Economic effects of water recovery on irrigated agriculture in the Murray‐Darling Basin*

In October 2010, the Murray‐Darling Basin Authority (MDBA) proposed that a range of 3000–4000 GL per year, on average, of additional water be made available for the environment in the Murray‐Darling Basin (MDB) to mitigate the effects of what it considers to be inadequate environmental flows. To help quantify the costs of this water reallocation, a hydro‐economic model was constructed based on the 19 regions of the MDB. The model results indicate the following: (i) substantial reductions in surface water extractions of up to 4400 GL per year impose only a moderate reduction on net profits in irrigated agriculture, Basin wide, given competitive water markets, but the effects are much more pronounced in particular regions/catchments and (ii) the costs of the water reallocation are comparable with the amount budgeted by the Australian government to acquire water from willing sellers and increase environmental flows if inter‐regional water trade is unrestricted.     

Effective use of public funding in the Murray‐Darling Basin: a comparison of buybacks and infrastructure upgrades

Policy instruments designed to increase environmental flows in the Murray–Darling Basin are compared using TERM‐H₂O, a detailed, dynamic regional CGE model. Voluntary and fully compensated buybacks are much less costly than infrastructure upgrades as a means of obtaining a target volume of environmental water, even during drought, when highly secure water created by infrastructure upgrades is more valuable. As an instrument of regional economic management, infrastructure upgrades are inferior to public spending on health, education and other services in the Basin. For each job created from upgrades, the money spent on services could create between three and four jobs in the Basin.     

Declining inflows and more frequent droughts in the Murray–Darling Basin: climate change,impacts and adaptation*

It is likely that climate change will be associated with reductions in inflows of water to the Murray–Darling Basin. In this study, we analyse the effects of climate change in the Murray–Darling Basin using a simulation model that incorporates a state‐contingent representation of uncertainty. The severity of the impact depends, in large measure, on the extent to which climate change is manifested as an increase in the frequency of drought conditions. Adaptation will partially offset the adverse impact of climate change.     

The impact of drought and water scarcity on irrigator farm exit intentions in the Murray–Darling Basin

Drought and future water scarcity in the Murray–Darling Basin (MDB) will continue to restructure the irrigation industry in the coming decades. There has been little work conducted in Australia that has modelled farm exit or exit intention. ABARES farm survey data were used to model irrigators’ farm exit intentions across the southern MDB from 2006 to 2013. In particular, we examined the hypotheses that drought and water scarcity positively impacted on farm exit intentions and that it is the poorest performing farms that intend to exit in times of drought. Results revealed that water scarcity impacts varied considerably. There was only weak evidence to suggest that irrigators’ exit intentions were higher in times of drought, but there was stronger evidence to support the influence of a lagged water scarcity impact on farm exit intentions during periods of nondrought (e.g. intending to exit at times when the property market was less depressed). There was also strong evidence that poorer performing farms (measured by rates of return and higher debt over a certain level) were more likely to have exit intentions in drought periods, but not necessarily so in nondrought periods. Older age is the most consistent predictor of farm exit intentions across all industries, though it was most significant in drought periods.     

Removing border protection on wheat and rice: effects on rural income and food self‐sufficiency in China*

In this paper, I use the Monash Multi‐Country model – a dynamic Computable General Equilibrium model of China, Australia and the Rest of the World – to analyse the effects of removing border protection on wheat and rice in China. The analysis points to the possibility that removing border protection on wheat and rice may lead to an increase in rural income in China. This is mainly due to the following two factors. First, removing border protection on wheat and rice not only leads to a contraction in agricultural activities, but also leads to an expansion in manufacturing and services activities. Second, on average, rural households in China obtain over half of their income from manufacturing and services activities.     

Dynamic general equilibrium analysis of improved weed management in Australia's winter cropping systems*

A recent analysis indicated that the direct financial cost of weeds to Australia's winter grain sector was approximately $A1.2bn in 1998–1999. Costs of this magnitude represent a large recurring productivity loss in an agricultural sector that is sufficient to impact significantly on regional economies. Using a multi‐regional dynamic computable general equilibrium model, we simulate the general equilibrium effects of a hypothetical successful campaign to reduce the economic costs of weeds. We assume that an additional $50m of R&D spread over five years is targeted at reducing the additional costs and reduced yields arising from weeds in various broadacre crops. Following this R&D effort, one‐tenth of the losses arising from weeds is temporarily eliminated, with a diminishing benefit in succeeding years. At the national level, there is a welfare increase of $700m in discounted net present value terms. The regions with relatively high concentrations of winter crops experience small temporary macroeconomic gains.     

