8.8 Review

8.7.5 International collaboration and agreements to set targets can help improve environmental sustainability

Climate change is both a national and global problem, so fixing it requires international collaboration that includes the following: • Kyoto Agreement 2008: Early in 2008, the Australian government signed the Kyoto agreement. This was an international agreement initiated in 1997 through the United Nations, aiming to stabilise the concentration of greenhouse gases in the environment that are linked to climate change and global warming. By 2011, over 190 countries supported this accord. In order to reach the agreed emissions targets, several countries committed to a carbon tax including Denmark, Finland, Germany, Italy, the UK, South Africa and India, while some nations relied on an emissions trading scheme to put a price or cost on carbon pollution and reduce emissions. From Australia’s point of view, signing the 2008 accord initially committed us to limiting our greenhouse gas emissions, for the period 2008–12, to a target of 108 per cent of the 1990 emissions level. • Paris Climate summit 2015: In late 2015, there was the Paris Climate Summit. Here, Australia agreed to a 26–28 per cent reduction in carbon emissions by 2030, compared with levels in 2005. Figure 8.22 shows the progress and projected cuts to emissions for selected countries for the period, 2005–30. FIGURE 8.22 Paris climate summit 2015 — percentage change in carbon emissions in selected countries, 2005–30 150% 0% –5% –10% –15% US and Can –17% NZ –25% Aus, EU –13% Japan –3.8% Korea –2% –25% –4% –26% –28% –30% –20% –25% –30% 100% 50% 0% 2005 2010 2015 2020 China +139% 2025 2030 150% –26% UNCORRECTED PAGE PROOFS

–35% –34%

Source: Graph copied directly from the Australian Government, Department of the Environment, see www.environment.gov.au/climate-change/publications/factsheet-australias-2030-climate-change -target.

• Notice that by 2020, Australia hoped to reduce its emissions by 13 per cent. This seemed to be achievable based on modelling. However, meeting the 2030 target will be far more challenging. • Notice, too, that Australia’s reduction is smaller than that for New Zealand, the European Union and Canada. • China’s emissions are likely to keep on rising to 2030 by 150 per cent of 2005 levels, while those for South Korea’s may fall by a mere 4 per cent. Japan too will find it hard to reach its 2030 target, given there was little progress by 2020. • UN Climate Conference, 2021 (CoP26): More recently, at the UN Climate Conference at Glasgow, the Australian government finally made a commitment to net zero emissions by 2050. The aim now is to limit global warming to 1.5 degrees Celsius on levels in the late 1800s (a target set at the Paris agreement). Already, average global temperatures are up 1.1 degrees Celsius. Over 70 countries including the heaviest polluters, USA, China and the European Union, have now signed up to the commitment. This means that the agreement already covers 75 per cent of all global emissions. In addition, over 1200 large companies, 1000 cities, more than 1000 educational institutions and over 400 banks and other financial institutions are in the Race to Zero that, by 2030, is expected to cut global emissions by 50 per cent. 8.7.6 Moving towards a circular economy can reduce damage A circular economy is a more sustainable approach to production and consumption of goods and services. It involves a ‘take-make-recycle-reuse’ approach rather than a ‘take-make-throw away’ economy. It is designed to: • reduce the extraction or demand for resources (especially non-renewable resources) currently running at over 90 billion tonnes a year • dramatically improve recycling to greatly cut levels of landfill waste of chemicals, plastics, textiles, food, electronics, and metal objects that reduce human health and degrade the environment • lower levels of emissions and limit the environmental footprint caused by economic activity. With this idea in mind, the World Economic Forum recently published its White Paper outlining the shift to a waste-free global economy by 2050. Such a shift would require much international collaboration since, currently, less than 9 per cent of the world’s economy is circular in nature. Some estimates suggest that the elimination of waste and the safe use of natural resources would generate a benefit worth up to $4.5 trillion UNCORRECTED PAGE PROOFS in the years to 2030. Interestingly, the Netherlands government recently set out its goal to create a circular economy by 2050, predicting that by 2030 it will have cut its consumption of primary raw materials by 50 per cent.

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Track your results and progress Find all this and MORE in jacPLUS 8.7 Exercise 8.7 Quick quiz 8.7 Exercise 1. Outline two important types of responses, at the local or international level, to the issue of climate change and environmental sustainability. (4 marks) 2. a. Explain how international collaboration has and is being used to help reduce environmental damage and promote environmental sustainability. (2 marks) b. Identify which countries have committed to the largest reductions in their emissions to 2030 and beyond, and which to the lowest? (2 marks) c. Outline Australia’s target for emissions reductions by 2030, against the levels in 2005? (1 mark) 3. There has been overfishing leading to reduced fish stocks in oceans. This represents a problem in the use of common access or environmental resources. Outline two ways the government could solve the problem of overfishing. (2 marks) 4. Explain how the following policies could be used to help limit global warming to 1.5 degrees Celsius by 2050: a. Using carbon taxes (2 marks) b. Using government subsidies (2 marks) c. Developing a circular economy (2 marks) UNCORRECTED PAGE PROOFS

5. Imagine you were asked to make policy recommendations to the Australian government to help reduce the environmental issues caused by the overuse of plastics.

