Dryland Salinity: Socio-Economic Research at the University of Western Australia
Agricultural and Resource Economics Group, University of Western Australia
Dryland salinity has become a major focus of research activity within the Agricultural and Resource Economics Group at the University of Western Australia. This document provides a brief outline of the research and related projects currently under way, as well as some other projects already completed at UWA.
David Pannell, 20 May 1999
Review of available data
Steven Schilizzi, Gavin White
Funding: UWA
There is now a large volume of literature regarding salinity abatement methods, both published and unpublished, but not all of it is useful for economic modelling purposes. The key question behind salinity abatement, from an economic point of view, is: is it worth the money? Accordingly, the existing literature has been screened so as to create a data base likely to be useful for the purposes of economic modelling. The phase farming model below would not have been possible without this work. Results have been made publicly available by putting the resulting paper and database on the SEA News website: http://welcome.to/seanews
Economics of phase farming of perennials and annuals
Steven Schilizzi, Ray Challen
External collaborators: Ute Mueller, Edith Cowan University
Where hedges and alley-farming are not the appropriate solutions for salinity abatement, block plantations on the farm of trees or other perennials (e.g. lucerne) can be the alternative. However, in most cases in drier areas of Western Australia, farmers who replace crops and pastures by trees incur substantial financial losses. In areas where cropping increases salinity and deep-rooted perennials can reduce salinity, one possible strategy may then be to keep trees on paddocks for as long as necessary, but no longer, and revert to cropping. In the long run, a phase-farming system of cycles of production and rehabilitation phases is generated. The question then rises of how long each phase must optimally be so as to maximise the financial returns of farmers? So-called "kamikaze" trees are a special case in areas of higher rainfall where trees can pay for themselves. Work is ongoing with modelling and data collection efforts.
Economics of oil mallees
Don Cooper, David Pannell, Steven Schilizzi
External collaborator: John Bartle, CALM
Oil mallees are a tree species found in Australia that can survive the dry conditions of the Western Australian wheatbelt (300-600 mm rainfall). Scientists and farmers are considering their use for salinity abatement. Unfortunately, at present, this abatement technology cannot pay for itself. Oil mallees produce leaves of rich oil content that can be sold on the solvent market, but at a low price. This study also explores the value of oil mallee side-products, namely woody material. This can be used as an energy source for electricity generation and for the production of activated carbon, of high economic value. Don Cooper, a MSc (NRM) student, has been investigating the extent to which the combined valuation of oil, electricity and activated carbon is likely to make oil mallees an economically attractive option for the wheatbelt.
Recharge/profit trade-offs in salinity abatement
Greg Dale, Steven Schilizzi, David Pannell
Farms have some (usually limited) leverage on water use by plants by using rotations and crop selection strategically. If restrictions on water use are imposed on farm plans, the new strategy comes at a short-term financial cost, even if long term environmental benefits can be expected. Greg Dale, an ARE student, investigated the extent to which water use could be increased, or deep drainage reduced, for limited losses in farm profitability. Preliminary results seem to suggest that there is scope for action at low cost. However, such strategies cannot halt salinity, but only slow down its spread. Further work is needed, based on improved data.
Interaction between salinity and risk management
Michele John, Ross Kingwell, Steven Schilizzi
Funded: ARC SPIRT scheme, GRDC.
Work in this area is starting with a PhD research project by Michele John. Increasingly, farmers are faced with having to fine-tune their management of production and price risks using tactical decisions, while at the same time having to fulfil sustainable farming objectives (salinity abatement in particular). This work will examine the extent to which tactical decision-making interferes with goals of sustainable farming and salinity abatement, and vice-versa. Effort will be put into identifying strategies that lead to mutually reinforcing outcomes (reducing both risk and salinity), as opposed to zero-sum trade-offs or mutually defeating strategies.
"Risky Business" workshops on salinity abatement
Steven Schilizzi, Ross Kingwell, Sally Marsh, David Pannell
Extended versions of the initial "Risky Business" simulation game have included salinity abatement through tree plantings. The game can be played in two versions, one with and one without cross-boundary externalities in terms of salinity encroachment. In both games, players must struggle and make plans with random seasons and prices, while trying to avert the onset or the spread of salinity by withholding land from traditional agricultural crops and pastures and instead planting unprofitable trees. In the "externalities" version, players are organised into catchment groups, where the decisions of each player can affect the outcomes of all the other players in the catchment. Both games are competitive, but the externalities one includes co-operation incentives for players in the same catchment. Run successfully with students, both versions are soon to be run with professionals.
