CSIRO LAND and WATER
Quantifying and valuing land-use
change for ICM evaluation in the
Murray-Darling Basin
An interim 1996/97 snapshot
Michael Young, Jane Gillooly and Steve
Marvanek
© Murray-Darling Basin Commission/CSIRO Australia
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Important Disclaimer:
CSIRO Land and Water advises that the information contained in this publication comprises general statements based on scientific research. The reader is advised and needs to be aware that such information may be incomplete or unable to be used in any specific situation. No reliance or actions must therefore be made on that
information without seeking prior expert professional, scientific and technical advice. To the extent permitted by law, CSIRO Land and Water (including its employees and consultants) excludes all liability to any person for any consequences, including but not limited to all losses, damages, costs, expenses and any other compensation, arising directly or indirectly from using this publication (in part or in whole) and any information or material contained in it.
1 Land and water resources of the Murray-Darling Basin 5
Key points 5
Land-use 6
Returns from agriculture 15
Spatial estimates of profit at full equity 19
Returns to water resources 22
Net economic returns 26
Managing natural resources 31
A decision framework for policy makers 34
A general assessment framework 37
2 Farmers in the Murray-Darling Basin 42
Key points 42
Assessment Framework Context 43
Responses to pressures for change 44
The nature of the natural resource management practices 45
Beliefs about the environment 50
Financial capacity 52
Management skill 55
Individual demographic and psychological differences 58
Changing social landscape 59
3 Soil resources of the Murray-Darling Basin 67
Key points 67
Soil resources 69
Land degradation — what is it? 69
Dryland salinity, sodicity and acidity 73
The value of yield gaps 77
Benefits and costs of treating sodic and acidic soils 85
4 Beyond the paddock in the Murray-Darling Basin 89
Key points 89
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Preface
This report is the first of a series of reports being prepared for the Murray-Darling Basin Commission (MDBC) under the ICM Business Knowledge Plan. This plan, among other things, identifies a need to build an integrated
information base that can be used by the MDBC and its partners to:
• establish a quantitative baseline enabling assessment of the influence of ICM on the natural resource and community outcomes in the Murray-Darling Basin (MDB) at the regional level,
• establish a database that will result in a greater return on investment as public and private funds are invested across the Murray-Darling Basin, • develop information necessary for objective evaluation of ICM in 2003. As part of this process CSIRO Land and Water’s Policy and Economic Research Unit has been commissioned to prepare a series of reports and data sets that help quantify and value land-use change for ICM evaluation in the MDB. The project is being implemented in four stages:
• Stage One will provide a Regional snapshot of land and water use in 1996/97 using existing National Land and Water Resources Audit data sets
• Stage Two will update and expand these data and provide an assessment of change between 1996/97 and 2001/02
• Stage Three will then review ICM information needs with a view to providing input to an ICM snapshot as of the end of 2003
• Stage Four will then assemble the data needed to produce this snapshot. This first report should be seen as an interim report that shows progress to date. The report has been produced by separating National Land and Water Resources Audit data for the Murray-Darling Basin from the Australia-wide data used to produce the Audit’s Theme Six final report “Australians and Natural Resource Management” 2002. Unashamedly, this interim retains the same format and style as this first report. Many of the sentences remain unaltered except that
1 Land and water resources of
the Murray-Darling Basin
Key points
• Eighty-five percent or 90 million hectares of the Basin is ‘agricultural land’ but only about 17% of this is cultivated or intensively farmed land (the remainder being used for grazing livestock). Based on the BRS land use map, the area under irrigation in the Murray-Darling Basin has grown rapidly to 1.6 million hectares in 1997.
• After accounting for all costs, industry depreciation all labour costs and other adjustments, total net agricultural income was $3.7 billion in 1996/97.
• Profit at full equity is used as a measure to assess the returns to the agricultural resource base and management. Spatial analysis of this measure reveals that in 1996-97, 80% of the profits from MDB agriculture came from only 1.5 million hectares or less than 2% of the area used for agriculture. Also, 50% of profits come from just 5 of 22 Catchment Management Board areas in the Basin.
• For the five years to 1996-97, over 66% of profits from agriculture were derived from irrigated agriculture using just 1.6 million hectares.
• Over the past 40 years agriculture has grown in absolute terms but with the more rapid expansion of other sectors of the economy, particularly services, mining and manufacturing, agriculture’s contribution to economic growth exports and employment has declined significantly.
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Land-use
The Murray-Darling Basin (MDB) has a land area of 106 million hectares. In 1996-97, the ABS agricultural census year, about 83% of the MDB was classified as dryland agriculture (including extensive livestock grazing) and less than 2% was under irrigated agriculture (Table 1). Figure 1 shows the extent and
geographic locations of the 6 broad land-use groups in the Murray-Darling Basin. Table 1 Broad land-use in the Murray-Darling Basin
Broad Land-use* Area (‘000ha) Proportion of Total (%)
Agriculture
• Dryland agriculture (inc livestock & cropping) 88,060 83.2
• Irrigated agriculture 1,639 1.5
Forestry 4,276 4.0
Conservation & Natural Environments 10,737 10.1
Built environment 224 0.2
Water bodies 905 0.9
No Data 15 0.0
TOTAL 105,856 100.0
Source: Stewart et al. “Interpretation of Land-Use Map of Australia”
Land use in the Murray-Darling Basin has significantly changed the landscape since European settlement. Prior to 1980, vast tracts of forests and woodlands were cleared particularly in the eastern and southern sectors of the Basin (Figure 2). Whereas in the 1950s, 1960s and early 1970s tax concessions were given to farmers who cleared land, now there are legislative restrictions and management controls on land clearing throughout the Basin.
Figure 1 Broad land-use categories in the Murray-Darling Basin
Data source: Australian Agriculture Assessment 2001 NLWRA (2001).
Patterns of land-use on agricultural land are shown in Figure 3. Cotton
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Since 1996, cropping has expanded in response to favourable grain prices relative to wool and beef, and areas under horticulture (such as wine grapes) have
increased. Cotton production is relatively new to the Basin.
