2020VISION FOR A SUSTAINABLE SOCIETY

MELBOURNE SUSTAINABLE SOCIETY INSTITUTE

The Melbourne Sustainable Society Institute (MSSI) at the University of Melbourne, Australia, brings together researchers from different disciplines to help create a more sustainable society. It acts as an information portal for research at the University of Melbourne, and as a collaborative platform where researchers and communities can work together to affect positive change. This book can be freely accessed from MSSI’s website: www.sustainable.unimelb.edu.au.

Cite as: Pearson, C.J. (editor) (2012). 2020: Vision for a Sustainable Society. Melbourne Sustainable Society Institute, University of Melbourne

Published by Melbourne Sustainable Society Institute in 2012 Ground Floor Alice Hoy Building (Blg 162) Monash Road The University of Melbourne, Parkville Victoria 3010, Australia

Text and copyright © Melbourne Sustainable Society Institute

All rights reserved. No part of this publication may be reproduced without prior permission of the publisher.

A Cataloguing-in-Publication entry is available from the catalogue of the National Library of Australia at www.nla.gov.au 2020: Vision for a Sustainable Society, ISBN: 978-0-7340-4773-1 (pbk)

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The last two centuries have seen extra-ordinary improvements in the quality of

human lives. Most people on earth today enjoy access to the necessities of life that was once available only to the elites. Most people enjoy longevity, health, education, information and opportunities to experience the variety of life on earth that was denied even to the rulers of yesteryear. The proportion of humanity living in absolute poverty remains daunting, but continues to fall decade by decade. The early 21st century has delivered an acceleration of the growth in living standards in the most populous developing countries and an historic lift in the trend of economic growth in the regions that had lagged behind, notably in Africa.

These beneficent developments are accom-panied by another reality. The improvements are not sustainable unless we make qualitative changes in the content of economic growth. The continuation of the current relationship between growth in the material standard of living and pressures on the natural environment will undermine economic growth, political

stability and the foundations of human achievement.

The good news is that humanity has already discovered and begun to apply the knowledge that can reconcile continued improvements in the standard of living with reduction of pressures on the natural environment.

The bad news is that the changes that are necessary to make high and rising standards of living sustainable are hard to achieve within our current political cultures and systems.

Hard, but not impossible. That is a central message from this book, drawn out in Craig Pearson’s concluding chapter.

This book introduces the reader to the many dimesions of sustainability, through well-qualified authors.

Climate change is only one mechanism through which current patterns of economic growth threaten the natural systems on which our prosperity depend. It is simply the most urgent of the existential threats.

Climate change is a special challenge for Australians. We are the most vulnerable of the

Foreword

vi

developed countries to climate change. And we are the developed country with the highest level of greenhouse gas emissions per person.

There are roles for private ethical decisions as well as public policy choices in dealing with the climate change challenge.

This book is released at the time of ‘Rio+20’, a conference in Brazil to review the relatively poor progress we have made towards sustainability in the past 20 years, and soon after the introduction of Australia’s first comprehensive policy response to the global challenge of climate change. Australia’s emissions trading scheme with an initially fixed price for emissions permits comes into effect on 1 July 2012. The new policy discourages activities that generate greenhouse gases by putting a price on emissions. The revenue raised by carbon pricing will be returned to households and businesses in ways that retain incentives to reduce emissions. Part of the revenue will be used to encourage production and use of goods and services that embody low emissions.

The policy has been launched in controversy. Interests that stand to gain from the discrediting of the policy argue that it is unnecessary either because the case for global action to reduce greenhouse gas emissions and the associated climate change has not been proven, or that the new policy places a disproportionate burden on Australians.

The health of our civilisation requires us to bring scientific knowledge to account in public policy. Everyone who shares the knowledge that is the common heritage of humanity has

a responsibility to explain the realities to others wherever and whenever they can.

The argument that the new policy places a disproportionate burden on Australians can be answered by seeking honestly to understand what others are doing.

The critics of Australian policy argue that the world’s two largest national emitters of greenhouse gases, China and the United States, are doing little or nothing to reduce emissions, so that it is either pointless or unnecessary for us to do so.