Incentive mechanism design
Steven Schilizzi, Laura McCann, David Pannell
External collaborator: Uwe Latacz-Lohmann, Wye College, UK
In most of the Western Australia’s south-western agricultural area, which receives below 600 mm of rainfall, there exists at present no technical solution to salinity abatement that is economically viable for farmers. It is therefore unlikely, without external funding, that farmers will take up the existing technologies at scales needed to substantially reduce salinity. If salinity-abatement is to happen, off-farm benefits will need to be evaluated and, if high enough, the costs will need to be met by public money. This is a problem of public good provision, a special case of incentive mechanism design. Work is starting along those lines to identify an efficient strategy for funding salinity abatement.
Institutional Arrangements
Laura McCann
While a major obstacle to solving the salinity problem is the lack of viable crops and technologies, especially for the low rainfall areas, government policies are also important. The aim of this on-going research is to identify institutional arrangements, policies, and economic incentive systems that can contribute most effectively to the management of dryland salinity and its impacts. It is important to understand both farmer and agency decision-making in order to design appropriate government intervention. It is also important to take into consideration the costs of implementing and enforcing alternative policies.
Evaluation of Irrigated Olive Production for the Wheatbelt
Frank D'Emden, Laura McCann, Stan Kailis
To slow the spread of dryland salinity in the wheatbelt, it is necessary to find alternative crops that are economically viable for farmers. Olives are native to low-rainfall areas of the Mediterranean and there is currently interest in olive production in Western Australia. Olive oil consumption is increasing world-wide because of its beneficial effects on health. Olives are also somewhat salt-tolerant. Research currently being conducted for a 4th year honours project by Frank D'Emden will look at the viability of irrigated olive production in the wheatbelt. Instead of using olive trees alone to reduce recharge, surface drainage will be channelled to storage dams in order to irrigate the olives during the summer months, further reducing recharge.
Economic cost of salinity
Martin van Bueren, David Pannell
External collaborators: Don McFarlane, Richard George, AgWest; Tom Hatton, Norm Campbell, CSIRO, other members of the Salt Scenarios 2020 project.
Funding: National Land and Water Audit, GRDC
Over the last 20 years or so, several thousand boreholes have been sunk in agricultural regions of Western Australia for the purpose of monitoring movements in the ground-water table. Since monitoring commenced, an extensive database has been developed. This database is currently being used by CSIRO to construct a hydrological model for predicting the future spatial spread of salinity in the landscape. As such, salt prediction maps in GIS format will soon be available for a large proportion of the agricultural region. These maps will subsequently be used to help estimate the economic cost of salinity, together with the spatial distribution of costs. The costs imposed on agriculture will be estimated by overlaying salinity predictions onto a map of land management units, each of which has a specific economic value. Values will be obtained from the MIDAS whole-farm models. Using this approach, it will be possible to approximate the loss in agricultural profitability associated with salinity. There is also scope for assessing the size of off-farm costs by overlaying maps of roads, infrastructure, and areas of high biodiversity.
Economic benefits and costs of broad revegetation strategies
Martin van Bueren, David Pannell
External collaborators: Don McFarlane, Richard George, AgWest; Tom Hatton, Norm Campbell, CSIRO, other members of the Salt Scenarios 2020 project.
Funding: National Land and Water Audit, GRDC
Further to the project titled 'Economic Cost of Salinity', the benefits and costs of several revegetation strategies are being assessed within a GIS framework. Hydrological modelling by CSIRO will be providing spatial predictions of salinity under a number of different revegetation scenarios. Maps of the areas revegetated, together with the consequent areas of land 'protected' from salinity, will enable us to estimate the spatial distribution of benefits and costs associated with each scenario.
Community attitudes and acceptance of water management options in the Moore River Catchment.
Josie Patterson, Michael Burton and Sally Marsh
In the Moore River catchment there is a potential for conflict between agricultural practices such as drainage (which aim to manage salinity and waterlogging), the maintenance of wetlands and other ecological values (which may be affected through the disposal of water) and management of public risks through flooding. This 4th year Honours project will look at the attitudes of three different community groups towards water management, and the values they place on these different elements. It will use a choice modeling framework, and will be based on surveys of farmers in the catchment, residents of rural towns, and residents of Perth.
Co-ordination of salinity research and development
Sally Marsh
In early 1998, a salinity R&D Steering Committee was formed under the auspices of the State Salinity Council. The Committee’s role was to oversee a review of salinity research and development needs for the state and to promote a cross-agency approach to seeking funding for priority areas. To assist in this task a R&D Technical Committee was set up, and Sally Marsh has been acting as executive officer for this group. This Committee consists of representatives across institutions (AGWEST, CSIRO, CALM, WRC, UWA, MURDOCH, DEP) and discipline areas working with salinity-related issues. The Technical Committee has undertaken a review, to be published in 1999, of current research in 12 discipline areas, and is currently undertaking an assessment of abatement options proposed by the revised Salinity Action Plan.