Background: Plastics are a big problem for our environment. They are normally made from oil — a non-renewable natural resource. Australia consumes over 3.5 million tonnes annually (1.0 million tonnes is single-use plastic and there is an estimated 70 billion pieces of soft ‘scrunchable’ plastics like food wrappers thrown out as rubbish). Of all plastic consumed, 60 per cent is imported, only 13 per cent is recycled, and the rest is landfill. Most plastics are not biodegradable, take years to break down, poison waterways, and enter the food chain posing a threat to our health. Identify and explain two important government actions that, potentially, could help to reduce environmental issues associated with plastics. (5 marks) Fully worked solutions and sample responses are available in your digital formats. UNCORRECTED PAGE PROOFS

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8.8.1 Summary Definition and general nature of environmental sustainability • There are lots of definitions of environmental sustainability: • Environmental sustainability would mean that ‘the rates of harvesting renewable resources, creating pollution, and depleting non-renewable natural resources because of economic activity can be continued indefinitely into the future’. • Environmental sustainability can be defined as the ‘responsible interaction with the environment to avoid depletion or degradation of natural resources and allow for long-term environmental quality’. • Sustainable economic growth is commonly defined as ‘a method of expanding the economy’s production levels to meet the needs for goods and services of the present population, without undermining the ability of future generations to meet their needs’. Measures of the environmental sustainability of economic activity • Some measures of the environmental sustainability of global economic activity might include the following: • Changes in total world CO2 emissions (that are linked with global warming and reduced crop yields). • Environmental Performance Index (EPI) — measures the environmental health (based on air quality, water quality, heavy metals, biodiversity, forests and fisheries), as well the vitality of ecosystems (based on CO2 and other greenhouse gas emissions, treatment of water waste, and nitrogen management in agriculture). • Recycling rates by country helps provides an indication of the likely impact on the depletion of nonrenewable resources and the problems of safely disposing of waste as landfill. • The type and amount of energy consumption by a country provides an indicator of the level of environmental damage and contribution to global warming and climate change. For example, most energy currently comes from coal that has high greenhouse gas emissions that add greatly to climate change. • Measures of the environmental sustainability of Australia’s economic activity: • Changes in Australia’s per capita CO2 emissions and emissions per dollar of GDP have fallen. This is a good sign given that rising GDP is normally linked with higher CO2 emissions. • Changes in the origin of emissions suggests that coal is now making a smaller contribution to our total emissions. • The number of hot days and bushfires can provide a guide to the direction of climate change and the sustainability of economic activity. These two indicators have increased markedly over recent decades, adding to deaths and property damage. The reasons why environmental sustainability is of importance to Australia and globally • Environmental sustainability is an important issue because it affects material and non-material living UNCORRECTED PAGE PROOFS standards of both current and future generations. • Environmental sustainability helps to maintain our material living standards (related to the levels of production, employment, incomes, and consumption). However, for decades, rising economic activity has come at a high cost to the environment. This has led to global warming and severe weather events that have reduced GDP by $120 billion over the last 50 years. For example, think of the devastating effects of severe

drought, frequent bushfires, and recent floods on production, employment, and incomes. If climate change is not limited, this cost is forecast to rise to a cumulative total of $1000 billion over the next 30 years, destroying jobs and cutting incomes. In some countries, climate change due to unsustainable economic growth had led to lower crop yields and hunger. • Environmental sustainability also affects our non-material living standards (related to levels of happiness, life expectancy, mental and physical health, stress). Recent severe weather events due to climate change have reduced mental and physical health, increased domestic violence, and added to the number of lives lost through heat, floods, and fires. In addition, there has been a loss of biodiversity, an increase in damage to vital ecosystems needed to support life, and huge harm to areas of natural beauty used for recreation and contemplation. The economic factors influencing the extent of environmental sustainability • The degree to which higher GDP is environmentally sustainable is not only affected by the level and speed of increases in national or global output, but also by the types of goods and services produced and consumed. • A typical starting point in understanding the causes of environmental problems is the concept of market failure. Market failure exists where, in the absence of government intervention, the free or unregulated operation of demand, supply, and the price system cause resources to be allocated inefficiently into uses that do not maximise the community’s general wellbeing. There are two main types of market failure that are especially relevant to environmental sustainability: • Negative externalities (i.e. costs associated with the production and or consumption of goods and services that are not paid internally by those involved with the particular economic activity, but instead are passed onto external third parties who gain no direct benefit). Negative externalities associated with some types of economic activities might include reduced food production, hunger, lower incomes, forced migration due to rising sea levels, and the loss of life. Because these costs are not reflected in the prices paid for some goods and services, the market mis-allocates resources, reduces efficiency and lowers the general wellbeing of society. • Some economic activities cause environmental or common access resources to be degraded (e.g. air, rivers, oceans, ecosystems, native forests, and wild fish stocks). This is because they are non-excludable and hence are seen as free. They are also rivalrous where one person’s consumption can prevent others from access to the same resource. Without a market price to indicate how valuable these resources are, they will be exploited and decline in quality. • Other factors also affect the extent of environmental sustainability and damage: • The growth rate in global GDP and some types of economic activity can reduce environmental sustainability at the local, national and global level. Usually, higher GDP leads to more environmental damage as a result of resource depletion, increased levels of waste, and higher CO2 emissions that accelerate climate change and cause negative externalities. But not all output has the same impact on the environment. For example, single-use products may cause more damage than reusable and durable products with a long life that can also be recycled. Products produced locally rather than imported and transported across the world, have a lower impact on CO2 emissions and climate change. The production and consumption of some foods like meat tends to have far greater negative impacts on the environment than plant-based foods, and some meats (e.g. beef) are worse than others (lamb, chicken, and fish). And products that use renewable and biodegradable natural resources can be less damaging than those using non-renewable and non-biodegradable inputs. • The rapid growth in global population has worsened environmental damage since more people need more resources and energy. This accelerates resource depletion and creates more waste. • Recently, increased knowledge about environmental sustainability has helped people to change consumer UNCORRECTED PAGE PROOFS and business behaviour. This has increased pressure on governments and others to make changes that reduce our carbon footprint.

