oxidizable
inorganics such as ammonia and cyanide, provided p[article size is <200
microns (which eliminates soil) are soluble by immersion in
supercritical water with added oxygen for as little as one minute.
Such conditions thrust the molecules into intimate single-phase
contact and reduce the wastes to water (or near potable quality)
plus a few harmless gases (O2 and N2 and C02): inorganic salts are
removed as solids. The vessel can be usefully cooled by heating
water for steam production. The costs is $80-130 pcm ($0.30-$0.50
per gal), but could be halved with economy of scale.
Pyroplasmic thermal technologies, operating at about 15,000o C and
usually applied to a fluid waste stream, dissociate toxic organic
molecules (even as intractable as PCB and 1,2,4-trichlorobenzene)
into their atomic components and recombine them to form harmless and
often useful products. Photolysis irradiates hazardous chemicals (in
unheated oxygenated aqueous solution) with ultraviolet radiation,
thereby cleaving chlorine bonds. Electric pyrolyzers, operating at
about 1700oC (but at substantial cost), dissociate organic from
inorganic wastes in sludges, contaminated sites or tailings piles,
and vitrify the latter into a non-leachable glass. Waste gases are
caustically scrubbed to remove acidity and the balance discharged to
the atmosphere. The "KPEG" and BCD processes dechlorinate
solidswhilst oxygen-irradiation cleaves C-Cl bonds and dechlorinates
aqueous streams. Mercury (a major ingredient in domestic batteries
and in gold mining processes) can be removed from aqueous steams
when it is suspended in microemulsion containing a cation exchanger.
Persistent organo-pollutants such as PCBs and DDT can be
biodegraded by white rot fungi phanerochaete chrysosporium, or by
the Base Catalysed Dechlorination [BCD] system. Non-thermal
processes can extract critical chemicals from fluids and sludges.
An extensive examination of advanced disposal methods for
hazardous waste is being performed by the Commonwealth Environment
Protection Agency and pilot plants are being studied. However,
organization of an advanced process is rendered difficult by the
comparatively low volumes of hazardous waste, their widespread
distribution, confusion over identification and reporting
requirements and difficulties in community consultation especially
for mobile licensing.
(e) Assessment of EIEPS for Non-Point Pollution
....(i) The Nature of Non-Point
Pollution
A large proportion of environmental degradation stems from a
multitude of relatively small, diverse and mobile sources which are
considered ônon-pointsö because their pollution is not
readily untraceable to any specific source or orifice. Non-point
pollution cannot readily be traced to a specific source.
The big offenders are agricultural (e.g., erosion, salination,
impacted soil, fertilizers, herbicides, pesticides, feedlot run-off
etc. -- often percolating underground); forestry, mining and
construction (erosion, leaching, fluid leakage, dust and
explosives); domestic septic tanks; rooftops, roads and paving
(stormwater and litter); onsite industrial waste dumps and moonlight
dumpers. Landfill too can be negative when it ousts filtering
wetlands. Non-point entomological pollution is a by-product of the
biocide of natural predators by pesticides in their prey, thereby
enabling exploding populations of previously minor pests.
Non-point effluents and emissions tend to combine and
intermingle, conducing to general ambient noise or pollution (eg
urban smog, atmospheric CO2, ozone depletion in the stratosphere,
eutrophication or salination or acidification of lakes and rivers).
Whilst it is possible by scientific instrumentation to measure the
concentration of stipulated compounds (and hence smells) in the air,
it is not necessarily practicable to trace and quantify the myriad
sources contributing thereto.
Often non-point pollution actually does emanate from a point, but
due the dispersal of those points (e.g., scattered homes and farms),
or the sporadic infrequency of the exposure (eg domestic painting),
or the mobility of the source (e.g. vehicles, ships and planes)
continuous specific monitoring is not feasible. Such pollution
includes many exhausts, lubricants, detergents, paints, papers,
fertilizers, pesticides, herbicides and germicides. Whilst the
diversity of end-applications prevents such emissions being directly
monitored or recovered, their quantum is known and imposition of
EIEPs on their fuel or known decibel level (eg of a plane upon
takeoff) provides a reasonable surrogate.