Figure 2 Vegetation clearance since 1788 in the Murray-Darling Basin
Source: Australian Native Vegetation Assessment 2001 (NLWRA 2001)
Water resources and use
The area of irrigated land in the Murray-Darling Basin in 1997 was estimated from the land use map to be around 1.6 million hectares (Table 1). Of the total area irrigated in the Basin, 35% was under dairying, 20% under cotton, 15% under beef production and 10% under rice production (Table 2). The quantities
of irrigation water used (Table 3) were similar, with 41% being used in the dairy industry, 20% in cotton, 15% in rice production and 9% for beef production Figure 3 Agricultural land-use in the Murray-Darling Basin
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Figure 4 Catchment Management Areas of the Murray-Darling Basin used for economic assessment
Table 2 Areas under irrigation by Catchment Management Area in hectares, 1997 (Derived from land-use grid and WR profit function surface. Irrigated = WR > 0)
Land use Borde
r River s (NS W) Borde r River s (QL D ) Cen tral W est (NSW ) Cond amin e (QLD) Goulburn (VI C ) Lower Mur ra y -Darling (NS W) Mallee (VIC) Marano a-Bal onne (QL D ) Murray (NS W) Dairy 861 761 6,573 4,913 206,448 102 7,173 217 101,319 Cotton 49,317 19,223 34,183 30,673 20,984 Beef 651 6,818 437 296 1,022 204 79,282 Rice 700 71,340 Coarse Grains 3,781 2,393 6,915 9,079 698 202 2,291 12,867 Grapes 325 1,562 891 3,580 13,745 1,007 Fruit 2,384 1,346 8,572 2,455 3,259 705 Vegetables 1,409 729 1,421 2,090 205 2,132 2,917 Oilseeds 209 100 7,949 Cereals 548 2,497 2,312
Land use Murru mbidg ee (NS W ) Na moi ( N SW ) Nort h Ce ntra l (VIC) North East (VIC) River Murr ay (SA) Warr ego -Par oo (QL D ) Wes tern (NS W) Wim m er a (VI C ) MDB tot a l percen tag e of MDB tot a l Dairy 6,695 4,867 203,524 8,167 13,635 1,979 575,511 35.1 Cotton 75,520 18,422 322,670 19.7 Beef 77,453 1,591 49,499 409 213 245,201 14.9 Rice 79,378 157,070 9.6 Coarse Grains 50,557 16,770 9,786 109 8,193 99 150,156 9.2 Grapes 6,328 1,508 1,393 24,688 109 315 296 57,188 3.5 Fruit 9,565 2,003 100 14,305 45,718 2.8 Vegetables 4,787 3,468 5,277 108 26,699 1.6 Oilseeds 9,161 2,396 21,668 1.3 Cereals 2,858 9,281 18,733 1.1 Legumes 3,565 200 401 8,108 0.5 Tree Nuts 1,939 4,118 0.3 Hay 101 599 1,213 100 3,627 0.2 Sheep 3,157 3,257 0.2 Peanuts 760 0.0 TOTAL 253,605 98,748 282,263 9,660 61,867 326 27,144 2,473 1640,485 100.0
Land use Borde r River s (NS W) Borde r River s (QL D ) Cen tral W est (NSW ) Cond amin e (QLD) Goulburn (VI C ) Lower Mur ra y -Darling (NS W) Mallee (VIC) Marano a-Bal onne (QL D ) Murray (NS W) Dairy 6,848 7,233 52,518 46,673 1,606,927 957 67,426 2,058 790,289 Cotton 360,016 84,894 249,538 134,963 92,331 Rice 7,555 770,468 Beef 3,580 29,151 2,404 889 4,598 818 317,229 Coarse Grains 14,616 6,940 23,081 26,329 2,654 769 6,643 34,742 Fruit 16,448 12,657 66,865 28,956 30,636 6,631 Grapes 1,136 11,090 6,412 25,431 98,962 7,167 Vegetables 7,750 3,093 7,813 8,163 923 8,529 11,668 Cereals 1,588 9,487 6,352 Oilseeds 627 380 21,463
Land use Murru mbidg ee (NS W) Na moi ( N SW ) Nort h Ce ntra l (VIC) North East (VIC) River Murr ay (SA) Warr ego -Par oo (QL D ) Wes tern (NS W) Wim m er a (VI C ) MDB tot a l percen t of M DB total Dairy 52,261 38,853 1,736,102 50,798 55,018 18,263 4,598,121 41.0 Cotton 551,294 226,319 2,241,780 20.0 Rice 857,281 1,696,357 15.1 Beef 310,088 6,842 197,798 1,945 939 991,717 8.8 Coarse Grains 136,748 65,277 37,187 316 31,953 375 468,285 4.2 Fruit 89,912 16,315 597 164,002 442,642 3.9 Grapes 44,928 10,861 9,081 206,608 382 2,237 2,013 436,537 3.9 Vegetables 19,127 12,101 22,332 596 111,253 1.0 Cereals 7,717 35,267 64,002 0.6 Oilseeds 24,735 9,105 61,652 0.5 Tree Nuts 22,052 42,530 0.4 Legumes 9,625 760 1,803 23,647 0.2 Hay 272 2,275 5457 380 13,805 0.1 Sheep 12,629 13,029 0.1 Peanuts 4,181 0.0 TOTAL 1,565,324 662,266 2,057,770 60,476 479,218 1,294 261,448 21,032 11,209,538 100.0
Table 4 Summarised irrigation data for catchment management areas in the
Murray-Darling Basin (Derived from BRS land-use grid and WR profit function
surface. Irrigated = WR > 0)
Land use
TOTAL
('000 ha) TOTAL (GL) ML/ha
Border Rivers (NSW) 54 381 7.1 Border Rivers (QLD) 28 132 4.7 Central West (NSW) 58 382 6.5 Condamine (QLD) 47 220 4.7 Goulburn (VIC) 223 1714 7.7 Gwydir (NSW) 80 573 7.1 Lachlan (NSW) 71 341 4.8
Lower Murray Darling (NSW) 8 62 8.1
Mallee (VIC) 28 221 7.8
Maranoa-Balonne (QLD) 23 101 4.3
Murray (NSW) 283 1975 7.0
Murrumbidgee (NSW) 254 1565 6.2
Namoi (NSW) 99 662 6.7
North Central (VIC) 282 2058 7.3
North East (VIC) 10 60 6.3
River Murray (SA) 61 479 7.8
Warrego-Paroo (QLD) 0 1 4.0
Western (NSW) 27 261 9.6
Wimmera (VIC) 2 21 8.5
MDB total 1640 11210 6.8
Australia total (based on land use map) 2303 14959
Returns from agriculture
The Australian Bureau of Statistics (ABS) and Australian Bureau of Agricultural and Resource Economics (ABARE) regularly report on a range of measures that track the performance of the agricultural sector each year. ABS reports several measures as part of the national accounts and also measures of financial performance of farms from its Agricultural Finance Survey — of management units undertaking agricultural activity having an Estimated Value of Agricultural Output of $22 500 or more. Every 5 years, ABS conducts a census of all
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production, farm costs and net value of farm production (ABARE 2000 [Australian Commodity Statistics]) derived from ABS data. Each measure of performance is designed for a specific purpose but none are available at a very fine scale. Consequently the performance measures fall short of what is required for some resource management planning and assessment purposes.
A major project commissioned by the National Land and Water Resources Audit and tailored in this report for the Murray Darling Basin involved estimating the net returns to the agricultural resource base on a reasonably fine scale of
1:1,000,000 for the base year 1996-97 and the average of five years ending 1996-97 (CSIRO Policy and Economic Research Unit 2001). The method is based on the concept of profit at full equity (see Box 1). For each 1 kilometre square of
agricultural land in the Basin net returns were calculated and mapped based on dominant land-use, the local gross value of production and costs of production, including costs of capital and managerial labour. The estimates presented are average profit at full equity – effectively the profit or net return to the natural resource base and managerial skill under current farming conditions. From the available data sets it is not possible to separate the return to the natural resource base from the return to managerial skill. The estimate does not include income received from off-farm sources. As a consequence of the full equity assumption, transfers in the form of interest payments, etc are not deducted.
