AARES2016: 60TH ANNUAL CONFERENCE OF THE AUSTRALIAN AGRICULTURAL AND RESOURCE ECONOMICS SOCIETY
PROGRAM FOR WEDNESDAY, FEBRUARY 3RD
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07:00-08:30 Session 4: Breakfast to Inspire – Quiz a Policy-maker
Location: Centenary Centre, Hyatt
07:00
TBA
SPEAKER: Phillip Glyde

ABSTRACT. Phillip Glyde is the new CEO of the Murray Darling Basin Authority.

Prior to that Phillip was a Deputy Secretary in the Australian Government Department of Agriculture and Water Resources, where he held responsibility for matters relating to agricultural productivity, food regulation and security, international farm trade and market, and was acting secretary for half of last year.

Phillip was also a former head of the national commodity forecaster ABARES.

Phillip has worked for the Australian Government for over 3 decades, on numerous public policy issues including natural resource management, environment and industry issues both domestically and internationally (including  the Organisation for Economic Cooperation and Development (OECD) in Paris). 

Phillip has an Honours Degree in Natural Resource Management from the University of New England and a Bachelor of Economics Degree from the Australian National University.

Phillip will draw insights from his experience on eveidence-based policy making and how economists and other researchers can help generate evidence, communicate and influence in the making of public policy.

08:30-09:00 Session 5: Conference opening
Location: Federation Ballroom, Hyatt
09:00-10:00 Session 6: Opening plenary session

Prof Kym Anderson, University of Adelaide

Location: Federation Ballroom, Hyatt
09:00
Competitiveness of Australia's Agricultural and Resource Sectors: Retrospect and Prospect
SPEAKER: Kym Anderson
09:40
Discussant
SPEAKER: Will Martin
09:50
Discussion
SPEAKER: Open
10:30-12:15 Session 7A: Special AAEA Invited Session - Food Insecurity and Its Causes in Australia and the United States

Organizer: Prof Craig Gundersen, University of Illinois

Location: Federation Ballroom North, Hyatt
10:30
The Incidence, Depth, and Severity of Food Insecurity in the United States from 2002 to 2013

ABSTRACT. Food insecurity is a leading health care issue in high income countries due to its magnitude (about one-in-seven households in the U.S.) and the wide array of resulting negative health outcomes. This session looks at the causes and consequences of food insecurity in the U.S. and Australia. “Food Insecurity and Homelessness in the Journeys Home Survey” (Herault et al.), examines the impact of homelessness on food insecurity with the Journeys Home Survey. Despite the oft-posited relationship between homelessness and food insecurity, there is surprisingly little work done on this topic due, in part, to the lack of data. They find that homelessness is strongly positively associated with food insecurity for men but less so for women. “Natural Disasters and Financial Stress in Agricultural Areas” (Breunig et al.) examines a key predictors of food insecurity, financial stress, with data from the 2007 Rural and Regional Families Survey (RRFS) from Australia. This study is particularly relevant because persons in rural areas have some of the highest food insecurity rates. They find that non-farming households whose members are employed in agriculture are the most at-risk. “The Incidence, Depth, and Severity of Food Insecurity in the United States from 2002 to 2013” (Gundersen et al.) moves beyond a binary measure of food insecurity to incorporate measures which portray the depth and severity of food insecurity. This work, using data from the Current Population Survey (CPS), finds that interpretations about trajectories of food insecurity and their determinants differ depending on which measure is used.

11:00
Food Insecurity and Homelessness in the Journeys Home Survey

ABSTRACT. Food insecurity is a leading health care issue in high income countries due to its magnitude (about one-in-seven households in the U.S.) and the wide array of resulting negative health outcomes. This session looks at the causes and consequences of food insecurity in the U.S. and Australia. “Food Insecurity and Homelessness in the Journeys Home Survey” (Herault et al.), examines the impact of homelessness on food insecurity with the Journeys Home Survey. Despite the oft-posited relationship between homelessness and food insecurity, there is surprisingly little work done on this topic due, in part, to the lack of data. They find that homelessness is strongly positively associated with food insecurity for men but less so for women. “Natural Disasters and Financial Stress in Agricultural Areas” (Breunig et al.) examines a key predictors of food insecurity, financial stress, with data from the 2007 Rural and Regional Families Survey (RRFS) from Australia. This study is particularly relevant because persons in rural areas have some of the highest food insecurity rates. They find that non-farming households whose members are employed in agriculture are the most at-risk. “The Incidence, Depth, and Severity of Food Insecurity in the United States from 2002 to 2013” (Gundersen et al.) moves beyond a binary measure of food insecurity to incorporate measures which portray the depth and severity of food insecurity. This work, using data from the Current Population Survey (CPS), finds that interpretations about trajectories of food insecurity and their determinants differ depending on which measure is used.

