Monthly Archives: July 2006

83 – “Water Resource Policy” workshop

Deb Peterson and I have organised a pre-conference workshop on water resource policy for the coming conference of the International Association of Agricultural Economists. It will be on 12 August 2006. Here is an ad for the workshop.

IAAE 2006 Preconference Workshop

Water Resource Policy

Water resources are high on the resource policy agenda throughout the world. There is a wide range of policy problems that governments continue to struggle with. This workshop brings together an outstanding program of international speakers to address some of the key policy issues in water resources around the world. Themes to be addressed include: water trading and prices; water and China (a joint session with the China workshop); water quality and environmental issues; and institutional arrangements. The workshop will include discussions by a panel of water experts. The workshop should be of value to policy makers and major water-resource users, as well as to economic researchers.

Date: Saturday 12 August 2006

Venue: Gold Coast Convention & Exhibition Centre, Gold Coast Hwy, Broadbeach.

Registration: register online or download printable registration form at



Welcome and Introduction
Deborah Peterson (Productivity Commission)
Water Trading and Prices
Chair: Donna Brennan (REAP Research)
Groundwater Irrigation in North India: Institutions and Markets
J.V. Meenakshi (IFPRI, HarvestPlus)
Questions and Discussion
Water Trading and Brokerage Mechanisms for Developing Countries
Mark Rosegrant (IFPRI)
Questions and Discussion
Water Trading in New Zealand – Theory, Practice and Potential
Irene Parminter (Ministry of Agriculture and Forestry, New Zealand)
Questions and Discussion
Water and China
Chair: Neil Byron (Productivity Commission)
Evolution of China’s Water Management—Overview
Jinxia Wang (Chinese Academy of Sciences)
Is China Exploiting Its Groundwater Resources? An Analysis of the Demand for Water
Richard Howitt (UC Davis)
Improving Allocative Water Efficiency in the Yellow River Basin, Northern China: A Study of Water Trade and the Return to Water Rights
Anna Heaney (ABARE)
Qin Fu (Chinese Academy of Agric. Sciences)
Zhanyi Gao (Ministry Water Resources, China)
Noel Gollehon (US Department of Agriculture)
General Discussion
Remarks from Malcolm Thompson for the premier sponsor, National Water Commission
Water Quality and Environmental Issues
Chair: Malcolm Thompson (NWC)
Environmental flows
John Quiggin (U Queensland)
Questions and Discussion
Salinity and Drainage Management in Irrigated Agriculture
Keith Knapp (UC Riverside)
Questions and Discussion
Protecting Water Quality
Dave Sunding (UC Berkeley)
Questions and Discussion
Institutional arrangements
Chair: David Pannell (Uni of Western Australia)
Economic aspects of infrastructure provision for rural water supply
Steve Beare (ABARE)
Questions and Discussion
Panel Discussion
Chair: Peter Cullen
David Zilberman (UC Berkeley)
Wendy Craik (CEO of Murray-Darling Basin Commission)
Wilfrid Legg (OECD)
Siwa Msangi (IFPRI)
General Discussion
Rapporteur: Mike Young (CSIRO Land and Water)

David Pannell, The University of Western Australia

82 – Seeking more effective NRM policies

Two of Australia’s main national programs for natural resource management are in their latter stages: the National Action Plan for Salinity and Water Quality, and the Natural Heritage Trust. These programs have been at the centre of a major national experiment in delivery of national and state funds through regional bodies. Discussions are currently occurring on what their successor program(s) should look like. It is timely, then, to consider the performance of the current arrangements and the potential for improvements to them.

The Australian Government is, indeed, already doing this. In late 2005, they commissioned a series of 8 reviews, conducted by external consultants, addressing issues such as salinity outcomes from regional investment, and the national investment stream of the Natural Heritage Trust (see under Books and Reports). Simultaneously, a three-person panel toured the country, reviewing the regional arrangements, and reported to government.

