David J. Pannell

Understanding and promoting adoption of conservation practices by rural landholders

Research on the adoption of rural innovations is reviewed and interpreted through a cross-disciplinary lens to provide practical guidance for research, extension and policy relating to conservation practices. Adoption of innovations by landholders is presented as a dynamic learning process. Adoption depends on a range of personal, social, cultural and economic factors, as well as on characteristics of the innovation itself. Adoption occurs when the landholder perceives that the innovation in question will enhance the achievement of their personal goals. A range of goals is identifiable among landholders, including economic, social and environmental goals. Innovations are more likely to be adopted when they have a high ‘relative advantage’ (perceived superiority to the idea or practice that it supersedes), and when they are readily trialable (easy to test and learn about before adoption). Non-adoption or low adoption of a number of conservation practices is readily explicable in terms of their failure to provide a relative advantage (particularly in economic terms) or a range of difficulties that landholders may have in trialing them.

The economics of risk, uncertainty and learning in the adoption of new agricultural technologies: where are we on the learning curve?

Abstract The roles of risk, uncertainty and learning in the adoption of new technologies are reviewed. Although they have been emphasized in many commentaries about the adoption process, they have been directly addressed in only a minority of the large literature relating to the adoption of innovations. Risk, uncertainty and learning play a number of distinct roles in the process of adopting new technologies. These distinct roles have often been blurred or treated incompletely in past research. Theoretical and empirical literature, which explores and evaluates these various roles is reviewed, with a focus on agricultural technologies. A conceptual framework that captures the main impacts and roles of risk is outlined. A range of research needs and emerging issues for risk and technology adoption in agriculture are discussed.

Sensitivity analysis of normative economic models: theoretical framework and practical strategies

The parameter values and assumptions of any economic model are subject to change and error. Sensitivity analysis (SA), broadly defined, is the investigation of these potential changes and errors and their impacts on conclusions to be drawn from the model. There is a very large literature on procedures and techniques for SA, but it includes almost nothing from economists. This paper is a selective review and overview of theoretical and methodological issues in SA. There are many possible uses of SA, described here within the categories of decision support, communication, increased understanding or quantification of the system, and model development. The paper focuses somewhat on decision support. It is argued that even the simplest approaches to SA can be theoretically respectable in decision support if they are applied and interpreted in a way consistent with Bayesian decision theory. This is not to say that SA results should be formally subjected to a Bayesian decision analysis, but that an understanding of Bayesian probability revision will help the modeller plan and interpret an SA. Many different approaches to SA are described, varying in the experimental design used and in the way results are processed. Possible overall strategies for conducting SA are suggested. It is proposed that when using SA for decision support, it can be very helpful to attempt to identify which of the following forms of recommendation is most appropriate: (a) do X, (b) do either X or Y depending on the circumstances, (c) do either X or Y, whichever you like, (d) if in doubt, do X. A system for reporting and discussing SA results is recommended.

Are we risking too much? Perspectives on risk in farm modelling

Risk and uncertainty have been extensively studied by agricultural economists. In this paper we question (a) the predominant use of static frameworks to formally analyse risk; (b) the predominant focus on risk aversion as the motivation for considering risk and (c) the notion that explicitly probabilistic models are likely to be helpful to farmers in their decision making. We pose the question: for a risk-averse farmer, what is the extra value of a recommendation derived from a model that represents risk aversion, compared to a model based on risk neutrality? The conclusion reached is that for the types of the decision problems most commonly modelled by agricultural economists, the extra value of representing risk aversion is commonly very little.

