Dr. Tadhg O'Mahony:

I will respond to the first issue raised by Senator O'Reilly on cost-benefit analysis. Cost-effectiveness analysis can also be included here. The fifth assessment of the IPCCC devoted a really good section to what it called the limits of economics in guiding decision making. It addressed some of the questions I mentioned earlier like how we manage risk, how we manage the different priorities of public policy, including well-being, equity, nature and biodiversity and how we handle the ethics of how we weigh that up. If we push that into a net present value calculation and that is what guides our decision making then we are not doing the politics and policy that are necessary to actually make wiser decisions about what we are doing with resources as well as what and who is impacted by these challenges. Biodiversity is one of the things impacted but of course, it does not have a voice. There are real challenges with reifying a technique like cost-benefit analysis or cost-effectiveness analysis as the arbiter of our decisions when it does not take into account the different risks in different areas.

Let us take the example of a cost-benefit analysis on a high capital investment like a railway or a road. We can value that and put a significant value on the biodiversity but when it is squashed into the net present value calculation, it just falls off because it is too small. That has been observed in the literature. The cost-benefit analysis on its own then becomes part of the problem. It often favours the status quobecause it can undervalue long-term benefits and overvalue the impact of the capital investment. It can also undervalue all those other aspects of risk, ethics and the priorities of society. It is effectively taking on a strategic role to which it is not suited. That is why I said I have concerns about overly relying on cost-benefit analysis and cost-effectiveness analysis.

They are tools but their limitations need to be known. In terms of regular people, absolutely, this is something I try to put into my statement. We are speaking about regular people who have a stake in this working better and they are often under pressure in terms of the economic pressures and trying to have a viable business. They also feel like they are being criticised and blamed and it is understandable that they feel this is not fair. That is why we need to work on these kinds of short-term changes but also on that strategic approach, recognising that it is not working for rural Ireland, for most farmers, and for biodiversity and to see how we can incentivise change and create opportunities. We do not have a system that allows us to do that, broadly speaking, because it is focusing on maximising economic production and maximising export that is not aligned with achieving win-win outcomes.