Economic motivations are sometimes viewed at "the villain", encouraging unsustainable (and perhaps even unethical) farming practices. This view is too simplistic. In this paper, I outline the various ways, both positive and negative, that economics affect Landcare. The links between economics and ethical, environmental, social, scientific and agricultural aspects will be teased out. At the farm level, the economics of farming practices clearly do play an important role in shaping what farmers choose to do. Many factors influence farmers’ decisions about adoption of new landcare practices, but where major changes are required, commercial reality is likely to be the decisive influence. To a greater or lesser extent, almost all farmers are willing to make financial sacrifices for the good of their land or the environment, but they also must give priority to remaining in business and meeting other family and social objectives. At the policy level, the ground is shifting as these realities are better appreciated. Some of the assumptions which shaped the design of the original Landcare programme are increasingly being questioned. Particularly in relation to salinity, a more accurate knowledge of the economics of the available farming responses is leading to a dramatic reassessment of what it will take to succeed. There are likely to be substantial impacts on the objectives of the Landcare programme and the way it operates in future.

A companion paper to this one by Sally Marsh addresses (primarily) social aspects of Landcare. Both of us believe that the boundary between social and economic aspects of Landcare is not clear cut. There is not only a blurring of the boundaries between these two realms, but also clear mutual reliance and strong links between them.

Sayings and songs testify that:

• Money can’t buy happiness;
• Money can’t buy friends ("No, but you get a better class of enemy," said Spike Milligan);
• Money can’t buy you love.

The last maxim was sung by Paul McCartney in the Beatles. But in another Beatles song, John Lennon sang, "Money don’t get everything, it’s true. What it don’t get, I can’t use." Years later he sang, "Imagine no possessions", only to posthumously suffer this critique from Elvis Costello (who is rather wealthy himself): "Was it a millionaire who said, ‘Imagine no possessions’?" Recently, McCartney (an occasional collaborator with Costello) became the first entertainer to accumulate wealth of over US$1 billion.

This ambivalence and inconsistency by the Beatles reflects very well the reality for the general population. We recognise the limitations of wealth, but most of us would be glad to have more. For many, wealth provides a strong motivational force, whether to meet needs or desires or, for some, as a symbol of success.

Many people believe that the discipline of economics is primarily about money. In my view, it is primarily about making decisions which require trade-offs because resources are in limited supply. Money commonly features in economists’ ideas about these decisions because it provides a common unit of measurement, which is helpful when evaluating the trade-offs, and because money itself is often one of the resources in short supply.

Landcare is entirely concerned with issues and decisions which require trade-offs because resources are in limited supply. During the 1990s, the Landcare movement in Australia attempted to address these decisions without taking seriously the discipline which could probably have offered them the most useful help. Even now there is a deep suspicion of economics amongst many people with environmental leanings. Some seem almost to view economics as an emanation from the devil (or, perhaps worse, a plot of multinational companies).

The aim of this paper is to set the framework for a constructive and effective relationship between economics and Landcare. I start by outlining some of the links between economics and social issues, ethics and bio-physical sciences, particularly those which are relevant to Landcare. Then I highlight some key ideas from economics and explain their implications for Landcare.

There are at least four distinct sets of social issues related to Landcare and land degradation.

1. Community input to planning and decision making is needed.
2. There are social impacts of land degradation and its management.
3. Social issues affect the uptake of new management practices.
4. The community needs support from government to manage and protect assets at risk.

There are economic dimensions to each of these social issues.

The community should play a strong role in setting the objectives of landcare policy and management. The economic dimension here is that the appropriate balance between economic, environmental and specific social objectives should strongly reflect current attitudes and values of the people with an interest. Members of the farming community, in particular, also provide important site-specific and community-specific information (including economic information) about land degradation problems and their management in different situations.

Among the various impacts of land degradation, social impacts are an important category. In addition, there can be social impacts of treatments intended to address land degradation. Consider the example of salinity.

Losses of productive land to salinity will contribute to declines in farm numbers and farm incomes, with flow-on social effects on rural towns and the provision of services. Overall, salinity is just one of a number of factors contributing to economic pressures on farmers. For most farmers, salinity is not the most important of these factors. The rate of adjustment of some farmers out of agriculture is not likely to be greatly influenced by land salinisation, although it will no doubt be the decisive factor for some individuals. Other economic pressures will continue to be the main influence on farm numbers and farm incomes.

