An Economic Analysis of FRDC Investment in Ecological Sustainable Development and Management (Cluster 11)

Background

Since the early 1990s, Ecologically Sustainable Development was accepted as the foundation for natural resource management Australia, and became a major component of fisheries legislation at both Commonwealth and State levels. The Environmental Protection and Biodiversity Conservation Act 1999 (Commonwealth legislation) also established a variety of government requirements that would be helped by the development of a comprehensive reporting system for ESD by the fisheries industry.

FRDC funded a series of ESD projects, following strong support from stakeholder groups at an industry workshop to develop such a system. A number of these projects are included in this cluster.

Also included in this cluster, are projects FRDC has funded relating to Environmental Management Systems (EMS). EMSs are “frameworks designed to assist individuals or organisations manage the way they conduct their operations, generally to reduce their impact on the environment” (National Fisheries ESD Website).

Developing an EMS involves preparing a plan that includes the issues covered, the targets set, details of the management actions to be taken to achieve the targets, and details of how the performance will be monitored and evaluated.

The National Fisheries ESD website highlights the major difference between ESD and an EMS. An ESD framework is designed to encompass all aspects and issues of the management of activities that may affect natural resources, whereas an EMS may be developed to address a single issue for one aspect of the business or industry operation. It was therefore concluded that the use of an EMS is mostly appropriate only for individuals or organisations, particularly for those aspects not covered by fisheries legislation.

 

Lessons Learnt for Future Investment

There are significant gains that can be made in addressing environmental and social issues in primary industries, when the achievement of those benefits can also contribute to private economic benefits to industry.

Conclusions

Investment was made in a total of seventeen projects within the cluster with the FRDC contribution approximating 46% of the total costs involved.

A number of potential benefits associated with this investment were identified, with both public and private benefits identified. The principal private benefit from the investment was its influence on maintaining access to fishing resources, and it was this benefit that was valued in the analysis.

Overall, the investment criteria estimated for the investment of $8.5 million (present value of costs) in the seventeen projects in the cluster were positive with a net present value estimated at $45 million and a benefit-cost ratio of over 6 to 1, (all expressed in 2008/09 $ terms and estimated using a discount rate of 5%; benefits estimated over 30 years from the final year of investment).

 

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