By Lindsay Bevege

26 July 2011 –It’s easy for economists to  love carbon pricing because they can “wave Adam Smith’s magical, invisible hand, and then leave implementation to the market”. The problem is this leaves the real work to agencies of government, along with the confused buyers who must sort out the messy details. In October, ICLEI, or the International Council for Local Environmental Initiatives, will hold a conference at Melbourne’s St Kilda Town Hall to work on the challenges. Lindsay Bevege, a former diplomat and a member of the  organising committee for the conference, explains some of the challenges.

The arrival of a carbon price adds to the already strong business case for sustainable urban design and planning,

But as with all business propositions, there are real costs and risks to be managed before long term economic, environmental and social gains can be realized.

Economists love carbon pricing because they can wave Adam Smith’s magical, invisible hand, and then leave implementation to the market – which in reality means the hapless souls in industry and operational agencies of government, along with the confused buyers, to sort out the messy details of finding a way forward.

For big-picture people, the end-point of a low-carbon economy is relatively easy to imagine:  we have economically viable technologies and demonstrated community models that offer consumers a diversity of lifestyle choice that improve their economic, health and social values with much lower environmental footprints.

The real challenge is getting there: this is where local and state government leadership is needed to put in the hard yards to help drive market transformation through better informed consumer choices and improved industry skills and capabilities to deliver on those choices.

And make no mistake: a carbon price will bring changes that will mean real pain for many local communities, however much better off the national community might be at the end of the process.

At the end of the last century, industry restructuring was the polite way of referring to the policy change of removing protection from Australian manufacturing.

Now, no-one seriously now advocates a return to the old protectionist regime, as Australians have clearly enjoyed significant long term economic benefits from the changes.

But the costs of change were borne by the weakest in society:  low-skilled workers and some regional communities that have suffered severe economic losses through unemployment, with accompanying social dislocation and impacts on physical and mental health.

The carbon price, if it is to do its job, will also mean that we stop doing some of the things we currently do and shift to less energy intensive designs, processes, industries and products.

The devil is not so much in the detail as in the transition: we need to find a better path through this industry restructuring than happened last time.

A first step to cushioning the pain for communities is to recognise honestly, the initial costs and problems involved, without seeing this as a betrayal of a “positive green vision”.

Unfortunately, just as some in industry speak only of doom and gloom, some in the environmental movement won’t hear of anything other than a bold green future.

But market research shows people prefer a clear challenge, which they embrace voluntarily, rather than being forced to accept sugar-coated forced medicine – witness the successes of the water conservation campaigns during the drought compared to the current opinion polls on the carbon tax.

There are some positive models for introducing change.  Many sectors, such as chemicals, agriculture, IT and commercial building have shown how economic, environmental and social changes can be mutually supportive.  The key is better understanding of technology and, even more importantly, of consumer needs.

The chemicals sector, for example, was once the environmental pariah of Rachel Carson’s Silent Spring.  Environmental regulations of the sector were initially fiercely resisted by the industry as too costly or technically impossible. They were derided as a shut-down notice for the industry and its workers.

Yet, a progression of technical innovations, based on research into the fundamental processes of chemical engineering, has dramatically reduced environmental impacts and improved productivity.

The industry is no longer a pariah.  It now leads on such ideas as life cycle analysis, and advanced materials provide not only much higher performance for users but also some of the best hope for reducing emissions in the buildings and manufacturing sector.  (This is not to ignore the dubious practices of a limited number of chemical companies that exploit lax environmental standards in developing countries).

Likewise, in the early days of the sustainable building movement, the issue of costs was taken head-on.  The industry recognised that green buildings did cost more than conventional buildings and that many consumers were unwilling to pay this.

But the industry was able to initiate change by working with the segments of the market committed to improved performance.

As the property industry became more familiar with sustainable designs, technologies and practices, costs fell and a broader transformation of the market kicked in.

That transformation still has a long way to go, with a huge legacy of energy inefficient stock in need of refurbishment.  But it now has a momentum of its own as its benefits become clear.

Sustainable buildings are delivering not only savings in energy and resource costs but also delivering even greater economic gains through documented improvements in worker health and productivity from improved indoor environments.

An even more impressive business case is emerging for action at precinct and community level to improve economic, environmental and social outcomes.

The economic returns include lower costs for housing, transport, energy, general infrastructure and community service delivery from better urban design.

There are also demonstrated savings in mental and physical health costs derived from accessibility to open spaces that provide recreational activities and contact with nature.

Finally, the long-term profitability of the property industry gets a boost when it provides greater value to its customers.

The social dividend includes improved quality of life, better access to education, transport, health and recreation services.

Neighbourhood security also improves as social isolation alienation is reduced by prosperity and interaction.

The environmental dividend includes lower greenhouse emissions, resource conservation and the use of urban neighbourhoods for conservation of biodiversity.

Neighbourhoods can even be environmentally restorative, with a negative environmental footprint – consuming the waste streams of others, generating more energy than they consume and helping ecosystems to recover and threatened species to survive.

Many of these ideas have already been demonstrated in projects around the world.

But bringing them into the mainstream will not be easy.  And like any new approach, the first efforts will cost more until new systems are established.

The people issues are also difficult.  The temptation to prescribe “better”’ lifestyles can easily slip into centrally planned social engineering, at the expense of individual expression and scepticism that are essential to creativity, innovation and accountability.

But the upsides of success make the effort more than worthwhile.  Strategies and tools for dealing with the complex social, economic and environmental systems that underpin neighbourhoods are still evolving.

The ICLEI conference will bring together the people who need to work together on the practical issues of creating and refurbishing neighbourhoods that can thrive on a sustainable basis.

It will provide a unique snapshot of current best practice and tools for the planning, management and reporting on neighbourhood developments.

Lindsay Bevege is a member of the organising committee for a conference to be held by the International Council for Local Environmental Initiatives, or ICLEI, to discuss these issues  on October 25 and 26 at the St Kilda town hall in Melbourne See details He is also managing director of Business Outlook and Evaluation which focuses on sustainable business strategies and public policy. He is a former head of public affairs with CSIRO and a diplomat.

by Lindsay Bevege –