The Environmental Law Framework for Sustainable Development Principles of Sustainable Development in International, National and Local Laws

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1 The Environmental Law Framework for Sustainable Development Principles of Sustainable Development in International, National and Local Laws Ilona Millar, Senior Associate, Baker & McKenzie Overview The aim of this paper is to provide an overview of the key legal principles of sustainable development and to outline how these principles have been incorporated into environmental laws at the international, national and local level. Due to the broad scope of the topic, this paper is not intended to be a comprehensive review of every law that addresses sustainable development. Rather, it highlights that there is a growing recognition, at all levels of government, of the importance of the principles of sustainable development, but that governments continue to wrestle with how those principles are implemented. In recent years, a number of Australian Courts and Tribunals have been tasked with interpreting legislative provisions that require the principles of sustainable development to be taken into account. These decisions, which will be touched upon below, are providing some guidance for decision makers. However, it is the author's view that there is a need to go beyond including the principles of sustainable development as aims or objectives of legislation. In addition to objectives, it is important to identify how environmental law frameworks can give effect to these principles. The first part of this paper introduces the concept of sustainable development and its key principles. The second part of the paper identifies the expression of some of the key principles at an international level. The third part of the paper review where sustainable development principles are addressed in a selection of Australia's federal environmental laws and the fourth part of the paper considers some of the recent developments in State and Territory laws that support sustainable development principles or outcomes. 1. The Meaning of Sustainability and Principles of ESD Sustainable development can be defined as "development that meets the needs of the present without compromising the future of generations to meet their own needs". The original concept of sustainable development was articulated in the report Our Common Future and was elaborated upon through a series of groundbreaking documents and legal instruments agreed to at the 1992 Earth Summit held in Rio de Janeiro, Brazil (also known as the United Nations Conference on the Environment and Development or UNCED). At the Earth Summit five key documents were signed, being: the Rio Declaration on Environment and Development; Agenda 21; the Convention on Biological Diversity (CBD); the United Nations Framework Convention on Climate Change (UNFCCC); and the Statement of Forest Principles. Although not legally binding, the Rio Declaration enunciated the key principles of sustainability including, but not limited to: (a) (b) (c) (d) the principle of integration; the precautionary principle; the principle of intergenerational equity; and the polluter pays principle v1\SYDDMS\AUSIM2 1

2 Looking at each of these principles in turn: Principle of integration The principle of integration underpins all of the principles of sustainable development. It requires that both development and environment considerations are taken into account in the decision making process. This requires both ensuring that environmental considerations are integrated into development objectives and that development needs are taken into account in applying environmental objectives. Precautionary Principle Principle 15 of the Rio Declaration states "In order to protect the environment, the precautionary approach shall be widely applied by states according to their capabilities. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost effective measures to prevent environmental degradation". In New South Wales, the precautionary principle is expressed in similar terms in section 6(2) of the Protection of the Environment Administration Act 1991 (NSW) (POEA Act) where the precautionary principle is seen as a key element of the definition of ecologically sustainable development. In particular, section 6(2)(a) of the POEA Act states that in the application as a precautionary principle, public and private decisions should be guided by: (i) (ii) careful evaluation to avoid, wherever practicable, serious or irreversible damage to the environment; and an assessment of the risk-weighted consequences of various options. In the case of Telstra Corporation Limited v Hornsby Shire Council Preston CJ provided detailed guidance on the concept of the precautionary principle and its application. Of note, His Honour stated that: The application of the precautionary principle and the concomitant need to take precautionary measures is triggered by the satisfaction of two conditions precedent or thresholds: a threat of serious or irreversible environmental damage and scientific uncertainty as to the environmental damage. These are cumulative. The degree of scientific uncertainty that needs to exist in order to trigger the application of the precautionary principle varies, depending on the magnitude of