Public Benefits, Private Benefits, and Policy Mechanism Choice for Land-Use Change for Environmental Benefits

The choice of policy mechanisms for encouraging environmentally beneficial land-use change should depend on the relative levels of private (or internal) net benefits, and public (or external) net benefits. A map of recommended policy mechanisms is developed, depending on the relative levels of these variables. Positive incentives, negative incentives, and extension need to be targeted carefully to appropriate projects—where private net benefits are closer to zero, and/or public net benefits are more extremely positive or negative. Technology development is suggested where private net costs outweigh public net benefits. No action is recommended for many potential projects. (JEL Q58, Q24)

A framework for the economic evaluation and selection of sustainability indicators in agriculture

Abstract In recent years, the concept of ‘sustainability indicators’ has become prominent in agricultural science. The idea is that particular characteristics of resources are monitored and recorded, with the intention that this information serves as an aid for decision making by farmers and/or policy makers. A great many sustainability indicators have been proposed by agricultural scientists. However, there is no guidance currently available as to which of the possible sustainability indicators provide information of economic value. In this paper we present a conceptual framework for the economic valuation and prioritisation of sustainability indicators. The framework is based on Bayesian decision theory, particularly its use to calculate the value of information under conditions of uncertainty. We present an illustrative numerical example. Based on this example and the theoretical framework, we identify a number of important insights about the practical use of sustainability indicators.

RIM: a bioeconomic model for integrated weed management of Lolium rigidum in Western Australia

The RIM (resistance and integrated management) model is presented. RIM represents a wide diversity of herbicide and non-herbicide options for management of Australias most important crop weed, Lolium rigidum, in the context of the non-irrigated extensive farming system of southern Australia. Enterprise choices in the model include cereals, lupins, canola and three types of pastures for grazing by sheep. Users of RIM may specify the enterprise sequence and any feasible combination of the 35 weed treatment options each year over 10 or 20 years. Weed treatment options include selective herbicides (11), non-selective herbicides (5), non-chemical treatments (16) and user-defined treatments (3). The model represents weed and seed bank population dynamics, weed-crop competition, weed treatment impacts (including phytotoxicity), agronomic details, and financial details. Economic and biological model results are presented for scenarios with differing levels of availability of selective herbicides and different rotational sequences.

Dryland salinity: economic, scientific, social and policy dimensions

A broad range of information relevant to salinity is reviewed in order to critically evaluate existing and prospective policy responses. The review includes issues of hydrogeology, farmer perceptions and preferences, farm‐level economics of salinity management practices, spill‐over benefits and costs from salinity management, and politics. The technical challenge of preventing salinity is far greater than previously recognised. The farm‐level economics of currently available management practices for salinity prevention are adverse in many situations. Off‐site benefits from on‐farm practices are often small and long delayed. Past national salinity policies have been seriously flawed. While current policy proposals include positive elements, they have not sufficiently escaped from the past.

Social and economic challenges in the development of complex farming systems

The fundamental challenge in developing a new farming system is to have it adopted and maintained by farmers. The difficulty of achieving widespread adoption is increased if the new farming system is complex and/or radically different to current farming practice. This paper is a review of these issues with a focus on farming systems based on mimicry of natural ecosystems. It is proposed that there are four conditions which are necessary for an individual farmer to adopt an innovative farming-system: awareness of the innovation, perception that it is feasible to trial the innovation, perception that the innovation is worth trialing, and perception that the innovation promotes the farmers objectives. Challenges involved in meeting each of these conditions are discussed. It is concluded that the most important challenges in developed countries are: (a) developing a farming system that is in fact more profitable than current practice; (b) assessing whether a system is in fact more profitable than current practice; and (c) overcoming the problem of deep uncertainty about the technology. In developing countries one must add the additional challenges of (d) high interest rates/high discount rates; and (e) insecure or inequitable land tenure.

Agricultural extension policy in Australia: the good, the bad and the misguided

In most states of Australia, agricultural extension policies and practices have increasingly been based on considerations of private/public goods, user pays and cost recovery. In addition, the delivery of extension has been strongly influenced by changing administrative structures and a change in the paradigm within which the extension community operates. These changes have had major impacts, including more extension being delivered by the private sector. There are positive aspects to the changes and, for some issues, they are appropriate. However, we have a number of reservations, particularly about the effectiveness of current extension systems in assisting the adoption of complex environmental and farming system technologies.