Different perspectives about the issue of environmental sustainability • Especially over the last 5–10 years, there has been a growing awareness amongst households, businesses, and governments of environmental issues including climate change. There has also been a greater acceptance of the need for decisive action. Even so, there are some differences in perspective amongst various economic agents. • Consumer perspective: As consumers, all of us affect the environment by what we buy, how we use it and how we dispose of it when it is no longer useful. Over recent years, there has been a massive shift in consumer support for improving environmental sustainability. • Business perspective: Until recently, many businesses tended to downplay environmental concerns associated with market failure like negative externalities and the abuse of common access resources. More recently, things have changed. The BCA, for example, believes that the momentum for moving towards net zero by 2050 is ‘unstoppable’. It is therefore important to embrace decarbonisation and seize a competitive advantage in developing new technologies and export industries; or be left behind and pay the price. • Union perspective: Most in the union movement and the ACTU see the global shift towards net zero emissions as presenting huge opportunities to create new and secure jobs for workers across Australia, and a chance to grow exports and incomes. • Government perspective: As economic agents, federal, state and local governments have a significant impact on the environment and how resources are used. This often occurs through decisions related to the location of rubbish tips, zoning of land use, the position that is adopted on international treaties (e.g. about fishing, greenhouse emissions, world heritage area listings, defence treaties), policies related to indirect taxation on particular goods, and budget allocations towards the support of public transport. More specifically, over the last 12 years the views of the Australian government on environmental sustainability and climate have altered. This has been largely driven by the change in voter attitudes, national politics and international pressure. For example: • Initially, there was denial of a climate issue • In 2007, Australia signed the Kyoto protocol targets to cut emissions to 108 per cent of 1990 levels. • Next came the start of the carbon tax in 2012. • In 2014, the carbon tax was abolished and replaced with a policy called Direct Action. • Australia ratified the Paris Climate Agreement in 2016 to reduce emissions by between 26–28 per cent on 2005 levels by 2030. • Most recently, the Australian government made a commitment at the UN Glasgow Climate Pact (2021) to work towards net zero emissions for the Australian economy by 2050. One reason why some governments have not been over enthusiastic about promoting environmental sustainability is the fear of a trade-off between protecting the environment and slowing climate change, and economic growth — the belief that action would lead to a loss of jobs and lower incomes. The economic responses by economic agents to improve environmental sustainability • There has been a range of responses by consumers, businesses, and governments here in Australia and around the world. Below are some of the most popular ones in current use. • Use a carbon tax: A market-based carbon tax puts a price on carbon pollution and makes it more costly and less profitable. As a negative incentive or punishment, it encourages both firms and consumers to switch to cleaner substitutes. Polluters are forced to pay for some of the negative externalities they generate. On a demand–supply diagram representing a market for a high-emissions good, the tax decreases the quantity of a good supplied by firms at a given price, pushing the equilibrium price upwards. As the equilibrium price rises, this causes consumer demand to contract. Consumers switch to a cleaner product, reducing emissions. UNCORRECTED PAGE PROOFS • Use a carbon emissions trading scheme: Another market-based approach is a carbon emissions trading scheme. This also puts an internal price or cost on pollution. It does this by requiring all polluters to have tradeable pollution permits sufficient to offset their emissions levels. These permits or offsets can be purchased creating a demand in the carbon market, the supply of which is usually capped or limited by the government at a level that enables the pollution reduction target to be achieved. A strong demand for permits by dirty firms drives up the market equilibrium price, making it more costly to pollute

and encouraging firms to find cleaner alternative products and production methods. The added cost of purchasing the pollution permits forces firms to charge a higher price for their good, contracting consumer demand. Negative externalities and damage to the environment are reduced. • Use subsidies paid to consumers and producers: Subsidies are another market-based environmental policy designed to reduce carbon emissions by creating positive financial incentives that can change consumer and business behaviour to encourage a shift towards cleaner economic activities with fewer emissions.

