“In the final week in Durban a sense of frustration is permeating the COP, where aspirations for a global deal remain high, but expectations swing between mildly hopeful and almost absent.”

The 2011 Durban Climate Change Conference is in its final week and its organisers are hopeful of hammering out a deal that finally makes it a legal obligation to tackle climate change. CPD fellow Fiona Armstrong is attending the event and has given her report to the Climate Spectator.

You can read Fiona Armstrong’s full article in Climate Spectator here.

Laura is the author of Stocking Up: Securing Our Marine Economy the first in a series of reports that will look at how different sectors of Australia’s economy can benefit from policies to preserve the environment and resources that sustain them.

There are also gaps in our official accounts, which record only a fraction of the real, long-term value of our oceans. We know that our oceans support 9,000 direct jobs in commercial fishing and a marine tourism industry worth $11 billion per year. Yet Australia currently accounts for only $44 billion out of a total of $69 billion in annual economic value.

A new report released by the Centre for Policy Development reveals a shortfall of $25 billion per year that nature provides for free as ecosystem services – clean water, fish nurseries, and food and recreation for the one in five Australian’s who fish at least once a year. A company that neglects to account for a third of its annual production value should expect wildly unpredictable returns. The same is true of the returns we can expect from our natural resources.

The federal government has committed to put a representative system of marine protected areas in place by 2012. Without proper accounting for ecosystem services we’re in danger of drawing lines on maps that fail to protect our most valuable assets. The current proposal for a South West marine park, for example, covers a lot of open ocean but very little seagrass. Seagrass areas sequester 10 to 40 times as much carbon as forests and are particularly important as nurseries for young fish. Adjusting the policy to meet scientific recommendations for areas of coastal shelf, seagrass and coral reef could protect a further $1.1 billion in ecosystem services a year.

A good understanding of the fundamental drivers of value and risk can be a useful guide for long-term investors – whether public and private. With the global population heading towards 9 billion on a finite planet, food prices will continue to rise rapidly over the medium to long term, while environmental pressures are likely to pose increasing risks to natural resource bases.

In this context Australia needs a responsible investment strategy to ensure that our portfolio of ocean wealth increases in value over time and rides out the booms and busts of the environment and economy. A common way to achieve more stable returns is to include a balanced mix of assets – our marine portfolio should follow this approach. Investment options available to Australia include:
»   A well-managed commercial fishing estate. Currently providing low financial returns, with half of Australia’s fisheries struggling to cope with high fuel prices and the high Australian dollar, it is however a valuable source of employment and provides a product that is likely to rise in value in the near future.
»    Marine Protected Areas (MPAs). This investment has been shown to provide very high returns, with immediate benefits to high-value tourism, medium-term benefits to recreational fishing, and longer-term benefits to commercial fishing through more stable and resilient stocks.
»   Highly Protected Areas (within MPAs), where no fishing or oil and gas exploration takes place. Just as banks keep some capital in reserve to hedge against unexpected losses, it makes sense for Australia to include highly protected areas in its marine estate. High capital reserves protect banks from GFC-like shocks to financial systems. Highly protected areas will help protect Australia’s marine portfolio from ecosystem shocks.

This is a time of great risk for our marine economy, but there are also opportunities if we get our policies right. Our report finds that the value of sustainably managed Australian fisheries could increase by 42% over 20 years if global fish stocks collapse. We have the scientific knowledge to identify and protect key marine areas. We have the policy opportunity. We need to make sure that this opportunity is not missed through the failure to recognise that a strong marine economy depends on a healthy marine environment.

This article was first published in The Australian Financial Review on 13 September 2011.

READ the key findings & recommendations in Stocking Up: Securing Our Marine Economy here.

DOWNLOAD the report here

“Sea grasses store 10 to 40 times as much carbon per hectare as forests, and Australia’s sea-grass meadows are the largest in the world, a report by the Centre for Policy Development says.

Considering the Gillard government wants to charge $23 per tonne of carbon emitted by Australia’s biggest polluters, that would make Australia’s coastal seagrass beds worth $79 per hectare, the report’s authors added at its official launch today.” 

The report recognises some of the added value that our oceans and marine parks contribute to our economy, most of it unnoticed.

