The effect of spatial interdependencies on prioritization and payments for environmental services

Empirical studies and on-the-ground policies assessing optimal selection of projects in the context of payments for environmental services programs rarely consider spatial proximity of one project to other projects. This occurs despite evidence from theoretical and ecological studies that benefits are often spatially interdependent. This paper develops a flexible construct of “spatial synergy benefits” using the principles of Newtonian gravity similar to efforts in other application areas. This approach is novel to the literature on environmental preservation and, as a systematic method, can account for a wide variety of spatial interdependencies. The empirical setting for the application is farm and forest preservation in Delaware, with a quadratic knapsack algorithm used to select the optimal set of parcels. Application results show that the specific level of the spatial synergy benefit measure does not significantly alter the number of parcels and acreage preserved, but that the composition of the optimal set changes as agglomeration preferences increase. These changes in the optimal targeted set indicate a potential bias in past research on PES selection. Policy makers informed by methods that do not explicitly account for spatial agglomeration preferences often make incorrect investment choices from a cost-effectiveness perspective.     

Multi‐objective crop planning using pareto‐based evolutionary algorithms

The scarcity of water is a growing problem worldwide. The increasing use of water in industrial, urban, and agricultural applications together with the continuous increase in population require the proposal of efficient solutions. In the case of agricultural use, it is necessary to not only maximize the economic benefits, but also to establish optimal water‐saving crop planning, especially for water‐deficient regions. Due to the multi‐objective nature of these problems, the decision‐making process is complex. Fortunately, the increase in computational resources available in recent years has allowed researchers to develop efficient computational algorithms to deal with real and complex optimization problems, including agricultural ones. In particular, multi‐objective evolutionary algorithms (MOEAs) are known for their ability to optimize several objective functions simultaneously to provide a representative set of the Pareto front, which is a set of problem solutions representing a trade‐off between the best values of each of the objectives. This article proposes solving a multi‐objective crop planning problem using two Pareto‐based MOEAs. Results obtained when solving this problem using real data collected from a large number of greenhouses in Spain to show the advantages of using these multi‐objective approaches.     

Statistical Modelling of Incentive Design Under Limited Information ‐ The Case of Public Access to Farmland

This paper explores the use of statistical modelling to aid efficient policy design for the provision of environmental goods on farms under conditions of adverse selection. The specific case of incentive‐based schemes to enhance the supply of public access to farmland is used as an example. A range of site willingness‐to‐pay (WTP) distributions are used to explore the benefits derived from policies designed under different levels of information. Where no individual farm information is available, low payment rates are optimal, but efficient market creation may not be possible. Increasing the information set allows discretion in pricing and entry: optimal payment rates and net benefits are higher and the pay‐off from procuring improved information can be substantial. Such benefits are reduced where there is a welfare cost associated with increased government expenditure. Optimal policies are sensitive to the skewness of the WTP distributions. Mechanisms for increasing the information set available to policy makers are discussed.     

Using Principal‐Agent Theory to Deal with Output Slippage in the European Union Set‐Aside Policy

This paper proposes modifications to the existing EU set‐aside policy which are designed to alleviate the problem of output slippage associated with heterogeneous land quality by using “incentive‐compatible” mechanisms drawn from principal‐agent theory. Specifically, it is suggested that there should be differential reference yields based on land quality to discourage the “adverse selection” of lower quality land for set‐aside, and that the scope of set‐aside monitoring should be expanded to include both the quantity and the quality of land set‐aside so as to discourage “moral hazard” problems. The potential of these modifications is illustrated using a numerical analysis, which is also used to evaluate the role of a range of factors which determine the set‐aside decision. Finally, an estimate of the “benefits” from reducing slippage required to justify the costs of including these modifications is provided.     

