VALUING AGROFORESTRY IN THE PRESENCE OF LAND DEGRADATION

Agroforestry can help prevent land degradation while allowing continuing use of land to produce crops and livestock. A problem with the evaluation of agroforestry using long-run static models and traditional discounting techniques is that the present value of the forestry enterprise is generally much lower than that of other production activities. This problem is common with Australian native species which tend to have a high environmental value but a low market value. This paper presents an economic analysis of an agroforestry operation in land prone to degradation and in the presence of positive externalities provided by trees. The value of the land is estimated based on the present value of expected returns in perpetuity under optimal management. Simulation analysis is used to evaluate the loss in land value caused by dryland salinity. A nonlinear programming model is developed and used to study the effects of timber prices and forest planting costs on optimal forest area and the level of salinity. Elasticities of relevant variables with respect to prices and costs are derived and policy implications of results are discussed.agroforestry, land degradation, externalities, dryland salinity, Land Economics/Use,

Carbon markets, transaction costs and bioenergy

Payment for carbon sequestration by agriculture and forestry can provide incentives for adoption of sustainable agricultural practices. However, a project involving contracts with farmers may face high transaction costs in showing that net emission reductions are real and attributable to the project. This paper presents a model of project participation that includes transaction and abatement costs. A project feasibility frontier (PFF) is derived, which shows the minimum project size that is feasible for any given market price of carbon. The PFF is used to analyse how the design of a climate mitigation program may affect the feasibility of actual projects.Climate Policy, Greenhouse Effect, Carbon Sequestration, Agroforestry, Transaction Costs, Environmental Economics and Policy,

DYNAMIC MODELS, EXTERNALITIES AND SUSTAINABILITY IN AGRICULTURE

The goal of sustainability in the management of natural resources and agricultural systems has received increasing attention during the 1990's. The many dimensions of the problem have been extensively discussed in the literature and a recognition of the interaction between economic, biological and social objectives have led to an acceptance of its multidisciplinary nature. When studying sustainability in agriculture, two aspects which cannot be ignored are (i) any measure must include economic as well as biological criteria and (ii) the dynamic nature of the production system and the environment (both physical and economic) must be accounted for. The goal of sustainable agricultural practices at the microeconomic level is explored in this paper, in an attempt to link the individual producer behaviour to the regulatory environment. Particular attention is paid to the dynamic aspect in the context of a grazing system, where plant and animal populations interact with each other and are influenced by the environment. An optimal control formulation is used to discuss the alternative ways in which externalities (such as salinity, soil loss and fertiliser and chemical run-off) can be incorporated into a model. The problem of valuing externalities and the role of the discount rate on optimal management strategies are briefly discussed.sustainability, dynamic modelling, bioeconomics, Environmental Economics and Policy, Livestock Production/Industries, Resource /Energy Economics and Policy,

A Positivist Approach to Pigouvian Taxes based on an Evolutionary Algorithm

Pigouvian tax, pollution tax, genetic algorithm, political preferences, Environmental Economics and Policy, Political Economy,

Management Options for the Inland Fisheries Resource in South Sumatra, Indonesia: I Bioeconomic Model

The inland fishery in South Sumatra, Indonesia, is an important source of income, employment and protein to small-scale fishers. Some overall indicators, such as virtual disappearance of certain important species and continuous reduction in the size of harvested fish, indicate that the fishery is not being exploited on a sustainable basis. In this study, an evaluation of the status of the existing fish stock is undertaken, and an analytical model for identifying efficient levels of exploitation of the fishery is developed. Primary data are used to describe the current costs of fishing effort. Secondary data, combined with results of analysis of primary data, are then used to derive a supply function for the fishery. Different types of fishing gear are standardised into a single type of fishing unit, and mixed species of harvested fish are treated as an aggregated fish stock. Empirical results reveal that both riverine and swamp fisheries in South Sumatra were biologically and economically over-fished during the period of study. This implies that regulation is required to reduce the level of fishing effort.smallholder fisheries, bioeconomic analysis, Inland fisheries, Indonesia, Sumatra, Resource /Energy Economics and Policy,