....(ii) Peculiar Difficulties of
Non-Point Pollution
Non-point pollution can be inhibited by controlling or taxing its
causative surrogates. A clear example is phosphate or nitrogen
pollution in a river (such as pervades the vast Australian
Murray-Darling basin, spawning blue-green algae and poisoning entire
river-systems). It may clearly come from fertilizer applications
upstream, although possibly it partially comes from a multitude of
small emissions from domestic pipes. It would not be fair to impose
a blanket impost at point of retail sale upon all distributions of
fertilizer or detergent, given that some farmers may apply it very
carefully and have constructed run-off bunds etc., or that some
homes may have very effective and well-maintained septic and
biocycle systems. Given the areas and the metering complexities, it
would it be impossible to monitor and measure every application and
runoff of fertilizer or investigate every waste-water pipe possibly
leaching into the river.
Thus, instead of attempting to trace the specific point or points
of a broadscale problem (e.g., eutrophication of the Darling River),
the specific agents causing same (ie fertilizers and detergents) can
be addressed, relatively cost-efficiently, at point of manufacture
or sale.
This is difficult to do fairly, because surrogates far distant
from the pollution -- indeed, anywhere in the catchment -- may be
responsible. Furthermore, not every application of fertilizer or
release of drainwater (or whatever the agent is) in the catchment
may be to blame, since responsible farmers, by installation of
biocycles or by construction of bunds and spreading fertilizers in
wise amounts at appropriate times, may minimize or eliminate runoff.
The only way to equitably manage the situation would be to levy all
relevant surrogates at point of manufacture or sale everywhere in
the jurisdiction (ie not merely in the catchment, lest product
purchased free of the levy be imported), then grant rebates to
individuals who abide by a code of practice.
This course would avoid -- as regards our example -- raising
costs and lowering yields (hence forcing extension of farmlands)
ubiquitously, but would involve substantial transaction costs (e.g.,
of seeking rebates and inspecting qualification), and that cost
should be factored into the levy, which (like all environmental
levies) should be strictly earmarked in its expenditure, not
absorbed into general revenue. The cost and complexity of the bother
might well encourage proper crop rotation and the growing of
legumes, which is the best approach anyway.
The problem we face then is that eutrophication of a river system
is simply not amenable to cleansing: the only viable purpose to
which the earmarked levies can be applied (besides inspection and
monitoring activity and guarding against black marketing, which
would be substantial) is towards prevention, that is, the
construction of tertiary treatment plants in towns and the
subsidization of farmers' biocycles and bunds. Such construction and
subsidization then faces accusations of apparent unfairness, since
the fertilizer-applying farmers will be contributing far more of the
levies than the town family using a few litres of detergent.
However, if wise tariff barriers are in place, the farmers will be
able to pass the levies on (eg to purchasers of their grain) without
fear of competition from imports grown by foreign farmers
unconstrained by answerability for environmental externalities.
Even adopting these balancing mechanisms, however, surrogacy
levies are not a complete answer to non-point pollution. A clear
case of abuse is in forestry, where the cost of replanting and
nurturing is avoided so long as old-growth forests (even if on
steep, remote or pristine lands) remains for exploitation. The
solution is to simply veto any further logging in old-growth
forests, and to apply watershed run-off, visual uglification and CO2
emission levies to subsiding reafforestation, since vegetation
retains water flows and is beautiful, and photosynthesis enables
carbon uptake and wood growth thereby facilitating a major
sequestration of the Greenhouse gas cycle.
....(iii) Carbon Sequestration
One specific form of non-point pollution is so important as to
require specific comment. About 6.0bn ( 0.5 billion tonnes of carbon
are released from fossil fuels into the atmosphere annually by human
activity, and burning of vegetation probably adds another 1.5
billion tonnes. The global carbon cycle can absorb CO2 into the
oceanic depths or transform it (via vegetative photosynthesis) into
wood or even coal, but of the 7-8 billion tonnes released annually,
some 3.4 billion ( 0.2 billion tonnes accumulates in the atmosphere
annually. This accumulation is exacerbated by the destruction of
vegetation and may become rampant if deterioration of the ozone
layer allows ultraviolet rays to kill plankton.