11:30
Natural Disasters and Financial Stress in Agricultural Areas

ABSTRACT. Food insecurity is a leading health care issue in high income countries due to its magnitude (about one-in-seven households in the U.S.) and the wide array of resulting negative health outcomes. This session looks at the causes and consequences of food insecurity in the U.S. and Australia. “Food Insecurity and Homelessness in the Journeys Home Survey” (Herault et al.), examines the impact of homelessness on food insecurity with the Journeys Home Survey. Despite the oft-posited relationship between homelessness and food insecurity, there is surprisingly little work done on this topic due, in part, to the lack of data. They find that homelessness is strongly positively associated with food insecurity for men but less so for women. “Natural Disasters and Financial Stress in Agricultural Areas” (Breunig et al.) examines a key predictors of food insecurity, financial stress, with data from the 2007 Rural and Regional Families Survey (RRFS) from Australia. This study is particularly relevant because persons in rural areas have some of the highest food insecurity rates. They find that non-farming households whose members are employed in agriculture are the most at-risk. “The Incidence, Depth, and Severity of Food Insecurity in the United States from 2002 to 2013” (Gundersen et al.) moves beyond a binary measure of food insecurity to incorporate measures which portray the depth and severity of food insecurity. This work, using data from the Current Population Survey (CPS), finds that interpretations about trajectories of food insecurity and their determinants differ depending on which measure is used.

10:30-12:15 Session 7B: Exploring Agricultural Productivity and Innovation

Improving agricultural productivity has long been considered as a critical way to increase farmers’ real income and international competitiveness of Australian agricultural commodities. Between 1949 and 2014, Australian agricultural productivity has grown at the rate of 2.0 per cent a year which has contributed to more than two thirds of gross agricultural output growth. Productivity growth has also helped to negate the adverse impact of changing climate condition, declining terms of trade and resource supply constraints, and faciliate agricultural industry releasing valuable resources.

It is widely believed that technology progress, on-farm innovation and industry structural adjustment are three pillars supporting ongoing agricultural productivity growth in Australia over the past three decades. Previous studies show that domestic public investment in agricultural RD&E has on average accounted for around one third of agricultural productivity growth since 1953 while resource reallocation between farms has contributed to more than half of efficiency improvement of input use of the industry. However, limited efforts have been made to convert these useful findings into applicable public policies. In particular when productivity growth slowed down in the recent decade, it is more important to bridge academic researchers and policy makers to develop a strategy to maintain productivity growth.

The mini-symposia is designed to host three presentations focusing on the discussion of agricultural productivity growth and its drivers in the United States, Australia and some Asian developing countries, like Indonesia and Thailand. These presentations are based on the researches either using the industry-level or farm-level data, and each provides good experiences and lessons of a particular country.

Location: The Assembly, Hyatt
10:30
Agricultural Productivity, Innovation and International Comparison
SPEAKER: John Mullen

ABSTRACT. An Introduction

10:35
The Rise and Fall of U.S. Farm Productivity Growth, 1910–2007
SPEAKER: Julian Alston

ABSTRACT. . Some studies have reported a slowdown in U.S. farm productivity growth, but the prevalent view among economists is to reject or downplay the slowdown hypothesis, implying that the rates of productivity growth experienced over the past half century can be projected forward. We set out to resolve this issue, which matters both for understanding the past and anticipating the future. Using newly compiled multifactor and partial-factor productivity estimates, developed for the purpose, we examine changes in the pattern of U.S. agricultural productivity growth over the past century. We detect sizable and significant slowdowns in the rate of productivity growth. Across the 48 contiguous states for which we have very detailed data for 1949–2007, U.S. multifactor productivity (MFP) growth averaged just 1.18 percent per year during 1990–2007 compared with 2.02 percent per year for the period 1949–1990. MFP in 44 of the 48 states has been growing at a statistically slower rate since 1990. Using a longer-run national series, since 1990 productivity growth has slowed compared with its longer-run growth rate, which averaged 1.52 percent per year for the entire period, 1910–2007. More subtly, the historically rapid rates of MFP growth during the 1960s, 1970s and 1980s can be seen as an aberration relative to the long-run trend. A cubic time-trend model fits the data very well, with an inflection around 1962. We speculate that a wave of technological progress through the middle of the twentieth century—reflecting the progressive adoption of various mechanical innovations, improved crop varieties, synthetic fertilizers and other chemicals, each in a decades long process—contributed to a sustained surge of faster-than-normal productivity growth throughout the third quarter of the century. A particular feature of this process was to move people off farms, a one-time transformation of agriculture that was largely completed by 1980.

