IDEAS home Printed from https://ideas.repec.org/a/ags/aareaj/313593.html
   My bibliography  Save this article

Assessing cost-effectiveness when environmental benefits are bundled: agricultural water management in Great Barrier Reef catchments

Author

Listed:
  • Rolfe, John
  • Windle, Jill
  • McCosker, Kevin
  • Northey, Adam

Abstract

Using economic analysis to prioritise improvements in environmental conditions is particularly difficult when multiple benefits are involved. This includes ‘bundling’ issues in agricultural pollution management, where a change in management action or farming systems generates multiple improvements, such as reductions in more than one pollutant. In this study, we conceptualise and compare two different approaches to analysing cost-effectiveness when varying bundles of benefits are generated for a single project investment. Each approach requires data to be transformed in some way to allow the analysis to proceed. The index approach requires the transformation on the benefits side so that the effects of multiple pollutant changes can be combined into a measure for each project which can then be compared to costs. By comparison, the disaggregation approach requires the transformation on the costs side where costs for each project have to be apportioned across the different pollutants involved. The paper provides novel insights with an application to agricultural water quality improvements into the Great Barrier Reef in Australia, demonstrating that while both approaches are effective in prioritising projects by cost-effectiveness, the disaggregation approach provides more insightful results and values that may be relevant for use as upper value guidelines in future project selection.