A spatial representation of profit at full equity across the MDB agricultural landscape provides a useful basis on which to evaluate costs and benefits of land-use. Land degradation costs and investment in remedial management can be combined with this profitability perspective to guide decisions on land-use change and further investment.
Box 1 The concept and method of estimating profit at full equity
Profit at full equity (PFE) is a measure of the net returns to land and water resources used for agriculture and the managerial skill of land managers. The concept is based on the assumption that the land is fully owned (100% equity) and that there is no income from sources other than farming the land. The definition of PFE used in this report is similar to that used by ABARE in its farm surveys and the ABS. But there are some minor
differences. Whereas ABARE and ABS estimate this measure for a farm unit including all income earned by all members of the farm family, the measure here is derived with reference to a square kilometre of agricultural land classified by industry/commodity type as represented in the National land-use map. Also, off farm income (net revenue derived off farm from the use of farm resources, for example, carting grain or contracting to help repair a shire road) is included in the ABARE and ABS estimates but there is no allowance for this here. In this report, PFE is defined as follows:
Quantity produced Price Profit at full equity ($/ha/yr) Variable costs Fixed costs Revenue Revenue = [ P 1 x Q 1 x T R N ] + [ P 2 x Q 2 x Q 1 ] Unit price ($/t or $/dry sheep equivalent DSE) Quantity (t/ha or DSE /ha) Turn off rate Price of Secondary Product $/l or $/kg Yield of Secondary Product l/ DSE or kg/ DSE Variable costs = (Q C x Q 1 + A C ) + ( W R x W P ) Quantity dependent costs ($/t or $/DSE) Area dependent costs ($/ha) Water requirement (litres/ha) Water price ($/litre)
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The concept and method of estimating profit at full equity (Continued)
Revenue is derived from information about yields for the area in question and derived local prices as well as price and production data for agricultural commodities recorded by the ABS at the Statistical Local Area level. Data on fixed and variable costs were derived from ABARE data at a regional level. Interest or rent payments, and depreciation on leased items were excluded in line with the full equity assumption.
Use was also made of State government gross margin information handbooks that give quantity and area dependent variable costs of agricultural production for various enter-prises. Information on land-use was derived from the Audit’s land-use maps representing 67 land-use types. Using satellite imagery, measures of vegetation vigour referred to as the normalised difference vegetation index or ‘greenness’ is are used to distribute production in proportion to yield variation across each statistical local area.
Net economic return
This measure is defined as:
Information on government support to agriculture was derived from Productivity
Commission report (1998). Government support includes direct expenditure on research
advisory. State and industry aggregate estimates were converted to a value per hectare or percentage of gross product value.
Such spatially explicit data sets, relating economic returns to agricultural land-uses and the natural resource base provide a critical link between land management strategies and their economic consequences. Further information on the method used in estimating profit at full equity and net economic returns to land and water resources can be found in Appendix 1 of CSIRO Policy and Economic Research Unit project report (2002).
Spatial estimates of profit at full equity
Over the five years to 1996/97, net returns per hectare to the land resource were negative or very low in the semi-arid interior of the Basin where extensive grazing predominates ( Figure 5). Only relatively small areas of the Basin have high returns per hectare and these are confined largely to the irrigated southern regions and the north-eastern section (Figure 6).
Over the five years to 1996-97 total profit at full equity from agriculture averaged $3.7 billion, with the land-use groups, cotton, fruit and dairy accounting for over 63% of profit. The depressed state of the sheep industry over this 5 year period is also apparent (Table 5) whereas the negative state of the beef industry in 1996/97 was temporary.
Table 5 Profit at full equity by dominant land-use type
Land-use 1996/97 ($m) 5 Yr Mean ($m) Cotton 1136.3 1002.1 Fruit 715.3 748.0 Dairy 524.8 597.3 Coarse Grains 374.7 441.2 Cereals 795.1 378.1 Grapes 336.6 349.4 Vegetables 128.7 151.3 Beef -282.1 134.5 Rice 51.9 47.5 Oilseeds 57.3 30.2 Tree Nuts 25.1 22.5 Legumes 37.1 15.8 Hay 2.0 1.9 Peanuts 0.6 0.4 Sheep -156.1 -186.0 TOTAL 3747.1 3734.2
Note these figures are (1) Basin−wide including extensive and intensive agriculture; (2) have not segmented industry sectors, for example intensive beef or feedlots; (3) Profit from production from mixed enterprises, for example a wheat-sheep farm, are partitioned into its relative components.
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A very small proportion of the MDB agricultural landscape produces most of the net return to land, water, capital and management. Eighty percent of profit at full equity comes from 1.5 million hectares — less than 2% of the area used for agriculture. This is highlighted in Figure 7 which shows the location of the most profitable areas of agriculture on a per hectare basis. The profitability of legumes in the Wimmera region of Victoria can also be seen. Five Catchment
Management areas, out of a total of 22, account for more than 50% of total profits from agriculture in the MDB (Table 6). Many of these are major irrigation regions and are dominated by one or two key industries such as the River Murray (fruit and grapes), Condamine (cotton), Goulburn (fruit and dairy), Namoi (cotton) and Murrumbidgee (rice and vegetables) Catchment Management Areas. Estimates of profit at full equity are dependent on commodity prices and will vary from year to year.
Returns to water resources
Table 7 shows that 66% of the total profits generated from use of agricultural and pastoral land come from irrigation compared to 34% for dryland cropping and grazing.
Table 8 provides estimates of average profit at full equity per megalitre of water used per year. The relative intensity of water use is also shown. Some land-uses like legumes and fruit do not use excessive amounts of water but are highly profitable thereby giving high water returns (about $1500 per gigalitre of water used). At the other end of the scale are activities like dairying which is a heavy user of water. In contrast, a high proportion of irrigation water is used for intensive pasture grazing, particularly dairying , which returns only $75 per gigalitre of water used. Dairying, together with rice and cotton production, accounts for 76% of the total water used for irrigation in the Basin.