In regions where salinity treatments (particularly woody perennials) are adopted at very high levels, their social impacts are likely to be even greater than those of salinity per se. To be adopted at such levels, woody perennials will need to be highly attractive in economic terms. In such cases, they will have a mixture of positive social impacts (e.g. employment associated with harvesting and processing) and negative social impacts (e.g. reduced farming populations in some areas). The positive social impacts will particularly arise where processing and value adding of harvested product occurs within rural areas. A good example is the integrated processing plants which have been proposed for oil mallees, to provide oil, energy and activated carbon. Negative social impacts have been strongly identified by some communities where blue gums have been established in large areas. It is likely that this is a sign of things to come. If we are as successful as we hope to be in developing new woody perennials which are profitable enough for very high adoption across the agricultural region, there will inevitably be a range of social impacts of the type observed for blue gums on the south coast.

Government policies for Landcare rely on farmers to voluntarily adopt new farming practices to reduce land degratation and protect the broader environment. The speed and level of adoption of new farm management practices depends on many factors. The economic profitability of the practices is probably the most decisive influence (Pannell 1999a, 2001; Lindner 1987; Cary and Wilkinson 1997), but economics interacts with social factors in this realm as well.

The strength of Landcare groups and catchment groups in Western Australia has been high in the past, but farmer dissatisfaction with the Landcare approach has increased greatly in recent years. In part this reflects the new level of understanding in the farming community about the scale of response needed on farms in order to successfully prevent salinity, and a recognition that voluntary adoption of non-commercial treatments will not be viable at that scale. As a result, the importance of economic drivers for adoption of new practices has been re-emphasised. .

I very much hope that this re-emphasis will be recognised by those designing the next round of the Natural Heritage Trust (NHT). There is a criterion in place that NHT funds must be used to generate public benefits. While this is reasonable, the existing extra restriction that works which also generate private benefits for farmers are not eligible for funds is irrational and highly counterproductive, even in terms of achieving the first criterion. For one thing, some activities like commercial perennials or some types of drainage will generate both private and public benefits, and in many cases the public benefits will not be attainable (or will come at greater cost) unless it is accepted that some private benefits will occur as a side effect, and can be used as leverage to achieve the public benefits. It should not be assumed that the potential for private benefits is sufficient to prompt farmer adoption, since farmers also look at the cost side of the equation.

For these reasons, the NHT criterion to exclude private benefits results in a loss of public benefits, not a protection of them. Compounding this, the criterion sends a strong message to farmers that the NHT is not about partnerships, but rather is a very one-sided arrangement. Given that most of the existing management strategies needed to address environmental degradation require farmers to sacrifice effort and money (above and beyond the finances provided by NHT) this criterion is unwise in the extreme. The nonsense of prohibiting so called "private good" activities from funding, when many of them are non-profitable in any case, is readily apparent to farmers.

Even where commercially viable treatments are available, social factors will play a role in their speed of uptake. Group cohesiveness, strength of information channels, credibility of information sources, and demographic trends all play roles. As an example of demographic influences, in Victoria, Barr et al. (2000) identified that many farmers in parts of the Murray-Darling Basin have other sources of income and may view agriculture as a secondary occupation. A proportion are "on a trajectory out of agriculture". We cannot expect major investments in long-term land-use changes by people in these circumstances.

The above factors mainly relate to the incentive for change. Farmers also vary widely in their capacity to change. That capacity depends on factors such as the farmer’s level of economic resources, knowledge, time, family situation and other social pressures.

Where particular individuals or groups are responsible for protection of assets of high public value (e.g. an important nature reserve, or a river used for potable water supplies), it may be judged appropriate for the broader community to directly provide financial and other resources to encourage and facilitate a high level of management. There has been increasing discussion of the use of "economic policy instruments" to encourage adoption of new farming practices. One set of economic policy instruments involves financial subsidies, designed and delivered in a variety of ways. Realistically, such subsidies probably cannot be provided at sufficient levels to alter land use on a large enough scale across the wheatbelt.

Discussion of subsidies leads into the issue of ethics. Ethical questions arise in Landcare in several ways. One is the question of who should pay for environmental protection or repair.

