Why should sustainable finance be given priority? Lessons from pollution and biodiversity degradation

The concept of sustainable finance is a relatively new concept that is increasingly accepted by the financial industry since the Berne Declaration came together to promote sustainable finance in the commercial sector. Although sustainable finance is very apt and timely, many issues need to be addressed if this concept is to be meaningful and it is to achieve its desired objectives. Some of the issues that need to be clarified and addressed include (1) defining the kind of sustainability that is envisaged (2) examining issues relating to the use of high discount rates and its compatibility with the goals of sustainability (3) the case of excessive pollution due to adverse selection, moral hazard and lobbying and (4) specialisation and path dependent systems that are detrimental to future production. This paper discusses these issues, providing examples from pollution and biodiversity degradation. The paper also shows why economic growth without considering pollution impacts and path dependent systems is detrimental to future production which violates the concept of sustainable finance. This discussion demonstrates why the concept of sustainable finance is timely and why it is necessary to take into account the potential issues that need to be addressed. The challenges that lie ahead are many, and the sooner they are addressed, the more credible and potent sustainable finance will be.Sustainable finance, economic growth, pollution, biodiversity degradation, path dependent systems

Exposure to pesticides, ill-health and averting behaviour: Costs and determining the relationships

Farmers\' exposure to pesticides is high in developing countries. As a result they suffer from ill-health, both short and long term. Deaths are not uncommon. The paper examines the cause of this high exposure by estimating farmers’ expenditure on precautions taken using the avertive behaviour approach. The data show that the expenditures on defensive behaviour are low. The paper then uses tobit regression analysis to determine factors that influence defensive behaviour. The results are useful, not only for Sri Lanka, but for many countries in South Asia, Africa and Latin America in reducing the current high levels of direct exposure to pesticides among farmers and farm workers using hand sprayers. Farmers\' exposure to pesticides is a major occupational health hazard in these countries.Exposure to pesticides, ill-health, defensive behaviour, influencing factors, developing countries

Pesticide Avoidance: Results From a Sri Lankan Study with Health and Environmental Policy Implications

In this paper the contingent valuation method (CVM) is used to elicit bids/values to avoid direct exposure to pesticides and the resulting illnesses among subsistence farmers in a developing country, namely Sri Lanka. Farmers using pesticides on their farms suffer from short-term as well as long-term illnesses. Deaths from direct exposure to pesticides are not uncommon. The CVM is used to determine the yearly value to an average farmer of avoiding the costs of direct exposure to pesticides and to calculate the pesticide cost scenarios for the entire country. The last section of the paper examines the factors that influence the willingness to pay (WTP) to avoid direct exposure to pesticides and the resulting illnesses and discuss the health and environmental policy implications stemming from the regression analysis.

Demand for electricity: evidence of cointegration and causality from Sri Lanka

This study examines the cointegration and causality relationship between the demand for residential electricity and real income, average real electricity prices, real kerosene prices and real gas prices using annual data for the period, 1960-2007 in Sri Lanka. Error correction (EC) techniques and the Granger-causality (GC) approaches are employed. The long run income elasticity of demand, price elasticity of demand and kerosene price were estimated to be 0.78, -0.62, and 0.14 respectively. The short run elasticities for the same variables were 0.32, -0.16 and 0.10 respectively. The GC results detect bi-directional causality between electricity consumption and real income as well as electricity prices and its consumption. This suggests that these variables are determined jointly. Furthermore, one-way causality running from kerosene price to electricity demand was also found.Electricity demand, causality, cointegration analysis

What Role Does Knowledge of Wildlife Play in Providing Support for Species\' Conservation?

Conservation of biodiversity is a complex issue. Apart from the creation of nature reserves, there is a plethora of other factors that are part of this complex web. One such factor is the public knowledge of species. Since public funding is imperative for the conservation of species and creation of reserves for them, it is important to determine the public’s awareness of species and their knowledge about them. In the absence of such awareness and knowledge, it is possible that the public will misallocate their support. In other words, resources may be provided for species that do not need support urgently. We show how availability of balanced information about species helps the public to make rational decisions and to allocate support (e.g. monetary) to species that need it most. Other implications of a ‘wildlife knowledgeable’ public are also discussed.Biodiversity, conservation, Australia’s tropical wildlife, public knowledge, balanced information.