environmental damage used in the formulation of the first condition precedent of the precautionary principle. For the formulation of serious or irreversible environmental damage, the correlated degree of certainty about the threat is highly uncertain of threat or considerable scientific uncertainty. The precautionary principle permits the taking of preventative measures without having to wait until the reality and seriousness of the threat becomes fully known. This is the concept of preventative anticipation. The type and level of precautionary measures that will be appropriate will depend on the combined effect of the degree of seriousness and irreversibility of the threat and the degree of uncertainty. This involves assessment of risk in its usual formulation, namely the probability of the event occurring and the seriousness of the consequences should it occur. The more significant and more uncertain threat, the greater degree of precaution required. The precautionary principle embraces the concept of proportionality. In applying the precautionary principle, measures should be adopted that are proportionate to the threat. Consideration of practicality need to be taken into account. There must be proportionality of v1\SYDDMS\AUSIM2 2

3 response or cost effectiveness of margins of error to show that the selected precautionary measure is not unduly costly. The precautionary principle should be viewed not in isolation, but as part of the package of principles of ecologically sustainable development. Precautionary measures selected should not only be appropriate having regard to the precautionary principle itself, but also in the context of other principles of ecologically sustainable development. 1 Intergenerational and intragenerational equity The Rio Declaration recognised a number of principles of equity. However, foremost of these are the principles of inter- and intra-generational equity. Inter-generational equity is defined as meaning that the present generation should ensure that the health, diversity and productivity of the environment are maintained or enhanced for the benefit of future generations. Intra-generational equity involves consideration of equity within the present generation, such as use of natural resources by one nation state (or sector or classes within a nation state) meaning to take account of the needs of other nation states (or sectors or classes within a nation state). In other words, people within the present generation have equal rights to benefit from the exploitation of resources and from the enjoyment of a clean and healthy environment. Brown-Weiss has identified three fundamental principles which form the basis of intergenerational equity, and hence are integral to sustainable development. First, the conservation of options principle requires each generation to conserve the diversity of the natural and cultural resource base in order to ensure that options are available to future generations for solving their problems and satisfying their needs. Second, the conservation of quality principle holds that each generation must maintain the quality of the Earth such that it is passed on in no worse condition than in which it was received. Third, the conservation of access principle provides that each generation should give its members equitable rights that access the legacy of past generations and should conserve this access for future generations. 2 Conservation of Biological Diversity Agenda 21 deals expressly with the conservation of biological diversity in chapter 15. The objectives and activities stated are intended to improve the conservation of biological diversity and the sustainable use of biological resources as well as support the Convention on Biological Diversity. The Convention on Biological Diversity emphasises the role of the conservation of biological diversity in the achievement of sustainable development and sets out general measures for sustainable use. In doing so, it calls for the development of national strategies, plans and programmes for sustainable use of biological diversity and to identify and modify components of biodiversity important for conservation, in particular threatened species and communities. As Preston CJ notes, maintaining ecological integrity involves maintaining ecosystem health ecosystem functioning and ecosystem services. In Australia, one of the core objectives of the National Strategy for Ecologically Sustainable Development (ESD Strategy) is to protect biological diversity and maintain essential ecological processes and life support systems. At the national level, the national strategy for the conservation of Australia's biological diversity (National Biodiversity Strategy) adopts a number of important principles intended to be used as a guide for implementation. 3 1 See a more detailed analysis in B Preston CJ "Ecologically Sustainable Development in the Courts in Australia and Asia" (paper presented at environmental law seminar on 28 August 2006 in Wellington, NZ) at p.p E Brown-Weiss "Inter-generational Equity: a legal framework for global environmental change" in E Brown Weiss (ed) Environmental Change and International Law: New Challenges and Dimensions, UN University Press 1992, at p Preston CJ, above note 1 at p v1\SYDDMS\AUSIM2 3