Economists emphasise the importance of rights, particularly the importance of clearly defining and enforcing rights. Two rules of thumb about how rights should or could be distributed are "polluter pays" (which is similar to the idea that polluters should observe their "duty of care" obligations) and "beneficiary pays". These two options are essentially opposites. Financial consequences of the choice between these rights distributions can be dramatic. For example, we might pay a farmer an incentive payment of $100 per ha per year to encourage a switch from annual crops to perennials which have benefits to the broader community (beneficiary pays) or we might enforce a regulation which requires farmers to make this switch without compensation (polluter pays), resulting in costs to the farmer of something like $100 per ha. These alternatives are opposites. In one case the community pays money to the farmer, and in the other the farmer is forced to pay.

Sometimes one or the other of these rules of thumb is discussed as if it has some status in economic theory. In reality, they do not. They are simply rules of thumb about what might be considered fair.

Pannell (1994) noted that

• quantifying the distributional effects of government action,
• quantifying the impacts of government action on "efficiency" (meaning a maximisation of the total economic benefits, without regard for the distribution of those benefits), and
• assessing the performance of the action with regard to several rules of thumb which attempt to capture (or perhaps shape) community attitudes regarding what is fair and equitable.

It is therefore difficult to speak definitively about the merits of distributional impacts from land degradation or its management, other than to observe that it is a highly subjective issue. For example, suppose that a farmer has a problem with herbicide resistance, and responds in part by increasing the level of cultivation used. The potential to apply a tax on soil loss to address external costs from this cultivation may be considered "fair" by some, since it allocates the cost to the person who is the source of that cost (i.e. it is consistent with the allocative rule of thumb called "polluter pays"). On the other hand, such a tax may be considered unfair, since it imposes an additional financial burden on a group of farmers who have already suffered financial losses from the development of herbicide resistance. The solution to this dilemma is necessarily a subjective judgment, made within a political context.

Governments, arguably, face a number of ethical imperatives in relation to policies for land degradation.

• Not to spend money wastefully. (e.g. Providing public funds as subsidies to farmers for measures that are not effective, such as revegetation of small areas that have not been strategically selected, will not only be wasteful, but also morale sapping for the farmers - Pannell 2000a)
• To be honest in the information and advice they give to the community. (e.g. I have referred elsewhere to the "spirit of forced optimism" which has fuelled Landcare. I would argue that this spirit is inconsistent with the need for honesty. Hopefully, such honesty can be delivered in a way which is not brutal.)
• To act in the best interests of the widest community, while protecting the rights of disadvantaged groups or minorities.
• To base policies on the best available knowledge, even if it is unpalatable.
• To resist the temptation to make decisions for political objectives at the cost of the wider community.

Of course I am not so naïve as to think that governments actually meet these imperatives at all times. The political incentives politicians face to spend money in ways which are popular but ineffective are starkly obvious. Nevertheless, sometimes policies for an issue are so obviously inappropriate and ineffective that most well informed people object to the policy, and agitate against it, leading ultimately to a paradigm shift. Salinity is in the process of such a shift at the moment.

Salinity is an important example to consider from an ethical perspective. Sometimes views are expressed by well intentioned people that, ethically, farmers should be willing to implement salinity prevention treatments, because their failure to do so will result in substantial adverse impacts on each other, on the non-agricultural community and on future generations. The ethics of salinity are, in reality, more complex than this. In some situations, hydrological evidence indicates that even major financial sacrifices by farmers would have little or no off-site benefits, negating much of that ethical argument. In addition, ethics can be a two-edged sword: the ethical principle of avoiding harm to others suggests that the community should not make excessive demands of sacrifices by farmers for the common good. Most importantly, I believe that the community has an ethical imperative to develop policies which address salinity in a balanced way and which are as effective as possible per dollar spent in pursuit of salinity reductions. In other words, the ethical responsibility for managing dryland salinity at the broad scale rests with governments (on behalf of the whole community and future generations) rather than with individual farmers. Regardless of how one feels that farmers should behave, a key criterion for policy should be that it is effective, which requires a realistic appreciation of how farmers actually will behave. A policy that relies on farmers complying voluntarily with ethical principles that they may or may not agree with would not be effective (Pannell 2000b).

