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Background: This paper compares the direct benefits to the State of Western Australia from employing a “suppression” policy response to the COVID‐19 pandemic rather than a “herd immunity” approach. Methods: An S‐I‐R (susceptible‐infectious‐resolved) model is used to estimate the likely benefits of a suppression COVID‐19 response compared to a herd immunity alternative. Direct impacts of the virus are calculated on the basis of sick leave, hospitalizations, and fatalities, while indirect impacts related to response actions are excluded. Results: Preliminary modeling indicates that approximately 1700 vulnerable person deaths are likely to have been prevented over 1 year from adopting a suppression response rather than a herd immunity response, and approximately 4500 hospitalizations. These benefits are valued at around AUD4.7 billion. If a do nothing policy had been adopted, the number of people in need of hospitalization is likely to have overwhelmed the hospital system within 50 days of the virus being introduced. Maximum hospital capacity is unlikely to be reached in either a suppression policy or a herd immunity policy. Conclusion: Using early international estimates to represent the negative impact each type of policy response is likely to have on gross state product, results suggest the benefit–cost ratio for the suppression policy is slightly higher than that of the herd immunity policy, but both benefit–cost ratios are less than one. [ABSTRACT FROM AUTHOR]

The primary chemicals used by Western Australia's horticultural industries with respect to field control and post-harvest disinfestation procedures for the Mediterranean fruit fly are soon to be withdrawn from use because of public health concerns., When this occurs, the necessary switch to alternative control methods such as bait sprays and intensive fruit fly trapping will involve additional producer costs., The present study demonstrates that these costs are likely to exceed the costs of eradication using the sterile insect technique., Given this result, eradication cost sharing arrangements between government and industry are discussed that could produce mutual benefits in the long term. [ABSTRACT FROM AUTHOR]

This Address examines the moral hazard problem in agri-environmental policy. It begins with a theoretical analysis of moral hazard in this context, including the identification of eight potential causes of cheating behaviour among farmers. But is cheating behaviour among farmers actually a problem for agri-environmental policy? And if it is, which are the statistically significant causes of concern? The answer seems to be: 'we don't know' as there are currently no empirical analyses of the moral hazard problem and its causes in agri-environmental policy. On this basis I analyse a set of policy solutions - to a problem for which we have no evidence of its causes or extent! [ABSTRACT FROM AUTHOR]

This article extends the multi-period agri-environmental contract model of Fraser (Journal of Agricultural Economics, Vol. 55, (2004) pp. 525-540) to include a more realistic specification of the inter-temporal penalties for non-compliance, and therefore of the inter-temporal moral hazard problem in agri-environmental policy design. It is shown that a farmer has an unambiguous preference for cheating early over cheating late in the contract period based on differences in the expected cost of compliance. It is then shown how the principal can make use of this unambiguous preference to target monitoring resources intertemporally, and in so doing, to encourage full contract duration compliance. [ABSTRACT FROM AUTHOR]

The Environmental Stewardship Scheme (ESS) provides payments to farmers for the provision of environmental services based on forgone agricultural income. Consequently, farmers with a relatively low opportunity cost of agricultural land will be particularly attracted to apply for entry into the ESS within a given payment region. This article tests whether there exists a significant relationship between Higher Level Stewardship (HLS) Scheme entry and agricultural yields. Empirically, HLS participation is found to be negatively related to cereal yields at the farm level. This could be associated with 'auspicious selection' of land into the Scheme, with greater 'value for money' provided by the higher entry of land with lower agricultural forgone income but higher environmental benefit within the region. [ABSTRACT FROM AUTHOR]

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. [ABSTRACT FROM AUTHOR]

This paper examines the issue of incentive compatibility within environmental stewardship schemes, where incentive payments to farmers to provide environmental goods and services are based on foregone agricultural income. The particular focus of the paper is land heterogeneity, either of agricultural or environmental value, leading to divergence between the actual and socially optimal level of provision of environmental goods and services. Given land heterogeneity, such goods and services are likely to be systematically over- or under-provided in response to a flat rate payment for income foregone. [ABSTRACT FROM AUTHOR]

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This paper investigates the role of targeting in the context of agri-environmental schemes involving monitoring and penalties. By separating participants into a target and a non- target group the aim of targeting is to reduce the moral hazard problem. The paper analyses three approaches to targeting which have different implications for the level of monitoring resources and the focus is on reducing the extent of cheating by participants in the non- target group. By complementing the adoption of targeting with appropriate adjustments to the monitoring/penalty parameters, it is shown how such an approach can exploit the risk aversion of participants to completely eliminate cheating by those participants in the non-target group. The implementation of such a system of targeting is discussed in the context of existing agri-environmental policies. [ABSTRACT FROM AUTHOR]

Motivated by the policy trend of exposing European Union farmers to more market risk by reducing price support, this paper evaluates the compensation required by EU cereal growers to accept the complete removal of price support. Additional considerations are whether this policy change also includes the removal of set-aside, or features only a partial removal of price support. A model is developed which captures the main on- and off-farm factors influencing grower perceptions of the impact of this policy change. This model is subjected to a numerical analysis which shows that divergent assessments of the expected profitability of releasing to production land previously set-aside mean growers are unlikely to agree whether compensation is even required. It is concluded that the retention of set-aside for environmental purposes is likely to mean growers are more united in their perception of the need for, and amount of, compensation to accept the removal of price support. [ABSTRACT FROM AUTHOR]

Focuses on the role of protein levels in determining the impact of protein premiums and discounts on a grower's income stream in Australia. Correlation between wheat price and yield for variance of income; Development of a model in relation to a grower's willingness-to-pay for a forward contract; Results of a numerical analysis of the model.