Essentially, by rewarding more sustainable behaviour, subsidies work in the opposite way to having a tax or price on carbon, which simply punishes polluting behaviour. • Use government laws or regulations: While market-based policies to reduce emissions can work well, most governments find they also need to have regulations that are backed up by laws and penalties for those that fail to comply. One example of legislation was the Clean Energy Act 2011 that allowed the government to introduce the Carbon Tax. However, along with the tax, the Act was repealed in 2014. In Australia today, the main piece of federal legislation is the Environment Protection and Biodiversity Conservation Act. • International collaboration and agreements to set emissions targets: Climate change is both a national and global problem, so international collaboration is essential. Australia has made commitments to reduce emissions and join the fight to limit climate change. These include: • Kyoto Agreement 2008 • Paris Climate summit 2015 — Australia agreed to a 26–28 per cent reduction, compared with carbon emissions levels in 2005, by 2030. • UN Climate Conference, 2021 or CoP26 — the Australian government committed to net zero emissions by 2050 designed to limit global warming to 1.5 degrees Celsius on levels in the 1880s — a target set at the Paris agreement. • Move towards a circular economy: A circular economy is a more sustainable approach to production and consumption of goods and services. It involves a ‘take-make-recycle-reuse’ approach, rather than a ‘takemake-throw away’ economy. It is designed to reduce the extraction of resources, improve recycling to cut landfill waste, and lower levels of emissions from economic activity. 8.8.2 Key terms A carbon emissions trading scheme is a market-based strategy that puts a price or internal cost on pollution, making it less profitable. It does this by requiring that all polluters must have pollution permits sufficient to offset their level of CO2 emissions. These tradeable permits can be purchased creating a demand in a carbon market. The supply of permits is usually capped or limited by the government at a level that enables the agreed pollution reduction target to be achieved. A strong demand for permits by polluting firms drives up the market equilibrium price, making it more costly to pollute. This encourages firms to find cleaner alternative products and production methods. The carbon tax (during 2012–14) was designed to put a price on Australia’s 500 worst-polluting companies (typically in electricity generation, waste disposal by councils, and in steel and aluminium smelting). This made polluting costly and less profitable, bringing about a positive change in business decisions affecting the environment. External costs became internal costs. The starting tax rate was $23 for each tonne of carbon emissions by firms. A circular economy involves one where resources that are extracted from nature are recycled and reused, rather than being dumped as rubbish into landfill. This helps to slow the demand for non-renewable resources, reduce non-degradable wastes that in the past have been simply thrown onto rubbish tips as waste or left to pollute water ways and ecosystems. CO2 emissions involve the release of carbon dioxide into the atmosphere as a result of the combustion of fossil fuels during the production and consumption of goods and services. By preventing the escape of heat from the earth’s atmosphere, rising CO2 emissions have led to global warming and increasing damage, resulting from UNCORRECTED PAGE PROOFS more frequent and severe weather events involving huge costs for individuals and business.

Common access resources are those things we all share and depend on — like air, rivers and oceans. Their use is non-excludable (this makes them free) and rivalrous (the use by one deprives others from their consumption).

This leads to their abuse, reduced wellbeing and market failure.

