Monthly Archives: May 2005

54 – Ivory towers are safe

If you want to keep up with the latest issues in agriculture there is no substitute for chatting with farmers. In my experience, most are generous with their time and knowledge and interested to see what they might pick up from you, but occasionally things don’t work out so well. This is the story of such a time.

There was one particular day in 1987 when the farming community and I didn’t get on so well. I was in the early stages of my PhD at the University of Western Australia. I was working on the economics of weed control so I decided to meet up with some farmers to discuss their weed management. We had a new post-doctoral research fellow in the Faculty, Sushil Pandey from Nepal, who had never been on an Australian farm, so he was keen to come along. We asked Greg Shea (better known as Shady), then an adviser at Northam, to line up a few farmers for us. On the appointed day, we picked up Shady at Northam and took him in our car down to York. Our first farmer was Mr Jones. (Farmers’ names have been changed to protect the guilty.) The farmer’s directions, which Shady had written down, were a bit vague, but eventually we found the place. We were supposed to go straight past the house and up the hill to the shearing shed. We went past the house and up the hill, but there didn’t seem to be any shearing shed. “Maybe it’s just over the hill.” We went through one gate and then another without success. Maybe it’s over that next hill. Finally after about eight gates, with Shady shutting each one behind us, we decided that we were on the wrong track. Just then I saw a 4WD ute in the rear view mirror just coming over the hill. We waited for the farmer to catch up to us (through two gates). As he arrived and got out, Shady strode up, hand outstretched, and said, “Mr Jones, Greg Shea, Department of Agriculture”. Mr Jones’s hand was not outstretched. He did not look pleased to see us. He said

“F***in’ Department of f***in’ Agriculture. What the f*** do you think you are doing?”

There were many further elaborations on this theme. I’ve rarely seen anyone so angry. A sixth sense told me that this was not the tame farmer we were supposed to be meeting. In fact he was feral, especially over us having pulled him away from some important task he was working on.

Eventually after Shady explained the situation (with Sushil and me bravely protecting the inside of the car from any sudden attack), Mr Feral was able to tell us that Mr Jones was in fact his neighbour. We were very glad to get away.

The rest of the day went pretty well, until almost the end. We met up with a very sharp farmer who we’ll call Mr Smith. We looked at a few of his impressive crops and then were talking in front of the house. We were starting to make “it’s time to go” noises when Mr Smith’s father appeared and took an interest in us. Mr Smith Senior was not a member of the temperance society. In fact, Mr Smith Sr had gone to some trouble that afternoon to make clear to one and all his disdain and disregard for the very idea of temperance. He took a great shine to Shady, especially after Greg successfully named a piece of old metal pipe from the gold fields. “What’s thish?” “A dolly”. Senior beamed. He was so happy with us that he started to do a little dance, singing incoherently, playing harmonica and shuffling around the group of four of us like a sort of bizarre totem pole ceremony. Poor Junior was embarrassed. We tried to say not to worry and to leave.

But then Senior decided we were such good friends that he would be willing to let us see his priceless collection of war relics. Would we like to see it? Well yes we would, but we’re really running a bit late and we hoped he’d understand if we just got on our way. Mr Smith Jr encouraged us to leave. Mr Smith Sr encouraged us to stay. Vigorously. No. Furiously. When we got into the car, the look on Senior’s face made me glad he was not armed. The sensible thing to do at this stage would probably have been to get out and go and look at his relics. But something in Senior’s eyes made me feel that there was some risk in this course of action. We decided to make a break for it. But before we could leave, Senior jumped into his 4WD and put it between us and the gate out of the yard. “If you don’t look at the relics I’ll f***in’ ram you” he screamed. He could barely stand up, so his aim had to be subject to some doubt, but he did have a big roo bar. More than ever it looked unsafe to back down and look at the relics. He might have just run us down. The only way out was forward.

