2020VISION FOR A SUSTAINABLE SOCIETY

MELBOURNE SUSTAINABLE SOCIETY INSTITUTE

The Melbourne Sustainable Society Institute (MSSI) at the University of Melbourne, Australia, brings together researchers from different disciplines to help create a more sustainable society. It acts as an information portal for research at the University of Melbourne, and as a collaborative platform where researchers and communities can work together to affect positive change. This book can be freely accessed from MSSI’s website: www.sustainable.unimelb.edu.au.

Cite as: Pearson, C.J. (editor) (2012). 2020: Vision for a Sustainable Society. Melbourne Sustainable Society Institute, University of Melbourne

Published by Melbourne Sustainable Society Institute in 2012 Ground Floor Alice Hoy Building (Blg 162) Monash Road The University of Melbourne, Parkville Victoria 3010, Australia

Text and copyright © Melbourne Sustainable Society Institute

All rights reserved. No part of this publication may be reproduced without prior permission of the publisher.

A Cataloguing-in-Publication entry is available from the catalogue of the National Library of Australia at www.nla.gov.au 2020: Vision for a Sustainable Society, ISBN: 978-0-7340-4773-1 (pbk)

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The last two centuries have seen extra-ordinary improvements in the quality of

human lives. Most people on earth today enjoy access to the necessities of life that was once available only to the elites. Most people enjoy longevity, health, education, information and opportunities to experience the variety of life on earth that was denied even to the rulers of yesteryear. The proportion of humanity living in absolute poverty remains daunting, but continues to fall decade by decade. The early 21st century has delivered an acceleration of the growth in living standards in the most populous developing countries and an historic lift in the trend of economic growth in the regions that had lagged behind, notably in Africa.

These beneficent developments are accom-panied by another reality. The improvements are not sustainable unless we make qualitative changes in the content of economic growth. The continuation of the current relationship between growth in the material standard of living and pressures on the natural environment will undermine economic growth, political

stability and the foundations of human achievement.

The good news is that humanity has already discovered and begun to apply the knowledge that can reconcile continued improvements in the standard of living with reduction of pressures on the natural environment.

The bad news is that the changes that are necessary to make high and rising standards of living sustainable are hard to achieve within our current political cultures and systems.

Hard, but not impossible. That is a central message from this book, drawn out in Craig Pearson’s concluding chapter.

This book introduces the reader to the many dimesions of sustainability, through well-qualified authors.

Climate change is only one mechanism through which current patterns of economic growth threaten the natural systems on which our prosperity depend. It is simply the most urgent of the existential threats.

Climate change is a special challenge for Australians. We are the most vulnerable of the

Foreword

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developed countries to climate change. And we are the developed country with the highest level of greenhouse gas emissions per person.

There are roles for private ethical decisions as well as public policy choices in dealing with the climate change challenge.

This book is released at the time of ‘Rio+20’, a conference in Brazil to review the relatively poor progress we have made towards sustainability in the past 20 years, and soon after the introduction of Australia’s first comprehensive policy response to the global challenge of climate change. Australia’s emissions trading scheme with an initially fixed price for emissions permits comes into effect on 1 July 2012. The new policy discourages activities that generate greenhouse gases by putting a price on emissions. The revenue raised by carbon pricing will be returned to households and businesses in ways that retain incentives to reduce emissions. Part of the revenue will be used to encourage production and use of goods and services that embody low emissions.

The policy has been launched in controversy. Interests that stand to gain from the discrediting of the policy argue that it is unnecessary either because the case for global action to reduce greenhouse gas emissions and the associated climate change has not been proven, or that the new policy places a disproportionate burden on Australians.

The health of our civilisation requires us to bring scientific knowledge to account in public policy. Everyone who shares the knowledge that is the common heritage of humanity has

a responsibility to explain the realities to others wherever and whenever they can.

The argument that the new policy places a disproportionate burden on Australians can be answered by seeking honestly to understand what others are doing.

The critics of Australian policy argue that the world’s two largest national emitters of greenhouse gases, China and the United States, are doing little or nothing to reduce emissions, so that it is either pointless or unnecessary for us to do so.

