Cost‐effective regulation of nonpoint emissions from pastoral agriculture: a stochastic analysis

Nutrient emissions from pastoral agriculture are a global cause of declining water quality. Their management is complicated through variability arising from climate and soil influences. This paper compares the implications of input‐based policies and direct restrictions on leaching to achieve 10 and 20 per cent reductions in nitrogen (N) load, in the context of pasture‐based New Zealand dairy farms. The most important mitigation practices on these farms are de‐intensification (involving reductions in N fertiliser application and stocking rate) and the application of nitrification inhibitors. A stylised conceptual model, incorporating both sources of variability, is used to identify the implications of alternative policies. Direct restriction of estimated N leaching is the most cost‐effective policy to reduce N leaching by 10 and 20 per cent. These results indicate the general insufficiency of input‐based mechanisms for water quality improvement, given the low correlation between input use and leaching, possible substitution with unrestricted inputs and their failure to motivate the use of mitigation strategies. Additionally, model output indicates that inherent variability in water quality, mainly due to climate influences, can dominate the benefits of regulatory action in any given year.     

Nondiscretionary residential water use: the impact of habits and water‐efficient technologies

Several studies published in the last few decades have demonstrated a low price‐elasticity for residential water use. In particular, it has been shown that there is a quantity of water demanded that remains constant regardless of prices and other economic factors. In this research, we characterise residential water demand based on a Stone‐Geary utility function. This specification is not only theory‐compatible but can also explicitly model a minimum level of consumption not dependent on prices or income. This is described as minimum threshold or nondiscretionary water use. Additionally, the Stone‐Geary framework is used to model the subsistence level of water consumption that is dependent on the temporal evolution of consumer habits and stock of physical capital. The main aim of this study is to analyse the impact of water‐saving habits and water‐efficient technologies on residential water demand, while additionally focusing attention on nondiscretionary uses. This is informed by an empirical application using data from a survey conducted among residents of Brisbane City Council, Australia. The results will be especially useful in the design of water tariffs and other water‐saving policies.     

The potential impact of markets for irrigation water in Italy and Spain: a comparison of two study areas*

The viability of irrigated systems in Southern Europe is closely linked to efficient institutional settings and water‐allocation mechanisms. A significant, although not widely used, mechanism for water allocation is an intra‐sectorial water market. The objective of this paper is to evaluate to what extent water markets may contribute to the improvement of the efficiency of water allocation and to the profitability of irrigated agriculture. The related issues of water allocation among farm types and farm specialisation are also addressed. The analysis is based on a basin‐level linear programming model, comparing the situation with and without a market. It includes both fixed and variable transaction costs and estimates their combined effects on market performances. The model is applied in two areas in Southern Italy and Spain, and simulates the behaviour of different farm types, derived from cluster analysis on a sample of farms in each area. The paper confirms that water markets could potentially improve the economic efficiency of water use, in terms of higher profit per hectare, given limited water availability. The potential improvements are associated with a more intense specialisation of farms and are strongly differentiated among farmers, particularly where significant restrictions to water availability occur. This corroborates the expectations of institutional difficulties in implementing water markets. However, the exchanges, and consequently the potential effects of water markets, are heavily affected by the actual level of water availability, as well as the size and the structure (fixed vs. proportional) of transaction costs. The paper calls for a more in‐depth analysis of the connections between market performances and institutional settings, as related to the issue of water‐agriculture policy design and coordination.     

Urban water demand with fixed volumetric charging in a large municipality: the case of Brisbane,Australia*

This paper uses suburb‐level quarterly data to model residential water demand in Brisbane, Australia, from 1998 to 2003. In this system, residential consumption is charged using a fixed annual service fee with no water entitlement followed by a fixed volumetric charge per kilolitre. Water demand is specified as average quarterly household water consumption and the demand characteristics include the marginal price of water, household income and size, and the number of rainy and warm days. The findings not only confirm residential water as price and income inelastic, but also that the price and income elasticity of demand in owner‐occupied households is higher than in rented households. The results also show that weather, particularly summer months and the number of rainy days, exerts a strong influence on residential water consumption.     

Water rights: a comparison of the impacts of urban and irrigation reforms in Australia

Although there has been a policy thrust towards making all Australians more cognisant of the relative scarcity of water resources, the approach adopted for urban dwellers differs markedly from that applied to irrigators. These differences are examined from a property-rights perspective focussing primarily on the institutional hierarchies in the Victorian water sector. The analysis reveals significant attenuation of urban dwellers' rights, presumably on the basis of the information deficiencies that circumscribe urban water use. Alternative policy options are then proposed, which might alleviate some of these information deficiencies and simultaneously address the efficiency losses that attend the present arrangements.     