Landcare problems are intrinsically multidisciplinary. Social scientists and economists interested in Landcare sometimes tend to neglect the bio-physical elements. For some reason, science and technology have been devalued by the architects of the Landcare program. In the 1990s, there was a move away from technical expertise and towards group facilitation and similar skills as the key requirements for extension agents in the Landcare area. As a result, Landcare coordinators are generally not as well informed about science and farming technologies as were traditional agricultural extension agents. This is a mistake. It substantially reduces the potential for these extension agents to be effective in assisting farmers with their decisions about land management.

The change in focus described above appears to have arisen in part out of a belief that suitable technologies for Landcare already exist, or are capable of being developed by farmers. For some issues in some regions this is true but for others, notably salinity in low to medium rainfall zones, it is not. Marsh and Pannell (2000) stated that

This refers to the importance of science in developing new technologies and new production systems which improve the economics of land conservation practices. In addition, scientific evidence has major implications for the economics of existing land management strategies. Studies like O’Connell et al. (1999) (economics of treating soil acidity), Pannell and Zilberman (2001) (economics of managing herbicide resistance) and Bathgate and Pannell (2002) (economics of perennials for salinity management) depend crucially on scientific information. They require high levels of cross disciplinary collaboration and cooperation. They provide exactly the sort of information which should be at the forefront of thinking of those involved in the Landcare Program.

I want to highlight one particular set of scientific information which most starkly illustrates the importance of good science to good economics and good landcare. Figure 1 shows the results of hydrological modelling for several catchments in Western Australia (George et al. 1999). These results indicate that if recharge across a catchment were reduced by 50 per cent, implying perennials on more than 50 per cent of the land, the eventual area of salinity in the catchment would be reduced by 3 to 12 per cent of the catchment. These are modelling results, rather than field measurements, so perhaps the reality will not be so severe. Nevertheless, even if the true responsiveness of salinity to preventative treatments is twice as great as shown in Figure 1, the implications of this one graph are numerous and profound. They include the following:

• The scale of perennials required to effectively prevent salinity in the long term is vastly greater than currently exists on farms.
• Previous hopes that we could protect large areas of land from salinity by revegetation of small areas of cleverly selected land look untenable.
• The economics of perennials at the scales indicated look highly adverse, unless the perennials themselves can generate adequate income directly. (e.g. consider the equation of establishing perennials on more than 50 percent of the land in order to prevent 3 to 12 percent of the land going saline).
• The prospects of farmers adopting perennials at the scales indicated are extremely remote, again unless the perennials themselves can generate adequate income directly.
• Where perennials are not profitable, programs such as Landcare which rely on voluntary farmer adoption of existing perennial options will not succeed in preventing much salinity at all.
• The need for R&D and participatory research to develop new perennials which are sufficiently profitable is highlighted.

The importance of this figure for our approach to salinity would be hard to be overstate.

I now want to briefly cover a grab-bag of issues from economics which have important implications for Landcare. I will start by outlining my vision of what economics is and is not about and what uses it can be.

Economics is not about costing. This is closer to accounting. Often economists are wasted on the task of calculating "the cost of" a land degradation issue compared to a mythical state of zero degradation. The cost of salinity. The cost of soil acidity. The cost of soil loss. "The cost of …" is a concept of almost no practical value (Van Bueren and Pannell, 1999; Bathgate and Pannell, 2002). Indeed, the large estimated costs for some issues have probably done more to mislead thinking than to improve it. It is better instead to focus on the costs and benefits of specific management strategies.

There are two broad ways in which economics is useful. (a) prediction and (b) decision making. In both cases, economics makes an important contribution but does not provide all of the perspectives that are needed.

(a) Use of economics in a predictive way.

In this mode of operation, economists typically

• assume people respond positively to financial incentives,
• use economic models to tease out and quantify the incentives which exist, inferring from that how people will therefore behave, and
• think laterally about broader considerations.

It is not necessary (or helpful) to assume that people only respond to financial incentives, but the influence of financial incentives clearly is strong, so that this approach to the use of economics does often provide very useful insights and explanations of human behaviour, especially the behaviour of small business managers such as farmers. We would all expect that other non-financial influences and motivations are overlaid on the influence of finance, but they usually do not eliminate the influence of finance.

(b) Use of economics in decision making

Economics provides a systematic and rigorous structure for considering decisions which must be made. Typically the approach taken would be something like the following:

• identify the objectives of the decision maker,

• identify the decision options,
• identify resource requirements of the options and total resources available,
• identify other constraints,
• tease out impacts of each of the options on the objectives, and

• think laterally about broader considerations.