A Dynamic Optimisation Model of Weed Control

It is argued in this paper that static approaches to weed management, where the benefits and costs are only considered within a single season, are inappropriate for assessing the economic benefits of weed control technologies. There are carryover effects from weed management as weeds that escape control in one season may reproduce and replenish weed populations in following seasons. Consequently, it is appropriate to view weed control in the context of a resource management problem where the goal is to determine the optimal inter-temporal level of weed control that maximises economic benefits over some pre-determined period of time. A dynamic optimisation model for weed control is presented. Using the tools of comparative static analysis and Pontryagin's maximum principle, the conditions for optimal input use (ie weed control) are compared for static and dynamic situations. It is shown that a higher level of input use for a given weed population is optimal using a dynamic framework than would be derived under a static framework. The analysis is further extended by the incorporation of uncertainty and shows that the optimal level of weed control is also affected by uncertainty in herbicide efficacy and the survival of weed seeds produced. A case study of the optimal long-term management under deterministic and stochastic conditions of an annual cropping weed, Avena fatua, is presented.weed control, resource economics, optimal control, dynamic programming, wild oats, Farm Management,

AN ECONOMIC ANALYSIS OF FARM FORESTRY AS A MEANS OF CONTROLLING SOIL SALINISATION

Dryland salinity emergence is an important land degradation problem in Australia. Large areas of agricultural land where conventional crops and pastures are produced are at risk. The salinisation problem can be controlled by planting trees in conjunction with crops, but a disadvantage of growing trees as a farm enterprise is the long lag between planting and harvest. When farm forestry enterprises are evaluated with conventional discounting techniques they do not generally rank as an attractive alternative to annual crops on productive land. In this paper, a dynamic model that explicitly accounts for decline or improvement in land quality over a period of 40 years is presented. The model is solved for a hypothetical farm on the Liverpool Plains of NSW. The optimal area planted to trees and the optimal groundwater table trajectory through time are determined under a variety of scenarios. Implications of the results for policy design are discussed.soil salinity, farm forestry, dynamic modelling, Farm Management, Land Economics/Use,

Applying search theory to determine the feasibility of eradicating an invasive population in natural environments

The detectability of invasive organisms influences the feasibility of eradicating an infestation. Search theory offers a framework for defining and measuring detectability, taking account of searcher ability, biological factors and the search environment. In this paper, search theory concepts are incorporated into a population model, and the costs of search and control are calculated as functions of the amount of search effort (the decision variable). Simulations are performed on a set of weed scenarios in a natural environment, involving different combinations of plant longevity, seed longevity and plant fecundity. Results provide preliminary estimates of the cost and duration of eradication programs to assist in prioritising weeds for control. The analysis shows that the success of an eradication program depends critically on the detectability of the target plant, the effectiveness of the control method, the labour requirements for search and control, and the germination rate of the plant.bioeconomics, invasive species, operations research, population dynamics, weed control, Resource /Energy Economics and Policy,

A genetic algorithm approach to farm investment

Agricultural Finance, Farm Management,

What Price for the Right to Go a-Droving? A Derived Demand Approach

Travelling stock reserves (TSRs) were established in Australia as a way of allowing the passage of livestock through settled lands to facilitate stocking of new lands. Subsequently, they remained important as a way of moving livestock from property to property or from property to market. Today, the area of land dedicated to TSRs in NSW is estimated at 2.3 million hectares, which are used more as a source of feed than as a livestock thoroughfare. The value of TSRs as a source of feed is particularly important during drought periods, and pricing of access for walking stock has become a subject of contention within the Rural Land Protection Boards (RLPB). The price of TSR permits for walking stock is considerably lower than for agistment, thereby compromising the capacity of the system to be self-funding. The objective of this study is to explore possible pricing arrangements using a derived demand approach. A representative linear programming model was developed for a farm in Nyngan, NSW. The model was used to obtain estimates of the demand elasticity for TSR services with respect to their own price, the price of supplementary feeds and the price of wool. The effect of drought on these elasticities was also explored.travelling stock reserves, derived demand, grazing, linear programming, Demand and Price Analysis, Livestock Production/Industries,