4 Polluter pays principle The polluter pays principle is essentially a principle directed to the internalisation of environmental costs. This involves the internalisation of environmental costs into decision making for economic and other development plans, programs and projects that are likely to effect the environment. The principle requires accounting for both the short term and the long term external environmental costs. This can be undertaken in a number of ways including: (a) (b) (c) (d) environmental factors being included in the valuation of assets and services; adopting the polluter pays (or user pays) principle, that is to say, those who generate pollution and waste should bear the cost of containment, avoidance or abatement; the users of goods and services paying prices based on the full life cycle of the cost of providing goods and services, including the use of natural resources and assets and the ultimately disposal of any waste; and environmental goals, having been established, being pursued in the most cost effective way, by establishing incentive structures, including market mechanisms, that enable the best placed to maximise benefits or minimise costs to develop their own solutions and responses to the environmental problems. 2. International Treaties and Principles of Sustainable Development There are a number of examples of international treaties that include principles of sustainable development. These include: World Heritage Convention (1972) which refers to natural and cultural heritage being preserved for the benefit of mankind. Ramsar Convention (1973) directed at the wise use of wetlands. Vienna Convention for the Protection of the Ozone Layer (1985) and Montreal Protocol on Substances that Deplete the Ozone Layer (1987) (Montreal Protocol) which requires precautionary measures to be adopted to prevent ozone depleting substances damaging the ozone layer. United Nations Framework Convention on Climate Change (1992) (UNFCCC) and its Kyoto Protocol (1997) has as two of its key principles, the precautionary principle and the principle of intergenerational equity. Convention on Biological Diversity (1992) as noted above, the basis of this convention is to conserve biodiversity. In addition, the Convention is guided by the precautionary principle and the principle of intergenerational equity. Convention on the Non-Navigational Use of Watercourses (1991) which has as its objective the sustainable use of water resources and seeks to give effect to principles which include the precautionary principle and also the principles of inter- and intra-generational equity. As a general observation, international treaties reflect agreements amongst States to adhere to minimum standards and values when seeking to protect the environment. However, most treaties, with the exception of the UNFCCC / Kyoto Protocol and Montreal Protocol do not place enforceable obligations on those States that are Parties to them. However, States are required to act consistently with their obligations and to give effect to those obligations in their domestic laws. In this regard, the introduction of national laws that give effect to treaty obligation are critical to translating those international principles into action on the ground v1\SYDDMS\AUSIM2 4

5 3. Principles of Sustainable Development in Australia's National Environmental Laws In Australia, Commonwealth and State and Territory governments, in response to the Rio Declaration, have adopted the National Conservation Strategy for Australia and the Intergovernmental Agreement on the Environment (IGAE). The IGE sets out the four key principles of ecological sustainable development the precautionary principle, intergenerational equity, conservation of biological diversity and ecological integrity, and improved valuation, pricing and incentive mechanisms. It is recognised that the principles should inform policy making and program implementation. 4 Principles of ecologically sustainable development have been given expression in a number of environmental treaties and in domestic environmental laws throughout Australia. Some of the key issues facing Australia at present include climate change; water management; biodiversity and species conservation; and land and natural resource management. In this section of the paper we will briefly look at some of the initiatives being undertaken in a legal context to incorporate the key principles of ecologically sustainable development into laws governing those environmental issues. Environment Protection and Biodiversity The Australian Commonwealth government works in partnership with State, Territory and local governments, non-government organisations, tertiary institutions and community groups to protect native species. The Commonwealth Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) is the principal piece of national environmental legislation. The objects of the EPBC Act include: the protection of the environment; the promotion of ecologically sustainable development through the conservation and ecologically sustainable use of natural resources; to promote the conservation of biodiversity, heritage and other matters of national environmental significance; and cooperation in implementation between the Commonwealth and States, local government and indigenous communities. Whilst the EPBC Act addresses a wide number of environmental