Table 6 Contribution of Catchment Management Areas to total profit at full equity Catchment Management Area PFE 5YR ($m) PFE 5YR (%)
River Murray (SA) 461 12.4
Condamine (QLD) 398 10.7
Goulburn (VIC) 390 10.5
Namoi (NSW) 381 10.2
Murrumbidgee (NSW) 352 9.4
Gwydir (NSW) 225 6.0
North Central (VIC) 223 6.0
Central West (NSW) 223 6.0 Mallee (VIC) 204 5.5 Murray (NSW) 198 5.3 Border Rivers (QLD) 146 3.9 Lachlan (NSW) 145 3.9 Border Rivers (NSW) 138 3.7 Lower Murray-Darling (NSW) 71 1.9 Maranoa-Balonne (QLD) 69 1.8 Wimmera (VIC) 58 1.6
North East (VIC) 36 1.0
Western (NSW) 30 0.8
ACT 2 0.1
Warrego-Paroo (QLD) -16 -0.4
TOTAL 3,734 100.00
Table 7 Total profit at full equity generated from dryland and irrigated agriculture
Land-use Net returns Area*
1996-97
Average of five years to 1996-97
$million $million million ha
Dryland cropping and grazing 1296 1256 (34%) 87.9
Irrigation 2452 2478 (66%) 1.6
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Figure 7 Area accounting for 80% of the Murray-Darling Basin’s total profit at full
Table 8 Annual returns to water and intensity of water use (PFE 1996-97)a Land-Use Group Water Returns ($/ML) Total Water Use (GL) % of total MDB water use Water Use (ML/ha) Beef 12 992 8.8 4 Cereals -4 64 0.6 3 Coarse Grains 126 468 4.2 3 Cotton 436 2,242 20.0 7 Dairy 75 4,598 41.0 7 Fruit 1,540 443 3.9 7 Grapes 771 437 3.9 8 Hay 58 14 0.1 4 Legumes 1,570 24 0.2 3 Oilseeds -3 62 0.5 3 Peanuts 148 4 0.0 3 Rice 31 1,696 15.1 11 Sheep 23 13 0.1 4 Tree Nuts 591 43 0.4 6 Vegetables 1,157 111 1.0 3
All MDB irrigated
Land-uses 334,279 11,210 100.0
a
Derived from estimates of mean water use per land-use type in each region.
Figure 8 shows profit at full equity for land that was irrigated in 1996/97 in the Southern Connected River Murray system that is the focus of the current Living Murray debate. If water markets cause water to move to the areas that generate the most profits per hectare then the areas where most adjustment can be expected are those where profits per hectare are least.
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Figure 8 Profit at full equity for irrigated land in the Southern Connected River Murray System, 1996/97
Net economic returns
To facilitate international debate about degrees of protection, the Organisation for Economic Cooperation and Development (OECD) has developed a method for converting estimates of the costs of all forms of assistance to agricultural production into a producer subsidy equivalent. This is that amount of money that, if paid in lieu of all government programs and arrangements like research and extension that tends to increase the value of agricultural production, would result in farmers receiving the same net income benefit. Arguably, if this estimate is deducted from profit at full equity, the result is an estimate of the net economic return to the resource base and management skill from agricultural production in the Basin (Figure 9). Critiques of this measure argue that the most appropriate measure is one that effectively compares MDB agriculture with the average degree of support for all agriculture across the world.
Figure 9 Net economic return for 1996/97 for the Murray-Darling Basin ($/ha/yr)
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Profit at full equity is a measure of returns to land resources and management skill under control of private individuals. The result is an estimate of the net economic return per hectare (see Box 1). As explained above, estimates of the net value of support to agriculture were derived from data supplied to the OECD and also data published by the Productivity Commission. The total value of support to agriculture, using the internationally agreed measure of support was $953 million in 1996-97 or 25% of profit at full equity (Table 9). Certain catchment management areas have a higher than average share of the total support eg. Goulburn (VIC), North Central (VIC) and River Murray (SA). These high percentages are related to the prevalence of dairy production in these areas. In terms of support as a fraction of the Profit at Full Equity, high percentages occur in the Western (NSW) and North East (VIC) catchment management areas (see Figure 10). However, these two areas combined only account for 4% of the total support spent in the MDBC.
It is appreciated that all OECD countries provide some support to agriculture and that on an international scale the level of support supplied by Australia is relatively low. The measure does not include the cost of environmental programs like the Natural Heritage Trust and the National Action Plan for Salinity and Water Quality. Net economic returns by Catchment Management Board area are presented in Table 9.
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Table 9 Net economic returns by Catchment Management Areas
Catchment Management Board
Profit at Full Equity ($m) Support in 1996/97 ($m) Support as a portion of PFE (%) Share of Total Support (%) Net Economic Returns ($m) ACT 0.6 0.3 47 0 0 Border Rivers (NSW) 192.1 23.7 12 2 168 Border Rivers (QLD) 222.0 23.6 11 2 198 Central West (NSW) 232.7 63.1 27 7 170 Condamine (QLD) 441.1 68.8 16 7 372 Goulburn (VIC) 310.6 142.8 46 15 168 Gwydir (NSW) 295.9 31.1 11 3 265 Lachlan (NSW) 137.6 48.4 35 5 89 Lower Murray-Darling (NSW) 60.9 7.8 13 1 53 Mallee (VIC) 214.5 40.1 19 4 174 Maranoa-Balonne (QLD) 86.7 15.5 18 2 71 Murray (NSW) 183.0 82.7 45 9 100 Murrumbidgee (NSW) 303.8 70.0 23 7 234 Namoi (NSW) 323.4 43.1 13 5 280
North Central (VIC) 192.1 127.3 66 13 65
North East (VIC) 23.9 25.7 108 3 -2
River Murray (SA) 448.5 102.9 23 11 345
Warrego-Paroo (QLD) -20.2 7.5 -37 1 -28
Western (NSW) 7.3 10.0 138 1 -3
Wimmera (VIC) 90.7 18.8 21 2 72
All of MDB 3,747.1 953.3 25 100 2,794
Managing natural resources
Why do we have a problem in natural resource management? There are many goals and stakeholders in managing natural resources. Goals include those of private land owners — the predominant objective being sustainable profit flows from enterprises that utilise the landscape such as agriculture and tourism.
Public goals include aesthetics and maintaining landscape utility to provide services such as clean water, as well as protecting and restoring the environment for its own sake.
Public and private goals are not always consistent although in some areas and industries, production and conservation objectives can be delivered by the same natural resource management approach. In addition, private management decisions on-site can have off-site impacts on both production and conservation in other areas. Divergence in goals and the off-site impacts present the main problems for natural resource management.
In brief, the problem in resource management stems mainly from:
a lack of knowledge about the causes and consequences of resource use and deterioration, and hence private decision makers not being fully informed in their choices;
some issues being intergenerational and requiring a long term view and strategy; externalities or spillovers where private actions impact on the quality of the
natural resources available to others; and
differences between private and public objectives and time horizons and the public good nature of many of the ‘services’ provided by the resource base. These services include existence services such as biodiversity and landscape aesthetics.
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and/or more wisely in resource management. Capacity to change presupposes an awareness of current or future problems and a desire for change based on assessments of benefits and costs. Yet the four reasons discussed above as being at the heart of resource management problems explain why some desire change and why others do not.
Figure 11 explains how an investment decision process might work with many feedback points.
Awareness: The first challenge is understanding that there is a problem. A problem is not just perceived or defined in biophysical terms. It must be imposing costs, for example loss of agricultural productivity, loss of ecosystem services and threats to ecosystem existence. These costs depend respectively on the market prices of farm production, the costs of services to replace those of the environment, and the values placed on existence of natural ecosystems. But even recognising costs and hence potential benefits is not sufficient — solutions must be known. Lack of information on not only what management practices to undertake, but on the consequences of any management practice is perhaps the biggest challenge to investment in natural resource management.