China has advanced a long way towards achieving its target of reducing emissions as a proportion of economic output by 40 to 45 per cent between 2005 and 2020. It has done this by forcing the closure of emissions-intensive plants and processes that have exceptionally high levels of emissions per unit of output, by imposing high emissions standards on new plants and processes, by charging emissions-intensive activities higher electricity prices, by subsidising the introduction of low-emissions activities, and by new and higher taxes on fossil fuels. China has introduced trials of an emissions trading system in five major cities and two provinces. This adds up to a cost on business and the community that exceeds any burden placed on Australians by the new policies – bearing in mind that the revenue from Australian carbon pricing is returned to households and businesses.

The US Government has advised the inter-national community of its domestic policy target to reduce 2005 emissions by 17 per cent by 2020. President Barack Obama said

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to the Australian Parliament that all countries should take seriously the targets that they had reported to the international community, and made it clear that the United States did so. United States efforts to reduce emissions are diffuse but far-reaching. They now include controls on emissions from electricity generators, announced in March 2012, effectively excluding any new coal-based power generation after the end of this year unless it embodies carbon capture and storage. From the beginning of next year they will include an emissions trading system in the most populous and economically largest state, California.

The United States is making reasonable progress towards reaching its emissions reduc-tion goals, with some actions imposing high costs on domestic households and businesses.

Australia has now taken steps through which we can do our fair share in the international effort, at reasonable cost. It would be much harder and more costly to do our fair share without the policies that are soon to take effect.

What Australians do over the next few years will have a significant influence on humanity’s prospects for handing on the benefits of modern civilisation to future generations. This book will help Australians to understand their part in the global effort for sustainability.

Ross GarnautUniversity of Melbourne

15 April 2012

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ContentsForeword by Ross Garnaut v

Table of Contents viii

Author Biographies x

Drivers 1

1 2

2 10

3 17

4 27

5 37

People 47

6 48

7 57

8 64

9 70

10 79

11 86

12 94

13 104

14 114

PopulationRebecca Kippen and Peter McDonald

Equity Helen Sykes

ConsumptionCraig Pearson

GreenhouseGasEmissionsandClimateChangeDavid Karoly

EnergyPeter Seligman

EthicsCraig Prebble

CultureAudrey Yue and Rimi Khan

AwarenessandBehaviourAngela Paladino

LocalMattersMatterKate Auty

PublicWisdomTim van Gelder

MentalHealthGrant Blashki

DiseasePeter Doherty

CorporateSustainabilityLiza Maimone

GovernanceJohn Brumby

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NaturalResources 123

15 124

16 132

17 141

18 150

Cities 161

19 162

20 170

21 177

22 184

23 192

24 200

25 210

Outcomes 221

26 222

Further Reading 234

Index 241

Ecosystem-BasedAdaptationRodney Keenan

WaterHector Malano and Brian Davidson

FoodSunday McKay and Rebecca Ford

ZeroCarbonLand-UseChris Taylor and Adrian Whitehead

ChangingCitiesPeter Newman and Carolyn Ingvarson

AffordableLivingThomas Kvan and Justyna Karakiewicz

BuiltEnvironmentPru Sanderson

InfrastructureColin Duffield

TransportMonique Conheady

AdaptiveDesignRay Green

HandlingDisastersAlan March

TwentyActionsCraig Pearson

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WaterHector Malano and Brian Davidson

16

Figure 1. Water is everybody’s business. Source: Cunera Joosten, Hydrocomplexity: New Tools for Solving Wicked Water Problems, 2010.

The global challenges relating to water are large. Despite the fact that 75 per cent of

the earth’s surface is covered by water, less than one per cent of that amount is available for human use. The demand for water continues to grow with increases in population, the growth in the general economy and the desire for better environmental outcomes. Balancing supply and demand is made more difficult because markets for water are either underperforming or nonexistent.

Water systems are developed to fulfil many economic, social and environmental objectives (Figure 1). It is often assumed that these three

objectives can be maximised and are non-exchangeable, when in reality there are always trade-offs between them, particularly between the economic and environmental goals. This question has been at the centre of the recent debate on the Murray-Darling Basin, in the Guide to the Proposed Basin Plan, which seeks to redress the environmental impacts caused by more than a century of irrigated agriculture.

It is important to recognise that water resource strategies and policy apply to more than just natural water resources. Almost always, these policies apply to systems that have been heavily modified by historical development.

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Water

What is meant by water resource sustainability?Sustainable water resource systems are those designed and managed to fully contribute to the objectives of society, now and in the future, while maintaining their ecological, environmental and hydrological integrity. Source: Loucks and Gladwell, 1999.