Suggested Citation

  • Rolfe, John & Windle, Jill & McCosker, Kevin & Northey, Adam, 2018. "Assessing cost-effectiveness when environmental benefits are bundled: agricultural water management in Great Barrier Reef catchments," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 62(3), July.
  • Handle: RePEc:ags:aareaj:313593
    DOI: 10.22004/ag.econ.313593
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/313593/files/ajar12259.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.313593?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Zhou, P. & Ang, B.W. & Poh, K.L., 2008. "A survey of data envelopment analysis in energy and environmental studies," European Journal of Operational Research, Elsevier, vol. 189(1), pages 1-18, August.
    2. Walsh, Patrick J. & Wheeler, William J., 2013. "Water quality indices and benefit-cost analysis," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 4(1), pages 81-105, March.
    3. Rolfe, John & Windle, Jill, 2011. "Using auction mechanisms to reveal costs for water quality improvements in Great Barrier Reef catchments in Australia," Agricultural Water Management, Elsevier, vol. 98(4), pages 493-501, February.
    4. Doole, Graeme J. & Vigiak, Olga & Pannell, David J. & Roberts, Anna M., 2013. "Cost-effective strategies to mitigate multiple pollutants in an agricultural catchment in North Central Victoria, Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(3).
    5. Neves Almeida, Thiago Alexandre das & García-Sánchez, Isabel-María, 2016. "A comparative analysis between composite indexes of environmental performance: An analysis on the CIEP and EPI," Environmental Science & Policy, Elsevier, vol. 64(C), pages 59-74.
    6. Robert J. Johnston & Elena Y. Besedin & Ryan Stapler, 2017. "Enhanced Geospatial Validity for Meta-analysis and Environmental Benefit Transfer: An Application to Water Quality Improvements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(2), pages 343-375, October.
    7. Stoneham, Gary & Chaudhri, Vivek & Ha, Arthur & Strappazzon, Loris, 2003. "Auctions for conservation contracts: an empirical examination of Victoria’s BushTender trial," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(4), pages 1-24.
    8. Atakelty Hailu & Terrence S. Veeman, 2001. "Non-parametric Productivity Analysis with Undesirable Outputs: An Application to the Canadian Pulp and Paper Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 605-616.
    9. Gary Stoneham & Vivek Chaudhri & Arthur Ha & Loris Strappazzon, 2003. "Auctions for conservation contracts: an empirical examination of Victoria's BushTender trial," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(4), pages 477-500, December.
    10. John Rolfe & Jill Windle, 2012. "Distance Decay Functions for Iconic Assets: Assessing National Values to Protect the Health of the Great Barrier Reef in Australia," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 53(3), pages 347-365, November.
    11. Pannell, David J. & Roberts, Anna M., 2010. "Australia’s National Action Plan for Salinity and Water Quality: a retrospective assessment," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(4), pages 1-20.
    12. Fare, R. & Grosskopf, S. & Hernandez-Sancho, F., 2004. "Environmental performance: an index number approach," Resource and Energy Economics, Elsevier, vol. 26(4), pages 343-352, December.
    13. Azad, Md A.S. & Ancev, Tihomir, 2010. "Using ecological indices to measure economic and environmental performance of irrigated agriculture," Ecological Economics, Elsevier, vol. 69(8), pages 1731-1739, June.
    14. Deal, Robert L. & Cochran, Bobby & LaRocco, Gina, 2012. "Bundling of ecosystem services to increase forestland value and enhance sustainable forest management," Forest Policy and Economics, Elsevier, vol. 17(C), pages 69-76.
    15. Zhang, Y. & Collins, A.L. & Jones, J.I. & Johnes, P.J. & Inman, A. & Freer, J.E., 2017. "The potential benefits of on-farm mitigation scenarios for reducing multiple pollutant loadings in prioritised agri-environment areas across England," Environmental Science & Policy, Elsevier, vol. 73(C), pages 100-114.
    16. Wendland, Kelly J. & Honzák, Miroslav & Portela, Rosimeiry & Vitale, Benjamin & Rubinoff, Samuel & Randrianarisoa, Jeannicq, 2010. "Targeting and implementing payments for ecosystem services: Opportunities for bundling biodiversity conservation with carbon and water services in Madagascar," Ecological Economics, Elsevier, vol. 69(11), pages 2093-2107, September.
    17. Balana, Bedru Babulo & Vinten, Andy & Slee, Bill, 2011. "A review on cost-effectiveness analysis of agri-environmental measures related to the EU WFD: Key issues, methods, and applications," Ecological Economics, Elsevier, vol. 70(6), pages 1021-1031, April.
    18. John Rolfe & Romy Greiner & Jill Windle & Atakelty Hailu, 2011. "Testing for allocation efficiencies in water quality tenders across catchments, industries and pollutants: a north Queensland case study," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(4), pages 518-536, October.
