Designing natural resource and environmental policy instruments, including market based instruments

Evaluation of natural resource and environmental regulations and policies

Evaluation of research and investment projects and financial instruments

Valuation of environmental and other non-market policy impacts

Conducting independent research and investigations

Providing independent advice on committees / panels in relation to environmental matters with significant economic dimensions

Developing and presenting training courses and workshops

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Designing natural resource and environmental policy instruments, including market based instruments

BDA Group has extensive knowledge and experience with environmental issues including water and air quality, native vegetation and biodiversity, environmental flows, waste management, energy and climate change. We have assessed alternative policy approaches to improve water quality and developed water quality trading and offset schemes around Australia. We have evaluated air quality strategies and individual policies and developed pollution tax regimes for major sources of air pollution. We have assessed options for securing environmental flows including market based instruments. We have also undertaken economic analyses of waste strategies and alternative waste policies including market based instruments. We have advised catchment management authorities and state governments on market approaches to regional vegetation and natural resource management. We have developed and evaluated market based instruments for promoting biofuels, used oil recovery, recycling, stormwater management, and so on. We have evaluated large scale infrastructure programs including in relation to desalination, renewable energy projects, wastewater management, solid waste recycling, etc.

We have conducted a number of major investigations into market based instruments for environmental regulation, both for industry and government. There are a range of different types of market based instruments and the choice of scheme is influenced by the aims of the scheme, the extent and significance of contributing sources of pollution, the differences in abatement costs between sources of pollution, the environmental context, level of uncertainty relating to environmental impacts, legislative and policy context, and level of stakeholder acceptance of market based approaches.

Our people have developed, implemented and refined internationally recognised pollution pricing and trading instruments, such as the Hunter River Salinity Scheme and a trading scheme involving diffuse nutrient sources under the NSW Government’s Green Offsets Program. We have developed a solid understanding of the regulatory framework, policy goals, potential concerns and barriers affecting the policy shift to market instruments.

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Evaluation of natural resource and environmental regulations and policies

A primary principle of good policy development is the consideration of the full range of impacts of a proposed policy, both intended and unintended. The cost of policy interventions should be fully considered, including administrative and enforcement costs to government and business, as well as environmental costs associated with proposed policy instruments. Economic analysis is primarily concerned with economic efficiency, and seeks to capture all impacts, whether or not of a market, environmental or social nature, that impact the overall welfare of society. The purpose of the analysis is to determine whether a proposed policy will deliver benefits to society that exceeds any costs introduced.

Other important considerations in environmental policy analysis beyond net economic benefits, are equity implications, both among the current generation (which will be concerned with the process of change and distribution of impacts) and between the current and future generation (the issue of inter-generational equity and resource sustainability).

Our people have extensive experience in economic and financial analysis of environmental and natural resource legislation, regulations and policies, including in the areas of regulatory compliance costs and non-market valuation.

We have evaluated policies and strategies to improve management of natural resources including water and land. We have investigated the potential for market based instruments to contribute to natural resource management including offset programs to protect native vegetation and biodiversity.

We have been directly responsible for economic assessments and regulatory impact statements of natural resource and environmental policies and regulations while working for the NSW and Australian governments. As consultants we have conducted a number of assessments of natural resource and environmental strategies, policies, and regulations for both Commonwealth and State governments. We have developed a solid understanding of contemporary approaches to economic impact analysis, including the application of benefit-cost analysis, multi-criteria analysis, regional impact assessment, input/output analysis, life cycle analysis, triple-bottom line reporting, and social impact assessment.

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Evaluation of research and investment projects and financial instruments

Benefit cost analysis (BCA) is the main method used for the evaluation of research, development and marketing investments. The method provides a systematic approach to evaluate alternative policy options from both a private and social perspective. The method also gained recognition in the 1960’s as a useful tool for environmental evaluation of large scale government funded infrastructure projects such as dams and power generation facilities.

In BCA all costs and benefits, both private and public, are considered with any incremental impacts associated with the investment quantified in monetary terms. This enables the economic profit associated with an investment to be calculated and ranked against alternatives. BCA typically involves a partial equilibrium analysis where the impacts of new technologies across different groups (such as farmers and the broader community) can be assessed.

We have used BCA to evaluate proposed investment options and the distribution of benefits and costs for many clients. Most assignments involve working with agency staff as well as scientific personnel to assess technology impacts.

We have evaluated the pay off to dairy farmers and the Australian community from investments by Dairy Australia as part of the evaluation requirements of the Council of Rural Research and Development Chairs. Dairy Australia also engaged us to conduct annual reviews of BCA’s for all investment programs and make recommendations to improve in-house evaluation capability. We have evaluated the payoff to cotton growers and the Australian community from the Cotton Research and Development Corporation investment portfolio as well as a number of technology specific investments. Australian Pork limited has engaged us to undertake cost benefit analyses for completed investment projects, their proposed strategic investment portfolio, individual program areas and to carry out analysis to support funding applications for development of new technologies.

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Valuation of environmental and other non-market policy impacts

Various environmental valuation techniques are available for valuing the environmental benefits of programs. The techniques seek to directly measure damage costs (or the community willingness to pay to avoid impacts) or other surrogate measures such as preventative expenditures. Each approach has different levels of theoretical sophistication, data requirements, ease of application, reliability, and so on. To value the environmental impacts of a program there are essentially two possible approaches: primary valuation research; or benefit transfer which uses values from other published studies. The robustness of benefit transfer depends largely on the quality of results for the study sites and the presence of similar conditions at both the study site and original policy site.

BDA Group can undertake primary valuation research or develop environmental values using benefit transfer depending on the needs of the project. We are adept at undertaking valuation exercises in limited timeframes drawing on available information and utilising benefit transfer to provide a meaningful assessment of environmental values.

We carried out a study for the Department of the Environment, Water, Heritage and the Arts into assessment and valuation methodologies for waste management that are consistent with the assessment requirements of the Commonwealth Office of Best Practice Regulation. While working for the NSW Government, our people developed the Environment Protection Authority’s environmental non-market valuation (ENVALUE) database and its development as a web-based tool.

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Conducting independent research and investigations

We have conducted many independent investigations for governments in the areas of environmental and natural resource policies and programs. Our people have overseen major independent economic and environmental assessments, including NSW State of the Environment reporting.

BDA has worked closely with primary producers, researchers, industry leaders, community representatives and government. We have experience convening a wide range of consultative forums, ranging from field interviews, focus groups and public meetings. We have dealt with government at all levels and are skilled at interrogating public databases or negotiating access to information otherwise held by government, research organisations or community groups. We have also developed and undertaken a number of surveys and focus-group based information collections.

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Providing independent advice on committees / panels in relation to environmental matters with significant economic dimensions

Our people are regularly appointed by governments as members of independent expert panels in the fields of natural resource and environmental management. Recent appointments are listed under our projects – advisory roles.

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Developing and presenting training courses and workshops

We have developed and presented applied courses in environmental economics, policy assessment and market based policy instruments to a range of public sector clients. Our basic course provides generalists working in policy areas with a better understanding of economic concepts and market based policy instruments. A key component of these courses has been experiences with MBIs and issues involved in the selection and design of MBIs for environmental management. A number of case studies and interactive exercises are used drawing on contemporary environmental and resource policy issues. The courses have facilitated individual skills development, as well as providing a valuable opportunity for officers across agencies to share experiences, openly discuss practical case studies and to network. We have also delivered more advanced courses aimed at economists working in environmental policy. We develop course format to suit the needs of the client – including one, two or three consecutive days, or a series of sessions spread out over a number of weeks.

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