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 IIRole 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.

ContributionsRole of Accounting in a previously

unstudied environmental decision

Accounting in an Advocacy Role

Shows limitations of Accounting

BackgroundLake 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

Timeline1835 Pedder discovered1940s First visitors arrive1953 HEC installs flow recorder on the Gordon1955 Lake Pedder National Park declared

1965 , Reece announces “some modification” to the National Park1965 Interdepartmental Committee for South West established1966 State seeks special financial assistance for the Gordon Project

1967 (April) Interdepartmental Committee 1967 (June) Select Committee appointed1967 (August) Select committee endorses, Authorisation Bill passed two days later

1972 Pedder drowned1973 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 viewConsists of omission, bias and selectivityOmission means the total exclusion of informationBias means information that is distorted or enhancedSelectivity 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 sourcesArchival 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 IInadequate 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 intangiblesSeven 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

Brundtland Commission, 1983)

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 EnergyLocal Politician “ People are heartily sick

of the Inquiry”

Discussion and Conclusion IEarly example of an important clash between economic

and environmental values

Accounting not a neutral technologyInformation was omitted, biased and selectively used.

Commentators criticised decision on 3 grounds1. Inadequate disclosure of detailed costs and benefits2. No informed disclosure of alternatives3. Selective use of long-term discount rate

Discussion and Conclusion IILimitations of Accounting

1. Fails to take into account a whole range of intangible environmental attributes eg aesthetic, therapeutic, religious, historical .

2. 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 IIIWould 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