“Ocean ecosystems add an extra $25 billion to the national economy each year which is not accounted for in official figures, the report says. These includes $15.8 billion a year in carbon storage” 

Read the complete article here

READ the key findings & recommendations in Stocking Up: Securing Our Marine Economy here.

DOWNLOAD the report here

According to Laura Eadie, “It’s not an easy thing to put a price on the value of life let alone an ecological treasure chest that sustains and if protected could sustain us for future lifetimes, but that’s what this study aims to do.”

Eadie told Xinhua that through analysis of the UN’s Environment Program biodiversityassessments, and in the face of Prime Minister Gillard’s recent pricing of carbon, the price tag of what is beneath Australia’s oceans depends on the strength of future protective modeling.

“What this means is Australia’s marine life, fish stocks and ecosystems willneed to be protected to buffer them from the risks of over- exploitation, risingtemperatures and acidity due to climate change, and pollution.”

To read the full report, click here.

READ the key findings & recommendations in Stocking Up: Securing Our Marine Economy here.

DOWNLOAD the report here

Forbes Advocate Andrew Darby reports on CPD’s Research Paper Stocking Up: Securing Our Marine Economy.

Building on the UN Environment Program biodiversity assessments, CPD’s paper counted the worth of nature hidden beneath the sea’s surface.

As Environment Minister Tony Burke indicates, this is once-in-a-generation chance to protect the marine environment.

Establishing stronger protections for our marine ecosystems could set Australia up to benefit at a time when global fisheries were being depleted.

To read the full report, click here.

Gunter Pauli has a dream. The Belgian economist and entrepreneur has a plan to develop 100 manufacturing innovations with viable business models that could generate 100 million jobs in 10 years. All with zero emissions and no waste.

He calls it “The Blue Economy” with innovations covering the full gamut of industrial activity, from energy to mining, from medicine to banking … all of it inspired by science and biometrics. And Pauli isn’t all talk … there’s plenty of action in the many startup-style projects around the globe funded by his organisation Zero Emissions Research and Initiative, which is now a global network.

Memorable achievements include recycling coffee waste for mushroom farming, making biodegradable detergent from discarded citrus peel, and the conversion of petrol stations into ‘charge stations’ for electric cars.

Last month we presented a talk with Gunter Pauli at Sydney University together with Sydney Ideas  titled: The Blue Economy: 10 Years, 100 Innovations, 100 Million Jobs.

WATCH Gunter Pauli’s talk here.

About the speakers:

Gunter Pauli was born in Antwerp, Belgium. His entrepreneurial activities span business, culture, science, politics and the environment. He founded Zero Emissions Research Initiative (ZERI) and the subsequent Global ZERI Network which uses science and publicly available information to find and develop sustainable business solutions. Serving clients from remote communities to major corporations, solutions are inspired by what is locally available, building on local knowledge and culture. Pauli has been visiting lecturer and professor at universities around the world, and a board member of NGOs and private companies in Asia, USA and Latin America. Since 2009, he has taken responsibility for the design of an economic development concept based on GNH (Gross National Happiness) principles and values as part of his advisory role in designing an economic development strategy for Bhutan. Pauli has published 19 books and 36 fables bringing science and emotions to children. He is fluent in seven languages and has lived in four continents.

Ian Dunlop is a Fellow at the Centre for Policy Development and a contributing author to their latest book, “More Than Luck: Ideas Australia Needs Now”. He is Chairman of Safe Climate Australia and chaired the Australian Greenhouse Office Experts Group on Emissions Trading from 1998-2000.

WATCH Gunter Pauli’s talk here.

The glaring omission in current national discourse is any mention of these risks.  The credible climate scientists have been sounding urgent warnings for some time.  Politicians interpret these warnings in terms of  “political reality”, proposing action which is far from that required.  No-one is addressing the real risks.  The science on an issue this complex will not be settled for a long time, but that requires even greater prudence in managing risk and uncertainty, particularly where climatic changes may be sudden and irreversible.

Sound corporate governance requires boards of directors to act honestly, in good faith and to the best of their ability in the interests of the company in perpetuity. They must also ensure risks are identified and suitable systems put in place to manage those risks. Global and national institutions are now indicating that global warming is one of the greatest risks we face, in both the short and long term. Thus its risk management should be a major concern and responsibility of the corporate sector, a responsibility the sector in Australia has steadfastly refused to acknowledge.

