Pannell Discussions

No. 114, 29 October 2007

Localised vs dispersed natural-resource assets

A key decision for regional NRM managers is the balance of investment between: (a) localized assets: discrete, high-value assets in particular locations (e.g. an important wetland); and (b) dispersed assets: groups of assets that are spread across the region, such as agricultural land, or many small pieces of environmentally valuable land on farms (e.g. remnant native vegetation in Australia).

Why treat localized and dispersed assets differently? The payoff from successfully investing in well chosen localized assets is likely to be high. This means that it may be feasible to use relatively expensive approaches, such as engineering works, or high levels of incentive payments, to protect those assets. The assets selected for funding would be particularly valuable, facing high environmental threat, with high feasibility of protection, and high adoptability of the relevant works needed to protect them.

To compete with investment in localized assets, investment in dispersed assets needs to be relatively low-cost per hectare, and highly effective over large areas. Appropriate responses may include technology development (developing new land-use options that are both sustainable and highly adoptable), extension (where such land-use options already exist but have not yet been adopted), and conservation tenders (which may reveal highly cost-effective interventions).

Weighing up localized and dispersed investment: The different asset types have different strengths and weaknesses as investments (see Table 1). The optimal balance of investment will vary by region, depending on factors such as:

the number of threatened iconic assets needing investment in the region;

the degree and urgency of the threats to iconic assets;

the feasibility of averting those threats;

the feasibility of the potential actions for dispersed assets.

Table 1. Main advantages and limitations of investing in different asset types.


Asset type

Main advantage

Main limitation



High confidence of NRM outcomes

Small areas managed


Dispersed (technology development)

Large areas of land-use change attainable

Long time lag


Dispersed (extension)

Engagement of the community

Poor NRM outcomes unless adoptable technologies are available


Dispersed (conservation tenders)

Well targeted investment in dispersed environmental assets

High transaction costs



Ideally, environmental managers would make an explicit decision about the balance of effort between localized and dispersed assets, and the appropriate tools to use in each case. The breakdown for different tools would depend on the local situation. For example, there would be a greater emphasis on technology development where:

there is a lack of existing sustainable technologies that are attractive to landholders;

there are good opportunities for development of improved technologies that are attractive to landholders;

landholders are commercially motivated, rather than lifestyle oriented.

There can be synergies between the two categories. Targeted investment in localized assets does provide some benefits in the form of protection of farmland that is close to the targeted assets. Conversely, the tools suggested for dispersed assets can assist with localized assets as well. For example, technology development can benefit localized assets by reducing the cost of land-use change close to those assets, or by increasing the adoptability of practices.

David Pannell, The University of Western Australia,

Further Reading

Pannell, D.J. (2007). Balancing investment in localized and dispersed NRM assets. Two pager (39K) (a bit more detailed than this discussion).

Pannell Discussions are brief pieces on issues and ideas in economics, science, the environment, natural resource management, politics, and agriculture.

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Copyright 2007 David J. Pannell
Last revised: June 01, 2011.