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In this study a spatially explicit economic analysis was employed to determine the land use change in a traditional coconut growing district of Sri Lanka. From a theoretical model of land use, an econometric framework was developed to incorporate spatial and individual effects that would affect the land use decision. Markovian transition probabilities derived from the econometric analysis and spatial analysis was used to predict the land use change over the next 30 years. The results revealed that the fragmentation and conversion of coconut lands to urban continue in the areas close to the urban centre and also with less productive lands. Spatial analysis provides further evidence of the positive trend of conversion of coconut lands to urban uses close to the urban areas.

Regulators around the world are currently considering national emissions trading systems (ETS) as a cost-effective way to reduce greenhouse gas emissions. ETS installations coverage is one of the numerous design issues confronting them. ‘Blanket coverage’ that includes all an economy’s industrial emitters of greenhouse gases has some intuitive appeal. Although it seems equitable it does not, however, take into full account all the costs related to the extent of coverage. This report shows how an alternative approach of ‘efficient coverage’ can achieve the same emission reduction outcome at lower social cost. The approach is based on maximising the benefits of including installations in an ETS, while at the same time taking into account all relevant transaction costs. A broad definition of transaction costs is used – the regulatory costs to the government as well as regulatory costs imposed on covered installations. Particularly for relatively modest emissions reduction targets, the study found there are significant cost savings with an ‘efficient coverage’ compared with ‘blanket coverage’.

Communal water storage reservoirs (embungs) that serve many villages in West Timor, Indonesia, by providing water during the prolonged annual dry season are experiencing severe sedimentation problems. Sedimentation of reservoirs progressively reduces their water storage capacity and the benefits to community. This paper investigates four alternative strategies for managing the sedimentation of a typical village embung: (1) current management (a “no management” situation), (2) soil conservation in the embung catchment, (3) periodic sediment removal and (4) both soil conservation and sediment removal. Without periodic sediment removal, an embung has a finite life dependent on the rate of sedimentation. The results indicate that periodic cleaning is clearly worthwhile. Strategy (4) gives the highest NPV. Strategy (3) was not as good, though towards the upper end of the range of reasonable discount rates, it was almost as good as strategy 4. No management is the worst strategy.

Trading schemes for emission allowances have become a panacea for nations aspiring to reduce their aggregate emissions of greenhouse gases from industry in a cost-effective manner. The contention of this paper is that an emissions trading scheme (ETS) should not be based on blanket coverage of installations on a downstream level, but should rather be designed to include some installations, and from some industrial sectors. In the case of an ETS there are high costs of administration, monitoring and transacting imposed on the installations covered. These costs are supposed to be more than offset by the cost savings realised through trading in the market for emission allowances. However, the paper shows that not all installations can fully offset administrative costs, and are therefore exposed to higher cost compared to a situation under an alternative instrument (e.g. standard). The paper formulates a conceptual framework for analysing overall cost and benefits from an ETS in the light of administration and transactions costs. It theoretically establishes a threshold point for optimal coverage of installations on a downstream level. The paper uses data from EU ETS to empirically determine optimal coverage for selected sectors. The results indicate that blanket coverage is more costly than the determined optimum coverage plan.

Irrigation enterprises can be evaluated from a perspective of technical and environmental efficiency. This study determines the technical and environmental efficiency in irrigated cotton enterprises. This is achieved by investigating efficiency at cotton enterprise in the case study area of the Mooki Catchment, located in northern New South Wales. Deep drainage loss which contributes to salinity is considered as an environmental detrimental output. Using four different specifications of Data Envelopment Analysis relative efficiency rankings are determined for each agricultural area in the catchment. This result is then compared to biophysical characteristics from previous studies to help identify the particular features of an area which may influence outcomes that are both environmentally sound and economically efficient. With the identification of the most and least efficient cotton irrigating areas in the region, policymakers can construct a relative ranking system to best determine policy directions in order to achieve economic and environmental objectives.

Prawn culture has been playing an important economic role in Vietnam for the last two decades. The area for aquaculture is continuously expanding in the provinces of the Mekong Delta. Fisheries and aquaculture contributed 29.2 per cent to the GDP component of the agricultural sector in the Mekong Delta in 2003. However, data from previous studies shows that more than 30 per cent of the total prawn farms are experiencing economic loss. Profitability can be increased by increasing yield through development and adoption of new technologies and improvement in the economic efficiency of prawn farming operations. This paper examines the technical efficiency of prawn farming in the Mekong Delta of Vietnam using the stochastic production frontier approach. The estimated mean technical efficiency for 193 sampled prawn farms was 46 per cent. Experience in prawn farming and the age of the farmers, as well as their education, are some of the factors that were found to affect technical efficiency. The prawn farms operated by more experienced, but younger prawn growers were found to attain higher technical efficiency., Contact Dr. Tihomir Ancev (tiho.ancev@sydney.edu.au) for a copy of this paper.

