How are environmental standards set?

I have been less active on the blog in the last 3 weeks or so mainly due to two reasons: 1). The AARES Conference that was held in the Sydney Convention Centre, 5-8 February
and 2) My department has moved to new offices in the Biomedical Building at the Australian Technology Park (ATP), and I was busy moving office.
On with the deliberations on Environmental Economics. It was reported just yesterday in the papers that the NSW Government will impose a mandatory separation distance, or buffer or exclusion zones, between Coals Seam Gas (CSG) development and residential areas broadly defined, including specific businesses, such as horse studs. The proposed separation distance is 2 km, which has been in use in Queensland for some time.
Of course, miners immediately started to cry foul saying they are set to loose billions as a result of the buffer zones. On the other hand, many environmentalists are likely to tell you that 2 km exclusion zones for CSG are not nearly enough. So, what is the right separation distance?
The short answer is: nobody knows. How did we come up with 2 km? The same answer: nobody knows. It is all a result of bargaining based on rather murky politics! And the outcome is a rather arbitrary number that does not necessarily make much environmental or economic sense.
And this is not unique to CSG. We see environmental standards, or environmental policy targets, being set in this manner all the time: how do we know that we should reduce our CO2 emissions by 5% by 2020? Why not by 8%, or by 3%? How do we know that we need 2,750 GL as a baseline target to be recovered for environmental purposes in the Murray Darling Basin? Why not 3,000 GL or 2,000 GL? Nobody knows.
Getting back to CSG, it seems very unlikely that a uniform magnitude of a buffer will work in a diverse landscape, underlined by diverse mineralogy and hydrology. One could easily imagine that in some cases we might need a buffer of 5-6 kilometers, and in other perhaps only 500 meters will do. One thing is certain: such a uniform, arbitrary number as 2 km, is not going to bring the most overall benefit to society. We surely can do better, and the knowledge of how to do it is there. All it remains is to convince the politicians to give it a serious thought rather then to react only to day-to-day politicking.

Author: Tiho Ancev

Tiho Ancev is a Professor of Agricultural and Resource Economics in the School of Economics, University of Sydney. His main research areas are agricultural, environmental, natural resource and energy economics. Tiho’s main contributions have been in water economics and policy, economics of energy, economics of air pollution and climate change policies, and economics of precision agriculture and agricultural input use. He has published widely on these topics in top international peer reviewed journals. Tiho has led and contributed to national and international research projects in these research areas. He is currently the Managing Editor-in-Chief of the Australian Journal of Agricultural and Resource Economics.