Yearly Archives: 2007

99 – Environmental policy: Canada vs Australia

This article highlights some of the similarities and differences between Australia and Canada in environmental policy, and speculates about reasons for the differences.

I spent six months in Canada in 1995 and have been back (more briefly) a couple of times since. It is a place where I can feel very much at home, although I must admit the weather can be a challenge, as it was when I visited Guelph last month.

In the area of environmental policy, Canada and Australia have a number of similarities, but also some differences. I reflected on some of each recently while reading a new article titled “Reflections on Environmental Policy in Canada” by Vic Adamowicz in the Canadian Journal of Agricultural Economics.

Similarities

  • Broadly speaking, in both countries there has been relatively weak enforcement of environmental regulations, particularly in the past. There is a preference for negotiation, and voluntary compliance, rather than application of standards.
  • Much of the responsibility for environmental policy lies with provincial/state governments, who tend to each do their own thing to some extent. National environmental programs attempt to influence what happens at the provincial/state level.
  • Benefit Cost Analysis is rarely used to inform decisions about policy or on-ground interventions. There are strong policy agencies concerned with economics and finance but, with some exceptions, the environmental agencies tend to place little emphasis on economics.
  • There is a need for greater capacity in the design and application of economic policy instruments for environmental issues.
  • A lot of the funding under environmental programs relating to agriculture is not particularly targeted.

Differences

  • Australia’s history with the Landcare program has no real parallel in Canada. Landcare has probably raised awareness of environmental issues among Australian farmers to a higher level than exists in Canada, although I suspect that the difference in actual responsiveness to environmental issues is much less than the difference in awareness.
  • Canada has made much less use of markets, in particular for water. Australia does use markets for water up to a point, although there is plenty of scope for their more extensive use.
  • Australia has made greater use of economic policy instruments for land and water conservation. This is perhaps due to the efforts of a few passionate and articulate individuals, who blazed a trail with pilot programs like BushTender and EcoTender. Presumably, it was their influence that led to the Market-Based Instruments Pilot Program that has operated under the National Action Plan for Salinity and Water Quality. Arguably, the enthusiasm by policy makers for economic instruments in Australia has sometimes even been excessive (Pannell 2001), in contrast to the indifference that is apparent in Canada.

I shared a draft of this piece with Vic, and one of his responses was to wonder why the above differences have occurred. He speculated that some may be due to real differences in the scarcity of resources. For example, much of Canada has water resources to an extent that Australians can hardly imagine. According to Wikipedia Canada has more than 31,000 lakes with surface areas of at least 3 square km, and for four of its largest provinces, the area of water is at least 10% of the area of land! On the Australian mainland, outside the tropics, the number of large permanent fresh lakes is tiny – a mere handful. Most of the lakes we do have are salt lakes, man-made lakes or coastal lakes and lagoons. Perhaps this difference in water abundance has prompted Australian policy makers to be more innovative and adventurous.

On the other hand, it may just be about people: the persuasiveness of individuals, the capacities of agencies, different levels of familiarity with alternatives, or different tendencies towards policy inertia. It might be interesting to probe the reasons further.

Whatever the reasons, given the broad similarities in culture and institutions, there would seem to be good potential for us to learn from each others successes and failures in environmental policy. On the other hand, perhaps I am being too optimistic – we sometimes seem to have trouble learning from our own successes and failures.

David Pannell, The University of Western Australia

Further Reading

Adamowicz, W. (2007). Reflections on Environmental Policy in Canada, Canadian Journal of Agricultural Economics 55: 1-13.

Pannell, D.J. (2001). Harry Potter and the pendulums of perpetual motion: Economic policy instruments for environmental management, Connections: Farm, Food and Resource Issues 1: 3-8.* http://www.agrifood.info/connections/summer_2001/Pannell.html

98 – Agricultural research for the poor

Earlier this month, I was rubbing shoulders with people who rub shoulders with the two richest men in the world, Bill Gates and Warren Buffet, at an event that was about helping the poorest people in the world.