The Direct Action emissions reduction policy relies on a $2.55 billion Emissions Reduction Fund (ERF) or, more recently, the government’s new Climate Solutions Fund. Firms bid for the available money in a reverse auction system, by proposing new projects where there is the greatest reduction in emissions for the lowest possible cost to the government and taxpayer. Ecological footprint is a measure of environmental sustainability based on the world’s limited carrying capacity. It involves measuring the quantity of environmental resources needed to produce the quantity of goods and services required to support a particular lifestyle or living standard. An Emissions trading scheme (ETS) is a market-based, environmental policy that puts a price on carbon emissions by the sale of tradeable pollution permits or offsets. Environmental economics looks at the financial side of environmental protection and how various policies can improve outcomes. Environmental natural resources (also called common access resources) are the inputs from nature that are used for human survival and production of goods and services. They include air, oceans, rivers, forests, wild fish stocks, biodiversity, and ecosystems. These are non-excludable, so although they are valuable they have no price and are regarded as being free. This means that the prices of goods that have used them for production do not reflect their scarcity or value. This leads to their abuse. In addition, they are rivalrous so one person’s use or abuse of them can deprive others of consumption, since their quantity and quality are limited. Environmental performance Index (EPI) is a general measure of environmental sustainability. It uses data relating to environmental health (based on air quality, water quality, heavy metals, biodiversity, forests and fisheries), as well the vitality of ecosystems (based on CO2 and other greenhouse gas emissions, treatment of water waste, and nitrogen management in agriculture). Environmental sustainability means that ‘the rates of harvesting renewable resources, creating pollution, and depleting non-renewable natural resources as a result of economic activity can be continued indefinitely into the future’. Greenhouse gas emissions involve the release of substances into the atmosphere as a result of the production and consumption of goods and services, leading to global warming. These gasses include carbon dioxide, methane, nitrous oxide, and hydrofluorocarbons. By preventing the escape of heat from the earth’s atmosphere, these emissions lead to global warming and increasing damage to our wellbeing that results from more frequent and severe weather events. The Kyoto Agreement was a UN international accord reached in 2008. It sought to limit the levels of greenhouse gas emissions, for the period 2008–12, to a target of 108 per cent of the level of emissions in 1990. Market failure a situation where the free operation of demand, supply, and the price system does not direct resources efficiently into specific types of production that maximise the general long-term wellbeing of society. Negative externalities, the use of common access resources, and having incomplete knowledge are all examples of market failure that lower society’s general wellbeing. Negative externalities are a type of market failure where some of the costs resulting from production and consumption of goods and services are transferred to external third parties who are not directly involved with the particular economic activity. Some types of economic activities have especially large negative externalities. Climate change caused by high CO2 emissions is an example of a negative externality, associated with some types of economic activity. Non-excludability is a feature of common access environmental resources where those who pay no price for a resource or good can still consume it (e.g. air, fish stock, forests, water). Users of these resources see it as free, and their overuse and abuse lead to negative externalities or costs that are passed on to external third parties. Being non-excludable (and free) causes these valuable inputs to deteriorate in quality. Non-material living standards are elements of our wellbeing that affect the quality of our daily lives, and may perhaps involve levels of freedom, happiness, family life, justice, amount of leisure time, mental and physical health, crime, the absence of pollution, and the state of the natural environment. Non-renewable natural resources are inputs that cannot be readily replaced once they have been used up (e.g. all minerals and oil). The Paris Climate Summit involved most countries entering an agreement in 2015 to limit their emissions of greenhouse gasses. Australia’s target by 2030 is a 26–28 per cent reduction compared with carbon emissions levels in 2005. UNCORRECTED PAGE PROOFS Renewable resources are those found in nature that can be replenished or replaced over a fairly short period of time. Here, we think of some plants and animals, and energy from solar and wind sources. Rivalrous is a feature of common access or environmental resources where the consumption of an input by one person prevents others from having access to that same quantity or quality of resources (e.g. air, fish stock, forests, water).

Subsidies are government cash payments (or tax concessions) that act as a positive incentive to change the behaviour of consumers and/or producers of some types of goods and services, in a particular way that benefits the environment. They reward some types of economic activities and can thus be used to improve environmental outcomes and reduce unsustainable types of economic activities.

Sustainable economic growth is commonly defined as a method of expanding the economy’s production levels to meet the needs for goods and services of the present population, without undermining the ability of future generations to meet their own needs. A trade-off is a cost, based on what has to be sacrificed or given up, following a decision or choice. To date, there has been a trade-off between global economic growth and the quality of the environment. The UN Climate Conference (CoP26) in 2021 brought many nations together (including Australia) to reach an agreement on climate action needed to limit the rise in global temperature to 1.5 degrees Celsius above the levels in 1880. As a result, many countries have committed to reaching net zero emissions by 2050. Resourceseses Resources Digital documents Topic summary (doc-37980) Key terms glossary (doc-37981) Multiple choice answer grid (doc-37982) Multiple choice answers (doc-37983) 8.8.3 Practice school-assessed tasks OUTCOME 2 Explain the factors that affect two economic issues at a local, national and international level and evaluate actions to address the issues. ECONOMIC SIMULATION ACTIVITY — A ROLE PLAY The United Nations (UN) has called another Climate Crisis summit to discuss the situation and actions required by key nations, to slow climate change and make their economies more environmentally sustainable. It will be attended by groups from key countries or areas. These might include: • the USA • China • a group representing the EU • Britain • Australia • a group representing Pacific Island nations • the Netherlands. Before starting, the Economics class needs to be broken into groups, one for each country or area. After completing research and preparation, a spokesperson from each group is required to deliver a speech (maximum 5 minutes). The speech should cover the following areas: • The country’s or the group’s current views or attitudes about climate change • How climate change has affected the country or group • An outline of the target for emissions reductions and progress so far in reducing emissions • An explanation of the policies that are in current use and may be used in the future to reduce environmental impacts and climate change. This activity will require that each group researches the necessary information for their country using a computer and a range of online sites (remember to include web addresses for all information sources). UNCORRECTED PAGE PROOFS

At the end of the speeches, each class member is required to prepare and submit a summary report (for assessment purposes). As a guide, this should have a length of perhaps 700 to 1000 words, or about 1–2 pages. It might also contain relevant tables, graphs, photos, illustrations, or cartoons. This document should be formatted so that it is suitable for release to the media (including newspapers).