This article discusses the principal claims made for the Resource Rent Tax (RRT) by Garnaut and Clunies-Ross (1975, 1979) relating to its efficiency and potential for generating tax revenue relative to other forms of resource taxation, and also their concern about the greater uncertainty of these revenues. An analysis of the risk-return trade-off associated with a shift from ad valorem royalties to an RRT finds this shift to be worthwhile. Estimates are also provided of the foregone tax revenue from the North West Shelf associated with the use of ad valorem royalties rather than the RRT. [ABSTRACT FROM AUTHOR]

This article analyses the modified form of ad valorem royalty recently announced by the WA government in relation to gold production, which features a threshold price below which there is no tax liability and compares this royalty with a profit-based royalty. The level at which the threshold price is set plays an important role in determining the performance of the royalty in relation to its impact on production and the expected level and variability of tax revenue. It is argued that the higher this price is set, the stronger the grounds for preferring a profit-based royalty, even taking into account the reliability of each form for generating tax revenue. [ABSTRACT FROM AUTHOR]

This paper aims to contribute to the economic theory of RPI-X (price-cap) regulatory systems which include profit-sharing between a company and its customers. The particular focus is on whether profit-sharing can be introduced in an investment-neutral manner, and on whether there is scope to choose a profit-sharing system which maximises the expected customer rebate. Using a model of a company choosing optimal capacity in the face of uncertain demand and subject to price-cap regulation, it is shown that the potential exists for profit-sharing to be investment-neutral, and it is suggested that the expected customer rebate is maximised for an investment-neutral system which is effectively a cap on profits at a specified level. [ABSTRACT FROM AUTHOR]

This paper presents a method of quantifying variation in quality in an amenity as a component of an hedonic property amenity valuation. The paper considers the residential land amenity of an ocean view, a situation where there is typically substantial variation in the quality of the view between sites. The method is effectively a scoring system based on three sub-characteristics of the ocean view. It is illustrated by application to a coastal housing subdivision in Western Australia. The results provide an estimate of the increase in the sale price of a site attributable to the quality of the site's ocean view. The method has a potential role in coastal land use management decisions. [ABSTRACT FROM AUTHOR]

Investigates the existence of an investment-neutral Resource Rent tax using a model of optimal investment to extract an unknown quantity of resource stock. Levels of profit margin; Resource stock uncertainty.

This article extends the analysis of the impact of a system of protein premiums and discounts to that on a farmer's planned production. Despite an unambiguously negative impact on expected profits of equally likely premiums and discounts, supply response to the introduction of such a system is shown to depend on the level of seasonal variability faced by the farmer. In particular, farmers in regions which are more seasonally unreliable are likely to feature a negative supply response, whereas those in regions which are more seasonally reliable are likely to feature a positive supply response. Consequently, it is suggested that, overall, protein payments for wheat may have encouraged a shift of wheat-growing activity away from more seasonally unreliable areas. [ABSTRACT FROM AUTHOR]

The article discusses study by John Quiggin and Jock Anderson on risk in agriculture. Topics discussed include economic analysis of production decisions under price and/or yield uncertainty, academic contributions made by Australian economists in the context of minerals and energy policy, and importance of water in agricultural production.

International trade of agricultural products not only generates wealth but is also responsible for the introduction of invasive pests beyond their natural range. Comprehensive bioeconomic modelling frameworks are increasingly needed to assist in the resolution of import access disputes. However, frameworks that combine welfare analysis attributable to trade and invasive species spread management are lacking. This study provides a demonstration of how a comprehensive economic framework, which takes into account both the gains from trade and the costs of invasive species outbreaks, can inform decision-makers when making quarantine decisions. We develop a partial equilibrium trade model considering international trade and combine it with a stratified dispersal model for the spread and management of potential outbreaks of an invasive species. An empirical estimation is made of the economic welfare consequences for Australia of allowing quarantine-restricted trade in New Zealand apples to take place. The results suggest the returns to Australian society from importing New Zealand apples are likely to be negative. The price differential between the landed product with SPS measures in place and the autarkic price is insufficient to outweigh the increase in expected damage resulting from increased fire blight risk. As a consequence, this empirical analysis does not support the opening up of this trade. [ABSTRACT FROM AUTHOR]

A letter to the editor is presented regarding the role of farmers in establishing environmental benefits to mitigate climatic changes.