Report: Can do better, must do better

BY ROD ORAM

OPINION: Of all developed countries, we are the most dependent on our natural environment for earning our living.

Our use of it goes far beyond the primary and tourism sectors. Many other businesses trade in some way on our natural resources or the image they conjure up in consumers' minds.

So we should care a lot about the environment and we should pursue strategies, corporate and national, that improve our income and environment.

But we aren't. Our track record on the environment is poor, as the recently released sustainability report from Statistics New Zealand shows.

And our debate about our economic future is desultory, focused largely on tax, regulation and other cost-saving measures, as shown by Don Brash's first speech as head of the government's 2025 Taskforce or by Business New Zealand's latest economic manifesto.

The Statistics NZ report deserves to be read widely and used as a tool to plot our progress on 85 measures. It offers abundant insights and builds on the agency's first effort in 2002 to quantify our economic, environmental and social sustainability and on a 2006 OECD working party on the subject.

We have made a lot of social gains. For example, labour productivity has risen since 1985 at an average rate of 2.2% a year; inflation-adjusted average disposable income has increased steadily since 1992; early childhood education, skills levels and education qualifications have also risen; life expectancy has improved, too, and the rate of deaths by assault fell from 1987 but has showed little change since 2000.

However, there are still significant gender and ethnic disparities on many of those economic and social measures and increased inequalities in, for example, income.

Our poorest performance, though, is in environmental measures. We've gone backwards on biodiversity with more species becoming threatened, next to no increase in native land cover and an increase in the proportion of fish stocks assessed as below target levels.

On water measures, the proportion of people drinking water that meets standards rose from 2001, but the water quality of rivers and streams has declined since 1989. Of the major lakes, 10 have deteriorated in quality and six have improved. Of groundwater sites monitored between 1995 and 2006, 39% had excessive nitrate levels.

On land measures, there was one positive the area of steep hill country pasture prone to erosion fell by 3.1% from 1997 to 2002. But excess nitrogen and phosphate levels in soil have increased and the area of land farmed has decreased with the biggest loss proportionately coming from our most versatile soils, which typically have been swallowed up by urbanisation. Only 80% of soils are within target ranges for health. The number of reported contaminated sites rose from 1238 in 2007 to 1895 in 2009.

We've gone backwards on energy: primary energy supply per person increased 5.9% from 1987 to 2001 though it has been decreasing since its peak in 2001; electricity from renewable sources fell from 80.5% in 1987 to 66.6% in 2007; our reliance on imported energy has risen since 1990 and our energy-related emissions of greenhouse gases have increased by 39% since 1990.

One measure, energy intensity, looks positive: since 1995 the amount of energy we've used to generate each unit of GDP has fallen. Likewise, our greenhouse gas intensity, the amount of gasses emitted for each unit of GDP, has fallen. But the report suggests this might have more to do with the fact that three-quarters of economic growth in 1990-2007 came from the service sector, which is low emission. Overall, our emissions still rose 22% in that period.

Business New Zealand said these declines in energy and carbon intensity showed businesses here were using resources efficiently. But unfortunately that's not true in an international context. Data from the International Energy Agency, an arm of the OECD, shows other countries have made better progress. So we are still a poor performer versus our competitors

Virtually all our businesses struggle to get their heads around these issues. Their low rating of sustainability as a business priority ranked them 15th in the 2008 World Competitiveness ranking by IMD, the Swiss business school.

Similarly, their answer to the question of whether "environmental laws do not hinder business" ranked them 44th. In other words, they see such laws as an impediment to business whereas top-ranking countries such as Denmark, Sweden, Norway and Switzerland saw such laws as a benefit to business.

The responses from businesses here come from a comprehensive survey administered by the NZ Institute of Management on behalf of IMD.

Thankfully, though, a few businesses and organisations are deeply engaged on the issues, seeking to lead by example toward the co-dependent goals of prosperity and sustainability.

The pipfruit industry and Zespri are two corporate examples. Both have recently published the carbon life-cycle analysis of their operations from orchards to consumers. This information gives them new insights into where they can achieve greater efficiency in energy and resources.

For example, changes in agrichemical spraying practices and orchard management would reduce greenhouse gases and save on average some $220/ha in operating costs. Prompted by its own life-cycle analysis, Zespri is working on a wide range of initiatives from orchards to consumers. Since shipping accounts for 41% of its total emissions, it is working with a German company on sea trials of kites to help power the ships. They take only 10-20 minutes to launch and recover, yet in optimum wind conditions they can cut fuel use by 50% or by 10-35% over a voyage.

The most comprehensive analysis so far of New Zealand's opportunities for achieving greater efficiency in energy, resource and emissions was published by the Greens last week. The paper builds up a picture, sector by sector, of measures the Greens reckon are affordable and achievable. They add up to a 40% reduction in greenhouse gas emissions by 2020.

Many of the measures deliver rapid savings that quickly repay the investment. Others would cost more but still less than buying carbon credits on the international market to meet our Kyoto obligations.

Other proposed actions are more controversial, such as reducing the intensity of dairy farming. The Greens argument is economic and environmental. At current low dairy prices farmers struggle to make a profit if they use large volumes of fertilisers, supplemental feed and other inputs to increase production.

If they farm less intensively they could reduce costs, output and emissions but increase profits. That's probably true but only if land prices fall. Any farmer trying to earn a return on high value land will probably have to keep farming intensively but seek efficiencies in other ways.

But rather than dismiss such ideas out of hand, as some farm and business leaders did, they should be contributing their own thinking to innovative responses to a better economic and environmental performance.

The government has yet to do so. Only recently has the cabinet finally got a paper that seeks, like the Greens, to identify, from the bottom up, actions that can improve the economy and the environment. Hopefully it will give the cabinet confidence to commit to a 2020 target for emission reductions that will stimulate economic growth.

If it does, it would be a sea-change in government thinking, one that hopefully might begin to focus business on its abundant environmental opportunities.

- © Fairfax NZ News