Sue Hrasky (RIP:In Memoriam) University of Tasmania Mike Jones University of Bristol Introduction I " If we can revise our attitudes toward the land under our feet, if we can accept a role of steward, and depart from the role of conqueror, if we can accept the view that man and nature are inseparable parts of the unified whole - then Tasmania can be a shining beacon in a dull, uniform, and largely artificial world. “ - Olegas Truchanus (1923-1972) Introduction II Role of accounting in environmental decision-making is complex intertwined with social, economic and political factors Traditional accounting captures financial information, but not natural assets Flora, fauna and ecosystems thus have no monetary value However accounting used to make operational and strategic environmental decisions Introduction III Accounting is a partisan mediator that privileges economic value point But seen to be neutral, objective, rational This article looks at the use of accounting in the Lake Pedder Decision in the late 1960s in Australia Caused political controversy; leading to world’s first environmental movement At heart Lake Pedder an ‘economic and political decision’ Obvious modern parallels eg dams across Mekong. Contributions Role of Accounting in a previously unstudied environmental decision Accounting in an Advocacy Role Shows limitations of Accounting Background Lake Pedder a 242sq kilometre wilderness Declared a National Park 1955 Need for Energy; Lake Pedder the solution Select committee endorses it in 1967 1972 Dams built 1973 A Commonwealth Committee of Inquiry, main source of evidence 1835 1940s 1953 1955 Timeline Pedder discovered First visitors arrive HEC installs flow recorder on the Gordon Lake Pedder National Park declared 1965 , Reece announces “some modification” to the National Park 1965 Interdepartmental Committee for South West established 1966 State seeks special financial assistance for the Gordon Project 1967 (April) 1967 (June) 1967 (August) 1972 1973 Interdepartmental Committee Select Committee appointed Select committee endorses, Authorisation Bill passed two days later Pedder drowned Federal Committee of Inquiry recommends federally funded moratorium (Reece rejects) Impression Management 1 Impression management wide concept embraces creative accounting Serves the interests of preparers rather than users. Fails to provide a true and fair view Consists of omission, bias and selectivity Omission means the total exclusion of information Bias means information that is distorted or enhanced Selectivity means partial disclosure. Impression Management II Draws on the non-neutral role of accounting eg Anthony Hopwwood(1992). Creates a false impression of technical rationality and objectivity Accounting used in political advocacy eg privatisation, closure, downsizing etc Accounting used in accounting narratives and graphs Accounting in the Pedder Decision? Our sources Archival and secondary data Key archival sources: 1967 State Legislative Council Select Committee THEC’s 1967 Report to Parliament Transcript of evidence given to the 1973 Federal Select Committee of enquiry Criticism of Decision-Making Process I Inadequate and flawed political process - Fait accompli, no independent evaluation; lack of transparency Lack of consideration of alternatives - HEC’s alternative plans not made public Lack of Impact assessments - No comprehensive ecological survey Narrow financial criteria manipulated - Sole agenda cheap power - No detailed costings or underpinning assumptions - Inappropriate Discount Rates - Biased cost estimates Criticism of Decision-Making Process II Conventional Accounting inappropriate for environmental decision-making (e.g. Capitalist orientation, business focus, reliance on neo-classical economics; numerical quantification; monetary orientation and technical accounting practices) Vast majority of biosphere not determined by price Traditional accounting does not privilege environment Inability to handle intangibles Seven Values by Holmes Rolston. Aesthetic - Aesthetic and mystical value, a natural masterpiece - Comparisons with Sydney Opera House, Ayres Rock and Great Barrier Reef Religious - A spiritual quality Therapeutic - Psychological value Historical - no fight to deprive future generations (Reminiscent of Inability to handle utilitarianaspects Seven Values by Holmes Rolston. Recreational - e.g. swimming, canoeing, camping -e.g. tourism, walking Educational - school trips - a unique attraction Intrinsic value/genetic diversity - Unique flora and fauna Inability to handle intangibles – Anthropocentric Value Priceless Miss Dunn: “ Why do you keep asking me questions of money? I don’t think cost comes into it. I know its an impractical thing to say, of course, it is, but if you relate it to the future and future generations – how do we have the right to deprive them of this?” In Favour of Development Fishing Lobby (Brown Trout) Renewable Energy Local Politician “ People are heartily sick of the Inquiry” Discussion and Conclusion I Early example of an important clash between economic and environmental values Accounting not a neutral technology Information was omitted, biased and selectively used. Commentators criticised decision on 3 grounds 1. 2. 3. Inadequate disclosure of detailed costs and benefits No informed disclosure of alternatives Selective use of long-term discount rate Discussion and Conclusion II Limitations of Accounting 1. 2. Fails to take into account a whole range of intangible environmental attributes eg aesthetic, therapeutic, religious, historical . Fails to reflect utilitarian benefits such as recreation, education, tourism, walking and timber. Accounting and economic considerations also fail to take intrinsic value of biodiversity Discussion and Conclusion III Would Lake Pedder have been dammed if the accounting calculations had been more accurate and he environment considered? - Impossible to say, but probably NO!! Have we advanced any more in environmental decision- making - Not really, environmental valuation still in infancy WAY FORWARD - If an environmental asset is priceless, then it should be invaluable