It is a red herring to distract the seriousness of this
impact (0.3oC per decade) by pointing out that changes to earth's
climate have occurred (at a gradual rate of 0.04oC per decade) in
the past. It is necessary to reduce CO2 emissions by 60%, NO2 and
CFC emissions by some 80% and methane emissions by 20% in order to
stabilize greenhouse gases at current levels. Growth of the nuclear
power industry has been curtailed because of the massive inherent
dangers of accident and because the high capital costs of
construction, monitoring and waste control have made the end product
expensive. However, regardless of the viability of nuclear energy,
were the fossil fuel industry to properly account for its
externalities its economic viability would be very different.
In compliance with Australia's reporting obligations, a
methodology is being developed for the extremely complicated task of
estimating national greenhouse emissions and sinks (uptakes) for
CO2, but considerable uncertainties are involved. Huge amounts of
carbon are removed from the atmosphere (and incorporated into leaf,
wood etc.) by vegetative photosynthesis, only to be emitted again
via organic decay and in the breath of animals. The carbon content
of the average US forest is 80 tons per acre, a US ton being 2000
pounds (i.e., 906 kg), which translates to 72,480 kg per acre or
29,354 kg per ha.. This flux is under a natural balance, which is
currently being greatly disturbed combustion of fossil fuel and
broadscale clearance of vegetation. Indeed, creation of excessive
CO2 actually acts as an atmospheric fertilizer and resultant
sequestration is likely to be significant.
At least 82% of the weight of fossil fuels is carbon. One litre
of petrol weighs on average 0.74 kg, 85% of which (0.63 kg) is
carbon and 15% hydrogen. Upon combustion the carbon and hydrogen
molecules combine with atmospheric oxygen burning some 10 kg of air
(which weighs 1.2 kg per cubic metre) to release (inter alia, along
with some carbon monoxide and nitrous oxide) 2.1 kg of CO2. One
billion tons of fuel carbon converts to 3.67 billion tons of CO2.
Carbon emission factors in kg C/GJ are 20.0 for crude oil and 25.8
for bituminous coal; 1 ton of oil equivalent is about 41.87 GJ and 1
ton of coal equivalent is about 29.31 GJ. The burning of coal
(usually in power stations of a mere 30-35% efficiency) involves a
similar equation, with 0.35 tonnes of good quality coal being
required per 1 Mw/h, such producing 870 kg of CO2.
A survey of anticipated international carbon sequestration to
year 2000 shows that most countries expect a substantial net
sequestration from land use change and forestry taken alone. In the
USA, 1990 vegetative sequestration of 476,710,000 tonnes is expected
to become 5339,049,000 tonnes by 2000. By way of disgraceful
contrast, land use change and forestry in Australia (read:
land-clearing) actually contributed (rather than sequestrated!)
130,843,000 tonnes in 1990, and little improvement at 121,992,000
tonnes is expected by 2000.
It is estimated that some 5 million hectares of Australia (3m of
it in Queensland) was cleared for agricultural purposes during the
decade to 1993. Most of this would have been burnt on-site, some
off-site (as firewood), and say 10% chipped or rotted on site,
releasing its carbon over a decade. Ignoring bushfires (forests
affected by which are presumed to eventually take up what they
release), it is estimated that the total carbon released from
vegetation clearance (less uptake in regrowth, pastures etc. at
known rates of 0.13-2.04% biomass p.a.) in Australia during this
decade was some 152,062,000 tonnes per annum. Add to this estimated
CO2 emissions from burning of fossil fuels, both by transport and
stationary (eg electricity generation) sources, @ 262,000,000 tonnes
p.a., indicates a total gross Australian artificial CO2 release of
414,631,000 tonnes per annum.
