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Economics - Australia

Australia

Economics - valuing non-market assets

The material below is an extract from the Australians and Natural Resource Management 2002 report. For ease of cross reference, figure, table and section references pertain to the chapter structure of this report. The Further Information section provides links to the full graphics version of the material below and the Australians and Natural Resource Management 2002 report.

An Assessment of Social and Non-market Environmental Values

As well as direct market impacts, Australians are also concerned about environmental and social considerations that are not reflected in prices and costs. Focus group work identified four factors of particular concern:

• Species protection;
• Landscape aesthetics;
• The condition of waterways for fishing or swimming; and
• The net loss of people from country towns each year.

Choice modelling-the state of the art in collecting information on the willingness of people to pay for environmental improvements-was used to assign values for these attributes in a manner that enables them to be transferred, with care, from one location to another. The resultant implicit price estimates are:

• 68 cents per household each year for every additional species protected;
• 7 cents per household each year for every additional 10,000 hectares of bushland protected or farmland restored;
• 8 cents per household each year for every additional 10 kilometres of waterway restored for fishing or swimming;
• Minus 9 cents per household each year for every 10 persons leaving country communities.

The choice model also allows the estimation of aggregate values for an array of potential policy options. For instance, a large 20-year National program involving:

• The protection of an additional 50 species;
• Improvement of the aesthetics of 2 million hectares of bushland and farmland;
• The restoration of 1500 kilometres of waterway for swimming and fishing; and
• The loss of an additional 5,000 people per year from rural areas.

In aggregate a program producing these benefits would result in a welfare benefit of $3.1 to 6.3 billion in present value terms at 3% discount rate, or a best-bet value of $4.6 billion. If the same environmental improvements could be achieved while reversing the decline in rural communities by 10,000 people per year, the best-bet estimate increases to $6.7 billion.

It is stressed that the program described above is very large. For example, "50 species" is 13% of the 381 plants and animals listed as endangered; "2 million hectares" is roughly equivalent to all the irrigated land or one third of the current area of land identified as High salinity hazard; "1,500 kilometres of river" is 40% of the length of the River Murray; and, depending upon the assumptions made, around 15,000 people per year are leaving rural areas.

The survey data suggests that people are willing to contribute financially to both environmental and social benefits, such as might be achieved with an environmental levy. The numbers, however, are not as large as might have been expected. Commonwealth and State Governments, for example, has recently committed Australia to a $1.4 billion program to improve salinity and water quality in 20 catchments over 7 years.

View or download the technical project report "Estimating community values for land and water degradation impacts" Martin van Bueren and Jeff Bennett (PDF 1.5 MB)

Further information

View the Australians and Natural Resource Management 2002 (theme) report.

View other Audit assessments by clicking the links below:

• Australian Water Resources Assessment 2000
• Australian Dryland Salinity Assessment 2000
• Australian Native Vegetation Assessment 2001
• Rangelands - tracking changes: Australian Collaborative Rangeland Information System
• Australian Agriculture Assessment 2001
• Australian Catchment, River and Estuary Assessment 2002
• Australian Terrestrial Biodiversity Assessment 2002

View "Natural Resource Economics" project and technical reports:

A project report has been prepared by CSIRO Land and Water Policy and Economic Research Unit in the development of this work:

• "Values of returns to land and water and costs of degradation" Edited by S.A. Hajkowicz and M.D. Young (PDF - 2.8 MB)

The technical appendices of "Values of returns to land and water and costs of degradation" report contain detailed descriptions of the methods used in this work:

• "Values of returns to land and water and costs of degradation" Edited by S.A. Hajkowicz and M.D. Young (PDF - 2.8 MB)

The technical appendices of "Values of returns to land and water and costs of degradation" report also includes a number of component project reports. These report may be viewed separately:

• "Ex-situ Costs of Australian Land and Water Resources Degradation to non-Agricultural Industries, Infrastructure and Households - REPORT A: EX-SITU COSTS OF SALINITY" by J.F.Thomas, The Resource Economic Unit, PPK Environment & Infrastructure (PPK) (PDF - 400 KB)
• "Ex-situ Costs of Australian Land and Water Resources Degradation to non-Agricultural Industries, Infrastructure and Households- REPORT B: EX-SITU COSTS OF EROSION AND SEDIMENTATION " by J.F.Thomas, The Resource Economic Unit, PPK Environment & Infrastructure (PPK) (PDF - 300 KB)
• "Ex-situ Costs of Australian Land and Water Resources Degradation to non-Agricultural Industries, Infrastructure and Households - REPORT C: TOTAL EX-SITU DAMAGE COST ESTIMATES FOR SALINITY, WATER TURBIDITY, AND EROSION" by by J.F.Thomas, The Resource Economic Unit (PDF - 400 KB)
• "The Ex-Situ Impacts to Industrial and Commercial Water Users Due to Degradation in the Quality of Water Resources" by PPK Environment Infrastructure Pty Ltd (PDF - 200 KB)
• "Estimating community values for land and water degradation impacts" Martin van Bueren and Jeff Bennett (PDF - 1.5 MB)

Case study: View or download a technical report and appendices on dryland salinity:

• Capacity to change - Case studies of dryland salinity and watertable control by Mike Read. (PDF - 1.2 MB)
• Capacity to change - Case studies of dryland salinity and watertable control - APPENDICES by Mike Read. (PDF - 1.9 MB)

View "People" project and technical reports:

• "Framework and Review of Capacity and Motivation for Change to Sustainable Management Practices" by D. Mark Fenton, Colin MacGregor and John Cary (PDF - 410 KB)
• *"Human and social aspects capacity to change to sustainable management practices" by John Cary, Neil Barr, Heather Aslin, Trevor Webb and Shannon Kelson (PDF - 707 KB)

This report does not contain maps and needs to be read in conjunction with:

• "Social Atlas for sustainable management - a social and economic database" by John Cary, Shannon Kelson and Heather Aslin. (PDF - 165 KB)
• "Social Atlas for sustainable management - a social and economic database" report by John Cary, Shannon Kelson and Heather Aslin (Zip - 7.8 MB)
• "Structural change in Australian agriculture: implications for natural resource management" by Neil Barr (PDF - 1.8 MB)
• "Structural change in Australian agriculture: implications for natural resource management - APPENDICES" by Neil Barr (PDF - 4.3 MB)

Link to the Map Maker to view economic data.

Link to the Australian Natural Resources Data Library - to download economic and social data

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