Ross Kingwell, Stefan Hajkowicz, John Young, Dean Patton, Lindsay Trapnell, Alexandra Edward, Mike Krause and Andrew Bathgate
 

Introduction

Dryland salinity is a growing environmental problem affecting the profitability of grain production in many parts of Australia. To combat the threat of salinity often requires extensive remedial interventions, yet economic analyses show these interventions often are prohibitively expensive (Pannell 2001, Hajkowicz and Young 2002). Further, there has been criticism that the allocation of millions of taxpayer dollars to combat salinity to-date has been of limited effect. There is a growing consensus that efficient and effective investments require more careful targeting of salinity management funds.

In 2002 the Grains Research and Development Corporation (GRDC) and the National Dryland Salinity Program funded a detailed economic evaluation of salinity management options in several main cropping regions of Australia. The purpose of the evaluation was to generate information to assist the R&D funders in their future funding of salinity management R&D. The main task of the evaluation was to identify the farm-level profitability of various salinity management options and ascertain which regions were well-served or poorly-served by the available options, and what were possible R&D opportunities and needs.

A team of investigators was required to report to the R&D funders within around 12 months. The approach taken by the project team was firstly to produce a spatial overview of salinity management issues and investment opportunities in Australia's main grain growing regions. Through collaboration with CSIRO, models and datasets derived from the National Land and Water Resources Audit were combined with other datasets to identify issues and opportunities of spatial importance to assist investment decisions for salinity management in Australia's grain growing regions.

Secondly, the team compiled a comprehensive list of economic assessments of salinity management options available to grain growers in Australia. The compilation identified what is known about the economic attractiveness of salinity management options in various regions of Australia. It also served to identify gaps in knowledge about certain options in various regions. Thirdly, this compilation was supplemented with additional commissioned economic analyses. These analyses considered some current and emerging salinity management options, selected because they either have not been previously subject to thorough analysis or are yet to be analysed in a particular region. Sensitivity analysis concerning their economic and technical attractiveness was reported. The GRDC’s grain growing agro-ecological zones , shown in Figure 1, were the framework for reporting.