Suddenly our chance appeared. Junior tried to grab the keys out of Senior’s ignition, but he shot forward to prevent this, clearing the way for our escape. I planted my foot and hurried out of the yard and down the bumpy track towards the front gate. I had seen an angry farmer in a 4WD in my rear view mirror already once today. Now I could see a drunk angry farmer, bearing down on us at suicidal speed. I sped up as much as I could. As we neared the gate, I had to veer around a patch of trees and then we were out on the gravel road. I looked back to see Senior go straight through the trees, with the car leaping wildly, missing thick tree trunks by inches and throwing up a cloud of dust, leaves and twigs. I tried to plant my foot, but got into a series of uncontrolled fish tails, swerving one way and the other. Eventually I got control, but by then I had lost my lead. I sped along at 120, 130, 140 – stupid speeds on a gravel road with a drunken maniac behind us. Sushil was in the back looking a very unusual colour muttering helpful things like “Oh God”, “Be careful!” and “I’m glad I’m not driving”. Personally, I was glad I was. I didn’t want my life in anyone else’s hands at this time.

We were coming up to a T junction where the gravel met the bitumen. What the hell was I going to do? If I slowed down, he might run into us from behind and send us into a crash. If I hit the T junction at 140, I could see us flying through the air like a stunt car and landing like a javelin in the paddock ahead. That looked certain. The risks of slowing down looked merely extreme.

I slowed down and thankfully so did he. Perhaps he had forgotten why he was angry by this time, or perhaps he’d only ever wanted to scare us. Whatever the reason, he didn’t follow once we reached the bitumen and turned left. I could almost hear him laughing as we sped away.

We all started breathing again. Sushil’s colour started to normalise. His first day of meeting Australian farmers was certainly a memorable one. I don’t think he’s been on a farm since. I have, but never with the same degree of excitement as on that day. Years later I heard that the old man had died. (I imagine his liver packed up.) I’m not a spiteful person, but I’ll admit that I didn’t feel wracked with grief.

David Pannell, The University of Western Australia

53 – Thinking like an economist 17: Strengths of economists

As part of a survey of policy makers and policy advisers in 2002 I asked, “What are the strengths of economists (relative to other disciplines) in providing advice or analysis on policy?”

All of the responses, without exception, highlighted positive aspects of the economics paradigm and approach to analysing problems. Positives identified included its potential for breadth, its ability to integrate diverse technical information, its focus on trade-offs and opportunity costs, its potential to consider distributional outcomes (winners and losers), its rigour, quantifiability, and robustness.

They provide discipline and rigour that other areas often lack. Economic measures are generally well understood and many other disciplines are qualitative. [Economists] allow comparisons to be made in a more objective manner. (Don McFarlane, Water and Rivers Commission, Western Australia).

The discipline provides a robust and fairly comprehensive analytical framework for assisting policy makers to make informed decisions. The strength of economics is that it facilitates clear and consistent policy formulation, advice and analysis. It must be noted that economics has its limitations (particularly as regards non-market goods). However, a good economist should clearly recognise and work within these restrictions. (Phil Connolly, NSW Treasury)

Logical application of basic economic concepts: opportunity costs, recognition of decision makers’ incentives to maximise net benefits. (Ian Wills, Monash University).

Economics is in my opinion by far the most rigorous of the social sciences. (I am not saying that the others have nothing to teach us.) (John Hyde, former member of Federal Parliament).

Ability to integrate information from a range of disciplines, some powerful analytical tools, often genuinely interested in policy issues, at ease with “constrained optimisation”. (Ross Kingwell, Department of Agriculture Western Australia).

A sound, consistent, quantifiable theoretical framework (Kym Anderson, University of Adelaide).

The most significant is that they can provide a way of clarifying or measuring the level of agony, use of resources and tradeoffs in a systematic way. (Roger Payne, Director General, Water and Rivers Commission, Western Australia).

Economics is about interdependence and opportunity costs. Economists are stronger on uncertainty than many other disciplines. (Alistair Watson, Freelance Economist).