matters, in relation to the conservation of biological diversity, the Act seeks to protects Australia's native species and ecological communities by providing for: identification and listing of species and ecological communities as threatened; development of conservation advice and recovery plans for listed species and ecological communities; development of a register of critical habitat; recognition of key threatening processes; and where appropriate, reducing the impact of those processes through threat abatement plans. Climate change and emissions trading Australia is currently undergoing a significant legal and political shift in its approach to climate change and the reduction of greenhouse gas (GHG) emissions. In December 2007 the new Rudd Labor Government ratified the Kyoto Protocol thereby drawing Australia into the existing Kyoto 4 Preston CJ, above note 1 at p v1\SYDDMS\AUSIM2 5

6 Protocol framework of mandatory emission reduction targets and flexible mechanisms (including emissions trading and carbon offset generation) with which to meet those targets. Australia is now required under international law to comply with its Kyoto target, which allows for an 8% increase in Australia's greenhouse gas emissions above 1990 levels. It has also committed to reducing greenhouse gas emissions to 60% of 2000 levels by Although a recent assessment indicates that Australia is on course to comply with its 2012 Kyoto target, achieving compliance is dependent upon the success of a number of domestic greenhouse gas reduction measures. The centrepiece of Australia's greenhouse gas reduction strategy will be the introduction of the domestic emissions trading scheme. On this front, work has been ongoing to develop the Carbon Pollution Reduction Scheme (CPRS). The CPRS Bill was introduced into Parliament on 14 May 2009 and involves the establishment of a cap and trade scheme which will seek to achieve policy objectives of reducing Australia's GHG emission by 60% below 2000 levels by 2050 and by between 5-25% below 2000 levels by Whilst the CPRS is designed to achieve environmental outcomes, it is interesting to note that in no place does it refer to achieving sustainable development. The Australian Emissions Trading Scheme will be underpinned by data collected under the National Greenhouse and Energy Reporting Act 2008 (Cth) (NGER Act). The NGER Act imposes mandatory registration and reporting obligations on companies whose greenhouse gas emissions, energy consumption or energy production meets certain thresholds. Renewable energy The Government has also committed to increase the national mandatory renewable energy target (MRET), which was introduced by the former federal government in 1997, to require that 20% of Australia's electricity supply (45,000GWh) will be generated from renewable energy sources by MRET is a compliance based system, with the primary obligations placed on the electricity retailers and wholesale electricity buyers. The scheme involves the creation, transfer and surrender of renewable energy certificates (RECs), which each correspond to one MWh of electricity generated from renewable sources, and imposes penalties on liable entities for not surrendering sufficient RECs at the end of a compliance period. Presently there are a number of state based targets which operate in parallel to the Commonwealth MRET scheme. In order to streamline and simplify the process each state shall have agreed to work to consolidate the target and expand MRET into one single scheme by the end of Water law Traditionally, water resources in Australia have been managed by the states. However, due to serious problems of over allocation in the Murray Darling Basin (Basin), one of Australia's largest drainage divisions, the commonwealth has recently stepped in to oversee a coordinated approach to manage the Basin water resources in the national interest. The Commonwealth's intervention in managing the Basin's water resources has involved the exercise of a number of its powers under the Constitution, and the referral of powers from Basin States. On 3 March 2008 the Water Act 2007 (Cth) came into force. Some of the key objectives of the Water Act include seeking to improve water security for all users of Basin water resources; increase efficiency and cost effectiveness of water management and administrative practices in relation to Basin water resources; promote the use and management of the Basin water resources in a way that optimises economic, social and environmental outcomes; ensure the return to environmentally sustainable levels of extraction for water resources that are over allocated or over used; and protect, restore and provide for the ecological values and ecosystem services of the Basin. In addition, the Water Act seeks to give effect to those international agreements to which Australia is a party including the Ramsar Convention the CBD, the Convention on Migratory Species and various agreements relating to migratory birds v1\SYDDMS\AUSIM2 6