Motivation benefits: The second challenge arises from conflicts between natural resource management for private and public returns and from competing uses of investment resources. The motivation to address a resource management
problem comes from expected benefits exceeding expected costs. These benefits and costs include time and effort and well as financial returns, social impacts and changes in risk exposures. The discount rate that individuals and organisations apply impacts on their assessment of life-time costs and benefits. For example, farmers who are nearing the end of their working life and do not wish to leave the farm to the next generation may place a lower value on the longer-term benefit flow from investments.
Overcoming barriers: The third challenge to investment is to overcome barriers created by lack of capacity rather than lack of understanding or motivation. Capacity is defined here to mean physical and financial resources, skills, and institutions to implement a desired policy, program, or action. For example, investments that require large up front cash injections, face financial constraints, and/or are complex may be beyond the capacity of many landowners to
undertake. The characteristics of a natural resource management practice interact with the capacity of managers and their enterprises or organisations to implement the practice.
Investment can be a reorganisation of production systems, change in land use, as well as change in land management practices. The challenge for policy makers is
• to fully understand the nature of the problems and identify the barriers to adoption;
• to assess whether the gains from change will exceed the costs; and • if this is the case, to design policies to reduce the barriers and promote
adoption.
Natural resource management is all about investment in protecting and remediating the natural resource base and about encouraging people and communities to acquire the necessary where with all to do this. And like all investments, hard decisions have to be made about how much to invest relative Figure 11 A conceptual framework for decisions on natural resource management
investment
Understanding
What are the options?
Motivation
Is the net benefit greater than the opportunity cost?
Resources
Are there constraints on the investment?
Investment in change
What are the outcomes? What options are feasible? Learning by doing What lessons have been learned? What is the impact on the cost?
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Returns to natural resource management and how they might be assessed
The natural resource base
• prioritises direct inputs into industries which deliver income and employment benefits,
• it delivers supporting services for industries and households, such as clean air and water, and
• it provides opportunities for recreation and enjoyment. By its very existence it infers benefits. These benefits are enhanced by management to protect and restore the natural resource.
Some of these benefits are illustrated in Figure 12. The benefits referred to are gross benefits. Against these must be set the costs of maintaining or enhancing our natural resources — implementing resource management — which include direct costs of putting the practice in place, and indirect costs in terms of foregone benefits if use of resources are restricted as a result of the practice. Benefits derived also depend on the success of resource management in
achieving restoration and protection outcomes. There is still much to learn about effective management options.
A decision framework for policy makers
Who has responsibility for resource management? Resource managers fall into a hierarchy:• managers who undertake investment on their own or others’ behalf. • groups who provide guidance or set rules at an industry, catchment or
regional level,
• managers at a state and national level also providing guidance, setting rules, and allocating resources to the middle level.
What are the problems facing policy makers?
Policy makers need to know what to do, how to do it and how to fund it. Given limited resources they must establish priorities. Policy makers need to determine: size and location of the problem and economic, environmental and social costs if
it is not addressed — this will depend on the number of people impacted, the economic importance of the activity affected, the nature of environmental damage and the vulnerability of the group to a shock and hence the social costs;
timing and type of actions imperative for addressing the problem — will the situation deteriorate quickly if not addressed; and
who is, or should be, addressing the problem — is there a role for the
government due to market failure, lack of information or divergence between private and social goals and objectives?
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Figure 12 Some sources of benefits from natural capital
Returns Examples
Private
Public
Source of minerals and metals
Î mining industry employment and flow-on economic activity value in adding to GDP and wealth in future GDP.
Fisheries and forestry, harvesting the production of natural capital and farming
Î employment and flow-on economic activity and managing the resource.
Agriculture using soils and water
Î employment and flow-on economic activity and supporting rural communities, managing much of the resource base
Water and land for industry
Îemployment and flow-on economic activity.
Amenity and recreational opportunities
Îtourism and recreational industries adding employment and flow-on effect plus individuals willingness to pay for such activities.
Clean water and other environmental services such as oxygen, CO2 sequestration
Îcosts saved in addressing problems and better health levels.
Biodiversity options value contribution of flora and fauna to food sources, pharmaceuticals
Î industries based on these and value of cost savings of better health outcomes.
Biodiversity and ecosystem integrity
These three issues seek to establish a baseline showing what will happen under an operating environment of ‘business as usual’1. However, where baseline
trends suggest priority the most important piece of information for the policy maker is whether there is a feasible alternative outcome. In particular the: availability of solutions and benefits that will flow from successful
implementation and
cost of successfully implementing the options, relative to the benefits. Figure 13 sets out the four phases in natural resource management decision making and some of the key issues facing the policy maker.
A general assessment framework
Five basic steps to assessmentThere are five basic steps to assessing priorities for action (Phase 1 in Figure 13). These steps are applicable at the level of the policy maker, catchment committee, community group and individual land manager. The steps aim to set out a process for estimating the total net benefit of undertaking any policy or practice. Those with the highest net benefits should take priority. Measurement of the costs and benefits in dollar terms is a convenience as it allows for easy
comparison across the space and time dimension. While environmental and social impacts are difficult to quantify, failure to do so may lead to them being left out of the assessment. Even if dollar assessments are not made, comparable quantification of the physical outcomes is advised. These can then be included in decision rules such as establishing minimum acceptable change levels as one criterion.
Step 1 — establish a baseline — what will happen if nothing is done beyond current measures to address deterioration in the resource base?
Step 2 — identify potential solutions (options) and their expected outcome — what are the benefits that flow from an action? These outcomes need to be described in
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The potential benefit estimate should reflect expected adoption and/or effectiveness rates and not assume 100% adoption or effectiveness.
Step 3 — identify the direct and indirect costs of the potential solutions or options — what are the financial costs, the costs of foregone production (less any reduc-tion in input costs) and the unintended environmental costs (if any) and social costs of the change?
Step 4 — net benefit assessment — are the discounted benefits estimated in step 2 relative to the baseline in step 1 greater than the discounted costs in step 3? Key issues are:
• the appropriate discount rate1 to use which will vary between private
and public decisions;
• private net returns where there are flow on benefits to others; and • for the public decision-maker, the comparison of the return on the natural resource management investment relative to other investments. Step 5 — assessment of other constraints and policy effectiveness — are there other
constraints to the investment in resource management? How effective are the policy tools available at overcoming these constraints? These assessments need to feed back into step 2 — the likelihood of achieving the desired outcomes, and into step 3 — the cost of the option. The reason this step comes last is that there needs to be at least two rounds from steps 2 to 5. The first round establishes priorities – which requires an assessment of feasibility, the second round pays more attention to design and market cost and
effectiveness estimates. Figure 14 summarises the framework.
