SEA Working Paper 00/08

Salinity Policy: A Tale of Fallacies, Misconceptions and Hidden Assumptions

David Pannell

Associate Professor, Agricultural and Resource Economics, University of WA
President, Australian Agricultural and Resource Economics Society
David.Pannell@uwa.edu.au

The steady rise in the political profile of salinity continued on November 3rd 2000, with the Prime Minister and premiers agreeing to a $1.4 billion "National Action Plan". Unfortunately, the package appears to be constrained in ways which will make it very difficult for it to be more effective against the salinity problem than previous government initiatives, such as the National Landcare Program and the Natural Heritage Trust. In each of these programs we have spent large amounts of money for little impact relative to the scale needed to address the salinity problem.

There are a number of fundamental problems in the hidden assumptions behind the government’s various policy approaches. The design of the latest policy package does not adequately account for the science, the economics and the social dimensions of salinity.

The hidden assumptions that have held us back are outlined below. Clearly, not all of these fallacies are believed by all policy makers, but all of them are present in currently active policies.

Lack of Viable Treatments

Firstly, there is the assumption that we already have available a range of treatments for salinity prevention which farmers could adopt and benefit from and that their failure to do so just reflects their ignorance or their shortsightedness. In reality, viable treatments for salinity prevention are only available for a small proportion of the agricultural land where they are needed. We know that the necessary treatments for salinity prevention on agricultural land include very large areas of perennial plants (including shrubs, perennial pastures and trees), integrated with engineering works such as drainage. By viable treatments, I mean treatments that farmers can adopt and generate benefits in the long term that are sufficient to outweigh their costs in the short term. For farmers at least, the benefits from salinity prevention are usually not enough to outweigh the large up-front costs that farmers have to bear to establish large areas of perennials, not to mention the ongoing income sacrifice from the land on which they have been established.

Paradoxically, the worst salinity threat in the long term is going to be in the drier agricultural regions. But because they are dry, they are unable to support conventional commercial timber production, so if farmers are going to make money from trees or shrubs in these regions, it will have to be from high value products, such as oils, or from local processing for products such as energy and panel board.

Perennial pastures are an alternative to trees and shrubs, but given current varieties and market conditions, they are also profitable in only a minority of the situations where we need them. There are, however, encouraging signs that if we invested strongly in R&D to provide better perennial options, it would be possible to make them profitable over reasonably large areas. Unfortunately, we have invested little in attempting to develop more profitable perennials for farmers to adopt.

The Scale and Cost of Change Required

The second hidden assumption is that, even if they don’t have economically viable treatments available to them, farmers should be and will be willing to make the sacrifices involved in preventing salinity. This thinking fails to recognise the scale of change that is required and the scale of the costs that we are expecting farmers to bear, and it is, in fact, completely unrealistic.

As an example, consider the following sums. Hydrologists have estimated that for effective long-term prevention of salinity, we need to revegetate at least half of the landscape with perennials of one sort or another. The perennials that most people think of are trees. A 2000 ha farm would need 1000 ha of trees, at a cost of approximately $1000 per ha, coming to $1 million. That is $1 million per farm. Farmers just don’t have a million dollars in liquid capital, and if they did, I don’t think they would be looking to invest it in non-commercial trees.

If you have been puzzled about why farmers have not been acting against salinity on the scale recommended by scientists, you can now see why. You don’t have to explain it away as a lack of awareness of salinity, or a lack of awareness of the treatments, or a lack of a sense of social responsibility, or the lack of a conservation ethic. It’s just that if farmers did act on the scale that is recommended, in most environments they would cripple the economics of their farms.

The third fallacy is that by applying persuasion and peer pressure, by distributing information to raise awareness and by encouraging a conservation ethic, we can encourage farmers to take on management changes on the scale that is needed. If the scale of change needed was much smaller, this might have been true. But from what I have already said about the huge economic cost, you can see that it is completely unrealistic.

Over-reliance on Catchment Planning

The fourth fallacy is that integrated catchment management and regional planning is the key to getting perennials widely planted on farmland. Again, because we don’t have perennial options that are viable on the necessary scale, no planning process, no matter how integrated or how catchment-based, is going to prevent much salinity. Advocates of catchment planning also seem to neglect the reality that real decisions about farm management are made by individual farmers, not by catchment groups or regional Natural Resource Management bodies.