Integrated assessment of public investment in land-use change to protect environmental assets in Australia

A framework for comprehensive integrated assessment of environmental projects is developed and applied in partnership with a regional environmental body. The framework combines theory with practice, bringing a pragmatic and efficient approach to the rigorous assessment of projects for a large number of environmental assets in the north central region of the state of Victoria, Australia. The approach is codified as the Investment Framework for Environmental Resources (INFFER). The analysis assisted the environmental body to make strong business cases for a number of environmental projects, resulting in funding for those projects. Key features of the study include extensive participation of decision makers and stakeholders, integration of a comprehensive set of information about projects, explicit assessment of uncertainties and information gaps, and analysis of the most appropriate policy mechanism for each project. The process of applying the framework involved four steps: identification of around 300 important environmental assets in the region, filtering the list of assets to remove those that are less likely to provide opportunities for cost-effective public investment, development and detailed assessment of projects for a subset of assets, and negotiation of funding for projects. Implications for land-use policy include that environmental projects vary widely in their cost-effectiveness, requiring careful targeting of funds if environmental benefits are to be maximised. Many existing environmental programs use simplistic analyses to support decision making, resulting in missed opportunities for substantially greater environmental benefits. Promoting adoption of improved analytical methods is very challenging, requiring changes in mind-set and culture in environmental organisations. Widespread adoption is unlikely unless funders create incentives by rewarding those project proponents who undertake rigorous and comprehensive project assessments that focus on achievement of environmental outcomes.     

Australia’s National Action Plan for Salinity and Water Quality: a retrospective assessment*

Perceptions of a salinity ‘crisis’ in Australia around 2000 resulted in the establishment of a major national program that aimed to prevent, stabilize, and reverse trends in salinity. The National Action Plan for Salinity and Water Quality allocated A$1.4 billion of public funds to 1700 projects over 7 years. Here, we assess the performance of the program in relation to 12 features that we propose as being essential for programs that aim to address complex environmental problems. The features include use of technical information to guide investment prioritization, use of socio‐economic information, effective integration of information for prioritization, selection of appropriate targets, choice of appropriate policy mechanisms, and provision of incentives and support to environmental managers to pursue environmental outcomes cost effectively. Our assessment reinforces findings from a number of public reviews that found serious weaknesses in the program. Overall, with a few exceptions, projects under the National Action Plan generated few worthwhile salinity mitigation benefits and will have little enduring benefit. This was readily foreseeable given attention to the scientific and economic knowledge of salinity available at the time the program was developed.     

Using proportional modeling to evaluate irrigator preferences for market‐based water reallocation

Irrigators’ policy preferences for water reallocation programs usually take the form of proportional data, where one option will be relatively more or less favored than another in the composition of a government's total budget apportionment to address water reform. This study applies a zero‐one inflated beta regression to model Murray–Darling Basin irrigators’ preferences for market‐based water policy programs. Market‐based arrangements are more likely to provide efficient solutions to water reallocation problems, particularly where future uncertainty and appropriate pricing induce irrigator preferences for such programs. Our modeling of drivers of irrigator preferences for government expenditure on market‐based programs identified different determinants of zero (a corner solution) and proportional outcomes for the reallocation of Murray–Darling Basin water. In addition, the proportional modeling identifies some variables (namely, state regional influences, the type of farm production and recent debt, low income, or water allocation stressors) that increase engagement with market‐based programs. Interestingly, while price variables are important and statistically significant, they appear to be less relevant to program engagement than other influences.     

Herbicide resistance and the adoption of integrated weed management by Western Australian grain growers

Extension programs to encourage farmers to reduce reliance on herbicides by adopting integrated weed management (IWM) practices have met with limited success. Studies aiming to understand the factors that influence farmers' choices of integrated control practices have faced difficulties in variable specification, and have not achieved high explanatory power. Using data from grain growers in Western Australia, where herbicide resistance in major crop weeds is common, this study tests the applicability of a framework for the IWM adoption decision in which herbicide efficacy is assumed to be a potentially exhaustible resource. Farmers' perceptions of multiple techniques and other variables are aggregated using principal components, and used in logistic regressions to explain the intensity of use of IWM practices. Eighty‐six percent of growers were correctly classified according to use of multiple IWM practices. Herbicide resistance and expectations of the future availability of effective new herbicides were significant in explaining IWM adoption. IWM adoption and herbicide‐resistance management are shown to be information‐intensive and involving an intertemporal resource management decision.     