It should try to sum up what happened at the UN’s Climate Conference, including the general tone or sentiment, any surprising revelations, and any outcome or consensus amongst the nations or groups.

A REPORT ON AN INVESTIGATION OR INQUIRY

Task: ‘How big is my environmental footprint and what could I do to reduce it?’ Outline of the task Economic growth can bring many benefits, but these often come at a cost. A trade-off often exists. Your task is to try and conduct an environmental audit of your own household and its consumption patterns (affecting your material living standards). Remember, many goods and services have an adverse environmental impact through making, using, or disposing of them, and that some have worse impacts than others. At the conclusion of your investigation, you are required to present a short report of your findings, detailing the environmental impact of your lifestyle and what actions you could take to reduce your environmental impacts. This report could be presented in written form, or as an oral class presentation using PowerPoint slides. To give you some background for this task, start by reading Figure 8.23, before attempting to calculate your ecological footprint. UNCORRECTED PAGE PROOFS

FIGURE 8.23 ‘World footprint — Do we fit on the planet?’

World footprint — Do we fit on the planet?

Today humanity uses the equivalent of 1.6 planets to provide the resources we use and absorb our waste. This means it now takes the Earth one year and six months to regenerate what we use in a year.

Moderate UN scenarios suggest that if current population and consumption trends continue, by the 2030s, we will need the equivalent of two Earths to support us. And of course, we only have one. Turning resources into waste faster than waste can be turned back into resources puts us in global ecological overshoot, depleting the very resources on which human life and biodiversity depend. Every year Global Footprint Network raises awareness about global ecological overshoot with our Earth Overshoot Day campaign, which attracts media attention around the world. Earth Overshoot Day is the day on the calendar when humanity has used up the resources that it takes the planet the full year to regenerate. Earth Overshoot Day has moved from early October in 2000 to August 8 in 2016

1960

2.5 Business as usual Earth Overshoot Day: 28 June 2030 2.0 Number of planet Earths 1.0 1.5 Ecological footprint Earth Overshoot Day: Carbon emissions reduced 30% 0.5 16 September 2030 0.0 2030 Year The result is collapsing fisheries, diminishing forest cover, depletion of fresh water systems, and the build-up of carbon dioxide emissions, which creates problems like global climate change. These are just a few of the most noticeable effects of overshoot. Overshoot also contributes to resource conflicts and wars, mass migrations, famine, disease and other human tragedies — and tends to have a disproportionate impact on the poor, who cannot buy their way out of the problem by getting resources from somewhere else. Ending overshoot The Earth provides all that we need to live and thrive. So what will it take for humanity to live within the means of one planet? Individuals and institutions worldwide must begin to recognise ecological limits. We must begin to make ecological limits central to our decision making and use human ingenuity to find new ways to live, within the Earth’s bounds. This means investing in technology and infrastructure that will allow us to

operate in a resource-constrained world. It means taking individual action, and creating the public demand for busi- nesses and policy makers to participate. Using tools like the Ecological Footprint to manage our ecological assets is essential for humanity’s survival and success. Knowing how much nature we have, how much we use, and who uses what is the first step, and will allow us to track our progress as we work toward our goal of sustainable, oneplanet living. 1970 1980 1990 2000 2010 2020 Source: Global Footprint Network, www.footprintnetwork.org/en/index.php/GFN/page/world_footprint. Updated 19 October2016.UNCORRECTED PAGE PROOFS

8.8 Exam questions

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Find all this and MORE in jacPLUS 8.8 Section A: Multiple choice questions Question 1 MC Global climate change has tended to result in: A. starvation following reduced agricultural productivity in some countries. B. the displacement of island communities and the destruction of their culture, even though they were not responsible. C. reduced production, incomes, mental and physical health, and biodiversity. D. all of the above. Question 2 MC Which of the following government measures would not normally be classified as a market-based environmental policy to reduce carbon emissions? A. Putting a price on carbon pollution permits or offsets to be determined in a cap-and-trade scheme to reduce negative externalities associated with economic activities B. The government passing a law that closes the economic activities of all coal-fired power stations C. The withdrawal of fossil fuel subsidies currently paid to the coal industry D. Introducing tax concessions for firms able to cut emissions by 5 per cent a year Question 3 MC Which of the following statements about environmental issues is least correct? A. In the absence of government action, the rise in greenhouse gasses is a market failure associated with the abuse of common access resources and linked with global warming that reduces living standards. B. CO2 emissions are seen as a negative externality where extra costs have to be paid by polluters, cutting their living standards. C. Market-based environmental policies that use financial incentives to change the behaviour of polluters can help improve living standards and make them more sustainable for current and future generations. D. Especially in the short-term it is possible that environmental policies may cause a rise in structural unemployment and make supply conditions less favourable for some firms. Question 4 MC Which of the following government policy measures would be least effective in helping to combat UNCORRECTED PAGE PROOFS environmental problems experienced in an expanding economy? A. A new government indirect tax imposed on single-use disposable products that create high emissions B. Building a new freeway to carry more cars