There are a range of mathematical techniques used to pull all of this together to provide advice on the decision options.

Using these two broad approaches, economists can make a number of useful contributions to consideration of landcare issues, including the following.

• Understand farmer responses
• Predict farmer behaviour
• Prioritise extension or research activities
• Estimate the improvement in profit needed for a practice to become attractive
• Identify win-win options, which are both profitable and environmentally beneficial
• Provide a focus for integration of diverse scientific and technical knowledge to present it in a way that is useful for decision making
• Evaluate the financial value of past research or extension work
• Estimate values of actual or potential outcomes
• Provide supporting information in applications for financial support
• Design policies for maximum effectiveness and value

Economics can be useful at a number of different levels:

• The individual farmer (e.g. acidity)
• Farmer to farmer issues (e.g. salinity, weed spread)
• Farm vs off-farm interests (e.g. stream salinity)
• Government policies (e.g. NHT)
• International issues (e.g. markets, standards)

Some issues are mainly within-farm issues.

• Soil acidity
• Herbicide resistance
• Soil chemical/physical fertility

Some have off-farm impacts.

• Salinity
• Erosion
• Chemicals in the environment

There are important economic questions at the farm level for both cases.

• The economically optimal rate of an input (e.g. lime to reduce soil acidity)
• A farmer’s likely gain by adopting a changed practice
• Likely economic impact of one farmer’s management on another farmer
• Do the costs to A exceed benefits to B?
• Likely impact of a policy (e.g. a subsidy or tax) on farmer behaviour and financial position.

Issues with off farm dimensions raise a number of issues for governments:

• Should government intervene, and if so why? For reasons of "efficiency" (maximising total benefits) or of equity (fairness)?
• What are the benefits and costs of a policy?
• Who wins and who loses and how much?
• How should policy mechanisms be designed for maximum impact?

This brief presentation of issues has been intended to give non-economists a better appreciation of the nature and scope of economics, and the positive contributions it can make to Landcare. I will now touch on several specific issues from economic theory which are particularly important for Landcare.

Farming systems based on trees or shrubs are usually characterised by high up-front costs, and benefits that occur some time in the future. If farmers have to borrow money to pay the up-front costs, it is obvious that any direct comparison of the up-front costs with the eventual benefits will not be valid without allowing for the cost of interest. Even if a farmer has savings available to be invested in the system, this implies that interest that could be earned on the savings will be sacrificed. Apart from possible differences in the relevant interest rates, there is no conceptual difference between having to pay interest and having to give up earning of interest. Both would have an impact on the decision of whether to invest in the new farming system. This is a simple version of the rationale which economists use for discounting future benefits in order to make them comparable to current costs. Unfortunately, discounting serves to further raise the hurdle for those seeking to promote farming systems with high up-front costs.

There is some controversy about the practice of discounting, with some arguing that it discriminates against future generations by discouraging investments in conservation with long pay-off times (e.g. Pearce and Turner 1990). This is a complex, philosophical argument about what is in the long-term public good. However for a private individual seeking to maximise their own financial welfare, discounting is absolutely uncontroversial.

Accountants are concerned with direct costs. Economists are also concerned with opportunity costs, which is the lost or missed income involved in pursuing a strategy. For example, planting trees on crop land has the direct costs of purchasing seedlings and inputs, and the opportunity cost of the net income which would have been earned if cropping had been continued.

If the gross margin of cropping is a constant $130 per ha per year, and the interest rate is 7 percent, the present value of cropping over 10 years is approximately $900 per ha. This means that giving up $130 per year over 10 years is financially equivalent to giving up $900 once at the start of the first year, in that both have the same cumulative effect (due to interest costs) at the end of 10 years. To illustrate, Table 1 shows the cumulative effect on final wealth of giving up $130 per year, and Table 2 shows the final outcome of giving up $913 once only, up front.

Uncertainty has been under-recognised as an impediment to the adoption of innovative land conservation practices. Adoption is a process involving collection, integration and evaluation of new information (i.e., reduction in uncertainty over time). High levels of uncertainty inhibit adoption because (a) most farmers (indeed most people) are psychologically averse to risk and uncertainty, (b) uncertainty leaves room for misunderstanding and misperceptions about the innovation and (c) in some cases there can be an "option value" from not trialing.