Active steps are being taken under the one billion trees program
commenced in 1989 to reforest some 40,000 ha per annum. of land by
2000 AD, and growth of that plantation is estimated to uptake 3m.
tonnes p.a.. One ha. of new-growth forest can thus be expected to
uptake 75 tonnes of CO2 per annum. This indicates the need to plant,
on a one-off basis, at least 5.5m ha of forest in Australia (area
770m ha) alone to enable uptake of current CO2 emissions. Against
such a scale, the planned 40,000 hectares per annum until 2000 AD is
puny. Further substantial areas -- say 500,000 ha per annum --
should then be planted annually to maintain adequate stocks of
new-growth uptake and to allow for logging of maturing plantations.
Extrapolating globally, if the 8 billion tonnes of CO2 released
annually by human activity were to be deliberately sequestered
without freeloading on oceanic cleansing then some 100m hectares of
forest should be planted on a one-off basis (upon a total land mass
of 13bn hectares): with oceanic freeloading, half that area.
The cost of planting useful forest and managing same to useful
maturity (say at 40 years for hardwood, 10 years for softwood)
varies considerably depending on the fertility, terrain and climate
involved. The costs of active planting can indeed be avoided in many
districts simply by removing grazing beats (for a few years at
least) and allowing natural regeneration. Realistic levies to be
imposed upon various types of fuel, according to their carbon
content, can thus be fixed with a reasonable degree of scientific
accuracy.
An initial proposal by Commission of European Communities to curb
carbon dioxide emissions by imposition of a levy is at present
stalling, stillborn, in the face of public and industrial outcry,
lest competition be disadvantaged and low income earners lose
consumption capacity. Following vociferous industry opposition
(particularly from coal producers) aroused in 1994 when the federal
Environment Minister floated the concept of a carbon levy, the
current Australian climate policy is a tame political expediency
which cautiously maintains the status quo and expressly avoids
inflicting economic burdens on any contributing sector or regional
area. It imposes no timeframes or targets reduction of greenhouse
gas emissions and only contributes token funds to relatively small
and fragmented new initiatives, envisaging instead that a gradual
change (at best) will take place and that extensive measures should
be planned (varying across regions) to assist adaptation to climate
change.
(f) Assessment of EIEPS for Renewable Resource Extraction
....(i) Introductory
Many planetary resources are capable of indefinite exploitation
so long as they are wisely conserved. These resources include the
atmosphere and stratosphere, plantation foodstuffs, ocean fisheries,
millable timber, inland waterways. However, the longevity and even
existence of these resources is threatened by abusive
over-exploitation of the resources themselves and by extraneous
impacts from afar (e.g., death of forests die to acid rain or toxic
algal bloom in inland waterways due to nutrient discharge). Erosion
and salination have destroyed much of Earth's farmland this century.
Over-fishing (especially by drift-netting) have placed north
Atlantic fish-stocks under threat of extinction and threaten to do
likewise in the Pacific.
Anticipatory policies and economic incentives for management of
renewable natural resources must be emplaced if species' rights are
to be recognized, "non-economic" spiritual recreational
educational etc. values are to be supported, irreversible harm is to
be avoided and these resources are to be viably retained for future
generations. However such emplacement tends to be contrary to the
short-term interests of elected governments.
....(ii) Valuation of a Renewable
Resource
The component values of a renewable resource (timber, wild fish
etc.) are [a] its commercial and recreational use, [b] its value to
future users and [c] its existence value. So long as [b] and [c] are
ignored, commercial exploitation will impact the resource right up
to the time when harvesting costs make doing so unprofitable.
Exploitation of renewable resources is essential, but safe
minimal standards ["SMS"] levels of each must be set by
independent authorities upon scientific bases and preserved. Only
the excess above this (the maximum sustainable yield ["MSY"])
should be available for harvesting. Bearing in mind the possibility
of unexpected impact, it is unwise to regularly harvest the MSY, and
safer to fix an Optimum Sustainable Yield ["OSY"] at a
reduced rate. Resource regeneration may be impossible but is often
prohibitively expensive: prevention is better than cure. The
existence value of a species is only protected by limiting
exploitation to set quotas so as to maintain its 'Safe Minimum
Stock' ["SMS"], thereby keeping future choices open and
maintaining option values. Allied with SMS quotas are subsidies not
to farm or exploit sites or stocks, but these presume the existence
of some right in the exploiter to maintain his operation regardless
of environmental impacts and such a right, whilst a feature of
traditional common law, has no place (other than at the level of
personal non-market subsistence) in the modern world.
