Mining, Agriculture and the Great Barrier Reef

The Federal Environment Minister recently approved several mining and mining related projects that involve dredging and general industrial development on the Great Barrier Reef (GBR) Coast.
This has rightly upset many environmental groups given the significance of the reef as an iconic and globally recognised environmental asset. One interesting premise on which the decision was made is that the conditions of the approved environmental licences entail offsetting the deterioration of water quality in the reef from these new projects by reducing water pollution attributable to agriculture. Agriculture has been long known to contribute to the water pollution problems in the reef.
While some have cautioned that such offsetting of the effects from mining and mining related projects by reducing pollution from agriculture may be flawed, in principle offsetting could make good sense if there are big differences in marginal ‘benefits’ from pollution between mining and farming.
One could imagine mining operators paying farmers to undertake measures on their farms that will minimise nutrient runoff (e.g. eliminating fertiliser application, putting in large buffer strips, etc.) if the cost of this type of ‘abatement’ is comparably low in relation to the benefits derived from mining operations. Reducing nutrient and sediment runoff is likely to improve water quality in the reef, and perhaps to offset the deterioration caused by new mining activities.
While this can be appealing to both farmers and miners, society needs to ensure that comparisons are being made on like terms. Offsetting might help with reduction of nutrient concentration in the reef, which is beneficial, but dredging and other mining development might create other water quality problems (e.g. heavy metals) that will not be offset, and will cause a long term contamination that is very difficult to rectify.
Offsets are all well and good, but due diligence is called upon, especially when it comes to a place like the GBR.

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.