Which makes recent public pronouncements by some corporate luminaries of particular concern; David Murray, Chair of the Future Fund, opined that carbon dioxide was not a pollutant, there was no correlation between carbon dioxide and global warming, and that the amount of ice in the world was slightly increasing, not decreasing (AFR “Lunch with David Murray” 10^th June 2010)

Belinda Hutchison, Chair of QBE Insurance, insisted that the recent natural disasters in Queensland had nothing to do with climate change, as demonstrated by “research received” (SMH “QBE blames La Nina for Disasters” 20^th April 2011).

Dick Warburton, Chair of the Board of Taxation, Citigroup and other public companies, Peter Farrell, Chair of Resmed, and Geoff Lehmann, former Chair of the Australian Tax Research Foundation, re-iterated at length minority scientific opinion, accepting that carbon dioxide emissions have a warming effect on global temperature, but implying that the sensitivity of temperature to increasing carbon dioxide concentration was far less than claimed by majority scientific opinion, to the point that the effect was unimportant. The bottom line being that “Adaptation to adverse climate change, if and when it does occur, may be the best and only viable strategy.” (Quadrant “The Intelligent Voters Guide to Global Warming”, March/April 2011)

These categoric statements stand in stark contrast to the opinion of major Academies of Science around the world and key scientific organisations such as the CSIRO, WMO, BOM, NOAA etc. that most of the global warming in recent decades can be attributed to human activities and that urgent action is required to reduce emissions if potentially catastrophic outcomes are to be avoided.

The risk equation is simple.  If we take serious action to reduce emissions, the cost is likely to be a manageable 3-5% of GDP, increasing the longer action is delayed.  If global warming turns out to be as the scientific majority believe, with major adverse implications, we are as prepared as we can be to minimise the effects, and to adapt to those we cannot avoid.  If the minority view proves correct, with minimal climate impact, we end up with a cleaner, less polluted and healthier environment, which we need for a multitude of other reasons.

If we take no action and the minority view proves correct, then it is “business-as-usual”. On the other hand, if the majority view proves correct, the world faces catastrophic outcomes totally unprepared, with an impact potentially worse than the Great Depression, WW1 & WW2 combined and a global carrying capacity of less than 1 billion people compared with 7 billion today. The impact on Australia would be particularly severe.

The empirical evidence of what might be termed the key performance indicators of global warming – melting of the Arctic and Antarctic sea ice and ice sheets, mountain glaciers and permafrost, ocean acidification, declining natural carbon sinks – all suggests that the warming impact is accelerating ahead of the scientist’s previous expectations.  This is reinforced by the increasing frequency of extreme weather events, particularly over the last decade.

Most importantly, the inertia of the climate system, particularly the slow warming of the oceans, means that the full impact of our emissions today only become evident decades hence.  Thus unless we take rapid action now, we may well be locking in irreversible climate change of catastrophic proportions for future generations; indeed we may have already done so.  Adaptation will be too late.

The need for urgent precautionary action should be obvious.

Everyone is entitled to their own opinion on this issue and it is reasonable to assume that the public statements above are reflected in the corporate approach to global warming being taken by organisations with which those individuals are involved.  That would not be of great moment, except that those organisations exercise substantial influence and corporate power, with a major impact on Australian society.

Sound governance requires that directors take a balanced view of risk and uncertainty.  To propose a strategy of either denial, or wait, see and adapt, in the light of current empirical evidence and the balance of expert advice, is a serious breach of fiduciary responsibility, both corporately and nationally – a breach which is only too evident in the current business approach to carbon pricing, where long term implications are dismissed in the interests of short term expediency.

It is high time major Australian corporations acknowledged the real risks we confront, took leadership in implementing genuine precautionary measures urgently, and in particular woke up to the opportunities these present.

An edited version of this article was published as an Opinion Piece in the Australian Financial Review on 23^rd June 2011.

Introducing CPD’s NEW Sustainable Economy Research Director
Australia has tremendous opportunity to leverage its abundant natural resources and skills in innovation to build a fair, sustainable and prosperous future economy. Yet first we need to get the policy settings right and move beyond the short term political scoring and threats from vested interests that pressure governments to sell off our common wealth at bargain basement prices.

