Tip:
Highlight text to annotate it
X
There are lots of things we can do to think about avoiding
that sort of crowding out - lots of ways in which you can
have a mixture of internal and external collective
actions that makes the best of the both worlds.
From tax advantages for environmental protection work
- providing conditional grants to volunteer organisations are just
a few examples. But I
want to move onto agricultural chemical waste becasue I think I've spent a lot of time talking about generalities
- i want to get some specifics. So, think about what we
have with the agricultural chemical waste sector. You do have
a top down regulatory base in this
area. You have supply restrictions - a sort of
chemicals are licenced and available. You have use restrictions
... set up under regulations
You have all sorts of approval processes; you've got to have your Chemcert to
be able to purchase and use chemicals. OH&S rules
in operation. They're all examples of top down regulatory
approaches. They tend to be really high cost
options right - but that external collective action
is justified because of the very high potential
costs of something going seriously wrong with
the use of the chemicals. But there are also
some wonderful examples in this field
of internal collective action; and the one that I'm going a few
minutes on now - and the one that Karen will speak of in much greater depth -
is the Drum Muster scheme. Now, I'm not going to talk in detail
of this because Karen will do a much better job than I will - but basically Drum Muster
is a scheme to avoid, er
lots and lots of old chemical drums lying around on farms
- it's a scheme which, er, involves
farms returning their spent drums to a central repository.
It's a voluntary scheme on the part of
the chemical suppliers, okay.
The suppliers engage in the scheme
by, um, paying a levy ...
or charging a levy, I should say, to the purchasers of
the chemical of 4c per litre or per kilogram.
So, as a chemical supplier
I might say, 'Well, I'm going to engage in the Drum Muster scheme
but it means I'm going to have to charge my purchasers
an extra 4c a litre.' So I'm going to impose a cost
on my consumers - on my buyers.
Now ... what that does - what that 4c per
litre does is to provide a kitty which then
... funds the collection of those
spent drums. So, um, you can go along to a
country town and go to the local tip and you'll find the Drum Muster collection
point. So that 4c a litre basically funds
the collection point. Now - remarkably
successful scheme. Karen will go into much more detail about that, I'm sure -
but it has worked very well. But think about it in terms
of decision making and incentives.
... First of all, the payment of the levy
by the user of the chemical fundamentally
results in a lowering of the cost
of disposal of the drums for the
farmer. Okay, there's a local drop off point, there's a centralised
drop off point. You don't have to go much further to
dispose of the drum - so that
provision of the service increases the probability that farmers will
bring the drums back for collection and recycling.
So what it does by increasing the probability
of returning the drum is to provide
a public good and private good. The private
good is basically enjoyed by the farmer, who gets rid of all the
old drums around the farm - so that's something that they enjoy
themselves. But it also provides a broader environmental
good in terms of aesthetics, in terms of contamination and
in terms of material recyling and re-use.
Now that's an interesting
phenomenon because what we're seeing is producers
volunteering to up the price of the
product they're supplying to the market. You don't have to be in this scheme
- so you could see this as an opportunity
to lower your price and not be part of the scheme.
Yet the chemical producers want to be involved.
And the farmers - the buyers of the chemicals - can
opt for a different chemical, a different supplier, and not be part of the Drum
Muster programme - but they opt to buy the Drum Muster
chemicals. So there's a voluntary acceptance
of these additional costs. Why do people do that?
... Well, we've done some studies
um, in an urban context which does shed some light on
this. Er, these are studies whereby we present
to people options for waste disposal
in an urban setting ... um, and this is basically, y'know, if you
live in Brisbane you can have a normal bin
or you can have a normal bin and a recycling bin. Of course the recycling bin means
you have to pay more rates. So we give people options to
get rid of the recycling bin and pay lower rates. Which
do they prefer? We give them options - choice options - and from
these choice options we can see just how much they are willing to pay
to be engaged in recycling. And what we find is
that the amount they're willing to pay is a significant, positive sum.
So people are stepping up and saying, 'Yeah
we want to be engaged in this recycling process.' And the
sums involved are not trivial. In fact, they're sufficiently un-trivial
to cover the costs of running those
recycling services. So what that illustrates
is, I guess, a willingness for the urban community
to be involved in a scheme which will see their waste
not only removed but, in that case, recycled.
I think the Drum Muster scheme demonstrates a similar
willingness on the part of farmers to
avoid the waste on their own farms but also to be engaged in a scheme
which will see a reduction in contamination
and ... a fuller use of the resources that are
available in the drums themselves. So, voluntarism on the part of
the farmer but voluntarism also on the part of the supplying company.
So, in conclusion, Mr Chairman ...
er, yes, agricultural chemical waste
is one of these things in economics which we say have
collective or public good elements that's going to requrie some form
of collective action. It's not going to happen just with a decentralised
market process. And what I
would stress for you afternoon I hope is that there is an opportunity
to use these decentralised, voluntary
internal collective action mechanisms, er
to deal with some of the agricultural chemical waste issues. Some of
them - not all of them. That
voluntarism - that internal collective action - has
significant advantages in terms of being able to lower the transaction costs of the
exchange process - and also, it enables
greater flexibility - it enables innovation in the way that
these schemes are operating way beyond those that can be offered
in any sort of regulatory top down approach ... Um,
and a word of warning here. A scheme which is
successful, er, is often seen
as something which should be encouraged by government
- and we've seen, at least in my experience,
some Landcare groups suffering this fate; where
successful groups have been, er ...
with obvious good intent, flooded with government money and government
help - and what that has done is crowded out
the effort that the volunteer individuals within those Landcare groups
have been willing to put in. They step aside and say, 'Oh, that's okay, we don't need to
do that anymore because the Department is doing that
role for us now.' So that crowding out effect is something that really has
to be watched. Drum Muster
in my opinion provides a very useful example
of that voluntary initiative - er, that is
cost effective and effective in achieving
the environmental goals for which it has been established. But what
I leave you with is a question - and that question is:
Is there anything else we can think of in the ag chemical waste
area which ... perhaps has some potential
to move into this internal collective
action sphere? Is there some
government policy which might be able to lever greater
voluntary input - perhaps to limit
more the free rider problem that we experience in these collective
action issues? So, a question for you. Is there any
way that we might be able to see the Drum Muster type model
being extended further in this realm? And I'll leave
you with that question ...