A focus on broader issues and outcomes. (Mark Altus, Department of Treasury and Finance, Western Australia).

Economists have a tremendous advantage in being able to understand the “bigger picture”. And we should not underestimate the advantage of having an understanding of basic economic principles. Having concepts in the back of one’s mind like “public goods”, “externalities” and “market failure” give economists an advantage over others in the policy area. (Trevor Wilson, Queensland DPI).

Ability to analyse within the context of a rational framework. (Graeme Robertson, Department of Agriculture Western Australia)

General equilibrium/an economy wide focus, not just individual isolated sector. (Neil Byron, Productivity Commission).

Economists are also able to contribute to the policy debate in ways that others in the community can not or will not do. The economic paradigm provides us with a unique capacity to do this. Perhaps, for this reason, there is a tradition of providing independent advice in defence of the public interest that seems to be stronger within economics than in most other disciplines. This point was made strongly and repeatedly in the survey responses.

The profession of economics is at its best when it is defending the public interest in the widest possible sense. (David Bennett, NRMC Pty Ltd, Natural Resource Management Consultants)

A strength of economists is our tendency to focus on public interest outcomes. (Gary Stoneham, DNRE Victoria).

I think that there is a need for economists to try to reduce “pork-barrelling” and insert a degree of economic argument into political allocations. In the end society benefits more from Governments making sensible investment decisions, rather than using money to keep the current government in power. But it is an uphill battle. (David Bennett, Natural Resource Management Consultanting)

Economists are less likely to be captured by special interest groups. (Ross Kingwell, Department of Agriculture Western Australia).

Politics is overly dominated by self-interested groups. By focussing on efficiency, we can contribute to better social outcomes. (Colin Mues, ABARE).

Professional economists should not be in the popularity business. (Alistair Watson, Freelance Economist).

Born with talent, having acquired specialist knowledge at public cost and probably enjoying very satisfactory lifestyles at public cost, economists are not justified in ignoring public policy issues while they count the angels on pinheads. Of course, it would be extremely inefficient for individuals to devote large licks of effort to things they are not good at, but being privileged members of an open democratic society they should try to contribute to it. (John Hyde, former member of Federal Parliament).

David Pannell, The University of Western Australia

Further Reading

Pannell, D.J. (2004). Effectively communicating economics to policy makers. Australian Journal of Agricultural and Resource Economics 48(3): 535-555. full paper from journal (138K pdf) also available via the Journal homepage:

Pannell, D.J. (2004). Is economics hard hearted? Pannell Discussions, No. 8, 12 July 2004,

52 – Thinking like an economist 16: Weaknesses of economists

As part of a survey of policy makers and policy advisers in 2002 I asked, “In your view, what are the common weaknesses of economists in their attempts to influence policy?” The responses should be helpful to economists who want to make a difference.

There were two strong themes in the responses. The first relates to the narrowness of the economics paradigm and of the advice its practitioners provide. There were so many responses around this theme that it ought to focus economists’ attention firmly onto this issue.

Too isolated from other disciplines. (Gary Stoneham, DNRE Victoria).

A tendency to be too academic rather than pragmatic. They may be seen as not in touch with the real world. (Mark Altus, Department of Treasury and Finance, Western Australia).

Too often economic advice is one-dimensional. [Economists] try to promote a “pure” economic thesis and do not readily try to deal with non-quantitative information or intangibles. This usually results in a narrow range of options. (Graeme Robertson, Department of Agriculture Western Australia).

The inability of many economists to understand and well explain the diversity of values and issues which can be taken into account within a micro reform framework. For example, too often we hear that economists are not interested in certain non-monetary values i.e. lifestyle, welfare, equity, environment, ethics, etc. (Scott Davenport, NSW Agriculture).

They take for granted the liberal foundations of at least micro-economics. (John Hyde, former member of Federal Parliament).