Review of socio-economic research priorites for salinity in WA
David Pannell
As a part of the review of salinity R&D outlined above, an informal survey of R&D priorities in the socio-economic sphere was conducted. David Pannell collected and synthesised this information. It was concluded that the area with the greatest discrepancy between current effort and research needs is Institutional/policy design, particularly topics under the heading "Design of new institutional arrangements and policies". There seems to be wide agreement that this is the top priority for new funding. Other areas in need of new work were:
Adoption of new farm practices.
Decision support tools.
Saltland products: whole-system study of economic, marketing, social, agribusiness and farm management aspects.
Quick economic assessment of available options.
Farmer current practices and attitudes regarding monitoring bores.
Extension methods for salinity.
Investigation of frequency of bore monitoring
Sally Marsh, Michael Burton, David Pannell
External collaborators: Carolyn Daniels, Landcare coordinator; Arjen Ryder, AgWest.
Funding: GRDC
Bores to monitor groundwater levels are a component of many catchment plans and many are still being sunk by farmers. Using data from the Jerramungup LCDC we are exploring why many farmers in this catchment appear to have stopped monitoring ground water levels. In 1989, 110 bores were sunk in the 7 catchments represented by the Jerramungup LCDC. Monitoring responses were initially high, 96% and 95% in 1990 and 1991 respectively, but fell to 74% by 1993 and then further to 44% by 1997. This represents a substantial disadoption, and one which needs to be further explored. Disadoption is usually associated with a perception that the practice was not useful, or is no longer relevant or of any use. This data gives us an opportunity to assess how useful this monitoring practice is perceived to be. Perhaps the monitoring of groundwater levels per se is not a useful management tool for farmers trying to address problems of rising groundwater levels on their farm, or perhaps there are problems with the monitoring frequency or other aspects of the approach being promoted.
Adoption of practices to prevent dryland salinity
David Pannell, Sally Marsh
Current policy approaches to salinity rely on farmers to adopt non-traditional practices voluntarily. This research is looking at the salinity management practices available to farmers and considering their adoption within the context of existing evidence and theory about adoption of new practices. There are several aspects of the salinity problem that mean that the adoption problem is considerably more difficult than for many other agricultural issues. For salinity, the problem of uncertainty about the consequences of adoption is profound. It is very difficult to resolve this uncertainty by the method traditionally used by farmers – on-farm trialling – due to the long time scales and the complexity of hydrogeological processes involved. A second problem is that of "externalities", whereby action on one farm has effects on another. This reduces the incentive to adopt in a number of ways. Current hydrological information shows that this aspect has been over-emphasised in the past. It is important to recognise parts of the landscape where externalities do not cloud the adoption problem. Thirdly, the economic desirability of the practices being promoted varies widely from region to region, and farm to farm. There are important policy implications from these insights.
Uncertainty and adoption of salinity prevention practices
David Pannell
Uncertainty has been under-recognised as an impediment to the adoption of salinity prevention practices. In this research I focus on the various causes and impacts of this uncertainty. High levels of uncertainty inhibit adoption because (a) most farmers are psychologically averse to risk and uncertainty, (b) uncertainty leaves room for misunderstanding and misperceptions about the innovation and (c) in some cases there can be an option value from not trialing. I emphasise that adoption is a process involving collection, integration and evaluation of new information (i.e., reduction in uncertainty over time). I discuss the range of factors that contribute to high uncertainty about conservation innovations, factors that reduce the potential for trials to reduce this uncertainty, and factors that contribute to the high cost of trials of conservation technologies. I argue that even though Landcare and other extension programmes are enhancing the flow of information within the agricultural community, they are not helping to reduce major causes of farmer uncertainty about salinity management practices. Innovative approaches to extension are needed to address this problem. New technology development could also help.
The significance of externalities and other causes of market failure for salinity
David Pannell
There is a widely held view that the salinity problem is fundamentally affected by what economists call "externalities". It is believed that farmers affect each other in their management of salinity, and that this causes a range of problems, including a failure by farmers to manage appropriately (a) because of fears of externally imposed salinity and/or (b) because some of the benefits of their action are "exported" to their neighbours. While this is certainly true in many cases, it is by no means universally true. This is important because the problem is likely to be more tractable in circumstances where co-operative action is not necessary. There are both hydrological and economic reasons why externalities are not as widespread or as important as has been widely believed. These are being explored in this research. Nevertheless, the absence of an externality problem does not make it easy to address salinity. There remain a number of other problems of market failure and severe difficulties in the adoption process.