China has advanced a long way towards achieving its target of reducing emissions as a proportion of economic output by 40 to 45 per cent between 2005 and 2020. It has done this by forcing the closure of emissions-intensive plants and processes that have exceptionally high levels of emissions per unit of output, by imposing high emissions standards on new plants and processes, by charging emissions-intensive activities higher electricity prices, by subsidising the introduction of low-emissions activities, and by new and higher taxes on fossil fuels. China has introduced trials of an emissions trading system in five major cities and two provinces. This adds up to a cost on business and the community that exceeds any burden placed on Australians by the new policies – bearing in mind that the revenue from Australian carbon pricing is returned to households and businesses.

The US Government has advised the inter-national community of its domestic policy target to reduce 2005 emissions by 17 per cent by 2020. President Barack Obama said

vii

to the Australian Parliament that all countries should take seriously the targets that they had reported to the international community, and made it clear that the United States did so. United States efforts to reduce emissions are diffuse but far-reaching. They now include controls on emissions from electricity generators, announced in March 2012, effectively excluding any new coal-based power generation after the end of this year unless it embodies carbon capture and storage. From the beginning of next year they will include an emissions trading system in the most populous and economically largest state, California.

The United States is making reasonable progress towards reaching its emissions reduc-tion goals, with some actions imposing high costs on domestic households and businesses.

Australia has now taken steps through which we can do our fair share in the international effort, at reasonable cost. It would be much harder and more costly to do our fair share without the policies that are soon to take effect.

What Australians do over the next few years will have a significant influence on humanity’s prospects for handing on the benefits of modern civilisation to future generations. This book will help Australians to understand their part in the global effort for sustainability.

Ross GarnautUniversity of Melbourne

15 April 2012

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ContentsForeword by Ross Garnaut v

Table of Contents viii

Author Biographies x

Drivers 1

1 2

2 10

3 17

4 27

5 37

People 47

6 48

7 57

8 64

9 70

10 79

11 86

12 94

13 104

14 114

PopulationRebecca Kippen and Peter McDonald

Equity Helen Sykes

ConsumptionCraig Pearson

GreenhouseGasEmissionsandClimateChangeDavid Karoly

EnergyPeter Seligman

EthicsCraig Prebble

CultureAudrey Yue and Rimi Khan

AwarenessandBehaviourAngela Paladino

LocalMattersMatterKate Auty

PublicWisdomTim van Gelder

MentalHealthGrant Blashki

DiseasePeter Doherty

CorporateSustainabilityLiza Maimone

GovernanceJohn Brumby

ix

NaturalResources 123

15 124

16 132

17 141

18 150

Cities 161

19 162

20 170

21 177

22 184

23 192

24 200

25 210

Outcomes 221

26 222

Further Reading 234

Index 241

Ecosystem-BasedAdaptationRodney Keenan

WaterHector Malano and Brian Davidson

FoodSunday McKay and Rebecca Ford

ZeroCarbonLand-UseChris Taylor and Adrian Whitehead

ChangingCitiesPeter Newman and Carolyn Ingvarson

AffordableLivingThomas Kvan and Justyna Karakiewicz

BuiltEnvironmentPru Sanderson

InfrastructureColin Duffield

TransportMonique Conheady

AdaptiveDesignRay Green

HandlingDisastersAlan March

TwentyActionsCraig Pearson

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22

InfrastructureColin Duffield

Infrastructure underpins our society both economically and socially. It involves long-

term decision-making as the capital cost is typically large and the facilities are expected to last for a long period. Thus it is often difficult to conceptualise what infrastructure is required long-term versus what can be afforded today. Further complicating decisions is the fact that infrastructure is not a means to an end in itself but facilitates assets to achieve society’s expectations. This chapter explores the emerging issues concerned with infrastructure and suggests the levers that are available to encourage appropriate management of infrastructure on the journey to 2020.

Infrastructure and Societal WellbeingTo start to understand what is needed in the year 2020 by way of infrastructure it is worth reflecting on what infrastructure actually achieves for our society. Economic infrastructure is typified by the sectors of transport, water, energy and communications, and to some extent by the mining sector that provides essential resources.• Transport is the supply line that feeds import

or export businesses and local economies,

and it doubles as a mechanism to access social activities.

• Water-related infrastructure includes storage and distribution networks for potable water, wastewater disposal (and frequently treatment thereof), stormwater and irrigation.

• The provision of electricity, and to some extent gas supplies, to households and industry underpins productivity.

• Telecommunications, broadband internet, video and satellite communication underpin business and, increasingly, social media and society.