Their reform suggestions, if they get to Boards of Management, can be seen as being narrowly defined. (Don McFarlane, Water and Rivers Commission, Western Australia).

A belief that efficiency is a necessary precondition rather than something that can be traded off against other objectives. (Mike Young, CSIRO Land and Water).

They think “economics” is self evident and sufficient in itself. (Roger Payne, Director General, Water and Rivers Commission, Western Australia).

Tendency to under-emphasise non-quantitative information. (Phil Connolly, NSW Treasury).

Too little attention to private and public transaction costs. (Ian Wills, Monash University).

The call for a broad perspective does not imply that economists should attempt to dominate the intellectual high ground. Modesty in claims for the discipline is important; we are only once source of information contributing to a broad decision process.

The second large set of responses related to the quality of economists’ communication. In summary, respondents felt that economists tend to use too much jargon, and to communicate in ways that are too elaborate and technical for non-economists

They argue for other economists. (John Hyde, former member of Federal Parliament).

[They should] avoid using jargon. (Mike Young, CSIRO Land and Water).

Make sure they are talking to the audience and not their colleagues over the heads of the audience. (Alistair Watson, Freelance Economist).

What sounds perfectly acceptable to a fellow economist might be incomprehensible or even offensive to a policy maker with a different background. Therefore, it is essential that economists develop their ability to describe their proposals in a manner that is comprehensible to economists and non-economists alike. (Phil Connolly, NSW Treasury).

I would say that economists are not the only discipline to sin in these ways in communication. Sociologists are possibly the worst offenders with jargon, and some highly technical sciences are not much better. I don’t believe it is that hard to avoid. Mostly it is a habit of speech that one can break with a little care and effort.

David Pannell, The University of Western Australia

Further Reading

Pannell, D.J. (2004). Effectively communicating economics to policy makers. Australian Journal of Agricultural and Resource Economics 48(3): 535-555. full paper from journal (138K pdf) also available via the Journal homepage:

51 – Links between dryland salinity and climate change

Climate change may interact in complex ways with land degradation in their effects on land management. For example, dryland salinity is linked to climate change in at least six ways.

Not only are there some remarkable parallels between dryland salinity and climate change (PD#50), but there are also some close links between them. It is one example of the way that climate change, to the extent that it does occur, will interact with other natural resource management problems. Here are the obvious links with dryland salinity.

  1. Changes in rainfall levels and rainfall patterns will affect rates of groundwater rise. To the extent that climate change involves lower rainfall, the salinity threat is likely to be reduced, although some work suggests that rainfall in summer may actually rise in some regions of Australia.
  2. Climate change (rainfall, temperatures and frost risk) will change the yields of different land uses, affecting the relative attractiveness of land uses for salinity-management.
  3. Climate change may alter production patterns internationally, driving changes in the relative prices of agricultural products, affecting the relative attractiveness of land uses for salinity-management.
  4. Changes in yields and prices affect the overall profitability of farms, which affects the capacity of farmers to adopt some of the salinity-management practices that have high up-front costs.
  5. If climate change policy leads to the establishment of markets for carbon credits, this would influence the adoption of woody perennials, which are recommended for salinity management in some cases.
  6. Adoption of woody perennials for purposes of salinity management would sequester carbon and contribute, at least a little, to mitigation of climate change.

These links will affect the performance of policies for both salinity and climate change. They complicate the evaluation of either sort of policy.

Michele John has conducted a detailed analysis of the interaction between climate change and dryland salinity in the eastern wheatbelt of Western Australia. Her analysis suggests that effects on the performance of perennial options (link 2 above) is likely to be less important than impacts on farmer capacity to adopt innovations (link 4).

In addition to Michele’s analysis, I would make the following observations about the other links. Link 5 is not likely to have a major influence on land-use decisions, as the scale of carbon credits being offered in Canada and Europe, who have signed the Kyoto Protocol, is too small to swing decisions unless the decision happened to be finely balanced to start with. The influences of links 1 and 3 are highly uncertain but could be significant. The significance of link 6 would be tiny in terms of reducing climate change.