Systems such as the Murray-Darling Basin have large water storages to regulate flows, and are used to support significant increases in population and economic activities that sustain the livelihood of many communities.

While it is never possible to reverse changes and create an environment that fully mimics the natural state, it is possible to maintain the integrity of an adapted or modified environment, provided that the environmental and economic objectives are clearly set out and water management processes are put in place to achieve these objectives.

Achieving sustainable management of water resources involves a change of thinking around the analysis and debate about water manage-ment. This is based on three key principles:

• A comprehensive understanding of the complexity and connectivity associated with the water cycle and the various uses of water, at a temporal and spatial scale;

• Knowledge of and improvements in tech-nically and economically efficient water use, which will be critical in meeting future increased demand; and

• Adherence to evidence-based decision-making.

In the following we explain these three principles. Based on these key principles we suggest that the best way to achieve sustainable management of water resources is to establish fully functioning markets for water, where all those who need to trade water from one use to another can participate without any artificial restraints placed upon them.

Understanding and Managing the Whole-of-Water Cycle Freshwater that is available for human use forms part of an interconnected system of stocks and flows. During much of the 20th century, water resource development focused on the construction of infrastructure to regulate flows and improve security of supplies for agriculture and urban use. Often this development occurred in isolation from the possible downstream impacts, called externalities. For instance, dams alter the flow of a river with large impacts on its ecology. These impacts can be ameliorated if the flow from the dam and the underlying processes that support river ecosystems are understood.

Why is water resource planning important?‘A nation that fails to plan intelligently for the development and protection of its precious waters will be condemned to wither because of its short-sightedness. The hard lessons of history are clear, written on the deserted sands and ruins of once proud civilisations.’ – LB Johnson, 1968

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2020

Our ability to evaluate the efficiency of water use depends on understanding these quantities and flows of water. The water cycle concept is an effective and comprehensive way to account for all the fluxes, storages and sinks in a river catchment.

Underlying the systems’ connectivity, it is critical to consider all the sources, uses and functions of water and the way actions in one part of the system or its environment have impacts and repercussion on other elements of the system (Figure 2). Describing the components of the water cycle is necessary if there is a need to:

• Assess the potential impacts of climate change on water security and availability;

• Assess the impact of population growth and efficiency gains; and

• Integrate alternative sources of water into the urban supply mix such as effluent recycling, rainwater runoff, etc.

Water Cycle Characterisation Involves Three Steps:

• Recognising what is in and what is out, by delineating the systems’ boundaries and interconnections with environmental drivers such as climate and water policies;

• Identifying internal connections between

system components to assess the integration between multiple sources of water (waste water, drainage, surface and ground water) and multiple demands (potable water, industrial and environmental demand); and

• Assessing external connections of water resource systems with associated systems, such as infrastructure, energy and associated carbon emissions needed to provide water-related services.

The importance of improved water accounting in the search for increased productivity and sustainability cannot be overstated. Molden in 1997 wrote, famously, that if we can’t measure water we can’t manage water. Accurate accounting plays a critical role in reducing uncertainty about water flows, providing a valuable insight into water valuation practices, and can be used to inform investors on the provision of water services. Adequate water accounting can also lead to:

• Improved design of data collection networks to reduce uncertainty and error;

• More accurate allocation of flows to the environment and economic uses;

• Improved and easier business case for enterprises;

• More access to credit for investors based on less risk for investors; and

• Better understanding of the impacts of interventions to improve water efficiency (as gain in one part of the catchment may imply reduced security at other parts).

Water accountability is also an important element in the process of establishing and maintaining markets for water, as markets require transparency and their participants must be accountable for their actions.

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Water

Recognising the External ConnectionsWater resource systems interact with the environment and with other resources in a number of ways. Between the point of capture – river or aquifer – and the point of wastewater disposal, the provision of potable water supply involves energy inputs in each step of the supply chain – capture, purification, distribution, usage, treatment and disposal. For instance, Melbourne Water is among the top 15 electricity users in Victoria and the top 150 users in Australia as it supplies 361GL of drinking water and treats 271GL of sewage.

Electricity generation uses water: directly to generate hydroelectricity or 1300L of water per kilowatt-hour of electricity generated from brown coal.

