Complex Adaptive System Modelling of River Murray Salinity Policy Options

This paper reports on complex adaptive system (CAS) simulation of the River Murray Basin in Australia to compare capacity of institutional options to maintain functioning of key river system within a "bandwidth" that limits irreversible system state changes and highly adverse consequences. The modelling framework characterise diverse irrigation agents who profit from water diversion and cause external salinity impacts, water and salt process that form the link between irrigator actions and agricultural profits and external costs, and a river manager who sets institutional rules. Emphasis is on the CAS nature of the system and on institutional rules to accommodate choosing actions differently based on con dition of the system has been referred to as state contingent management (Wills, 2003) or threshold based management (Roe and Van Eeten, 2001). Key findings are that policy focus on the source of salinity by reducing drainage are much more cost effective than strategies to mitigate salinity once it occurs and that state contingent dilution provision when it has high benefit and low opportunity cost is also a cost effective way to manage salinity.Resource /Energy Economics and Policy,

Market based policy for River Murray salinity

Environmental Economics and Policy,

Exploring the Cost Effectiveness of Land Conservation Auctions and Payment Policies

Until recently public efforts to encourage conservation on private land in many countries has primarily been through uniform payment policies. Auctions are increasingly used as a payment mechanism to acquire public benefits such as conservation actions that provide environmental improvements on private land (e.g. the US Conservation Reserve Program (CRP). The economic rationale for use of auctions is that they create decentralised incentives to offer bids at close to the true landholder opportunity costs, even when the implementing agency holds little information about these opportunity costs. This paper assesses the cost of a case study auction relative to four payment policies that use varying levels of information strategically to reduce rent payment and to prioritise funding based on environmental value. The results suggest that the estimated cost savings achievable with the discriminant price auction for conservation contracts depends on the policy to which the auction outcomes are compared. Auction cost savings are likely to be greatest when compared to policy alternatives involving little effort to discriminate amongst offers based on differences in landholder opportunity costs. A further key finding is that, for this case study, most of the savings resulting from the discriminant price auction could be attributed to the use of the environmental benefits index in project ranking and selection.Land Economics/Use,

Economic assessment of acquiring water for environmental flows in the Murray Basin

This article is an economic analysis of reallocating River Murray Basin water from agriculture to the environment with and without the possibility of interregional water trade. Acquiring environmental flows as an equal percentage of water allocations from all irrigation regions in the Basin is estimated to reduce returns to irrigation. When the same volume of water is taken from selected low-value regions only, the net revenue reduction is less. In all scenarios considered, net revenue gains from freeing trade are estimated to outweigh the negative revenue effects of reallocating water for environmental flows. The model accounts for how stochastic weather affects market water demand, supply and requirements for environmental flows. Net irrigation revenue is estimated to be $75 million less than the baseline level for a scenario involving reallocating a constant volume of water for the environment in both wet and dry years. For a more realistic scenario involving more water for the environment in wet and less in dry years, estimated net revenue loss is reduced by 48 per cent to$39 million. Finally, the external salinity-related costs of water trading are estimated at around $1 million per annum, a quite modest amount compared to the direct irrigation benefits of trade.Resource /Energy Economics and Policy,

Encouraging Revegetation in Australia with a Groundwater Recharge Credit Scheme

This paper describes a comprehensive method to design, test and then implement a Payments for Ecosystem Services (PES) framework to combat the environmental consequences of extensive native vegetation clearance in Australia. Clearing of vegetation, primarily due to the expansion of farming areas, has often resulted in regional dryland and irrigation salinity. The market based approach adopted ? a groundwater recharge credit trading scheme ? was designed using empirical data from a social survey and experimental economics. The objective of the trial is to test the cost effectiveness of an incentive based recharge credit trade scheme designed to engage landholders in establishing and managing deep rooted pasture and woody perennials to reduce these adverse salinity impacts. The scheme, based on a voluntary ?cap and trade? approach, allows farmers to meet recharge obligations by land management actions or by trading credits. Assessment of the scheme so far suggests that an incentive for aggregate group outcome achievement included in the design may have motivated higher enrollment rates than would have otherwise resulted. A schedule has been developed relating land management practices and recharge credits. The audited performance based payment system, has provided increased motivation to manage for environmental outcomes compared to the previous policy.Payments for Ecosystem Services (PES), market based instrument, cap and trade, salinity credit, revegetation, experimental economics

