Environmentally Sustainable Development

What is ecologically sustainable development (ESD)?

Growth that conserves resources so ecological processes and quality of life are maintained, including for future generations (intergenerational equity).

What is the overarching argument of the environment essay?

Australia has raised its targets but remains a weak performer because of fossil-fuel exports and reliance on offsets.

What is the economic rationale for environmental policy?

(1) Environmental resources are non-excludable but rivalrous, so they are overused (Tragedy of the Commons; Hardin, 1968).

Depletion shifts the PPF inward

(2) Negative Externalities created by private production causes market failure and worsened standards-of-living. ESD used to correct these externalities to internalise social costs and improve long-term quality of life.

What stat shows the cost of environmental damage?

The 2022 NSW and Queensland floods caused ~$5.6bn of insured losses

List the types of environmental policy.

(1) International agreements (Targets)

(2) Market Based Policy (Taxes, Subsidies, Tradeable Permits)

(3) Regulations (Safeguard Mechanism, Water Cap)

Paris Agreement (2015): what is it and what are its limits?

Shared targets to limit warming well below 2°C, pursuing 1.5°C, but voluntary and unenforceable; the US has withdrawn twice (second exit effective Jan 2026)

What are Australia's emissions targets and projected outcome?

(1) 43% below 2005 by 2030

(2) Changed to 62–70% by 2035 (set Sept 2025) more ambitious Albo targets

(3) Projected Outcome: Climate Action Tracker project only 15–23% below 2005 by 2030

Progress against targets: what are the stats?

Emissions 455.6 Mt (yr to Mar 2026), 25% below 2005 vs the 43% target for 2030; most of the fall since 2005 is land-use change, not energy (Climate Action Tracker)

How does the Carbon Pricing Tax (2014) work?

(1) Draw Demand/Supply graph with social and private cost
(2) A $23/tonne Piguovian tax raises polluters costs of production, reducing supply and increasing price, internalising the externality.

Effectiveness of Carbon Pricing Tax Scheme (2012-2014)?

(1) Cut electricity sector emissions 11–17 MT over two years

(2) Added 0.7 points to CPI + electricity prices +9%;

(3) Tax-free threshold increased in 2012 to combat price increases, but nonetheless repealed in July 2014 after political backlash

How does the Emissions Reduction Fund (2014–) work?

Pays firms to cut emissions via “reverse auction”, where the most cost-effective abatement receives payment first.

What are the strengths and weakness of the Emissions Reduction Fund (2014—)?

(1) Voluntary

(2) Largest emitters not targeted as funds do not greatly benefit them

(3) Pays for cuts that would have happened anyway (like more energy efficient lighting)

(4) Bcs subsidy, taxpayers, not polluters, bear the cost (initial $2.55bn fund)

How does the Safeguard Mechanism (reformed 2023) work?

(1) Baselines for facilities emitting over 100,000 tonne/yr are set. If these are crossed, firms must buy ACCU’s. Thus, large emitters are forced to internalise the cost of negative externalities. This baseline declines 4.9% annually until 2030, constricting emissions progressively.

(2) The policy also gives credit to emitters who go below the baseline. These ACCU’s are traded in the market for profit to support further ESD.

What are strengths and weaknesses of the Safeguard Mechanism (reformed 2023)?

(1) Strength: Net emissions at covered facilities are falling. Renewables and green energy industries are growing.

(2) Weakness: ACCUs traded at a low $30–40. Low price lets firms buy offsets instead of changing production. Estimated that 58%→68% of the net reduction target is met with offsets - not real ESD.

How does the Murray–Darling Basin cap-and-trade scheme (2012) work?

(1) Fixed cap on water extraction (draw inelastic supply curve)

(2) Tradeable permits within this range are given to farmers. Market forces then reallocate resources to higher value producers - ensuring limited resource of water is used only where it is most productive.

(3) Using taxpayers money, govt’s do buybacks of water to legally reallocate it to ESD

Evaluation of Murray Darling cap-and-trade-scheme (stats)?

(1) Weakness: The 450 GL/year target for retrieving ESD-use water through buybacks has slipped (extended further to Dec 2027) because irrigated water needs to be used for food production as the Murray Darling produces 1/3 of Aus’ food.

What policies and changes have occurred during the Energy Transition?

(1) 1.2bn Solar Sunshot Iniatitive —> Renewables now 40% of electricity,

(2) Future Made in Australia: 22.7bn over 10 years, has involved the $2/kg Hydrogen incentive has targeted transport and heavy industry

How does Australia compare to the rest of the world in ESD?

(1) Fell four places to 56th in the Climate Change Performance Index (2026), rated "very low"

(2) Emissions fell only 1.6%/yr (Mar 2026) vs 6-7% needed to reach 43% target