SMS and hence MSY and OSY must be conservatively and
scientifically set from a long-term perspective (i.e., centuries if
not millennia -- unlike the limited planning horizon motivating most
users). Monitoring of stock levels must be multi-disciplinary. Entry
into critical zones (i.e. below SMS), let alone descent into
calculating the ramifications of consciously destroying or
decimating a specific stock (e.g., bluefin tuna), must be avoided
with horror. Even this sober approach to maintaining the
resource-base is fraught with dangers, since the variables and
lead-times occasioned by environmental impacts can be complicated,
concealed and long-delayed (e.g., ozonization, 1988 monk-seal
collapse). It is essential to monitor continuously, heed early
warning signs, enable rigorous imposition of harvesting constraints
and prepare potent anticipatory mechanisms for "surprise"
management. An error in the calculation of MSY, or perhaps a
surprise event such as an increase in the El Nino effect, can
collapse a resource (e.g., Peruvian anchovies).
Having arrived at the OSY of each species, in each appropriate
zone, etc., available for tender or auction, the authority can
usually, in safety, leave bidding to market competition. It is
impossible to quantify or factor in existence and bequest values,
and these should be treated as adequately served by maintenance of
SMS. There is no need for the authority to conduct complicated
economic studies into the profitability of the harvesting: free
market operators will do that themselves. Nor need the authority
attempt to compile cost-benefit equations accounting for the vague
and diverse ramifications of employment-generation and downstream
resource-reliance which the harvesting services: those who benefit
indirectly or at second-hand from the harvesting will occupy
factories, shops, homes etc. to which appropriate locational values
will adhere, and they will contribute in their own way to the global
economy via Site Revenue.
5(g) Assessment of EIEPS for Non-Renewable Resource Extraction
....(i) Introductory
Whilst new discoveries (even major ones) are made from time to
time, and potentials exist for exploitation in more difficult and
dangerous arenas (e.g., on ocean floor or Antarctica), the available
scientific evidence is that planetary reserves of exploitable
mineral and fossil resources are strictly limited. All existing
supplies belong to the globe as a whole, not to their finders nor
their national governments, and those resources must be held in
trust at all times with a perspective of at least one millennium. It
is irresponsible and unethical, from the point of view of
intergenerational equity, to permit extraction of non-renewable
resources without rationing.
The permitted annual ration of each resource available for
extraction should be publicly auctioned, or made available for
tender. Strict conditions, covering regeneration etc., should be
applied to all quotas sold. Half the proceeds should be held in
trust and applied solely to the benefit of non-domestic fauna. The
other half should be applied to administrative and research costs
and thereafter to human charities.
....(ii) Auctioning Quotas for
Non-Renewable Resource Extraction
As regards the extraction of non-renewable resources, responsible
authorities have much the same obligation to observe
intergenerational equity as do their equivalents in the area of
renewable resources, but of course in their case there is no known
way to replace that which has been extracted. Accordingly, an
appropriate, long-term budget must be adopted, and planning (as
regards the exploitation and use of limited known stocks) should
proceed (continually, with fresh reassessment at least every 10
years) upon a 1000-year basis. Thus, if known stocks of a
non-renewable resource (e.g., copper or iron ore mineralization) is
x tonnes and the quantum of demand is d, then the annual quota
available for auction should be 1000th of x/d. This avoids the
problem of severance taxes upon exhaustible resources raising their
value in situ, hence encouraging squatting upon known reserves and
slowing depletion.