Adverse Selection in the Environmental Stewardship Scheme: Does the Higher Level Stewardship Scheme Design Reduce Adverse Selection?

The Environmental Stewardship Scheme provides payments to farmers for the provision of environmental services based on foregone agricultural income. This creates a potential incentive compatibility problem which, combined with information asymmetry about farm land potential, can lead to adverse selection of land into the Scheme and therefore a less cost‐effective provision of environmental goods and services. However, the Higher Level Stewardship (HLS) Scheme design includes some features that potentially reduce adverse selection. This paper studies the adverse selection problem of the HLS using a principal‐agent framework at the regional level. It is found that, at the regional level, the enrolment of more land from lower payment regions for a given budget constraint has reduced the adverse selection problem through contracting a greater overall area and thus higher overall environmental benefit. In addition, for landscape regions with the same payment rate (i.e. of the same agricultural value), differential weighting of the public demand for environmental goods and services provided by agriculture (measured by weighting an environmental benefit function by the distance to main cities) appears to be reflected in the regulator’s allocation of contracts, thereby also reducing the adverse selection problem.     

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

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.     

Effectiveness of harvest strategies in achieving multiple management objectives in a multispecies fishery

Fisheries management is characterised by multiple objectives, some of which may be complementary, while others may require trade‐offs between outcomes. Balancing these objectives is made more complex in the case of multispecies and multigear fisheries. In this paper, we develop a bioeconomic model that captures the key elements of such a fishery to test a range of potential harvest strategies to provide insights into how economic target reference points could lead to both desirable and undesirable management outcomes (e.g. discards). The model is developed as a long‐run optimisation model to identify target reference points to achieve multispecies maximum economic yield, and a dynamic recursive optimisation model, which includes more realistic representation of fishers’ behaviour, such as discards and trading of under‐caught species quotas. The potential economic, social and ecological impacts are evaluated using data envelopment analysis (DEA). The results suggest that the use of proxy target reference points can result in short‐term economic benefits at the cost of slower stock recovery and higher discarding. Limiting the number of species subject to quota controls may also prove beneficial in multispecies fisheries, while ensuring quota markets are efficient is likely to produce benefits irrespective of the harvest strategy adopted.     

Technology change as a policy response to promote changes in land management for environmental benefits

A previous study developed a framework for choosing among groups of policy mechanisms for encouraging environmentally beneficial land-use change. The framework highlights that these choices should depend on the relative levels of private (or internal) net benefits, and public (or external) net benefits. Incentive-based mechanisms (polluter-pays and/or beneficiary-pays) and extension need to be targeted carefully to appropriate projects—where private net benefits are close to zero, and/or public net benefits are more extremely positive or negative. This article focuses on policy mechanisms that alter the net benefits of changing land management, including R&D to develop new technologies, and training to improve the skill of landholders at using existing technologies. These policy options are now treated more comprehensively within the public benefits: private benefits framework. Benefits of technology-change projects can include reductions in the opportunity cost of compliance with environmental programs, increases in the public benefits of a particular type of land-use change, or improvements in private net benefits, resulting in public benefits through greater or more rapid adoption by private landholders. From an environmental management perspective, technology development is most relevant where public net benefits of land use change are positive and private net benefits are negative, but not highly negative. There is a set of projects for which technology change is the only viable alternative to no action, highlighting the importance of technology change in these cases.     