Sea-change bridgesThe Barwon Heads community valued the coastal ambience and heritage vista brought by their old timber bridge, but the bridge was in poor repair and did not meet current design requirements or cater adequately for pedestrians or cyclists. The solution to build two new bridges, one in the form of the historic timber structure, met both expectations and design requirements but did so with a high cost premium. Such solutions are rarely possible.

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Barwon Heads bridge: An example of a reconstructed heritage bridge with improved amenity via an adjacent new pedestrian/cyclist bridge.

Society also expects good facilities by way of schools, hospitals, community centres, appropri-ate justice facilities, convention centres and the like. It is therefore essential in this context to in-clude these so-called social infrastructure assets.

Current Investment in InfrastructureRather than hypothesise on the benefits or otherwise of investing in infrastructure, let’s look at what the best advisors are encouraging countries to do today. Once this has been understood, we will then consider why this is occurring and how current infrastructure is performing.

Definition of some economic concepts:

Gross Domestic Product (GDP) is the market value of all goods and services produced in a domestic economy. GDP per capita is often used as a proxy for a country’s financial standard of living.

Externalities are costs or benefits experienced by a third party as a result of a transaction (or project) that is not directly included in the price of the transaction. For example, noise impacts of a new motorway would be a negative externality to surrounding landholders.

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Country Program Purpose

Australia Infrastructure Australia Develops national infrastructure priorities and provides advice on strategies to invest US$20.2 billion as part of the Building Australia fund (a post Global Financial Crisis initiative).

Brazil Growth Acceleration Program

A strategic investment program focusing on energy, urban infrastructure, sanitation and transportation. Launched in 2007 with $349 billion investment and extended through 2011–2014 with a further $900 billion.

Canada Infrastructure Canada Responsible for a seven-year plan for Building Canada: US$33.5 billion plus US$5.1 billion for targeted programs.

China 12th Five year plan $1 trillion was committed in 2011 for infrastructure spending over five years. Focus areas: high-speed rail, secondary emphasis on water supply, electricity and highways.

India 11th and 12th Five-year plans Implemented by India’s Planning Commission,$5000 billion was committed in 2007 with 1/3rd to be spent on roads and the balance on transit, water, electricity and other infrastructure. The 12th plan runs from 2012 to 2017 and has $1 trillion set aside for infrastructure.

Mexico National Infrastructure Plan Launched in 2007, this program has identified over 300 infrastructure projects to invest in. The focus is ports, airports, roads, railways, water and energy, with current commitments of over $141 billion.

New Zealand National Infrastructure plan A strategic group established in 2009 to develop a 20-year plan for national connectivity via highways.

U.K. Infrastructure UK Established in 2010 with a charter to inform investment of $320 billion in energy, transportation and waster over the next five years.

Figure 1. Current infrastructure investment programs. Source: based on Ernst & Young 2011.

The Urban Land Institute and Ernst & Young provided a good snapshot of infrastructure activity in 2011 when they detailed a range of significant strategies for infrastructure investment. A summary of their findings is paraphrased as Figure 1.

From Figure 1 it is evident that there are high expectations and needs. The difficulty comes in terms of the availability of funds, which in turn places pressure on decision-makers to cut capital costs.

Since 2009, the United Nations Economic Commission for Europe has been convening

workshops to discuss economic plans and strategies to counter the impost of the Global Financial Crisis in Eastern European countries. At the first of these forums, held in Geneva, all country treasurers spoke of infrastructure investment (usually with the hope of private sector involvement) being one of the pillar strategies for their country’s recovery and long-term resilience. It was acknowledged that there were generally significant shortfalls in funds available for investment.

It is understandable that developing countries recognise infrastructure investment

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Public infrastructure investment, expressed as a percentage of GDP. Based on 2011 OECD data.

Australia

Austria

Belgium

Canada

Czech Republic

Denmark

Finland

France

Germany

Greece

Iceland

IrelandJapan

Korea

Mexico

Netherlands

New Zealand

Norway

Portugal

Spain

Switzerland

Turkey

United Kingdom

United States

EU15: European Union of fifteen

OECD - Total

Sweden

as a critical ingredient to improved prosperity but what drives developed nations to invest? The answer to this lies in the age, condition and appropriateness of the existing infrastructure. Infrastructure typically has a design life of 75 to 100 years. Countries such as Australia, Canada and the United States have critical infrastructure that is far beyond this and desperately in need of repair and regeneration. The assets in much of Europe are generally younger as they were reconstructed post-World War II.

