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This paper argues that it is time for ecological economists to bring the employment impacts of sustainable development policies to the forefront of the research agenda. Important conservation efforts continue to founder because of their perceived employment effects. The paper examines the evidence on the employment impacts of sustainable development policies and argues that maintaining or even increasing employment depends critically on appropriate policy design and attention to the political economy of implementation of policies. The paper concludes that a better understanding of these issues, fair labour market and structural adjustment programs, and especially forward planning to anticipate problem areas, must replace the piecemeal, ‘knee–jerk’ reactions to environmental issues, such as were evident in Australia during the last federal election.

If there is one criticism that might be made of the work of ecological economists in general, it is the relative lack of attention devoted to economic policy; specifically policy initiatives to smooth the progress to sustainable scale. Where there has been discussion of policy it has tended to be at an abstract level without giving any real consideration to the political economy of implementation. Take the preservation of old growth forests, for example. This is a priority for ecological economists, not least, because we have only just begun to understand the valuable ecosystem services they provide. We continue to research such vital areas believing that it will help policy-makers to recognise the short-sightedness of cutting down old growth forests, particularly when they are to be used for wood chips. Yet a key dimension is largely absent in our theorising; viz. political reality. As Joan Robinson is generally attributed with saying: ‘The answer to every economic problem is a political question’, an observation that, ironically, she makes in her critique of the neo-classical paradigm, given this particular brand of economics was developed specifically to ignore such questions. Ecological economists must be wary of falling into the same trap. Recent events in Australia provide us with a stark reminder of this. If, in one of the richest countries in the world, an area of old growth forest in the state of Tasmania can be sacrificed for wood chips, and this is allowed to happen purely for short term political gain, then the ecological economics scientific community clearly needs to work a lot harder to get its message across. In the Australian 2004 federal election campaign, the issue was presented, rather melodramatically in the media, as one of ‘jobs versus the environment’. It was ‘jobs’ that won the day. The Tasmanian case provides a graphic example of where attempts to preserve natural capital – one of the ‘prudent miniSmum conditions’ of sustainability theory (strong sustainability) (Costanza, 1992) – failed dismally because the employment issues were not addressed. This should be of no real surprise given that one of the key macroeconomic variables that governments all around the world focus upon is employment. Yet, within the ecological economics scientific community, the discourse on the subject is quite limited.3 Clearly, the scarcity of academic literature is not an indication of the importance of the topic. Structural unemployment is inevitable if societies are to become ecologically sustainable, and most will agree that winning popular acceptance of sustainable development is unlikely if it means individuals and – in some cases – whole communities have to sacrifice their livelihoods and self-respect to achieve it. Structural adjustment of economies is hardly a new phenomenon and, if anything, in an increasingly dynamic, economically integrated world it has becomes more frequent. People have lost their jobs because of technological change, trade liberalisation, changing consumer tastes, and the outsourcing of business processes to lower cost-centres in the developing world. Structural adjustment arising from a commitment to sustainable development policies is no different in that some jobs will be lost largely (but not exclusively) in the extraction sectors and others will be created elsewhere. What is different, however, is that whereas the free-marketeers typically pay little attention to the effects of social dislocation arising from (for example) the liberalisation of international trade and investment, ecological economists consider distributive justice to be of paramount importance. One would expect as a matter of course, therefore, to see measures introduced which attempt to make structural adjustment proceed more smoothly, with the minimum of political fall-out. Prompted by recent events in Australia, we pose several questions about the employment effects of implementing sustainable development policies: At the macro level, is an increase in unemployment inevitable? What arguments might ecological economists have advanced to allay fears in this regard during the last federal election campaign in Australia? Also, if unemployment and social disruption are to be minimised, what are the key considerations in the design and implementation of policy? This paper represents a modest attempt to address these questions but, more importantly perhaps, it is an appeal to others to share this research agenda to increase our collective knowledge so that situations like the one described in Tasmania may be avoided in the future. In the section following this introduction (Section 2), we begin with a brief description of the events in Tasmania. In Section 3 we critique the literature on the employment effects of policies designed to achieve sustainable development, and discuss the inevitability (or otherwise) of unemployment at the macro level. Section 4 then focuses on the various policy instruments available and how they might be utilised to achieve the best employment outcome. Section 5 draws some conclusions.

The long-term planning required for sustainability policies, it must be said, was notably absent in the apparent ‘knee–jerk’ reactions of both of the major political parties during the 2004 federal election campaign in Australia. It also appears to be absent in the Australian government's current environmental policies which, whilst concerted at both state and federal levels in some areas (e.g. water), nevertheless appear to be reactions ‘where the noise is loudest’ rather than being part of a planned, pre-announced, well advertised, thoroughly explained, and comprehensive ETR type strategy. After 16 consecutive years of economic growth, and at a time of historically low unemployment, Australia seems supremely placed to pursue a radical, socially-inclusive structural adjustment program, supplementing the funds generated by ETR from the current fiscal surpluses being generated by the current resources boom. Such a scenario is one many other countries could only dream of. Hamilton and Denniss (2005) suggest that a pragmatic, politically astute approach to developing environmental policy would be to follow the model which the Australian government has used since the early 1990s to introduce policies to eliminate uncompetitive practices across all sectors of the national economy; commonly known as National Competition Policy (NCP). In addition to staging the process sequentially, new agencies were created for the development and implementation of the policy, and a system of financial rewards and penalties was designed in order to entice state and local governments to cooperate. Hamilton and Denniss (2005, p. 50) conclude that: National Competition Policy has succeeded, on its own terms, despite the trenchant opposition of large numbers of voters, workers, unions, companies and State Governments. It did so, in part by identifying winners and losers, harnessing the support of the likely winners and compensating the most politically difficult opponents. To build a solid foundation for the advocacy of employment-friendly sustainable development policies, it is clear that we need to become more skilled in the design and implementation of these policies, and we also need to extend our theories based on the insights provided by the macroeconomic modelling of ETR and the Porter hypothesis. With regard to the Porter hypothesis, Konchak and Pascual (2006) argue that ecological economists, as a group, have not acknowledged the difficulties posed by the ‘economy-environment tradeoff’ or the political unpalatability of the ‘limits to growth’ discourse. To influence environmental policy-making more effectively, they argue, ecological economists need to frame environmental stewardship as essential to economic prosperity by using the Porter hypothesis. If this is the case, then we urgently need to build upon our current knowledge in a number of areas including, for example, the conditions under the which the hypothesis holds; the pattern of innovation that results; the type of accompanying government policies that assist most; and, more generally, how ETR and EFR affect macroeconomic management of the economy (e.g. through automatic stabilisers). Clearer answers are also required to other important questions. Most notable among these is the question of innovations that increase resource productivity and their impact on labour productivity. On this issue, there appears to be a certain amount of ‘cognitive dissonance’ amongst policy-makers. Currently, in the OECD, for example, it would appear that the Economic Directorate advocates policies based on securing economic growth via further increases in labour productivity (see, for example, OECD, 2006b), whilst the Environment Directorate simultaneously appeals to member countries to increase resource productivity, to ‘decouple’ resource use from GDP growth. Ecological economists welcome the OECD's attention to sustainable development, but if declining labour productivity accompanies policies that achieve greater resource productivity, then this is something with which the OECD – a body whose policy advice is respected and followed by treasury departments in many developed countries – is yet to come to grips. It is important because some clarification of the issue may change conventional attitudes to employment and inspire creative and socially-inclusive labour market policies.