Globally, agriculture is the largest user of water. Water in agriculture uses substantial energy and emits greenhouse gases. Indian farmers lifted some 150,000GL of groundwater using electric pumps and around 80,000GL using diesel pumps in 2000. In total, 14.4 million tons of carbon dioxide is emitted in supplying groundwater to agriculture, which is 16 per cent of India’s greenhouse gas emissions.

Figure 2. Water cycle components in the South Creek catchment, Western Sydney. Source: CRC for Irrigation Futures. 2009.

Potable Water

Supply

STP

irrigation

Soil

Laye

r

Aqui

fer

percolation subsurface flow

Soil water storage

STREAM FLOW

Water Cycle South Creek, Western Sydney

rainfall

surface storage overland flow

evapotranspiration

interception

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2020

Recognising the Time DimensionIdentifying the time dimension is critical in water management. Two dynamic factors impacting on water resource systems are climatic variability and the need to analyse the lifecycle implications of water management interventions.

The natural variability of climate has a direct impact on freshwater availability. Often, water system analyses are conducted without consideration to climatic variability. Such a simplistic approach is likely to lead to misleading conclusions about the level of security provided by water services, and has important implications for the appropriate selection of infrastructure and technology.

Similarly, an objective economic and environmental assessment of water services and their infrastructure can only be made by systematically evaluating the impacts of all processes from ‘cradle to grave’. Apart from environmental services, most water services involve complex, expensive infrastructure. Lifecycle analysis is often used to carry out this type of assessment. In this approach, water, materials, energy and environmental implications throughout the lifecycle of the water service provision system are evaluated.

Managing Water EfficientlyUnder conditions of scarcity and competition, the best outcome is to use water as efficiently as possible, satisying both a technical and economic criteria. Distributing water in the most technically efficient manner does not necessarily mean that it will produce the highest economic output to society.

Technical EfficiencyTechnology has a critical role to play in advancing the efficient use of water resources.

With technology, both economic and environmental objectives can be achieved with less water. In other words, technology can be an important enabler in improving both economic and environmental outcomes.

A case in point is the provision of environmental watering to maintain or enhance aquatic ecosystems within rivers. Providing more water does not necessarily provide more benefits to the environment either. The accurate provision of water in time and space is equally or more important than the total amount of water provided. Thus technology plays an important role in achieving more efficient environmental watering.

The total economic and environmental output is determined by how efficiently water is used. Technical efficiency is achieved when the ratio between the physical output and inputs are maximised. That is, when a given level of output is achieved with the minimum use of inputs, or when a given set of inputs is used to maximise the level of output.

We define water use efficiency as the quantity of output produced by a unit of water deployed: for example, crop production per unit of water applied (kilogram per megalitre). On the other hand, if water is used for environmental watering, the main output is the amount of habitat generated (something that has not been adequately quantified in a consistent manner to date) per unit of water applied.

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Water

Economic Efficiency There are many examples of projects that maximise technical efficiency, yet result in their owners losing money. Economic efficiency is maximised where the difference between the total returns and the total costs is greatest. Economic efficiency is an important element of resource allocation as it ensures that any good is used to create most value, without allocating more than the cost of providing it.

With respect to water, society is getting value for money when investments in infrastructure to ensure water security satisfy the provisions of economic efficiency. In addition, it is possible to compare different strategies to solving water scarcity by evaluating the economic efficiency of each. In that way, society maximises its benefits at a minimal cost. Knowledge of the economic efficiency of an investment also

helps decisions regarding what users should be charged for their water. This in turn leads to markets being a mechanism for allocating water and in providing the correct pricing signals to society, not only for the water itself, but also for any future investments in water infrastructure.

Examples of problems that arise from not considering both the technical and economic efficiency impacts of decision making are easy to find. Victoria’s desalination plant has been widely criticised for failing the economic efficiency test. The desalination plant passes some (but not all) technical efficiency tests, but fails on the grounds of economic efficiency in relation to other solutions. Having built the North–South pipeline, it would have been far more economically efficient to use market instruments such as water trading to acquire additional water when required.

Technically efficient water allocation mechanisms exist, but are they economically efficient? Source: Rubicon Water - Shepparton.

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Resource Allocation and Water Trading

Water trading has been in place in Australia since 1994. However, it is still hampered by various regional and state restrictions, including the exclusion of trading between rural and

urban areas. If greater water efficiency is to be achieved we must overcome these restrictions.