湄公河流域洪旱灾害损失分析

受海洋气候及气候变化的影响,湄公河流域洪旱灾害频发。澜湄合作及中国-东盟合作机制是我国发展周边外交的重要内容。搜集整理近几十年来湄公河流域洪旱灾害事件资料,分析了流域洪旱灾害损失情况、成因及影响因素,结果表明:洪旱灾害是湄公河流域的主要灾害形式,流域4国洪水发生次数占总自然灾害次数的50%左右;洪旱灾害对流域各国的人口、交通、农业、经济等方面的影响均比较显著;气候变化是引起湄公河流域洪旱灾害的主要原因。     

Spatial Econometric Issues for Bio‐Economic and Land‐Use Modelling

We survey the literature on spatial bio‐economic and land‐use modelling and assess its thematic development. Unobserved site‐specific heterogeneity is a feature of almost all the surveyed works, and this feature, it seems, has stimulated significant methodological innovation. In an attempt to improve the suitability with which the prototype incorporates heterogeneity, we consider modelling alternatives and extensions. We discuss solutions and conjecture others.     

Modelling outcome‐related risk in choice experiments

In this study, we introduce information on outcome‐related risk as an additional attribute in a choice model of preferences for a land‐based climate change mitigation project. We provide a comprehensive comparison of different model specifications arising from different behavioural assumptions about the way that respondents process information on outcome‐related risk within the choice task. We find significant differences between several specifications in terms of both model fit and WTP estimates. The behavioural assumptions made when choosing a particular model specification, and reasons that motivate them should be made explicit, and consequences of using different specifications should not be ignored.     

Economic drought management index to evaluate water institutions’ performance under uncertainty*

Reservoir management and intertemporal water allocation are critical issues in semiarid regions where agriculture has to confront highly variable rainfall patterns. In this paper, we derive and propose an economic drought management index (EDMI) to evaluate water institutions’ performance to cope with drought risk. The EDMI is based on the optimal conditions of a stochastic dynamic optimisation problem that characterises reservoir management. The index's main advantages are its ease of interpretation and breadth of scope, as it incorporates information on hydrological processes, structural constraints, water institutions’ rules, and the economic benefits of water use. An empirical application is developed to assess the institutional rules governing water allocation in two different supply systems in Andalusia (southern Spain).     

中国南方水稻干旱的解决途径探讨——对政府部门、科研

概述中国南方水稻种植面临的干旱问题，报告对有关政府部门、科研机构和农户调查的简况、政府部门和科研机构以及农户采取的抗旱措施，同时比较了各有关方面对干旱解决途径的看法，为解决中国南方水稻干旱问题，提出建议：加强中国南方水利设施的修建和管理、关注耐旱水稻品种的培育、加快农技推广体系的改革和建立完善的农技推广体系。     

Policy review of water reform in the Murray–Darling Basin,Australia: the “do's” and “do'nots”

The water reforms undertaken in the Murray–Darling Basin, Australia since 2007 have been viewed as a model for other countries seeking to respond to water insecurity. Here, a policy review is provided of this water reform and whether it delivers on key environmental objectives in the 2007 Water Act (the Act). The evaluation includes a review of the 2012 Basin Plan, a key instrument of the Act, and complementary policies associated with the acquisition of water entitlements for the environment via direct (reverse tenders) and indirect (infrastructure subsidies) means. Using the objects of the Act as a benchmark, an evaluation is provided of the following: (i) planned reductions in irrigation water extractions in the 2012 Basin Plan; (ii) risks associated with the 2018 amendments to the Basin Plan that, collectively, allow for an increase in irrigation water extractions of some 22 per cent, relative to the sustainable diversion limits specified in the 2012 Basin Plan; (iii) Basin‐scale environmental outcomes achieved, as of the end of 2018; and (iv) economic effects of direct and indirect methods of acquiring water for the environment. Findings from the review generate the “Do's” and “Do Nots” of water reform for Australia, and possibly other countries, when managing the trade‐offs between water for irrigation and the environment.     