7 The Water Act establishes the Murray Darling Basin Authority to oversee the management of water resources in the Basin and addresses the following matters: the preparation of a strategic plan for the integrated and sustainable management of water resources in the Basin; the adoption of water resource plans for water resource plan areas covered by the Act; allocation of risk in relation to reductions in water availability; the development and enforcement of water charges and water trading rules; and the establishment of the Commonwealth environmental water holder to manage the Commonwealth's environmental water. The Commonwealth water management arrangements are intended to compliment initiatives already taking place in the States and Territories. Over the past ten years, most governments have engaged in a process of reforming their water laws with the objective of seeking to recover water for environmental flows and return rivers and aquifers to sustainable levels of extraction. One example of this is the ACT Water Resources Act 2007 which aims to "ensure the management and use of water resources sustain the physical, economic and social wellbeing of the ACT while protecting ecosystems that depend on them" and also to "ensure water resources are able to meet the reasonably foreseeable needs of future generations". 4. Relationship between Commonwealth and State / Territory legislation Although the Federal Government is addressing some of Australia's obligations under significant international environmental agreements, such as the UNFCCC, Kyoto Protocol and the Convention on Biological Diversity, it is important to recognise that its powers with respect to environmental matters is limited. Under the Constitution, the primary responsibility for the management of natural resources and the environment lies with the States. It is therefore, the State and Territory Governments that have the primary responsibility for introducing and implementing policies and laws addressing the sustainable use of resources and the protection of the environment. This is evidenced by the wide range of laws in all States and Territories that address matters such as pollution control, contaminated land, water management, native vegetation management, planning, waste and threatened species to name a few. Because responsibility primarily rests at this level of government, it has often been the States and Territories that have been on the front foot in developing novel approaches to environmental issues and mechanisms that seek to promote sustainable development. A few examples of these leading approaches are summarised below. Emissions trading The State and Territory governments have been at the forefront in seeking to introduce measures to curb GHG emissions. In 2003 the NSW Government introduced the greenhouse gas abatement scheme (GGAS). GGSA requires electricity retailers and large users of electricity to achieve benchmarks by purchasing greenhouse abatement certificates (NGACs) to offset their emissions. Where a liable entity achieves emissions reductions below the benchmark, it is eligible to create credits. Other offset projects, such as demand side management, sequestration through forestry and fuel switching are also eligible to create credits. GGAS was the world's first emissions trading scheme and has been expanded to apply in the ACT. However, if the CPRS is operationalised, GGAS will be phased out. In addition to GGAS, between the States were also very active in designing an emissions trading scheme between the States and Territories. Whilst there was significant progress on a number v1\SYDDMS\AUSIM2 7

8 of elements of the scheme, it was ultimately disbanded when the Federal Government announced it would pursue a national scheme in Of note, many of the States and Territories are adopting their own emission reduction targets, for example, the ACT Climate Change Strategy aims to reduce emissions by 60% below 2000 levels by 2050 and return to 2000 levels of emissions by The ACT strategy is also pursing energy efficiency, transportation and other measures to address climate change through its various action plans. Feed-in tariffs A number of state governments (e.g. South Australia, Victoria, Queensland and the ACT) have passed legislation or adopted policy commitment to implement feed-in tariffs for solar energy. These schemes allow the owners of small solar power systems to be credited for any excess electricity fed into the grid from their system. Under feed-in tariff arrangements, renewable energy generators are paid a preferential rate for their energy and retailers are required to connect to those generators and purchase their energy. Waste Another significant issue facing Australia is waste management and dealing with sustainable use and lifecycle of various products. In recent years a number of states have been looking to alternatives for waste treatment, through increased landfill levies and through the introduction of waste avoidance and resource recovery legislation. One example of extended producer responsibility is the South Australian Container Deposit Legislation (where consumers obtain a refund for recycling certain containers, e.g. glass bottles). Other states, for example New South Wales and more recently Western Australia, have legislation in place to provide for broader extended producer responsibility schemes. In New South Wales, extended producer responsibility falls under Part 4 of the Waste Avoidance and Resource Recovery Act Under that Act, the Department of Environment and Climate Change must publish annual priority statements regarding the product it wishes to target