A stochastic model of irrigation adaptation to climate change in southern Europe

This paper develops a modeling framework that links hydrologic, agronomic, and economic variables within a discrete stochastic programming model. The model is used to analyze climate change adaptation measures in the irrigated agriculture of southern Europe. A wide range of both on-farm and institutional adaptation measures are considered. Results indicate that climate change will have sizable negative impacts on irrigation activities of southern Europe. The severity of these impacts depends on the policy choices and farmers ‟ investment decisions, which are interrelated. Results suggest that adaptation does not necessarily require substantial changes in the current European institutional setting. Rather, the main thrust should be placed on enhancing the adaptive capacity at farm level, and improving farmers ‟ knowledge of climate change impacts for better long-run investment decisions

Using ecosystem services to represent the environment in hydro-economic models

[EN] Demand for water is expected to grow in line with global human population growth, but opportunities to augment supply are limited in many places due to resource limits and expected impacts of climate change. Hydro-economic models are often used to evaluate water resources management options, commonly with a goal of understanding how to maximise water use value and reduce conflicts among competing uses. The environment is now an important factor in decision making, which has resulted in its inclusion in hydro-economic models. We reviewed 95 studies applying hydro-economic models, and documented how the environment is represented in them and the methods they use to value environmental costs and benefits. We also sought out key gaps and inconsistencies in the treatment of the environment in hydro-economic models. We found that representation of environmental values of water is patchy in most applications, and there should be systematic consideration of the scope of environmental values to include and how they should be valued. We argue that the ecosystem services framework offers a systematic approach to identify the full range of environmental costs and benefits. The main challenges to more holistic representation of the environment in hydro-economic models are the current limits to understanding of ecological functions which relate physical, ecological and economic values and critical environmental thresholds; and the treatment of uncertainty. (C) 2016 Elsevier B.V. All rights reserved.The authors acknowledge the backing of Universitat Politecnica de Valencia through its Support Programme for Research and Development. Support by the CSIRO for an internship visit by the lead author is also acknowledged. We also wish to thank the European Commission for financing the Seventh Framework Program project ENHANCE (FP7-ENV-2012, 308438) and the H2020 project IMPREX (H2020-WATER-2014-2015, 641811), and the Spanish Ministry of Economy and Competitiveness for granting the project NUTEGES (VI Plan Nacional de I+D+i 2008-2011, CGL2012-34978).Momblanch Benavent, A.; Connor, JD.; Crossman, ND.; Paredes Arquiola, J.; Andreu Álvarez, J. (2016). Using ecosystem services to represent the environment in hydro-economic models. Journal of Hydrology. 538:293-303. https://doi.org/10.1016/j.jhydrol.2016.04.019S29330353

Projected social costs of CO2 emissions from forest losses far exceed the sequestration benefits of forest gains under global change

Forest cover gains and losses occur in response to complex environmental and anthropogenic pressures. Yet the impact of forest gains and losses on the provision of ecosystem services differs markedly. Here we investigate the social costs of potential forest carbon change in Australia's intensive agricultural region from 2015 to 2050 using spatial forest cover change and forest carbon models combined with climate and socioeconomic projections. More than 24,000 possible scenarios were used to identify the trend and lower and upper bounds of forest cover/carbon change. Net deforestation (3.5 million hectares, Mha)under the lower bound forest cover (LBFC)projection was around one-third less than net reforestation (4.8 Mha)under the upper bound forest cover (UBFC)projection by 2030. However, the CO emissions (1.3 Gigatons of CO , GtCO )from deforestation were more than double the sequestration (0.5 GtCO )from reforestation. The social costs (up to 134 billion dollars)of the LBFC were almost five times the benefits of the UBFC (up to 28 billion dollars). The asymmetry decreased over time but persisted to 2050. This shows the markedly different social costs of potential forest carbon losses and gains under global change, evidence which can be useful to policymakers, stakeholders, and practitioners