The Bill and Melinda Gates Foundation is a mind bogglingly large charitable foundation, with about US$30 billion of Bill’s money, which will also spend another US$30 billion contributed by the world’s second richest man, Warren Buffet. It has been interesting to learn something about the way that these (and other) extraordinarily rich Americans have embraced philanthropy. I’ve no idea how they live their lives, but even if they indulged in the most lavish of lifestyles, and made the most generous provisions for their offspring, they obviously could only use up a tiny fraction of their billions, so they’ve decided to spend most of it on helping others who are in need. It is really rather inspiring, and perhaps might eventually do something to improve the USA’s tarnished international reputation.

The Gates Foundation has three programs: one focused on education for disadvantaged Americans, one on global health which combines practical assistance and medical research, and one on global poverty and hunger, including agricultural research to benefit the poor.

I was privileged to be to be invited to attend three days of meetings in Minneapolis related to the agricultural research program.

The Foundation plans to spend a lot of money on agricultural research in Africa and South Asia. The big and very tricky question is, how to spend it to generate the greatest benefits. They have engaged Phil Pardey at the University of Minnesota and Stan Wood at the International Food Policy Research Institute to undertake a project called HarvestChoice to help them with this question.

A small group of scientists and economists spent a day discussing how to tackle the required analysis, especially in the area of biotic constraints to agricultural production (pest insects, diseases and weeds). It was a very interesting and fruitful discussion, and it resulted in a clear direction for the team doing this aspect of the analysis.

For obvious reasons, given the nature of his core business, Bill Gates is also interested in whether there are key information gaps, the filling of which could make a substantial difference to the poor. His Foundation asked Stan and Phil to convene a Roundtable meeting of about 40 experts of many different types to discuss what the opportunities might be, and I participated in that meeting too.

I must admit that I felt a bit out of my depth at times, in a room full of people with so much knowledge and experience in attempting to assist the poor in developing countries. The discussions at the meeting were an interesting mix of pessimism and optimism. The discussions reinforced how how very difficult it is to make a real difference given the range of factors stacked against the very poor.

On the other hand, people did feel that there were a number of areas where it may be worth investing in creation, collection or collation of new information. I don’t think there was enough consideration of exactly how they will make a difference, and this was reinforced by the Gates Foundation representative who was at the meeting, but it was a good start.

I really hope that both initiatives can meet their aspirations and deal with the substantial challenges they face.

David Pannell, The University of Western Australia

97 – Regional environmental management in Australia

Australia’s main policy programs for conservation of land, water and biodiversity are delivered by a set of 56 regional bodies. We have prepared a document describing how the institutional arrangements for these regional bodies vary, state by state.

The arrangements differ somewhat between different states and territories, even to the extent that there are different names for these bodies (Catchment Management Authorities in Victoria and New South Wales, a variety of names elsewhere).

There have been rapid and frequent changes in the arrangements and structures surrounding these bodies, including changes in the legislative powers of catchment management bodies, their responsibilities, their names, their reporting channels through government, and the names and structures of government agencies with which they must work. The rapidity of change can be gauged by the fact that a book chapter published in 2003 documenting catchment management institutional arrangements state by state (Ewing, 2003) was substantially out of date before the end of that year.

We have just completed a document that provides a snapshot of current arrangements, state by state. For those of us trying to work with regional bodies in more than one state, this is a valuable document. Read it here, but do so quickly before the arrangements change again!

David Pannell, The University of Western Australia

Further Reading

Pannell, D.J. Ridley, A., Seymour, E., Regan, P. and Gale, G. (2007). Regional natural resource management arrangements for Australian states: structures, legislation and relationships to government agencies, CRC for Plant-Based Management of Dryland Salinity, University of Western Australia, here (129k pdf file)

96 – Economic questions for environmental managers

Economics can help environmental managers in a wide variety of ways. Here is a list of questions and issues that economic analysis can help to address.

There is a workshop in Perth this week about the potential contribution and role of economics (and other social sciences) in supporting regional environmental management bodies. The focus is on land degradation and other environmental issues that depend on how private lands are managed.

I thought that a useful way to explain this briefly would be to present a range of specific questions that economics can help to answer. They are broken up into groups, according to whether they apply at the farm level, the catchment level, the regional level, or the national level.