Another common misconception is that by being clever in the way we design and locate treatments such as trees and drains, we can have a large impact on salinity with only small areas of treatments. Unfortunately this is not the case. The level of off-site benefits per hectare of agricultural land treated turns out to be much smaller than we previously believed or hoped.

This hydrological reality contributes to another under-recognised result: the benefits of salinity treatments are not the same thing as the costs of salinity if left untreated. For one thing, the treatments are often only partially effective. For example, in Western Australia hydrologists have estimated that even if we made radical, large scale changes to farming practices very quickly, the area of saline land would double from about 2 million hectares currently to about 4 million hectares before stabilising. If we fail to make such radical changes then the area would increase still further to about 6 million ha, so it is really just that last 2 million hectares that is up for grabs. We’ll have to live with the 4 million.

The other reason why high costs of salinity aren’t necessarily sufficient to justify a program of treatments is that the treatments cost money. Any benefits from the treatments have to be at least partly offset, and in many cases fully offset, by the costs.

What’s New?

The above ideas were strong influences on the design of salinity policies in the 1990s. The 2000 National Action Plan is an evolution from those policies, although it does include some novel elements.

Novel elements of the National Action Plan include that it requires targets for salinity to be set and that funding to achieve these targets is directed to community-based groups in the regions. A problem with relying on targets is that scientifically credible targets for the available budget will be very modest (probably too modest from a political perspective) even allowing for unrealistic expectations about the sacrifices to be made by farmers. In the Murray Darling Basin, for example, even if we revegetate half the landscape now, the lag before salinity will decline to target levels in the rivers is estimated at 100 years or more. This means that achievement of water quality targets for the rivers in the Basin will depend primarily on the viability of massive engineering schemes, such as preventing saline water from entering the rivers by pumping it into evaporation basins, and/or desalinating water for domestic consumption in Adelaide.

The regional groups to which funds are to be channelled face an extremely difficult task. It will be a challenge for them not to spread much of the money thinly and non-strategically amongst individual farmers. They will need very high levels of information and leadership if they are not to allocate the money in ways that will be socially and politically attractive but technically and economically inefficient. It may be expecting too much of them to make the difficult but necessary decisions about priorities, especially where it involves fewer funds going directly to farmer members of their communities, many of whom are suffering financial hardship. Provision of high levels of technical information from government and research organisations will be essential for the process to operate effectively.

The plan does allow for technical and economic evaluations to be conducted to back agreements with regional groups (and ABARE has already conducted some excellent modelling studies in the Murray Darling Basin). It remains to be seen how influential these evaluations will be on the contents of the agreed plans.

Another relatively new element in the plan is the use of market-based economic instruments (salinity credits, auctions, subsidy payments). These do probably have a role, but a limited one in specially targeted, relatively localised situations to protect assets of exceptional value. If used to try to achieve very broad scale changes, it is clear that they will cost more than the benefits they will generate, at least given the current technologies which are available.

Agriculture Is Not The Sole Cause Of The Problem

Recent hydrological analyses in Western Australia have shown that in a number of the threatened towns, the salinity problem is largely caused within the towns. Water is coming off roofs, off roads, off bitumen tennis courts, whatever land is no longer growing perennial vegetation, and it ends up in the saline groundwaters and raises them towards the ground surface.

In towns where scheme water is available and water is being piped in, the problem is made worse by the release of that water into the environment, which happens via septic tanks and leach drains or when people water their gardens. So in some well-defined cases, changes need to be implemented in and around the assets we are trying to protect, rather than on farms.

A Change Of Focus Is Needed

We need a different approach to salinity policy. Firstly, we have to entirely change our concept of what we are trying to achieve on agricultural land in relation to salinity prevention. Rather than putting treatments on small areas in order to protect the broader landscape, what we are really attempting to do is convert profitable but unsustainable production of annuals, such as wheat and annual pasture, to profitable and sustainable production of perennials, including trees, shrubs and perennial pastures. We need R&D and industry development to identify a whole suite of different perennials which are profitable in different locations, different environments, different soil types, and different farming systems.

