Graeme J. Doole

Labour scarcity restricts the potential scale of grazed perennial plants in the Western Australian wheatbelt

Rural populations in Australia are in decline and rural farm businesses now endure chronic labour shortages. Livestock enterprises traditionally require more labour than their cropping counterparts and this threatens future increases in their intensity and scale. The influence that labour scarcity has on the profitability of mixed-farming systems in the Central Wheatbelt of Western Australia is investigated in this study. When labour supply is assumed to be non-limiting, perennial plants are profitable where their out-of-season production sustains a sizeable breeding flock in a prime-lamb enterprise. However, when labour supply is limited and labour demand is defined as a function of enterprise mix, cropping activity increases and livestock production decreases. In addition, the proportion of the farm planted with perennial pasture declines. This has implications for natural resource management, with perennial pasture helping to prevent soil erosion, decrease waterlogging, and reduce recharge to saline watertables. Efforts to improve the labour efficiency of livestock production are therefore highly pertinent if perennial pastures are to offset land degradation on a broader scale.

Economic value of grazing vegetative wheat (Triticum aestivum L.) crops in mixed-farming systems of Western Australia

Livestock production in Western Australian mixed-farming systems has traditionally been constrained by a profound scarcity of feed in autumn–early winter when crop stubbles and pasture residues from the previous growing season have been exhausted. This study investigates the profitability of partially filling this ‘feed gap’ through the grazing of vegetative wheat crops. Whole-farm bioeconomic modelling is used to provide insight into the relative value of grazing and grain production in both low- and high-rainfall areas of Western Australia. Dual-purpose wheat crops are a valuable source of feed in high-rainfall areas as they provide an affordable alternative to expensive grain supplements for a short period in winter. This also allows annual pastures to establish more vigorously by reducing grazing pressure on young plants. Model output suggests farm profit can increase by over 10% with the grazing of vegetative wheat crops in high-rainfall regions; however, these results are logically shown to be strongly related to the assumed rate of yield loss. In contrast, at the parameter values used in this study, grazing wheats are unlikely to be profitable in low-rainfall environments due to depressed crop production and the extended feed gap experienced in these areas. Higher grain prices unequivocally lower the relative advantage of grazing activity since this elevates the cost of foregone grain yield.

An optimization model of a New Zealand dairy farm

Optimization models are a key tool for the analysis of emerging policies, prices, and technologies within grazing systems. A detailed, nonlinear optimization model of a New Zealand dairy farming system is described. This framework is notable for its inclusion of pasture residual mass, pasture utilization, and intake regulation as key management decisions. Validation of the model shows that the detailed representation of key biophysical relationships in the model provides an enhanced capacity to provide reasonable predictions outside of calibrated scenarios. Moreover, the flexibility of management plans in the model enhances its stability when faced with significant perturbations. In contrast, the inherent rigidity present in a less-detailed linear programming model is shown to limit its capacity to provide reasonable predictions away from the calibrated baseline. A sample application also demonstrates how the model can be used to identify pragmatic strategies to reduce greenhouse gas emissions.

Empirical evaluation of nonpoint pollution policies under agent heterogeneity: regulating intensive dairy production in the Waikato region of New Zealand

Models used for policy evaluation rarely consider firm heterogeneity, despite its importance for instrument design. This study considers agent heterogeneity explicitly in the evaluation of policies for nonpoint pollution control through the integration of decomposition and calibration procedures for programming models. The application concerns the regulation of nitrate leaching from intensive dairy production in the Waikato region of New Zealand. Failing to represent firm heterogeneity leads to widely different estimates of mitigation costs, relative to where heterogeneity is considered. Variation in baseline emissions and the slopes of abatement cost curves between firms renders a differentiated policy less costly than a uniform standard. However, the relative values of these policies are not broadly different, as firms required to do the most abatement – intensive farms with large baseline pollutant loads – can do so more cheaply, on average.

Economic Contribution of French Serradella (Ornithopus Sativus Brot.) Pasture to Integrated Weed Management in Western Australian Mixed-Farming Systems: An Application of Compressed Annealing

Sowing phases of French serradella (Ornithopus sativus Brot.) pasture between extended cropping sequences in the Western Australian wheatbelt can sustain grain production through restoring soil fertility and reducing selective herbicide use. The objective of this article is to investigate the profitability of rotations involving this pasture under a variety of weed management scenarios to obtain greater insight into its value for mixed farming systems in this region. A stochastic search procedure, compressed annealing, is used to identify profitable sets of weed management strategies in a simulation model representing a large number of potential combinations of chemical and non-chemical forms of weed control. In contrast to a continuous-cropping sequence, the inclusion of a serradella phase in a rotation is profitable at high weed densities and with increasing levels of herbicide resistance. A single year of pasture in the rotation is optimal if resistance to Group A selective herbicides is present at the beginning of the planning horizon, but a three-year phase is required if resistance to multiple herbicide groups is observed. Sowing a serradella pasture twice over a two-year phase is also shown to be economically attractive given benefits of successive high weed kills.