Farm level

• Are particular farming practices (environmentally friendly ones) likely to be attractive to commercial landholders? Under what circumstances?

  • How do new land-use options that are intended to be environmentally friendly best fit into the farming system? In which rotations? On which soil types? What other adjustments on the farm will be beneficial if the new land use is adopted?.
  • What features of new farming practices are the main drivers of their farm-level economics?
  • Which options are likely to be win-win for farmers and the environment?

Sometimes people assume that to be useful for environmental managers, economic analysis has to directly model the environmental processes of concern. This is not always correct. The above questions are important for environmental managers, but they can be addressed without explicitly modelling the environmental impacts of the new practices.

The catchment level

  • What are the trade-offs between economic outcomes and environmental outcomes at the catchment scale? (to help set targets).
  • How large (in economic terms) are are the off-site/downstream economic impacts (positive or negative) from particular farming practices?
  • How would agricultural management need to be adjusted in a catchment to achieve particular environmental targets at least cost?

Regional level

  • Is a particular program or intervention by the regional body worthwhile? (benefit:cost analysis)
  • Which policy tool is most appropriate in a particular case? (e.g. extension, grants, regulation, MBIs, R&D, direct intervention with engineering, no action). Different tools suit different circumstances (Ridley and Pannell, 2005; Pannell, 2006).
  • How should the funds of the environmental program be targeted to achieve the greatest environmental benefit for the available resources?
  • How should the regional body strike a balance between (a) highly targeted investment in on-ground works that pays off in the relative short term, and (b) investment in development of new land-management options, that is less targeted and slower to pay off, but applicable over much larger areas, and would reduce the cost of subsequent targeted investments?
  • How should economic policy instruments (MBIs in Australian parlance) be designed and implemented to achieve the greatest benefits?
  • What is the value of an environmental improvement? (non-market valuation)

National or international level

  • What are the market prospects for products from a new environmentally friendly land use?

Other positive features of economics when used to address these questions

  • Economic modelling helps to integrate biological and physical information within a consistent framework. Economists working on these issues are used to talking to various disciplines.
  • Economics deals well with trade-offs, which are an essential feature of environmental management.
  • Economics helps to frame the discussion in a way that is useful for decision making.
  • Economics helps to prioritise which of the many unknowns are the important ones.
  • Economics can explicitly deal with uncertainty in a variety of ways.

David Pannell, The University of Western Australia

Further Reading

Pannell, D.J. (2001). Economic Dimensions of Landcare, State Landcare Conference 2001, 11-14 September 2001, Mandurah Western Australia, pp. 131-144. Full paper (74K)

Pannell, D.J. (2003). Heathens in the chapel? Economics and the conservation of native biodiversity, Presented at a workshop of the Cooperative Research Centre for Plant-Based Management of Dryland Salinity, “Biodiversity Values in Agricultural Landscapes”, Rutherglen, Victoria, 14-15 October 2003. Full paper (109K)

Later published as:

Pannell, D.J. (2004). Heathens in the chapel? Application of economics to biodiversity, Pacific Conservation Biology 10(2/3): 88-105.

Pannell, D.J. (2006). Public benefits, private benefits, and the choice of policy tool for land-use change, Full paper (150K)

Pannell, D.J., Marshall, G.R., Barr, N., Curtis, A., Vanclay, F. and Wilkinson, R. (2006). Understanding and promoting adoption of conservation practices by rural landholders. Australian Journal of Experimental Agriculture 46(11): 1407-1424. Access paper at Journal web site here. Pre-publication version available here (161K).

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. http://dpannell.fnas.uwa.edu.au/sif3.htm

95 – Linking research to policy

There is a lot of environmental research, and a lot of environmental policy, but the links between the two are often not nearly as strong as you would hope or expect. This story is about a case where the links are relatively strong.

For some years now, I’ve been trying to influence policy makers in Australia to improve the design of the national and state salinity policies. My concern has been that, from what we know of the science and economics of salinity, the approaches being used in the main policy programs are not making a meaningful difference to salinity management in most regions. Indeed, there are cases where policy has probably made matters worse.