Editorial - Decision rules, government rules, and the costs of vegetation protection in New South Wales

Governments regularly spend public funds to purchase environmental amenities. They might purchase land to add to the public estate, pay to fence stock out of endangered native forest, or offer stewardship payments as incentives to conservation. Governments also regularly introduce policies to achieve environmental goals, even though these policies impose costs on firms, households or farms. The basic decision rule, to maximise environmental benefits from a given budget, in all these cases is received wisdom within the economics profession. In the case of purchase of land to add to the public estate:Maximise environmental benefits by purchasing land in descending order of the ratio of benefit to cost until the budget is exhausted.More generally, funds should be allocated to individual activities within a programme in order of the decreasing ratio of benefits to costs until the budget is exhausted. This rule can be applied when benefits can be measured in any monetary or non-monetary quantitative index. In the case of conservation of vegetation, it can be applied relatively simply in the field when vegetation types and land values can be mapped jointly through GIS techniques.This simple decision rule is not always followed by government agencies that manage environmental programmes. Consider the protection of native vegetation, which is defined to include native forest, native woodland and native grassland. To meet international obligations to protect this kind of environment, most countries must involve private landholders in conservation because there are insufficient government reserves to meet the international commitments. Indeed, most countries have already introduced many policies to encourage private landholders to protect native vegetation on their forests and farms.The New South Wales state government, in Australia, has introduced the Native Vegetation Conservation Act (1998) to ensure that private landholders protect vegetation. The Act constrains farmers to retain all the native forest, native woodland, and native grassland, on their land irrespective of the costs to them. Farmers can then apply for consent to clear and crop this land, but consent is rarely granted in full and often not at all. The Act is consistent with a decision rule of “maximise-benefits-only” - protect all vegetation irrespective of the costs to those who have to conserve it.Constraints of this kind will inevitably lead to a loss of income and land value when they restrict the farm enterprises, and so will impose opportunity costs on the farmer. There is already ample published evidence on the sizes of these costs - from publications of the relevant state agency itself, consultants' reports, farmer submissions and independent research. For example, in a large region in the northwest of New South Wales, where land could be cropped very productively:- some farmers bear only small losses (a quarter lose less than five per cent of their potential income),- some farmers bear very large losses (another quarter lose more than half of their potential income),- the overall losses of income per farm are high (an average loss of almost 30 per cent of potential income across the region), and- the losses are highest for those who have already conserved most woodland.Consider now the problem of reducing these costs by applying the benefit-cost rule as opposed to the maximise-benefits-only rule that has led to this position. There are three economic decision rules that might be used to rank projects or activities.The benefit-cost rule: Impose the constraint on the farm with the highest ratio of environmental benefit per dollar of opportunity cost first, then on the farm with the next highest ratio, etc., until the environmental goal is met. And so maximise the ratio of benefits to opportunity costs.The benefit-only rule: Impose the constraint on the farm with the highest environmental benefits first, then on the farm with the next highest benefits, etc., until the environmental goal is met. And so maximise benefits.The cost-only rule: Impose the constraint on the farm with the lowest opportunity costs first, then the next lowest cost, etc, until the environmental goal is met. And so minimise opportunity costs.But do these rules normally lead to different outcomes? If the “budget” or willingness to impose opportunity costs were large enough, all three would lead to the same outcome because constraints would be imposed on all suitable land. Otherwise the outcomes differ - that is the different rules lead to different levels of environmental benefit from the imposition of a given level of opportunity cost (or from the expenditure of a given budget).Both the benefit-only and cost-only rules lead to inefficiencies (see Babcock et al (1997) and Wu et al (2000) for a discussion of the associated statistical issues). Benefit-only targeting leads to the retirement of highly-productive land from agricultural uses - which is a major reason why opportunity costs are often high when native vegetation is conserved under the Act in New South Wales. The cost-only rule can lead to the reservation or purchase of land with few environmental benefits, even though expenditure or opportunity cost is minimised.A comparison of the benefit-cost rule and the benefit-only rule in the northwest of New South Wales illustrates the problem. The region is potentially highly-productive crop land but large areas of it are presently covered by native forest and woodland which cannot now be cleared. Much of this vegetation is under various degrees of threat even though it is not rare or endangered. The farm is the unit of assessment under the Act, so is used in the example. Benefits are measured as the percentages of species that are saved on each farm when its vegetation is protected rather than cleared to crops. The total benefit is the aggregate of percentage species saved across the farms - again following the present administration of the Act. The opportunity costs are measured as the losses in land value because land cannot now be cleared due to the Act.The comparison of the two rules indicates substantial savings with the benefit-cost rule. For example, 90 per cent of the total benefits can be obtained by imposing 93 per cent of the total opportunity costs with the benefit-only rule, and by imposing only 54 per cent of the total opportunity costs with the benefit-cost rule. The benefit-cost rule saves 39 per cent of the total costs at this level of benefits. Again, 80 cent of the total benefits can be obtained by imposing 86 per cent of the total opportunity costs with the benefit-only rule, but by imposing only 46 per cent of the total opportunity costs with the benefit-cost rule. The benefit-cost rule saves 40 per cent of costs at this level of benefits.While such results can only be indicative of the magnitudes, they do serve to highlight the inefficiencies of decision rules used by government agencies. In New South Wales, the Native Vegetation Conservation Act imposes high opportunity costs on farmers, partly because it is implemented through a high-cost decision rule. Now that suitable GIS technology, vegetation maps, and spatial land value data, are becoming available, these costs can be lowered with a more rational decision rule to guide choices in the field.The environmental goal is not at issue, but the cost of achieving it is. We can identify who bears the opportunity costs of environmental conservation, and often value the magnitude of these costs. Now we can also reduce the levels of these costs with the use of the benefit-cost decision rule.Jack SindenAgricultural and Resource EconomicsUniversity of New EnglandArmidale, New South WalesReferencesBabcock Bruce A, Lackshminarayan PG, Wu JunJie and Silberman D (1997) “Targeting Tools for the Purchase of Environmental Amenities”, Land Economics, 73, 325-339.Wu JunJie, Adams Richard M., Zilberman David, and Bruce Babcock (2000) “Targeting Resource Conservation Expenditures”, Choices, Second Quarter, 2000, 3-8.     