Framework for evaluating management interventions for water-quality improvement across multiple agents

It is difficult to accurately predict the impacts of policies for control of nonpoint-source pollution because analytical frameworks incorporating agent heterogeneity are rare. This paper overcomes this limitation through describing a new framework in which the behaviour of individual firms is explicitly represented by large, complex models calibrated to baseline information. Disaggregation allows the simulation of policies that require uniform reductions in pollutant load or those that allow different rates of abatement between firms to achieve a given nutrient target at least cost, as with the trading of pollution entitlements. The reduction of nitrate leaching from intensive dairy production in a catchment of the Waikato River in New Zealand is used as an illustrative application. It is highlighted that satisfaction of water-quality standards will incur substantial costs within this region. Overall, the framework is notable for its integration of multiple modelling techniques from diverse disciplines and its focus on the behaviour of individual agents. Moreover, it can easily be applied elsewhere where sufficient information is available.

Optimal Environmental Policy Design for Mine Rehabilitation and Pollution with a Risk of Non‐Compliance Owing to Firm Insolvency

The modified Pigovian tax approach to regulating stock and flow pollutants from a non-renewable resource firm (Farzin, 1996) provides incentives for the firm to abate optimally, but does not allow for the possibility that a firm may become insolvent. In contrast, the current environmental bond policy applied in most jurisdictions across Australia and New Zealand provides funds in the case of insolvency, but often does not provide optimal incentives for rehabilitation. This study analyses these alternative policy approaches through a theoretical model and an empirical case study. From the case study for a mineral sands firm, the policy recommendation is that, based on economic efficiency alone, a modified Pigovian tax (termed here a damaged land tax) is optimal for most combinations of parameters. However, both risk-sharing and efficiency objectives can be simultaneously addressed by a mixed policy that includes a damaged land tax and an environmental bond.

Evaluating Environmental Policies Under Uncertainty Through Application of Robust Nonlinear Programming

Environmental policy evaluation is characterised by a paucity of information. The novel technique of robust mathematical programming is introduced as a means to proactively account for this uncertainty in policy analysis. The procedure allows identification of expected bounds on the range of abatement costs associated with environmental policy. It also has the advantage of not limiting conclusions to realisations of specific point estimates or probability distributions. Empirical insights are provided in an application to a New Zealand inland lake threatened by nitrate pollution from dairy farming. Overall, this novel framework is demonstrated to have several key advantages, including explicit treatment of severe uncertainty, capacity to bound the range of expected abatement costs accruing to a given policy instrument, and the opportunity to identify robust plans that are immune to parametric variation.

Cost-effective strategies to mitigate multiple pollutants in an agricultural catchment in North Central Victoria, Australia

Strategies to reduce phosphorus and sediment yields are identified for two Australian catchments using a nonlinear optimisation model. This provides novel insight into the cost-effective management of dual pollutants of water courses in Australia. A strong degree of complementarity between the two pollutants is highlighted, given the adsorption of phosphorus to sediment that augments the value of gully and streambank management for mitigation. However, the relationship between the two pollutants is asymmetric. A 30 per cent reduction in phosphorus yield achieves a 75 per cent reduction in sediment yield in one catchment, while a 30 per cent reduction in sediment yield achieves only a 12 per cent reduction in phosphorus yield. Sediment abatement costs are low given the efficiency of gully and streambank management. A 30 per cent phosphorus reduction lowers profit by 3–7 per cent, while a 30 per cent sediment reduction lowers profit by around 1 per cent. Land-use optimisation requires spatial heterogeneity in land-use and gully/streambank management responses. Overall, this research demonstrates the need to determine whether one pollutant is more important than another, while recognising the potential that mitigation practices possess for the reduction of multiple emissions during their evaluation.

A process for the development and application of simulation models in applied economics

Simulation models are widely used in applied economics to improve understanding of how a system could behave under different conditions. However, the potential degree to which such models can influence decision making depends on their ability to provide an adequate description of the important elements of a given problem. A systematic and robust procedure for the development and application of such models in agricultural, ecological, environmental and natural resource economics is presented. This process is based on the authors’ experience across a broad range of model types and applications and extensive literature review. The practical impact of simulation models is argued to be greater where stakeholders and technical experts are consulted extensively throughout the modelling process.