There are quite a number of factors that appear to have contributed to the poor political response to salinity (Pannell 2005) including: the short-term focus of politics being inconsistent with the long-term nature of salinity; the tendency for political debates to manufacture a “crisis”, which can result in urgent ill-considered responses; the conflict between effectiveness and the perceived fairness of policy; the complexity and diversity of the salinity problem; and the fact that new research findings may not be quickly noticed and responded to by policy makers.

Then there is the question of knowing how to respond to new research results. I have spent quite a bit of time and effort communicating with people about the science of salinity and its policy implications. Initially I thought that, as a researcher, the appropriate thing to do was to give the relevant information to decision makers, and then step back and allow them to make the decisions. However, even in the face of compelling evidence, people seemed to flounder when it came to making decisions in response.

There were at least two lessons from this experience. Firstly, given a problem as complex and multifaceted as salinity, most people don’t have a way of stitching together the different parts of the problem into a coherent and logically consistent whole. For such problems, it seems, intuition is not enough – one needs a reasonably structured decision framework to help make sense of it all, and especially to work out how to respond to new knowledge.

Secondly, even providing a good decision framework is not enough, for several reasons: lack of commitment to it, lack of knowledge of the required inputs, unanticipated confusion or misinterpretation of the framework, and so on. It seems that, for problems as challenging as salinity, decision makers need help in quite a hands-on way. The decision should still be theirs, of course, but they need help integrating and interpreting the evidence.

So my collaborator Anna Ridley and I set out to provide both of those needs. First we created the Salinity Investment Framework III (SIF3), a much more detailed and easy-to-apply version of a framework previously developed in Western Australia (see here).

Then we offered to help two catchment management organisations to pilot SIF3: the North Central Catchment Management Authority (CMA) in Victoria, and SCRIPT, on the south coast of Western Australia. So far, we have finished our analysis of salinity for North Central CMA, and the outcomes have been very positive.

The CMA has broadly accepted the recommendations from SIF3, and is set to substantially alter the shape of its salinity investments. The new approach will target investment in on-ground works to a small-ish number of locations that meet a combination of criteria:

  • there are public assets of particularly high value in the location;
  • these assets face a likely high impact from salinity;
  • there are changes in land management or engineering responses that will substantially reduce the impact of salinity in a reasonable time frame;
  • if changes are required on private land, those changes are not excessively costly or unattractive to landholders;
  • the responses required to address salinity will not cause other major natural resource or economic problems.

In addition, the CMA will increase their investment in technology development, to provide options for landholders who do not fall within the tightly targeted areas for on-ground works, and to reduce the long-term cost of targeted interventions. As a result of their positive experience with SIF3, the CMA says that it will increase its emphasis on relevant science to improve future decision making.

Getting to this point has required persistence, patience and a lot of good will on both sides. The lessons of SIF3 are not yet fully embedded in the CMA’s operations, but progress has been very encouraging.

As well as being useful to environmental managers at the regional level, SIF3 has strong implications for policy design, and we’ve had increasingly productive engagement with governments about this at the state and national levels. The demonstrated success with the CMA has increased the credibility of related messages to policy makers. Two weeks ago, our recommendations for changes in salinity policy, supported by a paper summarising the evidence behind them, were considered by the NRM Standing Committee, a key national policy body that brings together senior bureaucrats from the Australian Government and all states and territories. They will now advise the NRM Ministerial Council, the top-level decision making body for NRM policy.

There is still some way to go, but the current signs are good that we may move towards a policy framework for salinity that is more consistent with the latest technical and socio-economic research. If so, there are also likely to be positive spin offs into other areas of policy for natural resources in Australia.

David Pannell, The University of Western Australia

Further Reading

Pannell, D.J. (2005). Farm, food and resource issues: politics and dryland salinity, Australian Journal of Experimental Agriculture 45: 1471-1480. Full journal paper (103K)Summary version (19K)

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. Summary version (simple 2 pager in pdf)

A new approach to public investment in dryland salinity – 2 pager (49K pdf file) outlining the need for a new approach, and illustrating results of SIF3 in North Central CMA region.

Why a new approach to dryland salinity planning/investment is needed

http://dpannell.fnas.uwa.edu.au/sif3.htm