Non‐market valuation: usage and impacts in environmental policy and management in Australia

An extensive literature exists on environmental nonmarket valuation research. It appears that results from these studies should be useful inputs to decision‐making about environmental policy or management. Here, we investigate the extent to which this occurs in practice in Australian environmental management bodies. Nonmarket valuation experts were surveyed about their studies that they believed to have influenced policy. Then, decision‐makers in environmental bodies were interviewed about the level of influence nonmarket valuation has had on their decisions. We find that researchers' perceptions of the influence that nonmarket valuation has on decision‐making are overly optimistic. Interviews with decision‐makers suggest that nonmarket valuation is little used in decision‐making. Indeed, the majority of them are unfamiliar with nonmarket valuation techniques. Nevertheless, once the concept was explained to them, many decision‐makers believed it could benefit environmental policy. Researchers' perceptions of the reasons for low usage of nonmarket valuation are largely inaccurate. We suggest a range of strategies that economists can use to promote the use of nonmarket valuation in environmental policy and management decisions, including ways to improve communication and engagement with decision‐makers, and strategies to increase the capacity for decision‐makers to use nonmarket valuation results.     

The Procompetitive Effect of Demand-Enhancing Check-Off Programs

This article explores demand-enhancing check-off programs and how such programs may influence both private programs as well as industry market structure. Under duopoly, a firm may increase its sales through privately funding product quality improvements. However, such endogenous sunk costs may also be used to exclude a rival. Industry-funded check-off programs affect firms' strategies and can be procompetitive. The rationale lies not only in how the check-off enhancement is perceived by consumers but also in the way the check-off's crowding-out effect reduces the ability of a firm to use its private expenditures to bar a rival's market access.     