I have argued (Pannell 1999b) that "sustainable" farming systems are prone to high levels of uncertainty for a range of reasons.

1. Lack of experience. The problem of uncertainty due to lack of experience has a "Catch 22" style mirror problem: lack of experience due to uncertainty. If uncertainty is so high as to inhibit trialing, it is also inhibiting the key tool available for reducing uncertainty. Information from observing other farmers’ experiences with the innovation provides a potential way out of this vicious cycle, but in cases where adoption levels are persistently low (as with some conservation measures), even this solution is unavailable.
2. Partial relevance of off-farm information. Even if some farmers have adopted an innovation, the relevance to other farmers of their experiences will vary. Results from some land conservation practices may be more regionally-specific. For example, even if perennial plants successfully treat a salinity problem at one site, they may fail to do so at another, depending on the underground rock and formations and soil types.
3. Externalities. Some land degradation problems have important "external" impacts. For example wind erosion on one farm may impose costs on another farm, such as "sand-blasting" of crops, or burial of fences. Externalities can contribute two different types of uncertainty about the consequences of adoption of land conservation practices. Firstly, a farmer may be uncertain about who will be the beneficiary if he or she does adopt. Secondly, a farmer may be uncertain about whether their adoption will be ineffective if other farmers do not adopt.

Given that farmer uncertainty about some land conservation practices is high, the importance of conducting on-farm trials to reduce this uncertainty is highlighted. Unfortunately, there is a range of reasons why trials of land conservation practices may produce information of low quality, and so be ineffective at reducing uncertainty.

1. Long time scales before some of the key results can be observed.
2. Heterogeneity of the land.
3. A minimum scale may be needed for the practice to be effective in conserving land.
4. Some key results of the practice may be difficult or expensive to observe (e.g. groundwater levels).
5. The fundamentally different nature of some land conservation practices from traditional farming practices.
6. Poor implementation of landcare practices because (a) they are unfamiliar to the farmer and dissimilar to existing farm practices, and (b) they can be more complicated, with more scope for errors.

These problems and others make it difficult for trials to be used to reduce the uncertainty farmers have about landcare practices, and so the prospects for adoption are inhibited (Pannell 1999b, 2001).

Economists use the term "externalities" to describe unintended impacts of one economic agent on others. (Strictly, some types of impacts do not count as externalities, but this is a technical point we will put aside here.) In the case of salinity, for example, the impacts may be on neighbouring farms, natural ecosystems, rural towns, water resources, roads and other infrastructure. If farmers whose farms are the sources of salinity were to properly factor in these broader impacts, it is believed that they would act to prevent salinity to a substantially greater extent than they currently do.

One important consequence of externalities is that they may act as a discouragement to adoption of landcare practices, as mentioned above. They may also provide a potential justification for government involvement in land conservation. Economic theories have been developed which show that, in the absence of externalities (and of other causes of "market failure"), government intervention can only reduce "efficiency" (presuming that you are concerned about efficiency). For this reason, many economists believe that the burden of proof should rest with those who wish to see government intervention occur. They accept externalities as one potential justification for government intervention, since externalities themselves can reduce efficiency, and government may be able to address that.

Externalities have been commonly associated with salinity, due to the diverse range of off farm impacts listed above. Although externalities clearly are important in some situations, they have been over-emphasised and over-rated, particularly for salinity in Western Australia. Pannell et al. (2001) outlined six reasons why external costs from off-site discharges of saline groundwater are less important in Western Australia than has been commonly perceived.

(a) For a proportion of the landscape, little groundwater moves across farm boundaries; groundwater flow systems are localised (National Land and Water Resources Audit 2001).

(b) Even in regional flow systems, it can be possible for treatments to be effective locally, at least temporarily (e.g. deep open drains). This is particularly relevant to landscapes with low slopes and low transmissivity of soils, such as the wheatbelt valleys of Western Australia.

(c) Damage to key rivers will continue for many years (centuries in some cases) even if large-scale revegetation programs are implemented (Hatton and Salama 1999).

(d) As the process of farm consolidation and enlargement continues, it is increasingly likely that discharge and recharge sites occur within the same farm. Over time, fewer farmers are suffering from saline discharges that originated outside their own farm.