A WTP Model Showing the Relationships Between Three Approaches For Pollution

In this paper, a simple willingness to pay (WTP) model that shows the theoretical relationships among three valuation approaches that can be used to measure changes in health resulting from pollution is developed. The three valuation approaches considered are the contingent valuation (CV), cost of illness (COI) and the defensive behaviour approaches. After showing the relationships between the three valuation approaches, the model demonstrates that the CV approach exceeds the COI and the defensive behaviour approaches. The theoretical results are supported by field survey data. The pollution referred to in this paper is direct exposure to pesticides by farmers during handling and spraying on their farms.

GLOBALISATION, CONCENTRATION OF GENETIC MATERIAL AND THEIR IMPLICATIONS FOR SUSTAINABLE DEVELOPMENT

This paper examines impacts, both positive and negative, of globalisation on the selection of a limited gene pool in livestock and agricultural production. This concentration has increased yields at high rates. It is associated with modern forms of production that are an integral part of a globalised economic system. Such strategies, at least in the short run, reduce production costs and cater for the demands of an increasing population and the needs of modern societies. As will be demonstrated, the ascribed economic benefits of such forms of production also lead to the promotion of such production by donor agencies and are linked to overseas aid, in some instances. On the other hand, specialised systems of production are not without their drawbacks. Such systems of production make many breeds (eg. ‘all-round’ breeds) obsolete for commercial use. This often leads to their gradual extinction because of the low economic values placed on them. When concentration of production relies on a few breeds it inevitably leads to several lock-in dimensions in the use of some production inputs. The lock-in aspects of this form of production, processes involved in the disappearance of breeds and their implications for sustainable development are amongst the issues discussed in this paper.

Estimating short and long-term residential demand for electricity: New evidence from Sri Lanka

This study investigates the short-run dynamics and long-run equilibrium relationship between residential electricity demand and factors influencing demand - per capita income, price of electricity, price of kerosene oil and price of liquefied petroleum gas - using annual data for Sri Lanka for the period, 1960-2007. The study uses unit root, cointegration and error correction models. The long-run demand elasticities of income, own price and price of kerosene oil (substitute) were estimated to be 0.78, - 0.62, and 0.14 respectively. The short-run elasticities for the same variables were estimated to be 0.32, -0.16 and 0.10 respectively. Liquefied petroleum (LP) gas is a substitute for electricity only in the short-run with an elasticity of 0.09. The main findings of the paper support the following (1) increasing the price of electricity is not the most effective tool to reduce electricity consumption (2) existing subsidies on electricity consumption can be removed without reducing government revenue (3) the long-run income elasticity of demand shows that any future increase in household incomes is likely to significantly increase the demand for electricity (4) any power generation plans which consider only current per capita consumption and population growth should be revised taking into account the potential future income increases in order to avoid power shortages in the country.

Environmental and Human Costs of Commercial Agricultural Production in South Asia

Modern commercial agricultural practices involving chemical inputs such as fertilizers and pesticides have been associated with huge increases in food production never witnessed before, and in the case of cereal production (especially wheat) under Green Revolution technology, recorded spectacular growth. As statistics show, production and productivity have increased. However, the high chemical usage of fertilizers and pesticides used to bring about these spectacular increases in food production are not without problems. A visible parallel correlation between higher productivity, high chemical input use and environmental degradation and human health effects is evident in many countries where commercial agriculture is widespread. In this paper, I discuss the environmental and health effects/costs arising from the high use of chemical inputs to increase production and productivity in South Asia with a field study carried out in Sri Lanka to show the health costs arising from direct exposure to pesticides during pesticide handling and spraying on farms by small-scale farmers