Farmer perceptions of salinity and treatment options
Elizabeth Kington, David Pannell
We have little firm information about Western Australian farmers’ perceptions of their salinity problem, and their management responses to it. In this study, a detailed survey was conducted of farmers in the Kent catchment, on Western Australia’s south coast. The survey investigated the extent and timing of land clearing, farmer involvement in the National Landcare Program, areas of salinity on different farms, farmers’ expectations about future areas of salinity, farmers perceptions of what would be necessary to fully prevent increases in salinity, farmers’ current management responses, and the relationships between current salinity and a range of issues, including past clearing and conservation practices.
Assessment of past salinity policies
Elizabeth Kington, David Pannell, Kieth Smettem
External collaboration: Geoff Syme, CSIRO
Australian governments over the past 20 years have implemented a range of policy approaches to salinity. This study provides a detailed description of the various policy measures used, and attempts to identify why they have failed to prevent the ongoing increase in areas of saline land. The study, undertaken by Elizabeth Kington for her PhD thesis, considers technical, social and economic aspects of the problem, within a broad policy evaluation framework. It features a case study of the Upper Kent River catchment on the south coast of Western Australia.
Related Publications and Reports at UWA since 1990
Barton, J. (1992). Optimal management of dryland salinity in selected catchments in Western Australia. Agricultural Economics Discussion Paper 4/92, Nedlands, W.A.: University of Western Australia, School of Agriculture.
Barton, J. (1994). Economic aspects of dryland salinity in South Western Australia. M.Sc. Thesis, University of Western Australia, Dept. of Agricultural Economics.
Hertzler, G and Barton, J. (1992). Dynamic model of dryland salinity abatement. Agricultural Economics Discussion Paper 4/92 Nedlands, W.A.: University of Western Australia, School of Agriculture.
Marsh, S.P. (1998). What can agricultural researchers do to encourage the adoption of sustainable farming systems? Paper presented at the CLIMA/ASSSI(WA Branch) Forum, Sustainability of Farming Systems with a Focus on Future Management of Water and Nutrients, CSIRO, Perth, Western Australia, August 13-14 1998. (SEA Working Paper 98/05)
Marsh, S.P., (1998). Researchers and the sustainability message, Agricultural Science 11(4): 29-32.
Marsh, S.P. and Pannell, D.J. (1997). What we think we know about extension, and why its not enough for Landcare. Paper presented at Western Australian Landcare Conference, Geraldton, 1-4 September 1997. (SEA Working Paper 97/03)
Mercer, Jenny (1996). The Role of the "Oil Mallee" Eucalyptus kochii subsp. kochii in increasing the long-term profitability and sustainability of farming systems in low rainfall regions of Western Australia. Honours thesis, Faculty of Agriculture, UWA.
Mueller, U., Schilizzi, S. and Tran, T. (1999). The dynamics of phase farming in dryland salinity abatement, Australian Journal of Agricultural and Resource Economics 43(1): 51-67. (SEA Working Paper 98/04)
Pannell, D.J. (1998). Landcare and the adoption of sustainable farming systems, Proceedings, Profitable and Sustainable Farming Systems - Where are the $?, Marcus Oldham College, Geelong, Victoria, 2-3 July 1998. (SEA Working Paper 98/02)
Pannell, D.J. (1999). Uncertainty and Adoption of Sustainable Farming Systems, Paper presented at the 43rd Annual Conference of the Australian Agricultural and Resource Economics Society, Christchurch, New Zealand, January 20-22 1999.
Pannell, D.J. (1999). Social and Economic Challenges in the Development of Complex Farming Systems, Agroforestry Systems 45(1-3): 393-409. (SEA Working Paper 97/02, Agricultural and Resource Economics, University of Western Australia) abstract full paper (65K)
Pannell, D.J. (1998). Is Landcare extension sustainable? Australian Grain, volume 8, Oct-Nov.
Pannell, D.J. (1999). Why is the Adoption of Sustainable Farming Systems Often Slow or Low? Sustainable Agriculture Solutions.
Salerian, J. (1991). Economic analysis of soil salinity in a sub-catchment in Western Australia, PhD Thesis, University of Western Australia, Dept. of Economics.
Schilizzi, S. and White, G. (1999). Dryland Salinity Control: What Do We Usefully Know? SEA Working Paper 99/03, (available via http://welcome.to/seanews)
Wallwork, Simon (1995). Adopting Control of Dryland Salinity in a Wheatbelt Catchment: A Case Study. Honours thesis, Faculty of Agriculture, UWA.
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