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Rethinking the Externality Issue for Dryland Salinity in Western Australia

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  • Pannell, David J.
  • McFarlane, Donald J.
  • Ferdowsian, Ruhi

Abstract

Dryland salinity has been conceived of as a problem involving massive off-site impacts and therefore requiring coordinated action to ensure that land managers reduce those off-site impacts. In economic terms, salinity is seen as a problem of market failure due to externalities, including external costs from one farmer to another and from the farm sector to the non-farm sector. In this paper, we argue that, at least in Western Australia (WA), externalities are much less important as a cause of market failure than has been widely believed. If all externalities from salinity in WA were to be internalised, the impact of this on farm management would be small. There are a number of factors contributing to this conclusion, both hydrological and socioeconomic. Together, they mean that, relative to common belief, the true physical severity of externalities is diminished, and the economic significance of the remaining externalities is further diminished. This does not mean, however, that salinity is amenable to resolution in a free market, as there are other major causes of market failure, specifically public-good issues in research and development, and a range of problems related to farmer adoption of salinity treatments. Existing policies are not adequately addressing these market failures. Current misconceptions about the importance of externalities from salinity are themselves hindering progress in a number of ways.

Suggested Citation

  • Pannell, David J. & McFarlane, Donald J. & Ferdowsian, Ruhi, 2000. "Rethinking the Externality Issue for Dryland Salinity in Western Australia," 2000 Conference (44th), January 23-25, 2000, Sydney, Australia 123715, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare00:123715
    DOI: 10.22004/ag.econ.123715
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    1. Pannell, David J., 1999. "Uncertainty and Adoption of Sustainable Farming Systems," 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand 124511, Australian Agricultural and Resource Economics Society.
    2. George, R. J. & Nulsen, R. A. & Ferdowsian, R. & Raper, G. P., 1999. "Interactions between trees and groundwaters in recharge and discharge areas - A survey of Western Australian sites," Agricultural Water Management, Elsevier, vol. 39(2-3), pages 91-113, February.
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    1. 228 – Majority opinion
      by David Pannell in Pannell Discussions on 2012-11-22 06:31:54

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    1. Pannell, David J. & Ridley, Anna M., 2006. "A framework to select policy tools for dryland salinity," 2006 Conference (50th), February 8-10, 2006, Sydney, Australia 139889, Australian Agricultural and Resource Economics Society.
    2. Pannell, David J. & Roberts, Anna M. & Park, Geoff & Alexander, Jennifer, 2013. "Improving environmental decisions: A transaction-costs story," Ecological Economics, Elsevier, vol. 88(C), pages 244-252.
    3. Murtough, Greg & Aretino, Barbara & Matysek, Anna, 2002. "Creating Markets for Ecosystem Services," Staff Research Papers 31912, Productivity Commission.
    4. Jeff Bennett, 2005. "Australasian environmental economics: contributions, conflicts and ‘cop‐outs’," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(3), pages 243-261, September.
    5. Mullen, John D. & Vernon, Don & Fishpool, Ken I., 2000. "Agricultural extension policy in Australia: public funding and market failure," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(4), pages 1-17.
    6. Pannell, David J., 2001. "Dryland Salinity: Inevitable, Inequitable, Intractable?," 2001 Conference (45th), January 23-25, 2001, Adelaide, Australia 125811, Australian Agricultural and Resource Economics Society.
    7. Doole, Graeme J. & Pannell, David J., 2009. "Evaluating combined land conservation benefits from perennial pasture: lucerne ( Medicago sativa L.) for management of dryland salinity and herbicide resistance in Western Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(2), pages 1-19.
    8. Bathgate, Andrew & Pannell, David J., 2002. "Economics of deep-rooted perennials in western Australia," Agricultural Water Management, Elsevier, vol. 53(1-3), pages 117-132, February.
    9. Harris, E., 2007. "Historical regulation of Victoria's water sector: A case of government failure?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(3), pages 1-10.
    10. repec:ags:aare05:137931 is not listed on IDEAS
    11. Jones, Randall E., 2005. "Sustainability and integrated weed management in Australian winter cropping systems: a bioeconomic analysis," 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia 137930, Australian Agricultural and Resource Economics Society.
    12. Ross Kingwell & Michele John & Michael Robertson, 2008. "A review of a community-based approach to combating land degradation: dryland salinity management in Australia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 10(6), pages 899-912, December.
    13. Mullen, John D., 2001. "An Economic Persective On Land Degradation Issues," Research Reports 27999, New South Wales Department of Primary Industries Research Economists.
    14. David J. Pannell & Anna M. Roberts, 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 437-456, October.
    15. Pannell, David J., 2001. "Dryland salinity: economic, scientific, social and policy dimensions," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 45(4), pages 1-30.
    16. Kingwell, Ross & John, Michele, 2007. "The influence of farm landscape shape on the impact and management of dryland salinity," Agricultural Water Management, Elsevier, vol. 89(1-2), pages 29-38, April.
    17. Kingwell, Ross S., 2003. "Dryland Salinity: Spatial Impacts and Farmers' Options," 14th Congress, Perth, Western Australia, August 10-15, 2003 24391, International Farm Management Association.
    18. Graham, Tennille & White, Benedict & Pannell, David J., 2003. "Efficiency Policies for Salinity Management: Preliminary Research from a Spatial and Dynamic Metamodel," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 57879, Australian Agricultural and Resource Economics Society.

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    Keywords

    Farm Management; Marketing;

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