Using MBIs To Get From Where We Are To Where We Want To Be
Presented at Enviro 06 in Melbourne
11 May 2006
by Matthew Warnken

Despite an increase in the volumes of resources recovered from materials previously presenting as waste, millions of tonnes continue to be disposed of in 'mass-dump' landfills, accounting for the majority of waste generated in Australia. This linear pattern of resource flows, based on single use and then disposal, is unsustainable in the long term and generates immediate unwanted social, environmental and economic impacts.

The principal cause behind unsustainable waste disposal is the market failure that rewards (in the short term) externalising costs onto the environment. There is no price signal that internalises costs directly attributable to our current 'take-make-waste' economy. For example, costs of increased pollution, depletion of natural resource and disruption of ecosystem services, which can occur as direct downstream costs, or indirect upstream impacts.

Furthermore, this same market failure does not account for the positive externalities provided by resource conservation. For example the 'ecoservice' benefits associated with cyclical flows of materials and energy. Ecoservice benefits provided by resource recovery include energy savings, materials conservation, pollution prevention, carbon abatement and ecosystem restoration.

Rather than adopt a prescriptive approach that defines technology requirements for the change to sustainability, this paper argues for a systemic change in the operation of our markets to better reflect a 'nature as model' mindset. This change can be accelerated through the use of Market Based Instruments (MBIs).

The purpose of an MBI approach is twofold: firstly to internalise the costs associated with end-of-life management into the price of resources and products; and secondly, to drive the development of resource recovery infrastructure and markets so that ever increasing amounts of materials are recovered at continuously improving levels of resource value. Changing these market parameters will encourage the development of innovative technology, even to the stage where the levels of effort expended in the conversion of (wrong place/time) 'wastes' into (right place/time) resources are similar to those expended in the initial extraction, processing, design, manufacture and distribution of products.

MBIs will not be the only answer to the reform agenda, however, and an integrated implementation with other mechanisms is required. For instance, products need to be designed with the environment in mind. This means that a planned end-of-life recovery option must exist prior to product release, highlighting the need for extended producer responsibility. Also indiscriminate landfill can no longer be a mass-dump 'cure-all' to cover our wasteful patterns of production and consumption. Continuous pressure is required to remove this soft option.

Until the operation of our markets is changed to address the issue of externalities, our society will have no base from which to build a concerted effort toward addressing the sustainability challenges of the 21st century. MBIs are an integral component to making the revolutionary step-change from where are we are to where we want to be in a sustainable future.

>> Click here to download the conference paper