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Salinity Investment
Framework 3 (SIF3)
Assisting regional NRM planning and policy design
David Pannell
Anna Ridley
UWA
DPI Vic
Aim
 Increase NRM outcomes from public
investment
 Which projects are worth funding?
 Which policy tools to use?
The problem
 In most regions, poor targeting of
investment
 Poor selection of policy tools
 It’s difficult to do well
 Integrate diverse information
 Lots of knowledge gaps
 Spatially variable
 Economics often adverse
 Small budget relative to the issues
 NRM outcomes vs community expectations
How our approach is different
 Asset-based (spatially specific)
 Distinguish localised and dispersed
assets
 Consider public & private net benefits
 Full range of policy mechanisms
 Build in insights from R&D
 Focus on adoptability
SIF3
Public: Private Benefits Framework
Public and private benefits
 This framework is embedded in SIF3
 Relevant to change on private land
 E.g. salinity
 Water quality
 Clearing
 Helps operationalise some key
principles
“Project”
 A defined set of changes in a specific
location
 Has some level of private net benefits
to the landholder (internal)
 Also has some level of public net
benefits (external)
 neighbours, downstream water users, city
dwellers interested in biodiverity
Each dot is a set of
land-use changes
on specific pieces
of land = a project.
For any dot
which tool?
• Incentives
• Extension
• Regulation
• New technology
• No action
Lucerne
Farm B
Public net benefits
Possible projects
0
Current
practice
Lucerne
Farm A
Private net benefits
Forestry in
water
catchment
Alternative policy mechanisms
for seeking changes on private lands
Category
Specific policy mechanisms included
Positive incentives
Financial or regulatory instrumentsA to encourage
change
Negative incentives Financial or regulatory instrumentsA to inhibit
change
Extension
Technology transfer, education, communication,
demonstrations, support for community network
Technology
development
Development of improved land management
options, e.g. through strategic R&D
No action
Informed inaction
AIncludes
polluter-pays mechanisms (command and control, pollution tax, tradable permits,
offsets) and beneficiary-pays mechanisms (subsidies, conservation auctions and tenders).
Simple rules
for allocating mechanisms to projects
A
B
Public net benefit
1. No positive incentives for
land-use change unless
public net benefits of
change are positive.
2. No positive incentives if
landholders would adopt
land-use changes without
those incentives.
3. No positive incentives if
private net costs outweigh
public net benefits.
F
0
C
E
D
Private net benefit
Positive incentives only suitable for projects in area A
Simple rules
A
B
Public net benefit
4. No extension unless the
change being advocated
would generate positive
private net benefits (the
practice is ‘adoptable’).
5. No extension where a
change would generate
negative net public
benefits
6. … 10. see web site
F
0
C
E
D
Private net benefit
Extension only suitable for projects in area B
Simple public-private framework
Positiv e
incentiv es
Public net benefit
Extension
Technology
dev elopment
(or no action)
0
No action
(or extension or
negativ e incentiv es)
No action (or
f lexible negativ e
incentiv es)
Negativ e
incentiv es
Private net benefit
BCR ≥ 1
Assumes benefits
must exceed costs.
100
Positive
incentives
Public net benefit ($/ha/year)
More complex
version allowing for
lags to adoption,
learning costs, cost
of extension and
partial effectiveness
of extension.
Extension
50
Technology
development
(or no action)
No action
0
-100
-50
0
No action
(or extension or
negative incentives)
50
100
No action (or
flexible negative
incentives)
-50
Negative
incentives
-100
Priv ate net benefit ($/ha/year)
BCR ≥ 2
This version is more targeted
100
Assumes benefits
must be at least
double the costs.
Public net benefit ($/ha/year)
Positive
incentives
Technology
development
(or no action)
Extension
50
No action
0
-100
-50
0
No action
(or extension or
negative incentives)
50
No action (or
flexible negative
incentives)
-50
Negative
incentives
-100
Priv ate net benefit ($/ha/year)
100
What makes up private net
benefit?
 Depends on the farmer’s goals
(i)
(ii)
(iii)
(iv)
(v)
material wealth & financial security
environmental protection and enhancement
social approval and acceptance
personal integrity, ethics
balance of work and lifestyle
• Likely to vary by:



Commercial farmers
Lifestyle landholders
Hybrids
Different elements of private net
benefit
 Commercial
 Lifestyle
 Financial returns
important
 Some focused on
environment
 Some on aesthetics of
their property
 Short of time
 Some are short of skills
 Large areas of trees
possible, but only if
profitable enough
 For those focused on
aesthetics, smallmoderate areas likely,
large areas may be hard
Estimating private net benefit
 Economic modelling
 Surveys
 Observe actual behaviour
 In context of phase of adoption
What makes up public benefit?