Policies for sustainable development in the hillside areas of Honduras: a quantitative livelihoods approach

In this article, we use data for 376 households, 1,066 parcels, and 2,143 plots located in 95 villages in the hillside areas in Honduras to generate information needed by decision makers to assess the needs and opportunities for public investments, and design policies that stimulate natural resource conservation. We develop a quantitative livelihood approach, using factor and cluster analysis to group households based on the use of their main assets. This resulted in seven household categories that pursue similar livelihood strategies. We use a multinomial logit model to show that livelihood strategies are determined by comparative advantages as reflected by a combination of biophysical and socioeconomic variables. While 92% of the rural hillsides population in Honduras lives on US$1.00/capita/day or less, households that follow a livelihood strategy based on basic grain farming are the poorest because they often live in isolated areas with relatively poor agro‐ecological and socioeconomic conditions. Opportunities for off‐farm work tend to be limited in these areas and household strategies that combine on‐farm work with off‐farm work earn higher incomes. Per capita incomes can be increased by improving road infrastructure, widening access to land, policies that reduce household size and dependency ratios, and adoption of sustainable land management technologies that restore soil fertility. We used probit models to show that the latter can be promoted by agricultural extension programs and land redistribution. Investments in physical assets should be directed toward households that pursue livelihood strategies based on off‐farm employment or coffee production, while agricultural training programs are best focused on livestock producers.     

模拟退火算法在土地利用总体规划中的应用

土地利用总体规划的核心就是土地利用结构的配置,在土地利用结构配置的各种方法中,模型法是一种较好的方法,提出了基于模拟退火算法模型的土地利用总体规划方法.介绍了模拟退火算法的模型和关键技术,并以铜山县为例进行了模型设计,把土地类型分为十大类,把经济效益最大化作为主导规划目标,将其它效益作为约束条件.根据设计的模型编程实现,得到了预期的结果,结果表明模拟退火算法是一种土地利用总体规划的有用的、有潜力的优化方法.     

Risk Behaviours and Grazing Land Management: A Framed Field Experiment and Linkages to Range Land Condition

We use a framed field experiment considering hypothetical stocking rate decisions made by grazing enterprise managers and estimate non‐linear multinomial logit models for a range of nested non‐expected utility and expected utility models. The risk and decision‐bias parameters for five models estimated for individual responses are shown to be significantly related to land condition but in ways which suggest behavioural aspects of decision making are critical in understanding land management and stocking rate decisions. Our results show that individual heterogeneity in decision making amongst farming groups is likely to be a significant source of variation in farming intensity and technology adoption decisions. This heterogeneity does not appear to be a reflection of socio‐demographic characteristics. Furthermore, decision functions appear to be biased toward selection of simpler representative functions (e.g. Expected Utility) for sample averages. This suggests that experimental findings that Expected Utility is representative for actual decisions may be due to sample averaging rather than reflect actual behaviour.     

水利水电工程跟踪审计实践与探讨

简述建设项目跟踪审计的优越性及跟踪审计服务内容，详细探讨建设项目跟踪审计中的土石方工程和设备安装工程这2个主要工作内容。研究结果表明，建设项目跟踪审计对建设项目的科学决策，及时纠正项目建设中存在的问题，促使建设项目提高经济效益和在保证质量的前提下按期完成，保证合理、合法地使用建设资金，正确评价经济效益，总结建设经验，提高建设项目管理水平具有十分重要的意义。     

地调项目设计预算编制与审查中的几个问题

地质调查项目专项经费属国家推行部门预算管理的对象,实行地质调查项目设计预算管理,是地质调查项目专项经费管理的重要手段.把握好设计预算的编制、审查、修改、批复与执行五个环节是预算管理工作的核心.本文仅就如何做好设计预算编制工作中值得注意的六个方面工作与设计预算审查的有关问题做了些探讨.