Engineering institutes have started to

push the need for infrastructure investment on the basis of the poor condition of assets. A summary of recent audits in Australia indicates that overall Australia’s assets are but a little better than adequate, with local roads and rail being less than adequate.

Countries are all trying to invest more in infrastructure to stimulate their economy and to increase their country’s productivity. Unfortunately, the extent of investment appears to range from one per cent of GDP to a maximum in the order of five per cent of GDP, which is deemed less than required by most commentators and thus the broad-based initiatives (see Figure 1) put together when the Global Financial Crisis impacted growth in most countries.

Jackson’s recent book, Prosperity Without Growth, based on his role in the Sustainable

Development Commission, gives an excellent analysis of the varying extent to which stimulus-spending on infrastructure during the 2008–10 Global Financial Crisis targeted next-generation, green infrastructure, from eight per cent (Australia) to 80 per cent (South Korea).

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Current Infrastructure The intensity and frequency of destructive weather events has increased and this in turn requires revised design standards. Another question we have to ask is whether or not the infrastructure we currently have (and are still constructing) is adequate for the task at hand and fit for the purpose of withstanding natural and human-made hazards.

In recent years, cyclones and hurricanes of large magnitudes have reached further inland than previously, with devastating loss; long duration droughts have had nations on their knees; floods are appearing all too frequently and previous barriers such as levies are simply not doing their job; and we’ve had

nuclear power station disasters, tsunamis and earthquakes (see chapter 25). It would appear our design standards need to be made tougher. The cost of retrofitting is often colossal and sometimes simply not practical, so it is vital that new facilities are designed to cope with the impact of climate change.

Benefits versus Socio-Economic CostsThe world continues its transition from nationally based societies to an interconnected global system where the attractiveness of a country or region for overseas investment is in part premised on the level of infrastructure available to support productive service delivery.

Balancing investment In 2011 economists from the World Bank suggested that investment in transport, energy and communications results in an increased GDP of 0.07 to 0.1 per 1 percentage change in input regardless of whether a country is rich or poor. Such approaches conclude that the benefits of infrastructure investment are deemed to outweigh the negatives of greater CO

2

emissions. (However, this simplified approach is skewed as evaluation processes do not consider externalities.) There is, therefore, limited incentive to spend additional capital to achieve enhanced environmental outcomes – for example, a new clean generating power station may cost $1 billion while an equivalent-sized dirty power station may be delivered for say $700 million. The impost of the likes of carbon taxes or levies is one mechanism to counter this bias.

A more proactive mechanism is to strategically plan infrastructure investment so that productivity enhancements and sustainability results are integral to a successful outcome. The Parkville medical precinct in Melbourne is a fine example of how strategic investment can provide ongoing benefits. Its vision, as set out in 2006, was for: ‘a precinct that integrates world-class healthcare, research and education to rapidly translate research discoveries into clinical practice, nurture life sciences and biotechnology development and drive economic growth in Victoria.’ By 2011, a group of facilities is delivering state-of-the-art outcomes while reducing environmental impacts by creative energy savings and operational efficiencies (see the precinct plan opposite).

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Infrastructure

planning, combined with the pace of change, means action is urgently required. So what likely global scenarios should be considered by infrastructure investors in preparation for 2020? Concepts and thoughts of what will be confronted in 2020 follow:• Population is likely to increase by about 25

per cent from 2012 to 2020. The additional 7600 million people will require a massive increase in facilities to maintain our current standard of living, a challenge compounded by the deteriorating condition of existing facilities.

• The growth in prosperity of emerging nations such as China, India, Brazil and the former Eastern block countries increases demands for transport, energy and telecommunications, which will place accelerating pressure on the environmental balance of the globe.

The nature and struggle for market share is dominated by the United States, Russia, Japan, Europe and the emerging nations of China and India. Global environmental issues are directly affected by the strong relationship that exists between energy consumption and carbon dioxide emissions and global warming and climatic change, attenuation of the ozone layer, excessive land, and air and water pollution. Generation of these adverse environmental outcomes is underpinned by our infrastructure and thus, for the world to become sustainable, the nature and style of infrastructure need to evolve further.

Likely Scenario for 2020Long-term infrastructure planning should be undertaken over timespans greater than a decade or so, but the past lack of in-depth

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2020

• Individual nations will be required to balance their economic needs with competing challenges to address climate changes without overarching global policies and universal support. Thus it is unlikely that there will be political alignment on global warming.

