Economics, Environment, Natural resource management, Policy

154 – “Asset-based” environmental management

Many public programs for the environment and natural resources have poor track records in the achievement of outcomes. The “asset-based approach” to decision making about environmental priorities is part of an attempt to turn this around.

Since about 2000, I’ve put a lot of energy into attempting to assist governments and environmental management organisations to improve their decision making about investments in the environment and natural resources. As part of that, I’ve encouraged people to pay greater attention to the assets that are meant to be protected or improved through the investment. For example, an asset might be a river, a particular reach of a river, or a threatened species of fish in that reach.

The essential idea is to start by identifying the assets, and in a sense work backwards from there, asking questions like: What threats does the asset face? What actions would it really take to protect the asset from those threats? And what are the public and private benefits and costs of those actions?

This strategy has come to be referred to as the “asset-based” approach. It was part of SIF3 (the Salinity Investment Framework III – Ridley and Pannell, 2005). Inspired by an early version of SIF, the Victorian Department of Sustainability and Environment also committed to an asset-based approach as part of its investment strategy, and developed its own framework (Department of Sustainability and Environment, 2006). Now the asset-based approach is central to INFFER (Pannell et al. 2008), our Investment Framework For Environmental Resources (, which is being adopted by many environmental management bodies around Australia.

The reason I originally suggested an asset-based approach was to encourage and assist people to focus on environmental outcomes. In many environmental programs in Australia and elsewhere, success has been judged on the basis of activities, engagement with the community, financial accountability and sometime outputs. Often, assessment of actual environmental outcomes has been overlooked. I wanted to devise an approach that would put those outcomes at the centre of things, so that they wouldn’t continue to fall through the cracks.

As an example of outcomes being neglected, last year I heard a seminar from someone senior from the US Department of Agriculture about their many environmental programs for farmers, involving expenditure of billions of dollars per year. In question time she was quite frank in admitting that they don’t really know what environmental benefits are generated. The same would apply to the main EU programs, and the Australian National Audit Office (2008) was very forthright in its criticism of recent Australian programs for this failing as well.

The asset-based approach does not end with the identification of the assets. For each asset identified, in order to determine its priority for funding, you need to identify the relevant environmental threats, a goal for management, works intended to achieve that goal, the technical feasibility of those works (based on the cause-and-effect relationships between actions and outcomes), the adoptability and urgency of the works, the policy mechanisms to be used, and the costs of the intervention.

Those are all things that need to be considered whether or not you use an asset-based approach. Starting with the assets is really just a convenient device to structure people’s thinking and focus their attention. If another approach successfully builds in all of the above considerations, then its recommendations should be basically the same as an equally comprehensive asset-based approach.

Having worked with many people in INFFER assessments now, it is very interesting how much difficulty people sometimes have in specifying what the relevant assets actually are. It is rather worrying that so much money is spent without any clear idea of which environmental assets are actually supposed to be helped. Typically, people specify a very broad asset, encompassing the key elements (those that are valuable, threatened and feasible to protect), elements that are none of those things, and elements in between. It often takes considerable effort by the INFFER support team to help users to refine the asset definition to represent the things that are really crucial and feasible to protect. Historically, this sort of mindset has not been required, so, even if environmental assets were defined, people became used to defining them very loosely.

We sometimes get asked whether the focus on specific assets means that the investments are too narrow so that we will miss opportunities to achieve broader outcomes. I have two responses to this question.

(a) If there are spin-off benefits from an investment, that’s good, but it is still important to focus on deciding which assets are the core purpose of the investment.

(b) If you define the target assets very broadly, you still need to be realistic about what actions and interventions will be required to protect those assets. Broadly defined assets, implying relatively untargeted interventions, can sometimes compete with targeted interventions in terms of cost effectiveness, but only if they generate benefits at low cost per unit area of change. For example, it may be possible to use R&D focused on technology change to drive cost-effective broad-scale land-use change in a region. For such broad-scale change, positive incentive mechanisms, such as incentive payments or stewardship payments, are much less likely to be cost-effective, especially compared to their targeted use to protect carefully selected specific assets.

David Pannell, The University of Western Australia

Further Reading

Australian National Audit Office (2008). Regional Delivery Model for the Natural Heritage Trust and the National Action Plan for Salinity and Water Quality, Audit Report No.21 2007–08, Canberra.

Department of Sustainability and Environment (2006). The Land Based NRM Asset Approach Project, Department of Sustainability and Environment, Melbourne, Project 202164.

Pannell, D.J. and Roberts, A.M. (2008) INFFER: Investment Framework For Environmental Resources, INFFER Working Paper 0802, University of Western Australia. 4 pager (54K pdf)

Ridley, A., and Pannell, D.J. (2005). The role of plants and plant-based R&D in managing dryland salinity in Australia, Australian Journal of Experimental Agriculture, 45: 1341-1355. Full journal paper (127K pdf)