Our Sustainable Economy Program is underpinned by an understanding of the problems caused by systemic short-termism in both the public and private sectors and by the failure to value public goods which are hard to measure or monetise. Our Program addresses these problems by demonstrating the value of Australia’s natural wealth, and developing a positive, evidence-backed agenda for greening our economy. Read more here.

Leading our efforts to do this is Laura Eadie, our new Sustainable Economy Research Director. Here’s what Laura has to say about her ambitions over the next two years for an exciting and much needed program.

“As the debates about mining taxes, rebuilding Queensland and carbon pricing show, there is a big gap between the media spin that currently passes for politics and the real-world issues Australia is facing. Pricing carbon is an essential step, but how will we deal with other environmental and economic pressures like rising food prices, water shortages and peak oil?

Given the increasing pressures for transformational change Australia faces in the 21st Century, we  cannot continue to have policies dictated by vested interests with loud voices and large wallets. Turning political debates upside down may seem like an impossible aim, but we’ll focus on specific areas where we can demonstrate the significant social and economic benefits of managing environmental issues well, and the unsustainable cost of business-as-usual.

With so much noise confusing the real issues, our program will be uncompromising about scientific and physical realities and practical about what it would take for Australia’s economy to thrive over the long term. We’ll directly challenge the fuzzy economic thinking that dominates the environmental debate in Australia.

For example, Sophie Mirabella recently claimed the Climate Change Committee’s report “will shut down Australia as a modern, industrialised economy”. Really? Australia is far from being a modern industrialised country. Our exports from high tech industries are only a quarter of our imports – similar to Greece and Turkey. Given the rapid pace of clean-technology development in Europe and Asia and the pressure of the high dollar on manufacturers, a coherent set of policies to develop a resource- and carbon-efficient economy is an essential risk management tool, and a potential source of competitive advantage.

Similar confusion muddies debates about managing our natural capital, with short-term profits often prioritised at the expense of long-term value. Our first two reports will make the economic value of healthy oceans and forests visible, in order to promote better decision making about managing our natural capital.

If this sounds ambitious, we are not planning to do this alone. If you want to help, we’re looking for experienced professionals and interns who are interested in contributing to our work. If you have expertise or a strong interest in environmental economics, policy or law let me know!”

You’ll find a preview of our upcoming research here and here. Read Laura’s full bio here. You can contact Laura on laura.eadie@cpd.org.au or by calling 02 9043 6815.

MORE SUSTAINABLE ECONOMY IDEAS FROM CPD 

• Ian McAuley writes about the need to reshape our economy to rely on human capital and entrepreneurship in his chapter ‘Living Off Our Resources’ in More Than Luck: Ideas Australia needs now.
• Laura Eadie wades through the misinformation and ideological arguments against protection of marine areas to get to the evidence. Read her article on ABC Environment Online.
• CPD Fellow, Fiona Armstrong and Laura Eadie look at opportunities for Australia to build competitive advantage in renewable energy technology here in our InSight Budget 2011 edition.
• EVENT: The Blue Economy: 10 years, 100 innovations, 100 million jobs. Thursday June 9, 6pm at Sydney University. CPD and Sydney Ideas co-present Dr Gunter Pauli, an inspiring entrepreneur explaining his mission to invest in 100 sustainable businesses.

By making the economic value of services provided by our forests, oceans and fresh water visible, our work will promote better management of Australia’s natural capital. Results of the work will be released in stages, focusing first on those economic sectors with the most potential for policies to be reshaped to support sustainable economic development.

Upcoming research projects:

Healthy Oceans
Worldwide fisheries are under pressure from over-exploitation, pollution and rising temperatures. Australia has both a moral responsibility and a potential competitive advantage to gain from managing our ocean resources sustainably.

What is the real, long-term value of Australia’s marine resources? How can we manage them to protect our unique marine life for future generations, produce healthy seafood and provide long-term livelihoods for communities?

Farming Forests
Australia has many opportunities in regional areas to invest in forests to provide clean air and water, capture carbon and slow the loss of biodiversity. To manage forests as a key part of Australia’s ecological infrastructure we need sound policy frameworks informed by an understanding of both their public and private value.

What is the value of investing in forests for carbon farming and other ecosystem benefits? What mix of policies is needed to stimulate stable, long-term investment? How should carbon farming interact with Australia’s broader carbon policies?