Figure 1: GRDC Agro-ecological Zones

Key Findings

The report's key findings (Kingwell et al 2003) were:
• In the GRDC agro-ecological zones the salt-affected area in 2000 is estimated to be 2.6 million hectares. By 2020 the salt-affected area is forecast to grow by 1.1 million hectares to 3.7 million hectares.
• Zones with large increases include the WA Sandplain, SA Vic Bordertown Wimmera, NSW Vic Slopes, the WA Central and the Vic High Rainfall. Over 60 per cent of the additional salt-affected area will be in the GRDC Western Region, in particular the WA Sandplain zone and the WA Central zone. Some GRDC zones, such as the WA Sandplain and WA Central, are already major grain-growing regions so their forecast large increases in salt affected areas toward 2020 will impact on national crop production.
• Across all the GRDC zones, if half the forecast additional area to be salt affected is normally sown to crops, this represents at worst a potential loss of around 0.5 million hectares of crop land towards 2020.
• Zones forecast to experience large salinity problems over the next 20 years (WA Sandplain, SA Vic Bordertown Wimmera, NSW Vic Slopes, the WA Central and the Vic High Rainfall) are, with the exception of the Vic High Rainfall zone, also main consistent sources of Australian farm profit. Declines in farm profit due to salinity within these zones will potentially lessen overall grain industry profits and impact on regional economies.
• The impact cost of salinity, measured as the present value of the decline in farm profit over the period 2000 to 2020 due to worsening salinity, is around $238 million. Including impact costs in perpetuity increases this cost to $387 million which equates to an annual impact cost of around $29 million in foregone farm profit.
• The agricultural cost of salinity in the Murray Darling basin, expressed as an annualised cost, has been estimated to be $28 million (Heaney et al. 2001). The equivalent annualised cost found in this study for the GRDC zones lying within the basin was $20 million. The difference between the estimates arises from the different modelling approaches and datasets used. However, both studies are in agreement that the cost to agriculture of salinity is generally far less than commonly portrayed.
• Most of the farm-level benefits from plant-based salinity management options will come from their higher relative profitability and farming systems advantages. Where it is technically and economically feasible to contain the spread of salinity or recover land in early stages of salinisation, then the level of farm benefit from salinity management can be high. In other situations, adaptation options, such as saltland pastures, generate additional benefits. Farms or regions with large areas of salt-affected land will be particularly reliant on saltland management options as sources of additional farm profit. A study of the GRDC Western region suggests that much of the farm-level benefits from salinity management could potentially come from containing the spread of salinity, provided combinations of technically feasible and profitable options are available and adopted.
• Most farms have adopted a range of salinity management options. A number of plant-based options to manage salinity are suited to large areas across several GRDC zones but the farm-level efficacy of many options is influenced by their inferior profitability.
• Zones where the emerging impact cost of salinity is high, yet their groundwater systems are not predominantly local are a challenge to farmers, policy-makers, off-farm beneficiaries (and losers) and providers of technical solutions to salinity because of the long term nature of water movements. Such zones include SA Vic Bordertown Wimmera, NSW Vic Slopes, Vic High Rainfall and NSW Northeast - Qld Southeast. In these zones salinity management options need to be effective and profitable across much of the landscape to mitigate the short-term and long-term impacts of salinity.
• Lucerne is planted for salinity management on more farms than any other plant option. Lucerne is popular in NSW, SA and Vic, with large areas grown in NSW and moderate areas in SA. Deep-rooted perennials, other than lucerne, are popular in Vic and are grown on a moderate scale in that State and in NSW. In WA saltbush and bluebush are popular; yet are grown on a limited scale. Salt tolerant crops, particularly barley, are grown on a moderate scale only in WA.
• In broadacre regions across Australia around 724,000 hectares have been planted to trees to combat salinity. Although many thousands of farmers indicate they have planted trees to aid salinity management, in fact the area planted nation-wide is less than the area planted to lucerne for salinity management.
• WA leads by far other States in the area planted to trees with almost half a million hectares of farmland planted to trees for salinity management. Across Australia the area of trees planted to address salinity equals the area planted to oats or the combined area sown to field peas, chickpeas, rice and sunflowerseed. Earthworks such as surface drains and deep open drains are very popular in WA as additional salinity management options.
• A review of almost 100 published economic studies of salinity management options reveals that most studies have concentrated on plant-based options to manage salinity. Since 1997 there has been a rapid increase in the number of studies of plant-based options. By contrast there are relatively few (and no recent escalation of numbers of) economic studies of engineering or whole-of-catchment options.
• Over a quarter of all economic analyses reviewed relate to one zone, the WA Central zone. This zone has extensive and unfolding salinity problems. Yet the SA Vic Bordertown Wimmera and Vic High Rainfall zones that are also forecast to experience significant increases in salt affected areas each have only 5 studies among the set of almost 100 collated studies.
• A suite of commissioned case studies in major grain growing regions affected by salinity reveals comprehensively that lucerne and saltland pastures are often profitable inclusions in farming systems. This finding applies across a range of GRDC zones.
• Phase rotations that incorporate lucerne, or lucerne rows with crop interrows, are both profitable systems. To adopt lucerne, farmers need to be aware of its management requirements. Further, on each farm there is an optimal area of lucerne. Planting additional areas beyond the optimal area will only decrease farm profit. In many situations inclusion of lucerne boosted annual farm profit by between 1 to 20 $/ha of farm arable area, in spite of lucerne usually only being planted on a small portion of the farm.These profits equate to a paddock-level profit of up to $100 per hectare of lucerne.
• Saltland pastures boost farm profits through a more productive use of saline areas. In many situations inclusion of saltland pastures boosted annual farm profit by between 2 to 6 $/ha of farm arable area, in spite of the small portion of the farm devoted to these pastures. These profits can equate to a paddock-level profit of up to $120 per hectare of saltland pasture, provided the paddocks are not too badly affected by salt.
• In relative terms, lucerne often generates more profit for most farm businesses than saltland pastures. Once the productivity potential of a soil is lost through salinisation then the introduction of saltland pastures, at best, often offers only a limited improvement in farm profit for many farm businesses.