There is a need to distinguish here between valuable and common
non-renewable resources. In some instances this is relatively
obvious: oil, aluminium, silver etc. are in strictly limited supply,
have high economic worth and are likely to be in high demand and
irreplaceable indefinitely, whilst their consumption (in engines,
photography etc.) may have very restricted longevity. Other
resources (e.g., rock, roadbase, sand, gravel) are relatively
plentiful and cheap, and their extraction is likely to build a
permanent material infrastructure lasting for centuries. Policy
variations may be appropriate as regards rationing the former type
of resource which should be reversed as regards rationing the latter
type.
All existing non-operational mining rights and entitlements for
valuable resources should be revoked forthwith without
compensation, as (without blame to the individuals involved)
constituting a fraud upon the planetary trust.
All existing operational quarrying and mining rights and
entitlements, being similarly tarnished, should terminate as of next
30 June, but operators (who have infrastructure in place etc.)
should be granted an option to continue their operation to
exhaustion of the resource upon the basis that any excess extracted
above the legitimate quota will be sold to the authority at that
market price prevailing now. The authority will then stockpile all
the excess production (i.e., above the legitimate ration) for sale
(by public auction) at the legal rationed rate. Once the backlog is
cleared, the normal and proper process of assessing and auctioning
extraction quotas, to be filled from mines approved with due
priority under EIS processes etc, can resume.
Upon reporting of mineralization, etc., the responsible authority
would roughly prioritize the resource given the availability of
existing mines, demand etc. Such prioritization would involve
investigating the assay and extent of the deposit, difficulties of
extraction (access terrain, tailings problems, depth of deposit
etc.) and conduct environmental impact assessments. In all instances
the EIS would be conducted by independent entities with no
commercial interest in which particular deposit was selected for
filling oncoming quotas. Having selected oncoming prioritized
candidate sites for resource extraction, the authority would make
public all its data and facilitate bidders performing their own
research at their leisure. Partly by its own assessment, partly by
negotiation with those potential bidders, the authority would decide
what period of lease term (1, 5, 10 or 20 years etc.) was most
appropriate to be offered for tender or auctioned. Extension to the
term should be negotiable if there has been proven performance and
good reason. There are difficulties in having regular (say annual)
fresh auctions of the mining rights due to the cost of the private
infrastructure in place. If company A put in $1m of infrastructure
but in year 3 was outbid on royalties by company B, major problems
of equity and efficiency would arise.
The right to mine the ore body, over the appropriate term, would
then be publicly auctioned. The conditions attaching to the mining
(dust, noise, times of operation, rehabilitation, bonds etc.) would
be set in advance, and bidding would be as to (a) a lump sum (b) the
first year's base rent and (c) the royalty. There is no fee other
than the lump sum, the annual rental and the royalty: these comprise
the mine's Site Revenue.
The lump sum should be adequate to pay the finder, the
Authority's researches and the cost of the auction. The base rent is
in place to ensure at least nominal effort compared to other
competitive uses of the land. Thus, if the land would otherwise have
been rural, worth $10,000 pa., and the ugliness and dust of the mine
is estimated to have a downside of $190,000 pa as regards the annual
rental value of affected neighbours, then the auctioneer's reserve
on the base rent would be set at $200,000. The base rent is geared
to cover losses on normal site revenue which would have flowed from
the locality, and as such should be paid into general revenue. The
first year's base rent would thereafter be indexed to inflation
and/or the valuer's calculations of its downside as regards other
rentals thereby lost. It is in the interest of the community that
the mining be finalized and rehabilitated within the term. If the
resource price collapsed, e.g., because a massive high grade deposit
was located elsewhere or because a new material (say fibre optic)
replaced an old one (say copper) then the mining rights could be
surrendered, subject to rehabilitation or loss of bond.
The royalty would be set pcm of ore extracted by processing and
would be a matter for open bidding. The bid successful bid should be
benchmarked against the global price for the refined ore at that
time, and in each subsequent year the royalty bid should be adjusted
up or down in proportion to movements in the resource price. The
royalty, being a private payment for the right to extract and profit
from a public (God-given) non-renewable resource, would, under
triangulation, be payable entirely into trust for the protection and
enhancement of nature.