1 In this report, an appropriate discount rate for public long term investments is assumed to be 2-5%. This is an acceptable rate of time preference for evaluating potentially large benefits and costs that accrue across multiple generations. Where private investments are referred to, the dis-count rate chosen is 10 percent reflecting a more realistic opportunity cost for private investor funds over a shorter time period.
Figure 13 Phases in natural resource management decision making
I Priorities phase Establish priority problems, regions, industries and decide on objectives
II Design phase Identify the ‘best’ option and design policy/ program/ action
III Implementation phase Act to implement action to the timetable in the design
Key Issues
5 step assessment process
Public and off-site costs of ‘business as usual’ approach
Other linked social objectives Availability of feasible options Likely costs and benefits of options
Key Issues
Detailed benefit-cost of options Assumptions about adoption at ‘on
ground’ level
Level of risks and uncertainties about costs, benefits, timing
Key issues
Timetable for actions Responsibilities for actions Designing a monitoring system for
accountability
Resource implementation
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Figure 14 Framework for options assessment by policy makers in a catchment
Public cost/benefit
Impacts on
economic activity and social goals water treatment
other public infrastructure
Environmental impacts – value on these Is there a problem – what is the
outcome of doing nothing? catchment
regional or national
Step 1 Establish — a baseline
Agricultural land yield decline infrastructure replacement Non-agricultural land infrastructure replacement Private cost/benefit Public benefits
Contribution to economic activity/ social goals infrastructure costs
– what is the reduction in costs Environmental benefits
– what is the change from the no action case? Environmental impacts – value on these Are there solutions – what are their
potential benefits? When will they arise? How certain are they?
Step 2 Identify options and their outcomes
Private benefits Agricultural land will yields be restored?
– what are other limiting factors Infrastructure
how will replacement rates change?
Public costs
cost of administering program cost of implementing program cost of monitoring program social costs of change What are the costs of these
solutions? financial cost foregone production social cost of change
Step 3 Fully cost options
Private costs
additional investment required production foregone (less costs
saved)
personal costs of change
Policy decisions:
Does the public return on this investment exceed the return on alternative uses of public funds?
Step 4 Assess net benefits
No Private decisions: Does the
discounted net benefit exceed the discounted net cost for the private land manager?
How effective is policy at addressing these constraints?
Yes Are there other constraints to adoption?
Yes
Step 5 Access constraints and policy effectiveness
Are total benefits greater than total costs?
Widening the scope of benefit-cost assessment to include environmental and social costs and benefits
Many texts outline how to undertake a benefit-cost assessment including methods for applying discount rates, estimating net present values and
calculating internal rates of return. Methods for estimating the sensitivity of the return estimates to variations in key parameters are also straightforward. What is difficult is clear identification of option costs (including unintended costs), changes resulting from them and an estimation of the often complex impact of these changes. Here, the changes from an option are relative to what would have happened without the option and excluding the impact of any other sources of change. Much progress has been achieved in ensuring that the feedback effects of changes in demand and supply on prices, and quantities of goods and services produced and consumed, are taken into account in estimating benefits and costs. The focus of most assessments has largely been on the economic impacts. Social impacts are usually included only to the extent that the change in consumer and producer welfare is separately identified. Non-market environmental impacts are rarely included. The framework for estimating benefits and costs allows inclusion of environmental and social benefits and costs. This is a significant challenge for social assessment – both in terms of method and available data.
Using Audit information to develop priorities for the Murray-Darling Basin?
The NLWRA has provided considerable information on the biophysical status and trends of the natural resource base. This information cannot be turned into policy priorities per se, but it forms a starting point. Policy priority areas are those where economic, environmental and social net benefits of changing landscapes are high and there is insufficient motivation for and/or capacity within the private land managers to address the problem. These are usually problems with substantial public spillovers.
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2 Farmers in the Murray-Darling
Basin
Key points
Approximately 10% of farm establishments produce 40 to 50% of gross agricultural income and manage 60% of agricultural and pastoral land. Encouraging changes in the management practices on this small number of large farms is likely to provide the greatest impact in land management for natural resource protection.
Australian farmers generally have a positive but pragmatic attitude towards environmental issues. There are significant regional variations in attitude. There has been little change in the level of farmers’ environmental concern over the past decade.
Environmental attitudes generally show little relationship with changed management practices. Recognition of a resource degradation problem is, usually, a necessary condition but, rarely, a sufficient condition for the adoption of sustainable practices. Other factors such as financial risk and management skills mediate farmers’ capacity to change.
The inherent characteristics of natural resource management practices largely determine the rate of their adoption by producers. Sustainable practices that provide economic and other advantages have lower risk, are simpler to manage and will generally be adopted more rapidly. Few natural resource management practices have all these characteristics.
Low farm incomes and high debt are likely to discourage adoption of sustainable practices. Reasonable incomes and confidence in the stability of future farm incomes are likely to be associated with a greater capacity and willingness to invest in natural resource management.
Landholders who consider they do not have the technical knowledge and skills to adequately address land and water degradation on their properties are less likely to adopt resource management practices. More frequent landholder participation in training courses is commonly associated with adoption of resource management practices. Investment in skills acquisition should remain a key tool in promoting improved natural resource management. Farmers do not all learn about sustainable practices in the same manner. Styles of
farmer learning vary from reliance upon a few key informants to the use of a wide range of personal and indirect sources. No one delivery system will be
appropriate for all farmers. Dissemination of local knowledge will remain a key feature of any successful training program.
Rural Australia is in the midst of a period of significant structural change. The number of large farm businesses is increasing while the number of middle sized farms has been decreasing; the recruitment of young people to agriculture has decreased; many farms families are becoming increasingly dependent on off- farm income; and the median age of the farm population has been rising. The rate of change is likely to accelerate in response to pressures such as:
accelerating demographic urbanization; changing life aspirations of rural youth;
a decline in the cultural relevance of farming as a lifestyle identity;
changing female expectations of marriage and work relationships within the farm business; and
the impact of the looming retirement of the ‘baby boomer’ population cohort segment on the Australian labour market.
These changes will lead to some regions remaining clearly agricultural in their character and others moving towards amenity landscapes where agricultural productivity does not determine land values. These changes will shift the values local communities place upon their landscapes and resources. Protecting natural assets for cultural or economic reasons may override the needs of agricultural industries. Catchment management plans and other natural resource
management strategies need to take account of the ongoing changes in social and economic structures.
Assessment Framework Context
Agriculture is the dominant activity in the MDB. With 85% of the MDB classified as agricultural land, farmers and pastoralists are responsible for much of the land management in the Basin. The 1991 Census indicated that more than 16% of the workforce is directly engaged in agriculture, and in some Statistical Local Areas this number gets as high as 20%. Commercial agriculture is undertaken on some
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Responses to pressures for change
Australian agricultural development in the last two centuries was generally driven by a production-focussed ethos. Natural resource protection was often a reaction to the unanticipated major threats to the productive resource. Australian agricultural development has consequently been described as a continuing unplanned experiment (Barr and Cary 1992). In more recent times the focus of the Australian community has shifted from the historic production-focussed ethos towards a balanced of concern for both the protection of productive resources and the protection of natural values such as biodiversity and landscapes and the maintenance of food safety and quality. Agricultural landholders have not been immune from this shift in concerns; landholders in Australia generally now recognise significant land or water degradation
problems. In one recent study a quarter of the farms in most of the major farming regions of Australia reported one or more significant land or water degradation problems in 1998-99. There is also a widespread awareness amongst farmers of the importance of environmental impacts beyond the farm boundary (Reeve et al. 2001).