11:00
Agricultural Productivity Drivers and Its Implications for Public Policy
SPEAKER: Yu Sheng

ABSTRACT. This paper uses farm survey data to measure the contribution of cross-farm resource reallocation to industry-level productivity growth within Australian broadacre agriculture. We show that resource reallocation between farms, mainly occurred between incumbent farms (rather than through farms entering and exiting) and between farms with different productivity growth (rather than different productivity levels), accounted for around half of the industry-level productivity growth that occurred between 1978 and 2010, and its contribution appears to have increased over time. Moreover, the results also indicate that resource reallocation effects varies across different inputs (in particular, capital and labour), partly due to their different mobility. This analysis improves our understanding of how reforms targeting structural adjustment — and the resource reallocation this generates — can influence the relationship between technological progress and aggregate productivity growth.

11:25
Research and agricultural productivity: Indonesia and Thailand
SPEAKER: Peter Warr

ABSTRACT. Growth of total factor productivity in agriculture has contributed significantly to output growth in both Indonesia and Thailand. This study examines the extent to which publicly funded agricultural research within these countries contributes to the enhancement of productivity growth, while allowing for other possible determinants of agricultural productivity growth, including international agricultural research, infrastructure investments, extension, weather changes and epidemics. It draws upon the existing literature which estimates the rate of TFP growth in Indonesian agriculture and to attempt to explain its determinants, in particular the contribution of agricultural research. It is found that agricultural research contributes significantly to productivity growth in both countries.

11:50
Technology Discrimination and the Rate of Adoption of Alternative Technologies: A Global View
SPEAKER: Daniel Gregg
10:30-12:15 Session 7C: Farmer Adaptation to Climate Change

Climate change is associated with increasing frequency of weather-related disaster events (IPCC, 2012), and from the 1990s, the area affected by droughts in China has been increasing (NSBC, 2012), while the frequency of flood events has also been increasing since the 1980s (Zhao et al, 2004). These extreme weather events pose a significant threat to the agricultural production, thereby contributing to food insecurity in rural China. Maintaining a reasonable level of food security is challenging, particularly, for subsistent farmers who are heavily relying on agriculture for their livelihood.  In this context, farmers must decide how to respond to climate change. They risk poverty and food security by not responding to these climate variations appropriately. There will be costs of adjustment, which will vary between households and which will affect farmers' choices. These adaptations require a combination of agricultural management practices including technical and non-technical measures that usually depend on technologies, mechanisms and institutions available in the region.

This session aims to address some key issues in climate change and agricultural adaptation in China such as impacts of climate change on crop production in China and characteristics of farmers at risk from climate change while discussing adjustment policy options.  The research is based on a household survey of rice farmers in China, which was undertaken as a part of an ongoing project funded by Australian Centre for International Agricultural Research on ‘Assessing Farmer Responses to Climate Change –Adjustment Policy Options’(ADP/2011/039). The session will also draw evidence from US agriculture on impacts of and adaptation to climate change. 

Location: Federation Ballroom South, Hyatt
10:30
Farmer Adaptation to Climate Change

ABSTRACT. Climate change is associated with increasing frequency of weather-related disaster events (IPCC, 2012), and from the 1990s, the area affected by droughts in China has been increasing (NSBC, 2012), while the frequency of flood events has also been increasing since the 1980s (Zhao et al, 2004). These extreme weather events pose a significant threat to the agricultural production, thereby contributing to food insecurity in rural China. Maintaining a reasonable level of food security is challenging, particularly, for subsistent farmers who are heavily relying on agriculture for their livelihood. In this context, farmers must decide how to respond to climate change. They risk poverty and food security by not responding to these climate variations appropriately. There will be costs of adjustment, which will vary between households and which will affect farmers' choices. These adaptations require a combination of agricultural management practices including technical and non-technical measures that usually depend on technologies, mechanisms and institutions available in the region. This session aims to address some key issues in climate change and agricultural adaptation in China such as impacts of climate change on crop production in China and characteristics of farmers at risk from climate change while discussing adjustment policy options. The research is based on a household survey of rice farmers in China, which was undertaken as a part of an ongoing project funded by Australian Centre for International Agricultural Research on ‘Assessing Farmer Responses to Climate Change –Adjustment Policy Options’(ADP/2011/039). The session will also draw evidence from US agriculture on impacts of and adaptation to climate change.