C. Government spending to improve the quality, reliability, comfort and convenience of public transport D. Using budget subsidies to encourage local businesses to purchase new technology that reduces emissions

Question 5

MC Economic growth can result in:

A. a fall in the quality of air, the extinction of native plants and animals, and the destruction of healthy rivers and oceans. B. greater consumer choice, better health, and longer life expectancy. C. the growth of cities and of urban problems such as traffic congestion and waste disposal. D. all of the above.

Question 6 MC Which statement is most correct? Common access environmental resources include: A. all resources found in nature as well as those provided by people. B. minerals. C. equipment. D. climate, air, oceans, ecosystems and the stratosphere. Question 7 MC Environmental problems have become more severe because: A. firms seek to maximise profits, minimise costs and exploit common access and environmental resources, for which they are usually not charged a price. B. the recycling of waste by households and firms has been inadequate. C. increasing population pressures mean that more production is necessary just to maintain current living standards. D. all of the above are correct. Question 8 MC Regarding market failure, which statement is least correct? A. Failure occurs when resources are allocated to the production of certain types of goods and services that lower the general satisfaction of society’s wants and wellbeing. B. Clean air is normally a non-rivalrous but excludable natural resource. C. Improvements in the quality of information that people have about the environment can help reduce market failure and improve environmental outcomes. D. Market failure and environmental damage can be reduced by government taxes on products involving high emissions and that are single-use. Question 9 MC The greatest negative externalities are most likely to result from the production and consumption of which of UNCORRECTED PAGE PROOFS the following? A. Products that can be totally recycled B. Vaccinations against COVID-19

C. Meat products D. A wheat crop

Question 10

MC Which of the following is not generally regarded as a rivalrous good or service?

A. A wild fish caught in Bass Strait near Tasmania. B. A tree felled in an old growth forest in the Otways. C. Free to air TV program viewing on the ABC. D. A bed in a private hospital. Question 11 MC Which of the following is not generally regarded as an excludable good or service? A. A box of breakfast cereal B. A tonne of iron ore C. Street lighting provided by the local council D. A glass of water taken from the river Question 12 MC Which statement about market failure is least correct? A. Market failure means that the price system always directs resources to where they are most wanted by society. B. Market failure can include negative externalities and the use of common access environmental resources where not all costs are reflected in the price paid for a good or service. C. Market failure is normally reduced by government intervention to change the decisions made by consumers and businesses. D. Market failure lowers society’s general welfare. Question 13 MC Concerning international collaboration to help improve global environmental sustainability, which of the following is least correct? A. The UN has recently published a plan for the transition to a circular economy with zero waste. B. The UN’s CoP26 in Glasgow in late-2021 resulted in all countries making a commitment to reach net zero emissions by 2050. C. Following the Paris Climate agreement, Australia committed to reducing its emissions by 26–28 per cent of 2005 levels by 2030. D. The current aim is to limit climate warming to a rise of 1.5 degrees Celsius by 2050, on levels that existed in the 1880s. Question 14 UNCORRECTED PAGE PROOFS

MC Which of the following is most likely to be environmentally sustainable?

A. Holidaying at Noosa, Queensland rather than Torquay, Victoria B. Using coal-fired electricity to charge your phone

C. Buying goods like wine produced locally rather than imported from France D. Buying food packaged in thin scrunchable plastic wrapping

Question 15

MC As environmental indicators for Australia, which of the following is least correct?

A. The level of CO2 emissions per $1 of GDP has generally fallen over recent years. B. The frequency of droughts and floods has tended to increase. C. Our CO2 emissions have decreased overall during the last 15 years. D. Thankfully, the number of days with temperatures over 40 degrees Celsius has decreased because of our overall reduction in CO2 emissions in recent times.

Question 16 MC Which of the following products is least bio-degradable? A. Paper tissues B. A tin of leftover house paint C. Vegetable peelings and food scraps D. Timber offcuts from your project to make a coffee table Question 17 MC A carbon tax usually results in: A. a decrease in the quantity of a high emissions good demanded at a given price and no change in the supply of the good at a given price, decreasing the market equilibrium price of the good B. a decrease in the supply of the high emissions good at a given price and a contraction in demand as the market equilibrium price rises C. a decrease in both the quantity of a high emissions good demanded and supplied at a given price decreasing the market equilibrium price D. a decrease in the quantity of a high emissions good demanded at a given price by consumers, and an increase in the supply of the good at a given price by sellers. Question 18 MC With the operation of a carbon emissions trading scheme: A. the quantity of pollution permits supplied is usually limited by the government B. the quantity of pollution permits demanded mostly depends on the level of pollution resulting from changes in business activity C. a rise in the market price or cost of pollution permits will tend to act as a negative financial incentive that will repel resources from products with high emissions D. all of the above are likely to occur. Question 19UNCORRECTED PAGE PROOFS

MC A negative externality is best illustrated by which of the following examples?