Overall, climate change in general may interact with land degradation in effects on land management. Those interactions are likely to be complex and highly case-specific. Making sense of it requires a detailed farm-level analysis (and potentially larger scale analysis).

David Pannell, The University of Western Australia

Further Reading

John, M., Pannell, D.J. and Kingwell, R. (2005). Climate change and the economics of farm management in the face of land degradation: Dryland salinity in Western Australia. Paper presented at International Policy Forum on Greenhouse Gas Management, Victoria, British Columbia, April 28-29 2005. full paper in HTML (218K)

50 – Parallels between dryland salinity and climate change

There is a remarkable number of similarities and parallels between climate change internationally and dryland salinity in Australia. They include the way that the seriousness of both have often been exaggerated, the ineffectiveness of policies intended to address each issue, the large scale of response needed for prevention, and the long lags from taking action to observing a response.

Last week I attended a conference in Victoria BC (Canada) on economic aspects of climate change. As a small part of my presentation I made the point that, in a number of ways, the Australian experience with dryland salinity is remarkably similar to the international situation with climate change. Indeed the parallels between the two issues are striking. For example, consider the following.

The likely impacts and seriousness of both salinity and climate change have often been exaggerated. In any case, priorities should not depend solely on the projected impacts, but on the benefits and costs (not just financial) of proposed actions. Previously, people in Australia tended to focus on the seriousness of projected impacts of salinity but didn’t look hard at the effectiveness or expense of proposed actions. Similarly, the public debate on climate change seems to focus almost entirely on its impacts and not at all on the benefits and costs of possible responses to it.

The policies put in place for dryland salinity in Australia have been badly designed and will fall far short of meeting their objectives. The international policy response to climate change, the Kyoto protocol, is predicted by the Intergovernmental Panel on Climate Change (its strongest advocate!) to have such a minute impact on temperatures over the course of a century that it would not be detectable.

In both cases, the scale of change in human behaviour and economic activity that would be needed to significantly prevent the problem is very great. The policy responses have not nearly come to grips with this. They are like using a really, really expensive umbrella to ward off a tornado.

The core policies for salinity have been woefully neglectful of investment in development of new technologies that would be commercially attractive. They have assumed (incorrectly) that suitable technologies already exist. Similarly, the level of investment in developing renewable energy technologies is miniscule compared to the projected costs of Kyoto compliance. In both cases the hope is that other policy measures will prompt innovation, but I think a more direct investment in innovative R&D would be much cheaper and more effective.

Both problems are slow to develop, and the benefits of preventative actions taken now will tend to occur only after long lags.

There is a lot of momentum in the projected development of both salinity and climate change. They will be very hard to stop.

Adapting to/living with salinity has proven to be one of the key responses. So it will be with climate change.

The experts in salinity used to be predominantly from one technical discipline area, hydrogeology. For climate change it is climatology. Balanced and effective prescriptions for action in response to complex environmental problems depend on the involvement of a range of disciplines. Well-intentioned and concerned climatologists have had a field day in the debate, but their prescriptions should not go unquestioned by people with a broader policy perspective. Many people from other disciplines have serious concerns about the way that global climate modellers have controlled the agenda, the directions they have taken the policy debate, and the way that their results have been publicly represented.

There is a lot of uncertainty about the likely future extent of dryland salinity in some regions (e.g. in the state of Queensland). Uncertainty about the future of climate change is great too. Indeed it is much greater and more pervasive.

Of course there are many differences as well. One prominent one is that climate change affects everyone, whereas dryland salinity is more localised in its effects, and sometimes is completely localised. Another difference is that scientists have played a very prominent embedded role in the climate change bureaucracy (the IPCC), whereas they have had almost no role in framing dryland salinity policy up to this point.

David Pannell, The University of Western Australia