The translation of these changes in awareness of environmental impacts and attitudes to changes in land management practice has been mixed. There are some significant success stories where the methods of production have
undergone major change with consequent real improvements in natural resource protection. The widespread adoption of minimum tillage and direct drilling in many parts of the cropping zone is a good example. However, other aspects of land management have been relatively unchanged despite clear deleterious impacts on natural resource management. The continued use of cultivated fallow and stubble burning in other parts of the cropping zone is an example of this latter situation (Karunaratne and Barr 2001a; Karunaratne and Barr 2001b). Recognition of a resource degradation problem is a necessary but, rarely, a sufficient condition for the adoption of sustainable natural resource management practices. Whether farmers change their land management in response to this recognition depends on many interrelated factors. These factors include:
• the characteristics of the natural resource management practices; • farmer beliefs about the environment and practices to protect the environment;
• financial capacity of farm businesses to invest in natural resource protection;
• management skill and knowledge of land managers;
• support for environmentally friendly behaviour from peers and social networks;
• individual differences between landholders; and • regulatory and legal pressures.
The nature of the natural resource management
practices
Inherent characteristics of natural resource management (see Box 2) practices largely determine the rate of their adoption by producers. Sustainable practices that provide economic and other advantages will generally be adopted more rapidly. In most cases such advantages will depend on commodity prices. Landholders generally seek to reduce the risk of adopting a new practice. Sustainable practices which are observable, trialable, and less complex are generally more quickly adopted than practices that are not (Table 10). The characteristics of a practice vary in different locations. We cannot assume that a practice with advantages in one location will yield the same advantages
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Box 2 Characteristics of agricultural practices
Relative Advantage
Relative advantage is normally interpreted in terms of financial advantage to the farm business or the adopter. The perceived financial advantages of environmental innovations (where they exist) have consistently been shown to be one of the best indicators of their subsequent adoption.
Geographic applicability − locality differentials in relative advantage
For the adoption of natural resource management practices the appropriateness and relative advantage of a given practice will vary in geographic space to a very large extent.
Risk avoidance
The motivation of human behaviour is more complex than a simple drive for financial profit. While considerable research demonstrates relationships between beliefs about profitability and adoption behaviour, this is mediated by a great variation in attitudes towards business profit and a consideration of the risks that characterise Australian agriculture.
Complexity
Sometimes innovations that appear simple may in fact imply significant and complex changes to the farm production system. Such innovations are less likely to be adopted. Complexity increases the risk of failure and introduces increased costs in gaining knowledge.
Compatibility
Compatibility refers to the extent to which a new idea fits in with existing knowledge and existing social practice. If a new idea fits easily into an existing system it will be adopted more quickly. There are usually two ‘systems’ against which the compatibility of a practice will be judged – the current system of farming on a given property and the social system embracing a farming community or broader cultural beliefs and values.
Trialability
Innovations which can be trialed on a small scale prior to full implementation are more likely to be adopted. Trialing enables decisions about the utility of an innovation with minimal risk. Trialability is dependent upon observability.
Observability
Natural resource management practices whose advantages are observable are more likely to be adopted. Traditionally, new varieties or crops are often quite visible to passing observers and this visibility has been used to advantage.
Table 10 Characteristics of some agricultural practices with beneficial impacts on natural resources Sustainable practice Geographic applicability Relative advantage Risk
avoidance Simplicity Compatibility Trialability Observability
Ideal rating (Hi) (Hi) (Hi) (Hi) (Hi) (Hi) (Hi)`
Maintenance of soil cover Hi Hi (temporal) Hi
M-Lo (locality)
M M M-Lo
Establishing and monitoring ground cover targets (monitoring of pasture and
vegetation condition)a Hi M Hi
M-Lo M M M-Lo
Nutrient balance accounting (soil and
plant sampling) Lo Lo Hi
Lo M Lo Lo Soil and plant tissue tests to determine
fertiliser needsa Lo Lo Hi
Lo M Lo Lo
Regular soil testing M M Hi Hi M Lo Lo
Fertilising of pastures M Hi-M (locality) M Hi Hi Hi Hi-M
Agricultural lands treated with gypsum M Lo M-Lo Hi Hi M M
Agricultural lands treated with lime M Lo M-Lo Hi Hi M M
Regularly monitor water tablesa M M (locality) Hi Hi Lo Hi M
Use of deep-rooted perennial pasturesa Hi M M-Lo M-Lo M (locality) M Lo
Non-commercial tree and shrub plantinga M – Hi Lo Hi Hi M-Hi Hi Hi
Commercial tree and shrub planting (farm
forestry)a Lo Lo (locality) Lo
M Lo Lo Hi
Characteristics of some agricultural practices with beneficial impacts on natural resources (Continued) Sustainable practice Geographic applicability Relative advantage Risk
avoidance Simplicity Compatibility Trialability Observability
Ideal rating (Hi) (Hi) (Hi) (Hi) (Hi) (Hi) (Hi)`
Controlling animal pest or weed control to
control land degradationa Hi M M
M M-Hi M M
Pest and disease control in pastures M M-Hi (locality) M M M-Hi M-Lo M
Use of integrated pest management
(reducing pesticide use) Lo M-Lo M-LoHi
Lo M M-Lo M-Lo
Slashing and burning of pastures Lo M-Lo M Hi M Hi-M Hi
Cropping farms
Use of reduced or zero tillage (minimum
tillage)a Hi M M
M M-Hi Hi M
Stubble or pasture retention in ploughing
(direct drilling)a M M M-Lo
M-Lo M Hi-M M
Use of crop or pasture legumes in
rotationsa Hi M-Hi M-HiLo
M-HiLo M-Hi M M-Lo
Use of contour banks in croplanda M M-Lo M-HiLo M-LoHi M-Lo M-Lo M-Hi
Strip croppinga M
Adjusting crop sequences in response to
seasonal conditions Hi M-Hi M
M M-Lo M-Lo Lo
Irrigation farms
Irrigation schedulinga M M Hi M-Lo M-Lo M-Lo Lo
Laser graded layouta Hi M-Hi Hi-M M M-Lo M Hi
Storage and reuse of drainage watera M M-Hi M M M M-Lo M
Characteristics of some agricultural practices with beneficial impacts on natural resources (Continued) Sustainable practice Geographic applicability Relative advantage Risk
avoidance Simplicity Compatibility Trialability Observability
Ideal rating (Hi) (Hi) (Hi) (Hi) (Hi) (Hi) (Hi)`
Rangelands
Control grazing pressure by excluding
access to watera M M Hi
M-Lo M M-Lo M-Hi
Control of water flow from boresa Hi M-Lo Hi Hi Hi Hi Hi
Piped water supplies for stocka Hi M-Lo M HiLo Hi M Hi
Pastoral land stocked at recommended
rates Hi M M
M Hi M-Lo M-Hi
Degraded pastoral land converted to less
damaging use M Lo Ho
M M M-Lo M
Pastoral land destocked in low feed
conditions Hi M-Hi M-Lo
M-Lo Hi M-Lo M
Dairy farms
Use of effluent disposal systems (collection of effluent; ponds or drainage
sump) a Hi M-Lo M
M M M Hi
Pump dairy shed effluent onto pasture a M M-Lo Hi Hi M Hi Hi
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Many but not all practices designed to improve natural resource management are unprofitable. Many that are profitable are less profitable than alternative
practices and often more complex, harder to trial and have benefits which are difficult to observe (see Box 3). For many sustainable practices (such as deep-rooted perennials) the advantage to be gained by adoption is dependent on the value of the rural commodities produced as a result of using the practice. Low commodity prices for beef and wool over the past ten years have reduced the relative advantage of adopting many sustainable practices in the broadacre industries. Some practices offer advantages that are captured beyond the farm gate.