    19. Beher, Jutta & Possingham, Hugh P. & Hoobin, Sean & Dougall, Cameron & Klein, Carissa, 2016. "Prioritising catchment management projects to improve marine water quality," Environmental Science & Policy, Elsevier, vol. 59(C), pages 35-43.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Valatin, G. & Ovando, P. & Abildtrup, J. & Accastello, C. & Andreucci, M.B. & Chikalanov, A. & El Mokaddem, A. & Garcia, S. & Gonzalez-Sanchis, M. & Gordillo, F. & Kayacan, B. & Little, D. & Lyubenova, 2022. "Approaches to cost-effectiveness of payments for tree planting and forest management for water quality services," Ecosystem Services, Elsevier, vol. 53(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. John Rolfe & Jill Windle & Kevin McCosker & Adam Northey, 2018. "Assessing cost‐effectiveness when environmental benefits are bundled: agricultural water management in Great Barrier Reef catchments," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 62(3), pages 373-393, July.
    2. Rolfe, John & Whitten, Stuart & Windle, Jill, 2017. "The Australian experience in using tenders for conservation," Land Use Policy, Elsevier, vol. 63(C), pages 611-620.
    3. Rolfe, John & Windle, Jill, 2016. "Estimating supply functions for agri-environmental schemes: Water quality and the Great Barrier Reef," 2016 Conference (60th), February 2-5, 2016, Canberra, Australia 235510, Australian Agricultural and Resource Economics Society.
    4. Harald Dyckhoff & Rainer Souren, 2023. "Are important phenomena of joint production still being neglected by economic theory? A review of recent literature," Journal of Business Economics, Springer, vol. 93(6), pages 1015-1053, August.
    5. Shuaiyu Yao & Mengmeng Chen & Dmitri Muravev & Wendi Ouyang, 2021. "Eco-Efficiency Analysis for the Russian Cities along the Northern Sea Route: A Data Envelopment Analysis Approach Using an Epsilon-Based Measure Model," IJERPH, MDPI, vol. 18(11), pages 1-16, June.
    6. George Halkos & George Papageorgiou, 2016. "Spatial environmental efficiency indicators in regional waste generation: a nonparametric approach," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 59(1), pages 62-78, January.
    7. Li, Mingquan & Wang, Qi, 2014. "International environmental efficiency differences and their determinants," Energy, Elsevier, vol. 78(C), pages 411-420.
    8. M. S. Iftekhar & A. Hailu & R. K. Lindner, 2014. "Does It Pay to Increase Competition in Combinatorial Conservation Auctions?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 62(3), pages 411-433, September.
    9. Gregory Smith & Brett Day & Amy Binner, 2019. "Multiple-Purchaser Payments for Ecosystem Services: An Exploration Using Spatial Simulation Modelling," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(1), pages 421-447, September.
    10. Zhou, Haibo & Yang, Yi & Chen, Yao & Zhu, Joe, 2018. "Data envelopment analysis application in sustainability: The origins, development and future directions," European Journal of Operational Research, Elsevier, vol. 264(1), pages 1-16.
    11. Romy Greiner, 2023. "Examining Participation in and Supply of Private Land for Voluntary Conservation in Australia’s Tropical Savannas: A Discrete-Continuous Choice Experiment," Land, MDPI, vol. 12(7), pages 1-19, June.
    12. Whitten, Stuart M. & Reeson, Andrew & Windle, Jill & Rolfe, John, 2013. "Designing conservation tenders to support landholder participation: A framework and case study assessment," Ecosystem Services, Elsevier, vol. 6(C), pages 82-92.
    13. Wang, Ke & Wei, Yi-Ming, 2014. "China’s regional industrial energy efficiency and carbon emissions abatement costs," Applied Energy, Elsevier, vol. 130(C), pages 617-631.
    14. Sueyoshi, Toshiyuki & Yuan, Yan & Goto, Mika, 2017. "A literature study for DEA applied to energy and environment," Energy Economics, Elsevier, vol. 62(C), pages 104-124.
    15. De Valck, Jeremy & Rolfe, John, 2019. "Comparing biodiversity valuation approaches for the sustainable management of the Great Barrier Reef, Australia," Ecosystem Services, Elsevier, vol. 35(C), pages 23-31.
    16. Leleu, Hervé, 2013. "Shadow pricing of undesirable outputs in nonparametric analysis," European Journal of Operational Research, Elsevier, vol. 231(2), pages 474-480.
    17. Song, Malin & An, Qingxian & Zhang, Wei & Wang, Zeya & Wu, Jie, 2012. "Environmental efficiency evaluation based on data envelopment analysis: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(7), pages 4465-4469.
    18. Messer, Kent D. & Duke, Joshua M. & Lynch, Lori & Li, Tongzhe, 2017. "When Does Public Information Undermine the Efficiency of Reverse Auctions for the Purchase of Ecosystem Services?," Ecological Economics, Elsevier, vol. 134(C), pages 212-226.
    19. Hao Wang & Sander Meijerink & Erwin van der Krabben, 2020. "Institutional Design and Performance of Markets for Watershed Ecosystem Services: A Systematic Literature Review," Sustainability, MDPI, vol. 12(16), pages 1-26, August.
    20. Smith, Gregory & Day, Brett, 2018. "Addressing the Collective Action Problem in Multiple-purchaser PES: An Experimental Investigation of Negotiated Payment Contributions," Ecological Economics, Elsevier, vol. 144(C), pages 36-58.

    More about this item

    Keywords

    Environmental Economics and Policy;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aareaj:313593. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaresea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.