Of course, such a large experiment was destined not to succeed on all fronts. Weaknesses I see with the current arrangements include the following:

  • In a number of states, the regional bodies are still maturing.
  • Even for the relatively mature regional bodies, the task that they have been set under these programs is extremely challenging. It appears that the difficulty in designing and implementing cost-effective, outcome-oriented regional plans for natural resource management was not fully recognised by governments, at least initially.
  • The programs are too impatient, especially in relation to salinity. Ministers prefer the programs to focus expenditures on “on-ground works”. However, determining which on-ground works offer the best value for money requires detailed analysis, and the timeframes for planning effectively discourage such analysis. Further, in many cases, farmers lack options for salinity management that are economically viable on sufficient scale to address the problem. Their development in ongoing R&D will take time.
  • In many regional plans, the link between funded actions and the stated target outcomes is weak. The plans tend to be much too optimistic about what can be achieved by extension/education or by small, temporary incentive payments.
  • The use of science and economics in many plans is inadequate. There is reliance on community preferences without adequate assessment of their scientific or economic realism.

Notwithstanding these and other problems, it is clear that the government will continue the regional delivery system in a more-or-less similar form. How, then, can we enhance the performance of the arrangements? Here are some suggestions.

1. Develop an agreed set of investment principles to be applied by all regional bodies.

2. Require regional bodies to demonstrate consistency with those principles, through use of a sound investment framework. The framework should be focused at the asset level, and should result in much tighter targeting of investments. For example, I suggest that the regional bodies overall are currently trying to do about 10 times too much in their salinity plans.

3. Strengthen the accreditation process for regional plans and investment strategies in relation to their use of science. This includes social science – prioritisation processes for existing plans generally neglect what we know from research about the achievement of practice change.

4. Adopt a more rigorous approach to setting resource-condition targets and management-action targets. Current targets are often a compromise between a limited use of science and what the community might be prepared to accept. The current approach of selecting aspirational targets is counterproductive as it causes a disconnect between actions and outcomes. Targets are needed, but should be based on what is achievable by realistic actions.

5. Develop a more rigorous evidence-based approach to determining the relative allocation of funding to different regions. The current allocation is not consistent with needs and opportunities.

6. Introduce a subprogram for major investments that are funded separately from the regional process. In many cases, the most cost-effective investments for dryland salinity would be targeted, major projects to protect ‘iconic’ assets. The regions have mostly chosen not to undertake such major projects, and in any case they should be prioritised at the state or national levels rather than the regional level.

7. Introduce a subprogram for provision of appropriate technical and other support to regions. This needs to be done in collaboration with the States, who hold most of the technical information. Support is needed in the following areas:

  • Guidelines on the implications of latest research.
  • Guidelines on the investment framework to be used, and support in applying it.
  • Guidelines on the appropriate circumstances to use different policy tools (extension, MBIs, R&D, engineering, etc.). Use of inappropriate tools is a major weakness in the current program. (See here for my framework that gives guidance on this.)
  • Processes to ensure the provision of appropriate technical support (models and technical advice) and provision of consistent, high-quality data on key variables (e.g. groundwater salinity, depth to groundwater) at usable scales of resolution. The current strategy of leaving these issues to individual regions results in duplication of effort, inconsistency, and failure to use the best information.
  • Development of improved salinity management technologies and systems.

8. A stronger partnership with the states is needed. The states have essential roles to play in the following areas: legal/regulatory approaches (e.g. the need to purchase water rights to plant perennials in water resource catchments, as discussed in the National Water Initiative); development of improved technologies, such as more profitable (more adoptable) farming practices for salinity management; on-ground works on public lands (e.g. pumping in nature reserves); research to provide improved data for subsequent planning.

Overall, I believe that measures such as these are much needed. If they can be introduced, there is great scope for strengthening the cost-effectiveness and achievement of outcomes in Australia’s main NRM policy programs.

David Pannell, The University of Western Australia

Further Reading

Pannell, D.J. (2005). Salinity: new knowledge with big implications, A transcript from ABC Radio National, from the Ockham’s Razor progam. Full paper (19K)

Pannell, D.J. (2006). Public benefits, private benefits, and the choice of policy tool for land-use change,

Pannell, D.J. and Ewing, M.A. (2006). Managing secondary dryland salinity: Options and challenges, Agricultural Water Management 80(1/2/3): 41-56. Full paper (66K)

Ridley AM and Pannell DJ (2005). SIF3: An investment framework for managing dryland salinity in Australia. SEA Working paper 1901. CRC for Plant-based Management of Dryland Salinity, University of Western Australia, Perth. Full paper (126K pdf) 2-page summary SIF3 project page