10:55
Impacts of Climate Change on Major Crop Yield in China
SPEAKER: Jinxia Wang

ABSTRACT. Based on the data from 1980 to 2010 by province, the overall goal of this study is to evaluate the impacts of climate change on major crop yield (yield of rice, maize, wheat and soybean). Econometric results show that crop yield are significantly influenced by seasonal temperature, precipitation and their variations. However, the influences differ by crop. Increasing temperature has positive impacts on rice yield but negative impacts on wheat yield, while the yield of either maize or soybean is not sensitive to temperature. Increasing precipitation is beneficial to most of crops (wheat, maize and soybean), but harmful for rice. Finally, yields of wheat and maize are negatively influenced by temperature variations, and yields of rice and soybean are negatively influenced by precipitation variations.

11:15
Climate Change and China’s Agriculture: Impact and Adaptation
SPEAKER: Jikun Huang

ABSTRACT. China’s agriculture will face great challenge and is expected to face even greater challenge under climate change. Understanding the impact of and adaptation to climate change on agriculture is critical important for climate change policy. Acknowledging the large number of studies on climate change in the literature, the overall goal of this paper is to provide additional evidences on the impacts of and adaptation to climate change on agriculture in China.

Both econometrical analysis and general equilibrium modeling are applied to analyze direct and indirect impacts of climate change. The direct impacts on major crop yields are empirically estimated based on provincial data over past three decades. On the extreme weather events, the impacts of severe drought and flood on grain production are estimated based on a large scale farm survey. The indirect impact of climate change through market price response is simulated using an integrated impact assessment model under different scenarios. On adaptation to climate change, after identified the measures taken by government, community and farmers that may be able to mitigate climate risk based on empirical data, we estimate major factors that facilitate farmers to take these measures and effectiveness of major measures in reducing climate risk in crop production.

Econometric results show that crop yields are significantly influenced by temperature and precipitation. Increasing temperature has negative impact on the yield of several major crops such as wheat, rice, cotton and sugar though also has moderate positive impact on maize and rapeseed yield. But falling precipitation reduces the yields of most crops. The simulation results show that overall impact of climate change on agricultural production is negative but much less than the direct impact because of responses of producers and consumers to the changes in agricultural prices due to climate change. Moreover, if we consider the impacts of climate change in the rest of the world, climate change impact on China’s agricultural production will be further reduced.

Empirical results also show that there is a wide range of measures that can reduce climate risk. Most of these measures are related to water sector (e.g., water infrastructure, flood and drought information service, etc.) and farm management (e.g., crop or variety diversification, irrigation practices, adjusting field operation, etc.). Econometrical analysis shows that public extension service (e.g., the provisions of early warning and prevention information), policy support (e.g., financial and technical support) against extreme weather events, and community and household assets can improve farmers’ adaptation ability to climate change. Several major measures in water sector and farm management significantly reduces average crop yield loss and risk of crop yield due to extreme weather events.

This study concludes with several policy implications. While China’s agriculture will face greater challenge under climate change, there are a number of measures, particular those related to water sector, farm management and agricultural market, that can mitigate climate risk. As most of these measures are not new, how to enhance them and mainstream agricultural adaptation into agricultural development programs is critical important in making climate adaptation plan and policy.

11:35
Adaptation to Climate Change in Guangdong Province in China: Do Property Rights Matter?

ABSTRACT. Land tenure in China is often considered as an institutional factor constraining the farmer’s decision to adopt agricultural investments in China due to the absence of enforced and secure property rights. This study examines the association between land tenure types and farmer adaptation in response to extreme weather events in Guangdong Province in China. The results indicate that farmers with contracted land are more likely to implement adaptation measures than those who have rented their land from the collective and from other farmers. Results also suggest that farmers’ adaptive behaviour in response to extreme weather events is significantly different from their day-to-day adaptation to on-going changes in climate. Farmers’ adaptive capacity is also positively influenced by access to information, social capital and plot quality. Results of this study highlight the importance of properly defined land rights for agricultural sector investments in China.

11:55
The Economic Impacts of Climate Change on U.S. Agriculture: the Role of Adaptation
SPEAKER: Kaixing Huang

ABSTRACT. This paper provides a framework of estimating the economic impact of climate change on agriculture. This framework is advanced in accounting for adaptations and avoiding the misspecification problems. The value of adaptations can also be explicitly calculated. Combine this framework with the U.S. empirical data we find that adaptations will help to offset most of the impacts of climate change; the predicted overall effect is quite small under most climate change scenarios if full adaptations are included. Behind the small overall effect, however, is dramatic regional agricultural welfare redistribution.