Irrigation induced salinity is a serious problem in many countries around the world. In Australia, this type of salinity is most pronounced in the valley of the River Murray in South Australia. Location of irrigation enterprises has been identified as a key factor that needs to be taken into account by policies aimed at mitigating salinity. This article compares and contrasts two such policies: an irrigation zoning policy, where new irrigation enterprises are only allowed in low salinity impact zones, and an offsetting with salinity credits policy, where new irrigation enterprises can locate in high salinity impact zones, provided they offset their salinity impact with salinity credits. Key findings are that the offsetting policy will be both less costly and more effective in reducing salinity than a standalone irrigation zoning policy. This is due to the presence of incentives for choosing "optimal" location of irrigation enterprises when costs of salinity credits are taken into account.

Over-allocation of irrigation water has led to widespread environmental degradation in the Murray-Darling Basin, prompting discussions of the water efficiency performance of irrigated industries, particularly cotton. There is increasing pressure for irrigators to adopt water efficient practices in line with ecologically sustainable principles, especially with current drought conditions. However, there is great uncertainty surrounding the available measures to improve irrigation efficiency from both ecological and economic standpoints. An integrated biophysical and economic modelling approach is used to determine the optimal allocation of water, irrigation system, source of water, and crop pattern, subject to various environmental and resource targets. Spatially referenced data are used to provide realistic results that are directly applicable to the case study basin in northern New South Wales (NSW). The results can assist in policy design and its implementation to achieve environmental objectives at least cost.

Considerable uncertainties, especially those relating to the weather, are present among Australian grazing enterprises. Existing climate prediction tools are not being used effectively in aiding farmers to decide the optimal stocking rate and the levels of other management variables on their pastures. The paper aims to link a biophysical climate simulation model, Aussie GRASS, with an economic model of farm decision making under uncertainty. This model will be used to analyse farmers’ behaviour with respect to weather risk, and to derive optimal pasture management options that result in profitable and sustainable natural resource management on a farm level.

Georeferenced data on biophysical and socio-economic attributes are increasingly being used for decisions regarding priorities of land uses. However, research on the methodological approaches to using spatially referenced biophysical digital data in agricultural and resource economics is limited. Whether this is due to a failure to recognise the full versatility of these data or to some genuine limitations imposed by the data is one of the questions this article addresses. We also review some recent developments in the field and point to research directions in the use of such data in agricultural and resource economics as well as the choice of empirical approaches, such as econometric or programming models, static or dynamic models, and stochastic or deterministic models.

The article combines economic and hydrologic modeling on the watershed level and proposes a method for determining optimal spatial location of irrigation enterprises and use of water by source and intensity of irrigation management. This combination of economic/technical investigation results with solution that explicitly accounts for deep-drainage as a source of environmental adversities. Alternative policies to achieve this solution are analyzed.

Phosphorus pollution from excessive litter application and municipal discharges causes eutorphication of lakes in the Eucha-Spavinaw watershed in eastern Oklahoma and western Arkansas. Consequent algae blooms impair the taste of drinking water supply drawn from the watershed and reduce the recreational values of the lakes. The paper shows how GIS data based biophysical modeling can be used to derive spatially optimal, least-cost allocation of agricultural management practices to be combined with optimal wastewater treatment activity from the point source in order to achieve socially optimal phosphorus load in the watershed. The optimal level of phosphorus load is determined by equating marginal abatement with marginal damage cost. Transportation activities in the model allow for transportation of litter within and out of the watershed. Results show uniform regulation of litter application is excessively costly relative to measures that encourage adoption of management practices that equate marginal abatement costs across pollution sources. The results also show that change in the land use patterns in a long-run and using alum based litter additives in short-run are economically efficient management options.

Livestock waste management issues are of growing environmental concern in the United States and elsewhere. Lowering the quantity of nutrients excreted by pigs can ease associated environmental problems and at the same time can reduce waste management costs. Reduction in nutrient excretion can be achieved by feeding pigs with low crude protein diets. The paper develops a procedure for calculation of swine waste management costs as function of four dietary regimes. Feeding low crude protein diets significantly reduced amount of nitrogen excreted by pigs. As a result, reduction in waste management costs may be achieved, especially when the pig farm does not have enough land to apply all the manure it generates.