Ways we could do this include setting up a wholesale water market, whereby a number of water types (recycling, reuse, desalination and others) compete in a spot market in a similar fashion to the national electricity market. By revealing the actual price of water, an efficient water market could provide the appropriate price signals and incentives to water users to make better decisions that justify the adoption of more efficient water technology.

Just as the tests of technical and economic efficiency apply to the development of new water strategies and projects, they should also apply to water used for environmental purposes. The environment has long been recognised as a legitimate user of water and government policies

Figure 3. Key elements of evidence-based water management policy.

Water resource decision making must be factually based Water management actions always impact on a number of stakeholders due to the very nature of interconnected systems. Transparency and objective decision making are paramount to sustain a responsible involvement of stakeholders in setting down new water management strategies. Understanding the water cycle is a pre-requisite to transparency.

CREDIBLEEVIDENCE

Appropriatemethodology and

approach Time to gatherdata andanalysis

High dataquality control

Policyenvironmentreceptive to

assesspolicy andstrategyoptions

EVIDENCE-BASED POLICY

Researchcapacity andtransparency

Independence

TIMING POLICY

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Water

Three critical and often misunderstood concepts The price, the cost and the value of water are three entirely different concepts: - The cost of water is defined as the actual costs of providing water to its end-use point. It should be noted that if this activity is subsidised, two different costs might actually exist: the private cost which is the cost to the end user, and the social cost, which is the cost to society. - The value of water is equal to the difference between what people are willing to pay for all they consume and what they actually have to pay for that quantity of water. - The price of water is what people actually pay for it in a marketplace. For example, in the South Creek catchment of Western Sydney in 2008, these quantities were as follows:

Cost Value Price

$3.32/kl $8.72/kl (households)

$1.75/kl (industry)

$1.06/kl (primary production)

$1.61/kl plus $75.70 fixed cost

per household

ensure that it receives an allocation. However, this allocation needs to be assessed under the criteria of technical and economic efficiency. The fact that government has not sourced

environmental allocations from existing water markets, preferring to purchase them directly from existing irrigators, is a concern as they are not valued within a market process.

Evidence-Based Decision-MakingAfter collecting accurate information, stakeholders and policy makers need to make decisions on how to use the water. Decision making in water management is a challenging process, due to the complexity of water resource systems. Decision-makers are confronted by strategies that involve a large

number of participants and stakeholders, often with conflicting objectives and interests. Sound policy can be achieved if based on facts, rather than beliefs or perceptions (Figure 3), and by

integrating knowledge and information from several disciplines.

A key to achieving succesful evidence-based decision-making is a policy-making environment that is receptive to ongoing learning.

An ongoing partnership between decision- makers, stakeholders and scientists is also critical. All evidence, and in particular modelling, must be open to examination and must be explicit about its assumptions and methodologies. Above all, modelling must be able to deliver results free of any influence that may compromise their robustness.

Further Reading

Water Johnson L. (1968). Transmitting an assessment of the Nation’s water resources. A letter to the president of the Senate and to the Speaker of the House. Washington DC. 18 November 1968.Khan, S., et al. (2007). Optimal Irrigation Productivity and River Health Through Pick and Mix Strategies: Catchment water cycle management, alternative cropping systems, real water savings and aquifer storage and recovery. CRC Irrigation Futures Technical Report 3/07, CRCIF.Loucks D., Gladwell, J., eds. (1999). Sustainability Criteria for Water Resources Systems. International Hydrology Series. UNESCO. Cambridge University Press. Malano, H., Davidson, B. (2009). A Framework for Assessing the Trade Offs Between Economic and Environmental Uses of Water in a River Basin. Journal of Irrigation and Drainage 58: S133–S147.Malano, H. (2010). Modelling and Decision Making in Water Resource Management. In: IAHS Publication 338. Hydrocomplexity: New tools for Solving Wicked Water Problems. Khan, Savenije, Demuth & Hubert, eds. 111-126. Paris, UNESCO.Molden, D. (1997). Accounting for Water Use and Productivity. SWIM Paper No. 1. International Irrigation Management Institute (now IWMI), Colombo.Murray-Darling Basin Authority (2010). Guide to the Proposed Basin Plan. MDBA, Canberra. http://www.mdba.gov.au/bpkid/guide/ Singh, R., et al. (2009). ‘Understanding the Water Cycle of the South Creek Catchment in Western Sydney. Part I: Catchment Description and Preliminary Water Balance Analysis’. CRC for Irrigation Futures. Technical Report 05/09.