中小流域水权制度构建——以温榆河为例

基于广义水权的视角,在国家水权制度框架的基础上,从流域、区域和基层用水3个层面,提出了构建温榆河流域水权管理框架的思路,并从水权分配机制、水权实施机制和水权保障机制3个方面,系统阐述了温榆河水权制度建设的具体途径,旨在为中国其他中小流域水权管理改革提供参考和借鉴。     

Presumptions of linearity and faith in the power of centralised decision‐making: two challenges to the efficient management of environmental water in Australia

Water policy in the Murray‐Darling Basin continues to be dominated by the trade‐offs between agricultural and environmental interests. This has recently been played out with the acrimonious debate that circumscribed the release of the Guide to the Murray‐Darling Basin Plan. In this paper, we argue that too much emphasis has been placed on the volume of held water as an indicator of environmental benefit. We also contend that there is an attendant presumption of linearity in the relationship between volumes of held water and environmental benefit which could lead to perverse outcomes. A second problem is that there is too much enthusiasm for contemplating the solutions to water management problems as residing primarily at the federal level of government. These factors stand to ultimately limit the efficient delivery of environmental objectives.     

Testing for allocation efficiencies in water quality tenders across catchments,industries and pollutants: a north Queensland case study*

The design of competitive tenders to purchase environmental services requires judgements to be made about the funding scale and tender scope, with the latter incorporating considerations of geographic area, industries involved and the types of environmental outputs required. Increasing the scale and scope of tenders increases the likelihood that a larger range of proposals will be proposed and cost‐effective ones selected. However, the use of larger and more broadly scoped tenders may reduce landholder participation and increase asking bids. In the study reported here, these issues have been tested with a single water quality tender run in north‐eastern Australia in 2007 and 2008. Post hoc tests and workshop exercises show that while larger‐scale and scope tenders can generate efficiency gains, care has to be taken to maintain participation and avoid higher bid levels.     

Managing groundwater in a mining region: an opportunity to compare best‐worst and referendum data

In nonmarket valuation, practitioners must choose a format for the valuation questions. A common approach in discrete choice experiments is the ‘pick‐one’ format, often with two alternative policy proposals and a status quo from which the respondent selects. Other proposed formats, include best‐worst elicitation, where respondents are asked to indicate their most and least favoured alternative from a set. Although best‐worst formats can offer efficiency in data collection, they can also lead to responses that are difficult to reconcile with neoclassical welfare estimation. The current article explores methodological issues surrounding the use of pick‐one versus best‐worst data for nonmarket valuation, focusing on framing and status quo effects that may occur within three‐alternative discrete choice experiments. We illustrate these issues using a case study of surplus groundwater use from Western Australian mining. Results identify concerns that may render best‐worst data unsuitable for welfare estimation, including a prevalence of serial choices in which the status quo is universally chosen as the worst alternative, rendering part of the choice process deterministic. Asymmetry of preferences and serial choices can be obscured when models are estimated using ‘naively’ pooled best‐worst data. Results suggest that caution is warranted when using best‐worst data for valuation, even when pooled results appear satisfactory.     

Economic contribution of French serradella (Ornithopus sativus Brot.) pasture to integrated weed management in Western Australian mixed‐farming systems: an application of compressed annealing*

Sowing phases of French serradella (Ornithopus sativus Brot.) pasture between extended cropping sequences in the Western Australian wheatbelt can sustain grain production through restoring soil fertility and reducing selective herbicide use. The objective of this article is to investigate the profitability of rotations involving this pasture under a variety of weed management scenarios to obtain greater insight into its value for mixed farming systems in this region. A stochastic search procedure, compressed annealing, is used to identify profitable sets of weed management strategies in a simulation model representing a large number of potential combinations of chemical and non‐chemical forms of weed control. In contrast to a continuous‐cropping sequence, the inclusion of a serradella phase in a rotation is profitable at high weed densities and with increasing levels of herbicide resistance. A single year of pasture in the rotation is optimal if resistance to Group A selective herbicides is present at the beginning of the planning horizon, but a three‐year phase is required if resistance to multiple herbicide groups is observed. Sowing a serradella pasture twice over a two‐year phase is also shown to be economically attractive given benefits of successive high weed kills.     

Territorial management contracts as a tool to enhance the sustainability of sloping and mountainous olive orchards: Evidence from a case study in Southern Spain

The continuity of farming in traditional sloping and mountainous olive production systems (SMOPS) is at risk, especially in marginally productive areas. The abandonment of olive production on sloping lands would have adverse economic, social, environmental and cultural effects. To tackle this risk of abandonment and to improve the sustainability of traditional SMOPS, we propose the Territorial management contracts (TMC) of rural areas. The potential of this instrument to be specifically applied to organic olive production systems on sloping lands is assessed. The paper then summarises the results of a survey of Andalusian farmers in sloping and mountainous areas aimed at identifying key characteristics of the TMC with the potential to enhance its uptake in target farming communities. Results show that farmers are well-disposed towards TMC, and that issues such as flexibility and external advice need to be considered for its successful implementation. From a policy perspective, the instrument is well aligned with the objectives of the last reform of the EU Common Agricultural Policy (CAP).