Evaluating off‐site environmental mitigation using choice modelling*

Evaluation of off‐site mitigation entails comparison of utility changes between two sites. Choice modelling has been used to identify community willingness to trade‐off attributes for two different types of stream in New Zealand. Estimated utility functions are used to derive marginal rates of substitution and stream attribute part worths which can be used to design or evaluate both on‐site and off‐site mitigation policy. Latent class multinomial logit models identified classes of citizens who valued stream attributes quite differently. Significant differences in values for some attributes on different stream types imply heterogeneous mitigation ratios across environmental attributes.     

Australasian environmental economics: contributions,conflicts and ‘cop‐outs’*

Australian and New Zealand environmental economists have played a significant role in the development of concepts and their application across three fields within their subdiscipline: non‐market valuation, institutional economics and bioeconomic modelling. These contributions have been spurred on by debates within and outside the discipline. Much of the controversy has centred on the validity of valuations generated through the application of stated preference methods such as contingent valuation. Suggestions to overcome some shortcomings in the work of environmental economists include the commissioning of a sequence of non‐market valuation studies to fill existing gaps to improve the potential for benefit transfer.     

Modelling hydroclimatic uncertainty and short‐run irrigator decision making: the Goulburn system*

Australia has an incredibly variable and unpredictable hydroclimate, and while irrigation is designed to reduce risk, significant uncertainty remains in both seasonal water availability (‘allocations’) and irrigation crop water requirements. This paper explores the nature and impacts of seasonal hydroclimatic uncertainty on irrigator decision making and temporary water markets in the Goulburn system in northern Victoria. Irrigation and water trading plans are modelled for the three seasons of the irrigation year (spring, summer and autumn) via discrete stochastic programming, and contrasted against a perfect information base case. In water‐scarce environments, hydroclimatic uncertainty is found to be costly, in terms of both the efficiency of irrigation decisions and the allocation of water via the water market.     

Modelling the supply of ecosystem services from agriculture: a minimum‐data approach*

We argue that to support agriculture–environmental policy decision making, stakeholders need ‘quantitative back‐of‐the‐envelope’ analysis that is timely and sufficiently accurate to make informed decisions. We apply this concept to the analysis of the supply of ecosystem services from agriculture. We present a spatially explicit production model and show how it can be used to derive the supply of ecosystem services in a region. This model shows that the supply of ecosystem services can be derived from the spatial distribution of opportunity cost of providing those services. We then show how this conceptual model can be used to develop a minimum‐data (MD) approach to the analysis of the supply of ecosystem services from agriculture that can be implemented with the kinds of secondary data that are available in most parts of the world. We apply the MD approach to simulate the supply of carbon that could be sequestered in agricultural soils in the dryland grain‐producing region of Montana. We find that the supply curve derived from the MD approach can approximate the supply curve obtained from a more elaborate model based on site‐specific data, and can do so with sufficient accuracy for policy analysis.     

Russian Roulette at the Trade Table: A Specific Factors CGE Analysis of an Agri‐food Import Ban

In the summer of 2014 Russia imposed a ban on most agri‐food products from countries enforcing Ukraine‐related sanctions against Russia. We use a specific factors computable general equilibrium (CGE) model to simulate the short‐run impact of this retaliatory policy. The baseline is carefully designed to isolate the impacts of the ban on the European Union (EU), Russia itself and a selection of key trade partners. The modelling of the ban follows a novel approach, where it is treated as a loss of established trade preferences via reductions in consumer utility in the Armington import function. Not surprisingly, the results indicate that Russia bears the highest income loss (about €3.4 billion) while the EU recovers part of its lost trade through expansion of exports to other markets. An ex‐post comparison between simulation results and observed trade data reveals the model predictions to be broadly accurate, thereby validating the robustness of the modelling approach.     

Land expansion and growth in low‐ and middle‐income countries*

Over past decades, low and middle‐income countries have experienced considerable expansion of agricultural land, yet this effect on growth has not been examined The following paper shows that the Solow‐Swan growth model can be extended to the case whereby arable land is expanding, as originally suggested by Solow (1956). This extension indicates that land expansion boosts growth, and this effect increases with the relative share of land in income. An empirical analysis over 1990–2018 for 138 low and middle‐income countries supports this finding. The growth impact of land expansion over 1990–2018 varied significantly across the sample of countries depending on how much income was derived from land. This result explains why countries dependent on agriculture have engaged in extensive land expansion: it boosts overall growth. However, these growth benefits must be weighed against the considerable environmental costs of converting forests and other natural habitat to more agricultural land, such as increased carbon emissions, loss of ecosystem services and biodiversity, risk of disease, and impacts on local livelihoods.