Breeding and feeding pigs in Australia and Vietnam

This report establishes that ACIAR Research Project AS2/1994/023, ‘Breeding and feeding pigs in Australia and Vietnam’ (supported by ACIAR from July 1995 to the end of 2000) has yielded an extraordinarily high rate of economic return on the funds invested. The collaborating agencies were the Department of Primary Industries, Queensland, James Cook University and The University of Queensland in Australia, and the Institute of Agricultural Sciences of South Vietnam in Vietnam. The best estimate benefit–cost ratio for investment in this project is at least 159:1 with a corresponding internal rate of return of 900% and a net present value of A$496 million. This is a total value, not an annual value. To give context to the number A$496 m, in 2000, 1.3 million tonnes of pig meat, worth A$2,323 million, was consumed in Vietnam in that year alone. The returns to the project are still significant even when the net present value up to, and including, 2001 is considered. While the breeding and the feeding components of the project had highly favourable levels of economic return, the relative economic returns for the genetic component are considerably higher than the nutrition component. In Vietnam, the project has enabled better quality (less fatty) pork to be produced, has resulted in more favourable feed-conversion ratios in pig husbandry and has reduced the number of sows needed to produce a given annual stock of pigs for slaughter. This is mostly a result of genetic improvements in the Vietnamese pig herd made possible by the import of Australian Yorkshire pigs (also known as Australian Large Whites) from Queensland. These pigs have several genetic advantages in the tropical climate of Vietnam. However, nutrition research has also added to these benefits. As a result of changes in the lysine/energy content of concentrated pig meal for fattening and finishing pigs, it has become possible to produce leaner pork more cost effectively in Vietnam. The new feed formula is being adopted by Vietnamese-owned millers of concentrated pig feed, and benefits should flow to Vietnamese pig farmers. In addition, in the near future, results from the nutrition research component of this project should enable Vietnamese-owned mills to produce concentrated feed for weaner pigs for the first time. To date, this production has been exclusive to foreign-owned mills. Because of the inadequacy of the data available, it was not possible to quantify the benefits to Australia from this project. They are, however, believed to be significant and are listed and discussed. It is pertinent to observe that this project has been very effective as an Australian foreign aid project. It has made possible substantial advances in pig husbandry in Vietnam, and Vietnam has obtained a high level of economic benefits from the project. The project has been well managed with an appropriate level of attention given to diffusion of economic results. With the nutrition component of the research, there has been effective follow-up and liaison with state farms and Vietnamese-owned produce mills to ensure adoption of the more cost-effective pig feed mixtures developed as a result of this research. The extremely high net benefits from the project result from the following factors. First, the genetic material transferred as a part of the research package, namely from Australian Yorkshire pigs of the herd of the Queensland Department of Primary Industries (QDPI), was most appropriate to Vietnamese tropical conditions and was capable of adding both to the quantity and quality of pig production in Vietnam. Second, the transfer of this genetic material was not on a commercial basis but essentially was an aid item. Third, the considerable costs involved in developing the pig herd of QDPI (now sold to private interests in Australia) was not assigned as a cost of this project. They were treated as a sunk cost because they had been incurred before the ACIAR project. Fourth, there was an extremely short lag or gestation period before the flow of benefits or results from this subcomponent in Vietnam. Benefits could be obtained almost immediately. Fifth, effective mechanisms were quickly put into place to help diffuse the superior genes. These included their adoption on state farms, and the construction or reconstruction of five regional artificial insemination (AI) centres and associated improvement in their facilities and the skills of their staff. The latter initiatives were supported by the Australian International Development Assistance Bureau (AusAID), but are not costed against ,the project since the AI centres have multiple uses and they remain as long-term assets for Vietnam.pig, Vietnam, Australia, breeding, feeding, high rate of return, high impact, high economic return, DPI QLD, James Cook University, University of QLD, Institute of Agricultural Sciences of South Vietnam, benefit-cost ratio, net present value, internal rate of return, significant returns, genetic, nutrition, pork, Agribusiness, Farm Management, Food Consumption/Nutrition/Food Safety, International Development, Livestock Production/Industries, Production Economics,