Citation: Sharon Beder, Environmental Impact Assessment, Ecodate, July 1997, pp. 3-8

This is a final version submitted for publication. Minor editorial changes may have subsequently been made.

Sharon Beder's Other Publications

An important principle of sustainable development is the integration of economic, social and environmental concerns. Sustainable development recognises that the economy and the environment are closely interrelated. Much economic activity uses up materials and resources, including forests and minerals and creates waste products. Yet many economic activities, including agriculture, fishing and tourism, are also dependent on a healthy environment. Other industries are indirectly affected as it becomes more expensive to obtain resources and because pollution decreases the health of the work-force. For economic activity to be sustainable therefore, there is a need to consider environmental factors along with economic factors in government and private sector decisionmaking. This principle is at the heart of international agreements and various national policies and strategies.

Environmental impact assessment is one way to ensure that major development decisions take account of, and where possible mitigate, environmental impacts. Where the goals of economic growth and environmental protection conflict governments attempt to reach a decision by weighing the environmental damage that might occur due to a proposed project against the benefits that might accrue.

In the past the environment has often lost out in such a comparison. Environmental economists argue that because environmental 'assets' are free or underpriced they tend to be overused or abused, resulting in environmental damage. They claim that by estimating a monetary value for environmental 'assets' more weight will be given to environmental protection in the decision-making process. Cost-benefit analysis in conjunction with environmental impact assessment is therefore promoted as a primary method for integrating economic and environmental considerations in decision-making. This paper will consider how objective such an exercise can be.


An Environmental Impact Statement (EIS) is sometimes required before projects or developments, such as freeways, chemical plants and waste facilities, can be approved by the government. The EIS is supposed to provide a justification for the project or development, to include a detailed assessment of the potential environmental effects of the project, and to consider alternatives to the project. It includes scientific studies and economic analyses and it is done by the developer of the project or by consultants hired by the developer.

The immediate objective of those preparing the EIS, or their clients, will usually be to get approval for the project to go ahead even if that project may have an adverse impact on the environment and on local residents. Because the EIS is done rather late in the planning process the developer will almost certainly have committed considerable financial resources to a particular option at a particular site. The EIS at this stage becomes another obstacle in a field of bureaucratic hurdles on the way to their end goal. But on top of this it is a public document that will be scrutinised by local residents, bureaucrats, politicians and environmentalists.

Naturally, project proponents will want that document to emphasise the advantages of the project to the community and to downplay the disadvantages. However this means the objectivity and independence of EISs are often questioned. They are viewed by some local residents as sales documents for the project. Subconsultants working on EISs have also become concerned that their findings are edited and selectively reported in the final document. Consultants who insist on presenting the environmental impacts in a way that jeopardises project approval risk loss of future business. This creates a conflict of interest for these consultants who are often engineers with an ethical obligation ~o serve the public interest.


This conflict of interest situation was put to the test in Australia in the mid-1980s with a controversy over the Sydney Harbour Tunnel EIS. In 1985 an engineering firm approached construction company Transfield with an idea for a car tunnel to cross Sydney Harbour. The Sydney Harbour Bridge suffered traffic congestion at peak hours and the Tunnel would provide an alternative route between North Sydney and the City Business District (CBD). Transfield joined with the Japanese firm Kumagai Gumi to form a consortium that then sold the idea of a toll financed tunnel that they would build to the Department of Main Roads. The Minister for Main Roads was particularly keen on the idea.

Before approval could be given to the Tunnel an EIS had to be prepared. Transfield-Kumagai hired engineering consultants Cameron McNamara to prepare the EIS on their behalf. As in most cases, the EIS supported the project and argued that there would be little or no adverse environmental effects. However in this case the EIS consultants were accused of breaching the Engineering Code of Ethics by North Sydney Municipal Council and the Society for Social Responsibility in Engineering. These organisations made representations to the Institution of Engineers Australia (IEAust) alleging that the consultants had overestimated the benefits and underestimated the environmental costs of the Tunnel project. The Council's consultant, John Gerofi, an engineer himself, stated that he could 'find no rational explanation as to why competent and respected consultants employing professional engineers and other qualified staff would have produced an EIS with so many questionable assumptions which favoured the project, and with so many deficiencies.'