Secondly, we need to better face the reality that a lot more agricultural land is going to go saline. We have invested relatively little in attempting to develop profitable uses for saline land and water. Farmers with large areas of salt affected land, such as Michael Lloyd in Western Australia, are already trialling and implementing farming systems based on salt-tolerant species. We should invest in R&D to identify and test a much bigger range of salt-tolerant species and work with farmers on ways to use them in practical and profitable systems which are integrated with on-farm engineering works. A number of non-agricultural uses for saline land and water also appear promising and deserving of support for their development.

Thirdly, we need expenditures specifically targeted to protect particular public assets (towns, rivers, water resources, nature reserves and so on). We now understand that non-agricultural means for protecting public infrastructure and environmental assets are important. In some cases they are the only viable option. The Murray Darling Basin Commission is already spending tens of millions of dollars on engineering works. Rural towns in Western Australia are evaluating engineering options to address their own salinity problems. For different public assets, the most cost-effective combinations of off-farm and on-farm treatments will vary widely. We need to be rigorous and systematic in the approach we take to evaluating what combinations of treatments are needed, what they will cost, what their benefits will be, and whether or not they are actually worth the investment. Subject to meeting this rigorous test, targeted spending on protection of the public assets would be justified. The amounts of public money involved are too massive for us to be sloppy in our decisions about how we use it.

These three elements should be our top priorities for salinity funding. To fund them, it will be necessary for us to spend less in areas that were prioritised in the 1990s: Landcare facilitators and coordinators, catchment planning, and broad-scale financial assistance to farmers that has to be spread as thinly as my grandmother used to spread vegemite.

Of the three key elements, numbers two and three are easy to argue, but number one (developing profitable perennials) seems to meet some resistance. In situations where engineering works are cost-effective, it is true that their rapid effectiveness in protecting or repairing public assets reduces the urgency and the value of establishing perennials on farm land. However, it does not follow that we should abandon the goal of seeking profitable perennials. Reasons include the following.

At present, investment in development of profitable perennials is probably the worst funded aspect of the salinity budget. At least for the time being, until we have developed more viable technologies, it should be one of the key funding priorities. Once we have the technologies, that will be the time to reallocate funding back towards the promotion, education, and awareness raising activities that we have spent most of the money on up until now. You could say that we have tackled the task backwards.

It has to be conceded that this approach is no certainty to succeed on the scale we would like. The challenges involved in creating a new industry from scratch are formidable. The tasks required vary from one case to another, but for shrubs, for example, they would include screening of plant species, identifying potential products, developing harvesting and processing technologies, conducting market research, establishing marketing bodies, creating systems to help with financing, and getting the perennials established over huge areas. This clearly won’t happen quickly. And we are really talking about creating a large number of new industries, for different products from different types of perennials. So it is, unavoidably, a risky strategy. On the other hand, there is no risk in the existing approach – it is certain to fail to protect most of the threatened agricultural land.

The Clock Is Ticking

In at least three respects, we are running out of time with salinity.

Given that reversing salinity is slow, very expensive and in some cases practically impossible, the longer we take to start investing our funds wisely, the worse the situation will be in the long run.

Secondly, the momentum behind ever increasing salinity budgets appears to be irresistible. We need to start spending the money sensibly, so that the new money is not spent as unproductively as the old money.

Thirdly, we have almost used up the stock of good will of farmers. Many of them have been making major personal sacrifices and financial commitments under the impression that the treatments they have implemented have been officially sanctioned and will be sufficient. Despite the large personal sacrifices made, there are few if any catchments where the water table has been brought under control, and farmers can see for themselves that the problem is continuing to worsen.

It must be because the science is so complex and the social issues so prominent that our policy makers have made such poor decisions about the allocation of the salinity budget. It is time to recognise not just the scale of the salinity problem, but also the scale of the treatments that are needed, and to get realistic about what it will really take to get treatments implemented on that scale.

Citation: Pannell, D.J. (2000). Salinity Policy: A Tale of Fallacies, Misconceptions and Hidden Assumptions (SEA Working Paper 00/08). http://www.general.uwa.edu.au/u/dpannell/dpap0008.htm

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Copyright 2000 David Pannell
Last revised: June 16, 2013.