• The impact of global warming will become more evident through greater numbers of severe events that adversely affect communities. Changes to design standards and technology will be expected.

• There will be growing pressure to reduce reliance on fossil fuels, starting with ‘dirty’ fuels such as brown coal. Alternative technologies will be required. Early focus is likely to be on high-speed trains (already evident in China, Japan, Europe and starting in the United States), greater use of electronic communication, and carbon-efficient vehicles.

• Funding pressures will remain regardless of whether public or private finance is being sought.

In summary, nations will likely seek to continue improving their quality of life through growth, productivity and modified consumption, which in turn will further increase the use of resources and energy. By 2020, there will have been significant development with

limited radical change to the way we live or the expectations we have on the underpinning infrastructure. This will place the world in a desperate situation in terms of climate change consequences, unless action is taken urgently.

Levers for ChangeDecision-makers face many difficulties when it comes to infrastructure. Specific issues include:• Uncertainties on the priority areas for

investment to meet today’s needs and contribute positively over the next 50 years;

• Lack of a precise understanding of the extent of physical changes caused by global warming;

• The potential for major change in global leadership and influence;

• Resource constraints, particularly liquid carbon fuels;

• Balancing sustainability with short-term political and economic imperatives; and

• Greater emphasis and accounting of externalities to take account of good and bad impacts on societal sustainability.

Central governments can, if they choose, influence the outcome. In addition to the strategic planning tool, governments have the power to impose regulation on infrastructure. Such regulation can take the form of rules and regulations, oversight of pricing, rate/return regulation, establishment of the level of service, taxes and charges, and consumer pricing.

Regulation, particularly taxation, is considered to be a dead hand to productive development and thus, while the planning

angle is positive, regulation can be an impediment. Institutional structuring and clear positive governance arrangements can guide the market to achieve positive outcomes. Such approaches are generally driven by policy (strong vision), guidance and education.

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Local political unity for the developed policy and potentially global unity would of course strengthen the possibility of success.

The opposite to government regulation is a free-market response, where the market will find a point of competitive equilibrium and thus take much of the guesswork out of forecasting where demand will be required. Unfortunately, such an approach takes little account of externalities such as global warming and is unlikely to drive a community in a balanced way. It is considered unlikely that market forces alone will lead to a socially acceptable global vision due to the magnitude of the investment required. A combination of public and private response in an orchestrated manner would appear ideal.

The best outcome is for new infrastructure decisions to be made creatively, and the community to be positioned for a different world. The competing demands are well understood. The urgency for productivity gains, lifestyle enhancement and the need to reduce the vulnerability of the world caused by global warming is compelling.

ACTIONS FOR 2020Decision-makers must be bold and brave in planning the future from the perspective of infrastructure. They must take decisive action to present a vision that will drive a new community equipped for the future. This means ensuring that:• New infrastructure is designed and developed

with long-term consequences in mind, regardless of the short-term cost of doing so.

• Design standards and regulations for infrastructure are amended to ensure that climate change impacts are fully considered.

Ideally such changes would be driven by political leadership. But realistically, by 2020, proactive action by professionals such as architects and engineers to ensure that infrastructure that is designed and built for sustainability will be a good start. To ensure this is not simply rhetoric, standards will need to be updated and their use legislated.

Further Reading

Infrastructure American Society of Civil Engineers (2009). 2009 Report card for America’s infrastructure, ASCE. http://www.infrastructurereportcard.org/report-cardsCalderon, C., Moral-Benito, E., Serven, L. (2011). Is Infrastructure Capital Productive? A Dynamic Heterogeneous Approach, Policy Research Working Paper 5682, The World Bank. http://econ.worldbank.org/external/default/main?pagePK=64165259&theSitePK=469372&piPK=64165421&menuPK=64166093&entityID=000158349_20110615103058Engineers Australia (2010). Australia’s 2010 Infrastructure Report, Engineers Australia. http://www.engineersaustralia.org.au/infrastructure-report-cardJackson, T. (2009). Prosperity without growth: Economics for a finite planet, Earthscan, London.Urban Land Institute and Ernst & Young (2011). Infrastructure 2011: A strategic priority, Washington, D.C.: Urban Land Institute. http://www.ey.com/GL/en/Industries/Real-Estate/2011-infrastructure-report--setting-strategic-priorities