The goal of an objective ElS document is illusory. Values and judgements enter at every stage of the preparation of an EIS, beginning with definition of the problem. Both justification of the project and the framing of alternatives will be shaped by the way the problem that the project is supposed to be solving is defined. For example, in the Sydney Harbour Tunnel EIS, the problem was said to be traffic congestion. Traffic built up and slowed down on the approaches to the Sydney Harbour Bridge, causing delays to people trying to cross the Harbour by motor vehicle. A second crossing was therefore justified on the grounds of traffic congestion, and alternatives framed, in terms of providing better road access across the Harbour.

Opponents to the Tunnel did not perceive congestion to be a problem at all. Ted Mack, Mayor of North Sydney at the time the Tunnel was proposed, argued that congestion shaped a city by encouraging the movement of people and businesses to other parts of the metropolitan area so that new centres of activity were established. Ross Blunden, emeritus professor of traffic engineering, argued that congestion encouraged people to change their journey times or take public transport. Both concluded that a second crossing, far from removing congestion, would merely attract more car traffic and that congestion on both crossings would be the eventual outcome.

The scope of what is to be covered in the EIS is also a matter of judgement and the way it is decided varies from state to state. A narrow scope can make a project appear more desirable. With the Sydney Harbour Tunnel, one can see that whilst the proponents argued that pollution would be reduced in the immediate vicinity of the Harbour because of the smoother flowing traffic, a broader scope would have ensured that the wider impacts of increased car usage encouraged by the Tunnel --greenhouse emissions, smog production and oil usage -- were also taken into account. They were not considered.

The design of an EIS requires judgements of what types of impacts will be significant and the collection of data requires decisions about the time period and area over which samples are collected, the species to be studied and the quantities of individual specimens to be collected, and more generally the scale of study. Such decisions are not made only on the basis of what might be considered by a scientist to be appropriate, but will also be affected by considerations of cost, time availability, previous studies and perhaps even likely outcome. In the case of the Sydney Harbour Tunnel EIS many of these decisions were criticised by other scientists.


Perhaps the most contentious analysis in an EIS is the costbenefit analysis. In an EIS the cost-benefit analysis is part of the justification for the project. Cost-benefit analysis is a tool which decision-makers use to choose between alternative courses of action and in deciding whether a proposed project should go ahead or not. Cost-benefit analysis is undertaken to weigh the costs of proceeding with a project against the benefits that would arise from it.

In order to weigh costs against benefits, cost-benefit analysis usually attempts to put a monetary value on both costs and benefits so that they are expressed in the same units. The costs of a road project would include the cost of labour and materials used in construction, as well as other costs such as the loss of parkland and homes, pollution, disruption to neighbourhoods or the loss of peace and quiet. The benefits of a such a project might include time saved to motorists, increased predictability of journey times and increased accessibility to a particular location.

Identifying all the consequences of a particular project or policy option is difficult because it involves predicting the future and dealing with the uncertain' interactions between human activities and the ecosystems in which they take place. The judgements made in assessing the environmental impacts in the scientific parts of the EIS, discussed above, will affect the outcome of the cost-benefit analysis and could make the difference between a project being considered to be economically justified or not.

Obviously, some costs and benefits are not easy to put into monetary terms. These include environmental values such as the value of clean air and water, unspoilt wilderness areas, ecological balance and diversity. Different people will put different valuations on these. Valuations can include economic, ecological, aesthetic and ethical components. The economic consultant who undertakes such a valuation must use judgement in deciding not only which methods to use to assess values but also whether to quantify them. If s/he decides to quantify environmental values, different methods will yield higher or lower figures and it will be tempting (especially if s/he wants future work) to use the method that suits the client's desired outcome.

Advocates of increased quantification in cost-benefit analysis argue that by placing explicit values on proposed actions, the process is more open to scrutiny by others. However, what tends to happen is that the analysis is highly technical, and neither available nor accessible to the public. The value judgements are hidden beneath a mass of figures that give the impression that the analysis is rational, neutral and objective. Barbour argues: Value conflicts that should be resolved politically are concluded in what look like rational, neutral, objective calculations. This may appeal to administrators, but it hinders public debate of the policy issues and lessens the accountability of bureaucratic officials. Numbers carry an unwarranted authority when used to legitimate decisions that are basically political in character (p. 170).