(e) Discounting of future benefits and costs is necessary to allow valid comparison of economic impacts occurring at different times. Given the slowness of some key off-site benefits from treatments, discounting causes the significance of these benefits in present day terms to be small.

(f) Given the adverse economics of currently available perennial plant systems (particularly in drier regions), the optimal balance between the costs and benefits of salinity prevention measures may involve very little prevention of salinity, even when off-farm benefits are considered. The findings reported earlier about the large scale of revegetation needed to prevent salinity on relatively small areas of land (George et al. 1999; Stauffacher et al. 2000; Campbell et al. 2000) and the discussion surrounding figure 2 reinforce the finding that external benefits per hectare of treatment are low.

For some public assets, the greatest need and justification is for highly localised treatments, within or adjacent to the assets themselves, rather than treatments dispersed across surrounding agricultural land. The impacts of dispersed, catchment-wide treatments alone would be too little, too late to prevent severe damage to the assets. In some cases this is because the primary cause of rising groundwaters is recharge on the site of the non-agricultural asset, rather than recharge in the surrounding catchment. This applies to most of the rural towns in Western Australia which have been evaluated under the state’s Rural Towns Program (e.g. Matta 1999).

Economics is blurry at the edges. The boundaries between economic and social issues can be difficult to discern, and the importance of bio-physical science to economic analysis of landcare practices has been spelled out. I have attempted to make a case that economics has a major and positive contribution to make to the landcare movement. I have also attempted to show that economics does not have to be narrow or hard-hearted. It should provide information which is useful to decision making, but economic analysis is not a substitute for judgment by people with broad perspectives and knowledge. Rather it provides one source of information which should influence that judgment. The messages of economics may not always be positive, but they are better heard than ignored if we are to have the greatest effectiveness in our efforts towards a sustainable agriculture.

I am grateful to Sally Marsh for comments on a draft of this paper. Thanks to Grains Research and Development Corporation for financial support.

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Pannell, D.J. (1999a). Social and Economic Challenges in the Development of Complex Farming Systems, Agroforestry Systems 45(1-3): 393-409.

Pannell, D.J. (1999b). Uncertainty and Adoption of Sustainable Farming Systems, Paper presented at the 43rd Annual Conference of the Australian Agricultural and Resource Economics Society, Christchurch, New Zealand, January 20-22 1999. http://www.general.uwa.edu.au/u/dpannell/dpap9901f.htm

Pannell, D.J. (2000a). Salt levy? The complex case for public funding of salinity. SEA Working Paper 2000/01, Agricultural and Resource Economics, University of Western Australia. http://www.general.uwa.edu.au/u/dpannell/dpap0001.htm

Pannell, D.J. (2000b). Ethics in dryland salinity management and policy, SEA Working Paper 2000/04, Agricultural and Resource Economics, University of Western Australia. http://www.general.uwa.edu.au/u/dpannell/dpap0004.htm.

Pannell, D.J. (2001). Explaining non-adoption of practices to prevent dryland salinity in Western Australia: Implications for policy. In: A. Conacher (ed.), Land Degradation, Kluwer, Dordrecht, 335-346.

Pannell, D.J., McFarlane, D.J. and Ferdowsian, R. (2001). Rethinking the externality issue for dryland salinity in Western Australia, Australian Journal of Agricultural and Resource Economics 45(3): 459-475. full paper (114K) brief version (11K). newspaper article based on the paper (6K). Final journal version (164K pdf file) also available via the Journal homepage:  www.blackwellpublishing.com/ajare

Pannell, D.J. and Zilberman, D. (2001). Economic and sociological factors affecting growers’ decision making on herbicide resistance. In: D.L. Shaner and S.B. Powles (eds.) Herbicide Resistance and World Grains, CRC Press, Boca Raton, pp. 251-277.

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Stauffacher, M., Bond, W., Bradford, A., Coram, J., Cresswell, H., Dawes, W., Gilfedder, M., Huth, N., Keating, B., Moore, A., Paydar, Z., Probert, M., Simpson, R., Stefanski, A., and Walker, G. (2000), ‘Assessment of Salinity Management Options for Wanilla, Eyre Peninsula: Groundwater and Crop Water Balance Modelling’, Technical Report 1/00, CSIRO Land & Water, Canberra, Bureau of Rural Sciences, Canberra.