A. You pay for the cost of renovating the inside of your house B. You clean up and beautify your front garden, which is visible from the street

C. The club near your house runs its noisy and unruly venue each Friday and Saturday night until 3 am D. A bauxite mining company restores a damaged mine site and replants the native vegetation

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8.8 Section B: Extended response questions Question 1 (14 marks) a. Explain what is meant by the term, environmental sustainability. (2 marks) Before answering the questions that follow, examine Figure 8.24 showing the change in global GDP. FIGURE 8.24 The change in the value of global GDP ($US trillions) 10 1960 1970 1980 1990 2000 2010 2020 World 20 30 40 50 60 70 80 90 Source: World Bank, https://data.worldbank.org/indicator/NY.GDP.MKTP.KD. b. Referring to data drawn from the graph, describe the change in global GDP over the period. (2 marks) c. Giving clear reasons, explain whether this change in real GDP is likely to have been environmentally sustainable. (4 marks) d. Identify and outline two commonly used measures to indicate changes in the degree of global environmental sustainability. (2 marks) e. There has been a rise in greenhouse gas emissions. Explain why humanity should be alarmed. (4 marks) Question 2 (9 marks) There is now growing concern about the environment and an acceptance of the need for policies to reduce CO2 UNCORRECTED PAGE PROOFS emissions to help protect our current and future living standards.

a. Outline what is meant by a carbon tax. (1 mark) b. Draw and fully label a demand–supply diagram representing the market for coal-generated electricity. On this diagram, show the effects of the government deciding to put a tax on polluting power companies that use coal. Explain how this tax could help reduce CO2 emissions and limit climate change. (4 marks)

c. Explain how this tax might affect each of the following: • the unemployment rate, especially over the short-term • the rate of inflation.

Question 3 (7 marks) (2 marks)

(2 marks)

Subsidies are used to affect the behaviour of producers and consumers.

a. Define the term, subsidy. (1 mark) b. Draw and fully label a demand–supply diagram representing the market for a desirable low-emissions product like wind-powered generators (that are a substitute for a cheaper high-emissions product like coal-fired electricity). On this diagram, show the effects of the government’s decision to pay a subsidy to those firms installing wind-generated electricity. Explain how this subsidy could help reduce CO2 emissions and limit the effects of climate change. (4 marks) c. Explain how this subsidy is different to a carbon tax in the way it works to reduce emissions. (2 marks)

Question 4 (3 marks)

Before answering the questions that follow, examine Figure 8.25 showing the change in the price of solar panels.

FIGURE 8.25 Changes in the cost of solar panels (US$ per watt of power), 1976–2019 100 Per-W price in 2018 US dollars 1 10 1 10 100 1000 10 000 100 000 1 000 000 Historic prices (Maycock) Experience curve at 28.5% Chinese c-Si module prices (BloombergNEF)

1976 1985 2003 2008 2015 2019e Cumulative capacity (MW) Source: BloombergNEF 2019a a. Referring to the graph, describe the change in the cost of solar panels over the period. (1 mark) b. Suggest one likely reason for the fall in the price of solar panels. (1 mark) c. Explain how this change in the cost of panels would be likely to affect the demand for panels by households and businesses. (1 mark) d. Explain how this trend in prices might affect CO2 emissions. Question 5 (4 marks) Before answering the questions that follow, examine Figure 8.26 showing changes in large-scale business investment by power companies: 0 UNCORRECTED PAGE PROOFS

Electricity-related investment

$b

9 Generation, transmission & distribution* Large-scale solar** Large-scale wind** Other renewable** $b

9

6 3 3 0 0 2009 2011 2013 2015 2017 2019 * Renewable and non-renewable; work done by the private sector for the private sector; 2019 observation annualised ** Capital expenditure is assumed to be distributed equally over the project’s life; ‘other renewable’ includes large-scale battery, biomass, pumped hydro and hybrid Source: RBA, see https://www.rba.gov.au/publications/bulletin/2020/mar/renewable-energy-investm ent-in-australia.html. a. Referring to the graph, list the main types of electricity-related investment spending by large privately owned power companies. (1 mark) b. Identify the most important change in the type of investment spending during 2018 and 2019, as compared with the years 2009–2015. (1 mark) c. Explain the impact of this change in the type of investment on Australia’s level of CO2 emissions. (2 marks)

Question 6 (5 marks)

Discuss the following statement: ‘The costs of not having an effective environmental policy to deal with the climate crisis would do more to harm to our living standards than implementing an effective market-based environmental policy.’ (5 marks) Hey Teachers! Create custom assignments for this topic

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