In the Harbour Tunnel EIS certain benefits were not quantified but were listed. These included reduction of traffic in the city centre, improved access between the city centre and North Sydney and more reliable scheduling of buses. However even this non-quantified assessment was disputed. The Department of Environment and Planning argued that traffic in the city would not be reduced and that buses would not be more reliable because of increased congestion on the roads leading to the Harbour crossings. (The capacity of those roads was not being expanded.) Additionally the Department argued that some costs of the project had been left out such as the likely loss of patronage of public transport if more people were to use their cars due to the greater ease of driving to the city. This extra traffic would lead to more congestion on other parts of the road system, the need for more parking facilities, increased air pollution and greenhouse gas emissions not to mention loss of revenue to State Rail; all costs that were not considered in the ElS.

In transport, and particularly road projects, savings of time for motorists or commuters are often the major benefit of the project and these are quantified. This creates two areas of contention. One is predicting what the time savings would be; the other is estimating what those times savings are worth to the community. The assessment of how much a person's time is worth, another value decision, can determine whether benefits will exceed costs in the CBA. This was indeed the case for the Harbour Tunnel CBA.

Normally, future costs and benefits are discounted (reduced) because it is assumed that they are not worth as much to people today, because people would rather have money and benefits now than later. In order to put everything into today's values a discount rate is applied to future values. The choice of a discount rate makes a big difference to the outcome of a CBA. It can be very much influenced by value judgements, including the judgement about entitlements of future generations. In terms of environmental costs, the higher the discount rate that is used, the greater is the bias towards the present and against the future. The further the costs are into the future, the less they will be worth in today's values; yet future generations will still have to put up with them.

In the case of the Harbour Tunnel, a number of CBAs were done by various consultants. Those commissioned by proponents of the tunnel all showed that benefits outweighed costs and those commissioned by the opponents to the tunnel all showed that the costs outweighed the benefits.


The circumstances of ElS preparation where large investments, careers and the viability of businesses are at stake make it inevitable that the values and goals of those preparing an EIS, and those who employ them, will shape its contents and conclusions by influencing the way scientific and economic data is collected, analysed, interpreted and presented. The vast majority of EISs conclude that projects have little environmental impact and that their benefits outweigh any costs. Here I am not talking about outright falsification or omission which does of course occasionally happen. I am talking about subtle judgements within a range of legitimate and valid choices. Inevitably there will be a grey area between what is accepted as credible by the scientific or economics profession and outright deception. (See figure on page 7.) But even within the range of scientific and economic credibility there is usually scope to produce a favourable EIS.

Following preparation of an EIS it goes on public display and is assessed by a government department or a local council. This public and government scrutiny is supposed to act as a check against any bias inherent in the EIS. However if the relevant government body is in favour of the project then it is left to the public to point out any problems with the EIS. Whether individuals or groups with enough knowledge to do this take the time to make submissions and whether their submissions are listened to is another question. In the case of the Harbour Tunnel, a cabinet split meant that the Department of Environment and Planning was highly critical of the ElS. There were also some 450 public submissions opposing the project. Nevertheless since the Department of Main Roads was in favour of the project and it was the 'determining' authority, that is the authority that made the final decision, the project was given approval,


Ian G. Barbour, Technology, Environment and Human Values, Praegar, New York, 1980.

Sharon Beder (ed), Environmental Impact Statements.' Selected Readings, Environmental Education Project, Sydney University, 1990.

Sharon Beder, Cost-Benefit Analysis.' An Explanation Using the Sydney Harbour Tunnel as a Case Study, Environmental Education Project, Sydney University, 1990.

Sharon Beder, The Nature of Sustainable Development, 2nd edition, Scribe, Victoria, 1996, chapters 7-9.

Cameron McNamara, Sydney Harbour Tunnel.' Environmental Impact Statement, Transfield-Kumagai Joint Venture, Sydney, November 1986.

Department of Environment and Planning, Proposed Sydney Harbour Tunnel.' Environmental Impact Assessment, Sydney, DEP, 1987.

Sydney University Television Services, Sydney Harbour Tunnel, Environmental Impact Statement, Sydney University, 1991, video.