Container deposit scheme and Native Vegetation Laws in NSW

Last week’s tragic events at Sydney’s Martin Place took all of our attention, and clouded two important environmental developments in NSW. The first is that the NSW Parliament was set to debate a proposed container deposit scheme exactly on the day of the siege. This was understandably delayed, but it remains on the Parliament’s agenda, and as expected creates a lot of animosity within the beverage industry.
The economics of beverage container deposit is a good example of a missing market. Within the market for beverages, a deposit scheme increases the costs and creates inconvenience for producers, consumers and retailers. So, only considering that market, a deposit scheme is not a good idea. However, in the absence of a deposit scheme, a lot of containers are likely to find their way into the environment and thereby cause significant environmental costs (pollution, damage to wildlife, damage to infrastructure,…). But as there is no market where these environmental costs would manifest, there is no real way to contrast these costs with the benefits of the convenience of operating without a deposit scheme.
If it is quite likely, as it probably is, that the environmental costs from dumped containers outweigh the costs of imposing a deposit scheme, then the NSW Parliament will be right going ahead with the legislation to introduce the scheme. Whether it will happen – in the light of the upcoming state election, and the pressure from the beverage industry –, remains to be seen in the New Year.
The second piece of news worth mentioning is the release of the report from the review of Biodiversity Laws in NSW. I wrote about the review on this blog few months back.
The report has now been released and has generated an angry response from environmental groups, and at the same time a welcoming response from the farming community.
This is not surprising, as the key recommendations from the review are that much of the current legislation governing native vegetation and biodiversity protection be abolished, and that clearing native vegetation on farms should be managed at a local scale, giving a lot more power to local farming communities. This will effectively mean very little protection of native vegetation and biodiversity. Not a great outcome!
The public demands protection of native vegetation, but those demands have so far been met by putting strong regulatory pressure on farmers without just compensation, which was not right. The review report is simply shifting the regulatory onus away from the farmers, but does not explicitly articulate how will protection and conservation be ensured in order to satisfy the demands from the wider public. It seems to me that the review has missed an opportunity to propose a more fundamental and balanced change that would have resulted with protected native vegetation in NSW and with just outcomes for the farmers. This is a bit disappointing, but given the last week’s tragic events and the upcoming holiday season, the review will probably escape the full scrutiny that it deserves.
Anyway, this is the last post for this year. Looking forward for new interesting topics to write about in 2015!
Merry Christmas and a Happy New Year to all!

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.