• In circumstances where only small areas on a farm will be sown to lucerne or other profitable deep-rooted perennials (e.g. tagasaste), their contribution to countering the salinity threat will be minor. Often the economically optimal proportion of farm area devoted to these deep-rooted fodder species will only delay rather than prevent the onset of salinity and in some cases have virtually no impact on the rate and degree of salinisation. Some farmers will also need to consider engineering and tree-based options.
• A dilemma for many farmers, in spite of tree planting efforts to date, is that there are no readily available profitable tree options for widescale planting in most grain-growing areas. The economic analyses of many current tree options show that in general they are yet to compete well economically with current crop and pasture options. There are a few exceptions, such as oil mallees, in some situations.
• Although parts of many GRDC zones are climatically and edaphically suited to various tree species, a variety of technical and economic issues affect their widespread incorporation in grain production systems as a salinity management option.
• Engineering solutions can be expensive; especially if transporting the salinity problem to other graingrowers is to be avoided. Published case study evidence to date shows that, although engineering solutions facilitate water management, their farm-level economic justification is weak in many situations. However, as dryland salinity problems gradually emerge in many zones, farmer interest in the economics of engineering solutions to salinity will increase. Anticipating and reacting to this demand would seem desirable with an important task being to show where engineering works are cost-effective to help farmers best target their investment and to potentially to avoid unnecessary expenditure on engineering works.
• As areas of salt-affected land and waterways increase, farmer interest in other salinity management options, apart from plant-based options, will also probably increase. Hence, providing relevant information on commercial use of saline water would seem desirable.
• Harvesting surface water to reduce recharge is often now a more pressing concern than water erosion in some areas. The hope is that by moving water off a farm, recharge problems are lessened. In regions with local groundwater systems, such as in five of the WA GRDC zones and the SA Mid-North Lower York Eyre zone, this option may assist an individual farmer. However, the hydrological and economic implications of moving water off a farm need appropriate investigation to ensure that downstream farmers or environments are not adversely affected.
• Information or models that at low cost offer farmers reasonable predictions about the extent and rate of spread of salinity on their farms and the efficacy of options in treating the salinity would be highly useful. The position of a farm within a catchment, its soil properties, the hydrological nature of the catchment, rainfall incidence, plant options and their water use, surface and sub-surface water management are all important factors influencing a farm's salinity threat and management options. Ensuring that farmers have low-cost access to accurate information about these issues, and access to interpretive advice, will facilitate their decision-making for salinity management.
• In the vast majority of around 40 commissioned case study farm analyses and regional analyses, farmers and farming system analysts demonstrated that incorporation of various deep-rooted perennials boosted farm profit, improved water management and, in some cases, removed or lessened the rate of spread of salinity. However, reduced salinity impacts often were not observed for several years. Most of the farmers participating in the analyses were unaware of just how profitable were the changes in their farm management to address salinity concerns. Also most were not sure, in prospect, of how effectively recharge would be reduced and to what extent this would reduce the spread of salinity.
• Perennial fodder species appear to offer the best short to medium term prospect of providing a means of managing salinity in many agricultural areas through boosting farm profit. However, in many situations they may not be profitable at the scale required to have a significant impact on the rate of spread of salinity on farmland, or the rate of increase of saltload in rivers and streams. Hence, although profitable inclusions in farming systems in many situations, they may only slow or delay the onset of salinity or at worst have virtually no impact on the rate and severity of salinisation.
• In zones such as WA Central and WA Sandplain where some plant-based options to improve salinity management are shown to be potentially profitable, where the predicted increase in area affected by salinity is large, where much of the area of the zone is suited to the plant options and where the zone contains quick responding flow systems; then farmers may need access to farm demonstrations of the plant options to hasten their adoption of these options. In this case R&D funds could support farm demonstrations, investigate and remedy management problems and support the dissemination of farm findings. By contrast, in zones such as the SA Vic Bordertown Wimmera and Vic High Rainfall zones that have relatively few profitable deeper-rooted pasture options, where the predicted increase in area affected by salinity is large, and where the zone contains a slow responding flow system, then farmers' needs might be best served by R&D to:
(i) discover new species that reduce recharge yet are profitable inclusions across a large proportion of the zone's farming system;
(ii) develop appropriate engineering options;
(iii) generate profitable low recharge farming systems in any adjacent zones that are contributing, in the long term, to regional salinity problems. The main benefits of such R&D in adjacent zones may be to improve riverine environments.
This R&D focussing on development of new management options is also relevant to zones that do have some existing profitable options, as it offers the prospect on increasing the area of adoption of perennials to levels that will more effectively control salinity.
• The central R&D challenge is to develop farming systems that reduce recharge and maintain profits; as well as developing profitable farming systems that incorporate salt-affected land and saline water. The zones that require special focus are the WA Sandplain, SA Vic Bordertown Wimmera, NSW Vic Slopes, the WA Central and the Vic High Rainfall.

References

Hajkowicz, S.A. and M.D. Young (2002) An economic analysis of revegetation for dryland salinity control on the Lower Eyre Peninsula in South Australia, Land Degradation and Development, 13, 417-428.
Kingwell, R. (ed), Hajkowicz, S., Young, J., Patton, D., Trapnell, L., Edward, A., Krause, M. and Bathgate, A. (2003) Economic Evaluation of Salinity Management Options in Cropping Regions of Australia, (ed:R. Kingwell), GRDC & NDSP, ISBN 0-646-42276-6, pp.179.
Pannell, D.J. (2001) Salinity policy: A tale of fallacies, misconceptions and hidden assumptions, Agricultural Science, 14, (1): p35-37.

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Citation: Kingwell R.(ed)(2003). Economic Evaluation of Salinity Management Options in Cropping Regions of Australia, GRDC & NDSP, ISBN 0-646-42276-6

Limited copies of the full report are available from Ione Cooray: email: icooray@agric.wa.gov.au