 Any benefits to “others”
 neighbours, downstream water users, city
dwellers interested in biodiverity
 May include
 Financial
 Ecological
 Social
Estimating public net benefits
 Asset value
 Workshops
 Surveys
 Scientific assessment
 Judgement of people in the regional NRM body
 Threat, feasibility and cost of
protection
 Scientific or engineering advice
 Economic modelling
 Local knowledge
SIF3
The decision-tree approach
SIF3
 How should public investor respond to
a particular salinity problem?
 Major body of research spanning
 economics (farm-level to public policy level)
 hydrogeology
 social aspects (demographics, land-use change)
 farming systems/farm management
 policy issues (mechanism design, externalities)
 Some very important changes in knowledge
SIF3 description
 Relate particular situations to the PPF
 Rules of thumb  benefit:cost analysis
 Rules depend on
 type of asset at risk
 a set of bio-physical and socio-economic criteria
 Can develop a map of ‘best-practice’
investment tool by scenario
Analysis tables for 60 scenarios
Asset types
 Salinity impacts on waterways
 High value terrestrial assets
 e.g. infrastructure, key vegetation/biodiversity
 Dispersed assets
 agricultural land, remnant veg on farms, flood risk
 Salt-affected land
Terrestrial
assets
Salt
input
Groundwater
response
High
High
High
Low
Low
Fresh
runoff
Waterway
Low
Dispersed
assets (e.g.
agric land)
Saltland
Adoptability
+ Exten
- Incent
-- Technology
Recommended responses in all scenarios
Water
Terrestrial assets
Land
Salt land
Extension
Incentives
Regulation/permits
Engineering
Technology
Land retirement
Do nothing
Water
Terrestrial assets
Land
Salt land
SIF3
Water
Terrestrial assets
Land
Salt land
Extension
Incentives
Regulation/permits
Engineering
Technology
NAP
Land retirement
Do nothing
SIF3
Piloting implementation
Piloting implementation
 Working with two CMAs
 Process
 Reviewed existing investments and plans
 Data collation
 Apply SIF3 decision trees using GIS
 Intensive consultation/communication
 Focus groups to understand capacity issues
 Interviews with lifestyle landholders
Results: localised assets
Results: dispersed assets
 Much less use of extension and small
temporary grants
 Only where highly adoptable options exist
 More use of technology development
 Make an explicit decision on level of
investment in dispersed assets
Response
 NCCMA board has accepted all
recommendations
 Have completely rewritten salinity
implementation plan
 Will re-write catchment plan
 NCCMA asked us to repeat process for
other environmental issues (INFFER)
 Several other CMAs keen as well
SIF3
Lessons and Implications
Lessons/implications
 Large potential NRM gains
 Programs need a re-focus on NRM
outcomes, not activities
 Victoria struggling even after 10 years
 Need
 A guiding framework (rule some things out)
 Data and analysis
 Not just judgment
 Tighter targeting
 A different mix of policy tools
Lessons/implications
 Distinguish localised & dispersed assets
 Localised
 High value per affected ha
 Concentrated investments potentially warranted
 Use engineering, incentives, extension, regulation
 Dispersed:
 Lower value per ha, but large area
 Investments must be low-cost & highly effective
 use technology development, auctions, extension
Lessons/implications
 Public: private framework + decision
tree a powerful guide
 Rules out many of the options
 Quickly gets to a short list using readily
available information
 Still need detailed feasibility analysis
 But only on a few key prospects
 Principles and processes not enough
Lessons/implications
 Anticipate adoptability of practices
 Economics and social science
 Determines feasibility of interventions
 Drives choice of policy tools (extension,
incentives, technology development, no action)
 Need patience
 Good planning takes time
 Not just on-ground works
 Handling community expectations
Lessons/implications (capacity)
 Integration needs strengthening
 Major skill gaps in economics and social
 Regions do use technical science, but
 Which science?
 Science quality?
 M&E is a weakness
 Need targets based on analysis
 Need a person to drive/link
Gaps in the Standard
 Stronger guiding frameworks to
 Rule some things out
 Assist with integration, target setting, M&E
 Bring BCA mindset to interventions
 Asset-based approach
 Cause and effect - link actions to outcomes
 Solves the scale issue
 Localised vs dispersed assets
 Adoptability of practices
 Public and private benefits - choice of
intervention
www.sif3.org