....(iii) Finder's Fees
If any competitive market tendering or auction system is to work,
mere finders of non-renewable resources should have no prior right
to exploit them. They should, no doubt, be entitled to some reward
and encouragement, but the finder's fee must be separated from the
resource rental.
Having located and proven a find, a finder should report all its
data to the relevant authority. That authority would then, no doubt,
conduct its own proving tests, aided by those of the finder. If the
finder had done a good job, the authority would pay him for all
proven disbursements (including labour costs) plus a suitable
(market-related) bonus for initiative in a risky business (where
only a percentage of prospects may locate paydirt).
The finder would have no specific rights to mine the ore body,
however on the basis of the public data now available, competitive
mining companies could do their sums and ascertain likely
infrastructural, rehabilitation etc costs and the likely mining
period (i.e., term to exhaust the deposit).
(h) Earmarking of EIEP Revenue
Rental paid in respect of each form of pollution should be
applied strictly towards, and should -- to the extent that is
humanly possible -- be applied to abatement programs and totally pay
for neutralizing its impact. Thus, rental paid in respect of
airspace occupied by CO2 must be ear-tagged for the preservation,
improvement and protection of tree cover, and charges paid in
respect of sewage paid to its tertiary treatment. With effluent
anyway, this has in fact been the typical European approach.
Earmarking of externality taxes on a vast range of complex
pollutants from fertilizers and CO2 through PVC, PCB and DDT to
radioactive wastes, so as to require their application to healing
downsides (rather than to swell general revenue) makes them more
palatable to the community and indeed to polluters themselves.
It should be noted that collecting and ear-tagging the "pollution
rental" is not a tax at all, but rather the recovery by the
community (indeed by the entire global commons) from the polluter of
the economic value destroyed by its activity. This rental corrects a
resource misallocation and in no way (unlike most taxes) warps
allocative efficiency. If the revenue so-raised is devoted to this
purpose then zero intergenerational or inter-species impacts result
and the price mechanism is bound to adjust until Pareto-efficiency
is reached. This solution also avoids all the problems of allotting,
valuing and policing transferable pollution rights.
As a ramification of triangulation, the dollar values bid by
humans for the right to extract natural resources must be held
entirely on trust for Nature. Humanity has its full entitlement in
the form of the goods created from those raw resources, and the
employment such process involves. The capital value of the raw
resources are not, and never could be, the property of humanity.
Despite this, Nature is ever-generous. Half of public revenue
derived from grant or rights to exploit non-renewable resources must
be held in trust for the benefit of natural species. In part this
would be applied to research, veterinary care etc., but the vast
bulk would be applied to maintain and preserve extensive national
parks and to pay bounties to landowners who, at commercial
sacrifice, preserve habitat for natural species. However, without
prejudice to the rights of Nature as beneficiary entitled, it would
be appropriate for the other half of such trust fund, for the time
being, to be applied to supply permacultural infrastructure to the
neediest peoples of the globe. In no instance should any of the
trust fund to be paid into national or international general
revenue.
6. CONCLUSION
Neoclassical economics was manufactured by, or on behalf of, an
imperialist elite which quite deliberately disregarded the valid and
vital interests of the developing world and of Nature. As a result,
markets and patterns of production and consumption which are
dangerously destructive of the environment and discount
intergenerational equity, have become dominant and even threaten
human survival on earth.
Sanity and balance can only be restored by adopting (on a global
basis) Site Revenue as the sole source of public finance, and by
recognizing that humanity and Nature coexist as equal partners. Due
to the massive externalities imposed by human industry, appropriate
economic instruments must, as aspects of the Site Revenue system, be
imposed to remediate all pollution and to collect the economic value
of non-renewable resources extracted, under a strict rationing
scheme, such proceeds to be held on trust strictly for Nature as
sole beneficiary.
The only way for humanity to survive upon this planet, whilst
observing decent international and intergenerational equity and
environmental sustainability, is by adoption of a low-impact,
low-demand lifestyle with Site Revenue as the sole source of public
finance. This need not, however, derogate from quality of life: far
from it.
SELECT BIBLIOGRAPHY
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FOOTNOTES:
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