for extended producer responsibility schemes. In the past, these priority areas have included plastic bags, tyres, televisions and computers. In 2007, Western Australia passed the Waste Avoidance and Resource Recovery Act 2007, which provides head powers for the approval of voluntary product stewardship, agreements and mandatory extended producer responsibility schemes. Threatened Species Biodiversity Among innovative state based measures aimed at protecting biodiversity, New South Wales has recently implemented biobanking, a market based scheme which encourages development to move away from areas with high biodiversity value while providing incentives for land owners to protect and secure these areas. The New South Wales biobanking scheme enables biodiversity credits to be generated by land owners who commit to enhance and protect biodomestic values on the land through a biobanking agreement. These credits can then be sold, generating funds for the management of the site. Credits can be used to counterbalance (or offset) the impact on biodiversity values that are likely to occur as a result of development. The credits can also be sold to those seeking to invest in conservation outcomes, including non-governmental organisations and governments v1\SYDDMS\AUSIM2 8

9 5. How sustainable are existing legal frameworks and what can be done to better achieve a more sustainable community When looking at existing legal frameworks for sustainable development it is clear that in almost all environmental laws across Australia, there will be a reference to the need to have regard to the principles of ecologically sustainable development. Some legal frameworks, particularly those related to water management, pollution control and threatened species, are also more specific in the application of some of those principles. However, in many instances, particularly when considering planning and development decisions, moving beyond "having regard to" towards "giving effect to" principles of ecologically sustainable development is more challenging. When asking the question whether existing legal frameworks are sufficient to give effect to the principles of sustainable development, the answer will always depend on the particular environmental laws in question and at what level they are being applied. There are some laws which have been very successful in ensuring that, for example, those responsible for pollution cover the costs of that pollution. Conversely, it is difficult to point to consistently positive applications of the principles of sustainable development in many land use and planning decisions. The Sandon Point case of Walker v the Minister for Planning, is a case in point, where the Court of Appeal held that good decisionmaking would involve the Minister considering whether any of the objects of the EPA Act was relevant to the decision, and taking into account those that were considered relevant; but that a failure by the Minister to consider whether one object in particular was relevant to a particular decision (in this instance to consider principles ecologically sustainable development), or an incorrect decision that this object was not relevant, would not without more make a decision void. Although the principles of sustainable development have filtered down from international treaties and principles, the implementation of the principles of sustainable development is generally carried out from the ground up with outcomes achieved at the local level. This reflects the principle of subsidiarity and a trend towards decentralisation, where decisions are best made at the lowest level of governance able to adequately deal with them. This approach contrasts with the greater role that the Commonwealth is having in environmental decision making around issues such as water and climate change. Whilst there are some successes, as a rule the existing legal frameworks for environmental law, whether national or State, are not achieving dramatic changes that give effect to principles of sustainable development. Small steps are being taken, but environmental outcomes are always balanced against economic and development priorities. One way to achieve more dramatic changes is to look towards economic incentives for changed practices or behaviour. Using markets for emissions trading, water trading and biodiversity banking, are seeking to do this. However, more could be done in this space, particularly in relation to the building sector. In looking to lessons for the ACT, it is important to consider the context in which decisions relating to sustainable development are being made, in particular how those decisions interact with national laws and policies. As a general rule, the ACT will be best placed to introduce and implement measures which will give effect to the principles of sustainable development. In doing so, it may be able to be more ambitious and take complimentary steps that go beyond that which is legislated for nationally. Ultimately it will be important to weigh up what is an appropriate response to the environmental challenges faced by the ACT with the costs of taking or not taking particular measures (both economically and to the environment). ******************************************************* v1\SYDDMS\AUSIM2 9

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