The NSW Environmental Protection Agency (EPA) has recently released the 2012 edition of the State of the Environment (SoE). This report is published every three years (the last was in 2009), and its purpose is to take stock of the available information on the state of the environment in NSW.
The news is generally good! The environment in NSW has been improving over the last three years. This is a broad trend across environmental themes surveyed (corresponding to the chapters in the report): people and the environment, atmosphere, land, water and biodiversity. However, not all news delivered in the report is good, and this was noticed by environmental activists. They picked on declines in biodiversity, and on stubborn persistence of number of days where concentrations of two air pollutants: coarse particulate matter (PM10) and tropospheric photochemical ozone, exceed the nationally set air quality standards.
I was particularly intrigued by the air pollutants, as together with colleagues we have recently completed a study on the effects of environmental taxation policies (Load Based Licensing) on emissions of major air pollutants in NSW, including PM10; and NOx and VOCs (volatile organic compounds), both of which are precursors in formation of photochemical ozone.
Figures 2.10 and 2.11 in the SoE 2012 report show that emissions of PM10, NOx and VOCs have declined in the Sydney region over the last 20 years. However, when the Lower Hunter (Newcastle) and Illawara (Wollongong) are added to Sydney (all three together referred in the report as the Greater Metro Region – GMR) emissions of both PM10 and NOx have increased, and substantially so. This is consistent with the findings from our own study, which showed that emissions have not declined in spite of environmental taxation. In particular, some specific features of the environmental taxation policy can offer explanation of why emission trends in Sydney are so different to the emissions trends in the overall GMR. This is mainly due to the so-called spatial weighting where emissions from industries in densely populated areas (Sydney) are taxed at a significantly higher rate than emissions in less densely populated areas (Lower Hunter and Illawara).
All this just reiterates that environmental taxation is as good as the match between the rate at which emissions are taxed and the cost structure of the emitters. If the rate is set at a correct level relative to the costs of reducing emissions, we will see emissions dropping and air quality improving. If the rate is set too low, emissions are going to keep rising, and there will be many days when national ambient air quality standards are exceeded.
