Designing agri-environmental policy for catchment management with hidden and limited information: a case study of dryland salinity abatement in the Lake Warden catchment Western Australia

Sallyann Harvey

    Research output: ThesisDoctoral Thesis

    187 Downloads (Pure)

    Abstract

    Dryland salinity is a major threat to some of Western Australia’s environmental assets. Economic incentives, in the form of voluntary cost-sharing agreements, have in most cases failed to influence landholders to change their land use on the scale that is required to protect environmental assets at threat from salinity. Some agreements incorporate a measure of environmental benefits in determining the landholder's payment, but do not account for variability in the opportunity costs for these actions. In reality, these costs are only known by the landholder, are often omitted from incentive design and may result in inefficient policy design. This study employs a land use decision model and methods that estimate the individual landholder's opportunity costs of land using readily available data. This approach is applied to landholders in the Lake Warden Catchment, which contains an internationally significant wetland on the south coast of Western Australia. The optimal payment for land use change when the environmental agency has full information on opportunity cost of land is estimated. The alternative policy options of fixed payments across a catchment and differentiated payments by impact on the natural resource are compared with the full information policy. Results show that the inclusion of annual pastures in a uniform fixed payment scheme, either alone or with native revegetation, is not a cost-effective way of reducing recharge in the presence of hidden information. A selfselecting menu of contracts improves the cost efficiency of reducing recharge compared to uniform fixed payment incentives, although only slightly when compared to the uniform payment scheme for native revegetation only.
    Original languageEnglish
    QualificationDoctor of Philosophy
    Publication statusUnpublished - 2010

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