For further information see Audit project reports on capacity for resource managers to implement sustainable practice (Cary et al. (2001) .
Beliefs about the environment
Farmer concern for the environment rose dramatically in the late 1980s. The change in attitude during the 1990s there has been much less. The University of New England recently repeated a monitor survey of farmer attitudes (Reeve et al. 2001). And found that Australian farmers in general have a positive but
pragmatic attitude towards environmental issues.
Attitudes to resource degradation do set the bounds of achievable social change. Recognition of a resource degradation problem is usually a necessary condition but, rarely, a sufficient condition for the adoption of sustainable practices. Other factors such as financial risk and management skill intervene and influence farmers’ capacity to change.
Box 3 Dryland lucerne: a profitable but complex innovation
The watertable under the riverine plains of northern Victoria has been rising since the introduction of European agriculture. The long-term solution for rising watertables in this region is to develop a system of farming based on a productive and profitable, deep-rooted perennial crop. The most appropriate commercial plant available at present is lucerne, yet only a minority of farmers grow significant areas of lucerne.
Lucerne is relatively complex to introduce into a pastoral management system, and there are considerable risks in its successful establishment. Sowing lucerne does not guarantee a successful crop of lucerne. The chance of failure is greater than with many other pasture species. One way to minimise the financial risk of establishing lucerne, and to make up for time a paddock may be out of production, is to sow lucerne with a faster-growing crop such as safflower. Farmers may have to learn to grow new crops that are more compatible with lucerne.
Lucerne requires rotational grazing management. Using the four-paddock rotation system, a farm running three flocks would need 12 or 16 paddocks. For farms previously ‘set-stocked’ this implies additional expensive fencing and more dams and reticulation to provide watering points in each paddock. Fencing at this intensity is likely to impede the easy management of cropping activity on mixed farms.
Lucerne pasture is more productive than normal pasture, but there are complex
ramifications in the farm system as more sheep will be required to graze the extra pasture. The increased flock size requires extra capital, more work in sheep handling and an increased workload of rotational grazing. Higher sheep densities in paddocks may mean a greater need for control of intestinal parasites and increased use of veterinary chemicals or greater attention to rotational grazing systems to minimise parasite infestation.
One means of maximising the benefit of lucerne is to abandon lambing in autumn in favour of spring lambing. This may mean a need to further re-arrange the farm timetable. To maximise the benefits of prime lamb production, the farmer will often need to develop new marketing skills and develop relationships with export abattoirs.
These changes have to be worked in with the continuing cropping enterprise. There are good reasons to maintain a lucerne paddock for its full eight-year life after successful establishment. Consequently, the farmer may have to crop paddocks elsewhere on the farm for a longer period before putting them back into pasture. This will require improved cropping skills.
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It cannot be assumed that an investment in attitude change might modify the behaviour of land managers. The expectation that changing attitudes of land managers will directly lead to changed behaviour is simplistic in many situations. This is most evident in beliefs about the value of promoting a
‘stewardship ethic’ as a means of changing management practices. Stewardship is the responsibility or obligation to maintain the land for future generations. Policies to change behaviour via changing the stewardship ethic are likely to achieve relatively little in the absence of other enabling conditions. In situations involving common property resources or externalities there will be a conflict between individual self-interest and the expectation that farmers will undertake activity for the common or future good for little, or negative, financial return (Cary & Webb 2001).
There is a significant body of research that demonstrates that links between environmental beliefs and environmental behaviour are tenuous. Environmental attitudes are far more weakly linked to measures of adoption of farm
conservation practices than beliefs about the profitability and risk associated with those practices (Cary 1994; Gorddard 1993; Vanclay 1988; Wilkinson & Cary 1994).
A stewardship ethic alone cannot be relied upon as a sufficient condition to facilitate change in farming practices. Policies designed to promote a stewardship ethic may often indirectly, rather than directly, influence the adoption of improved resource management practices. Community awareness programs create effective impacts through a two-stage process where awareness generates a favourable climate for the use of other policy instruments that, more directly, influence behaviour change. Recent examples of this use of a public stewardship ethic are the implementation of a cap on the extraction of water from the Murray-Darling system and tree clearing controls in some States.
Financial capacity
According to the Australian Bureau of Agricultural and Resource Economics, the gross value of agricultural production in the Basin was $9.4 billion in 1993-94, almost 40% of the Australian total.
The contribution of off-farm income to total farm family income has been steadily increasing for many of Australia’s farm families over the past 20 years. . This strategy has helped to maintain standards of living for many Australian farm families This is probably also the situation in the MDB but this has not yet been confirmed by income statistics data for the Basin.
The patterns of income distributions between farm families and all Australian families are remarkably similar. Issues related to low income are common to urban and rural families. From the perspective of natural resource management policy, the distributions imply that from a voluntary behaviour perspective and financial capacity we should expect no more or no less of farm families in their financial contributions to the environment than we expect of families in general. Low incomes, resulting from farm industry structural change, extended low commodity prices or extended drought conditions, will frequently be
concentrated in specific localities, with potentially adverse effects on resource management. This makes it difficult to draw conclusions about the financial capacity of MDB farms based upon regional data from any one year. Figure 15 maps median farm family income averaged over the last three Population and Housing Censuses after adjusting for inflation. This map indicates areas with consistent low farm family incomes, suggesting the existence of underlying structural problems in some parts of the semi-arid rangelands of New South Wales and Queensland, and along the Great Dividing Range.
Low farm incomes and high debt are likely to discourage adoption of sustainable practices that require capital investment but do not have immediate financial returns, or that increase the risk exposure of a farm business. Confidence in the stability of future incomes is associated with a greater likelihood to invest in natural resource management (Table 11)
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Figure 15 Median farm family income averaged from 1986–91 and 1996 censuses