10:30-12:15 Session 7D: Progress in Environmental Accounting

This session is sponsored by the Australian Bureau of Statistics

Session description:  The session will focus on the Environmental Accounts program at the Australian Bureau of Statistics (ABS), with a focus on the framework (the United Nation's System of Environmental-Economic Accounting, or SEEA) on which it is based, as well as specific components of the program, namely Water Accounts, Land Accounts and Agriculture Accounts (SEEA-Agriculture). The set of ABS Environmental-Economic Accounts measures the interactions between the economy and the environment (in both physical and monetary terms), and the stocks, and changes in stocks, of environmental assets. The ABS accounts cover environmental assets, water, energy products, waste, greenhouse gas (GHG) emissions, carbon, environmental taxes, environmental expenditures and land cover. They include physical supply and use tables, functional accounts (such as environmental taxation accounts and environmental expenditure accounts), and asset accounts for natural resources. Our accounts are generally produced at a national level, often with state/territory splits.

Individual presentations:

1. System of Environmental-Economic Accounting (SEEA) - Ross Alexander
2. Water Accounts - Steve May
3. Land Accounts - Tom Walter
4. SEEA Agriculture - Lisa Green

Location: Mount Ainslie Room, Hyatt
10:30
System of Environmental-Economic Accounting (SEEA)
10:55
Water Accounts
SPEAKER: Steven May

ABSTRACT. Session description:  The session will focus on the Environmental Accounts program at the Australian Bureau of Statistics (ABS), with a focus on the framework (the United Nation's System of Environmental-Economic Accounting, or SEEA) on which it is based, as well as specific components of the program, namely Water Accounts, Land Accounts and Agriculture Accounts (SEEA-Agriculture). The set of ABS Environmental-Economic Accounts measures the interactions between the economy and the environment (in both physical and monetary terms), and the stocks, and changes in stocks, of environmental assets. The ABS accounts cover environmental assets, water, energy products, waste, greenhouse gas (GHG) emissions, carbon, environmental taxes, environmental expenditures and land cover. They include physical supply and use tables, functional accounts (such as environmental taxation accounts and environmental expenditure accounts), and asset accounts for natural resources. Our accounts are generally produced at a national level, often with state/territory splits.

Individual presentations:

1. System of Environmental-Economic Accounting (SEEA) - Ross Alexander
2. Water Accounts - Steve May
3. Land Accounts - Tom Walter
4. SEEA Agriculture - Lisa Green

 

11:20
Land Accounts
SPEAKER: Tom Walter
11:45
SEEA Agriculture
SPEAKER: Lisa Green
10:30-12:15 Session 7E: Advances in Biosecurity
Location: Black Mountain Room, Hyatt
10:30
Optimal Local Surveillance Measures for an Exotic Pest in Heterogeneous Spaces over Time
SPEAKER: Tom Kompas

ABSTRACT. Along with established environmental pathways, increases in trade and tourism have increased the risk of entry of exotic pests and diseases; ones that can potentially do great harm to the environment and agricultural industries. Local surveillance measures ensure the early detection of these pests and diseases, thus limiting their spread and potential damages. Finding the optimal surveillance measure, or how early to detect an invasive species, is computationally difficult when both time and heterogenous space are considered. This paper constructs a spatial stochastic dynamic model and uses a Sample Average Approximation (SAA) approach to predict damages and solve for optimal surveillance measures, accounting for all of the costs of an incursion and spread, including the cost of the surveillance program itself. The model is applied to a potential entry of Asian Papaya Fruit Fly (PFF) in Queensland, Australia. PFF is among most destructive exotic fruit flies globally, and the current surveillance grid and level of expenditures for early detection in Queensland appear considerably less than what is optimal.

10:45
Introducing compliance-based inspection protocols to Australia’s biosecurity system
SPEAKER: Susie Hester

ABSTRACT. As the volume and range of products traded globally continues to expand, managing the spread of invasive species becomes more challenging. Each year the Australian Government spends significant amounts of money on its biosecurity inspection regime in order to reduce the likelihood of biosecurity hazards entering Australia. The Australian Government has recently replaced full inspection on several plant-product pathways with an adaptive-sampling protocol where the frequency of inspection is based on an importer’s history of compliance with biosecurity requirements. Apart from reducing the administrative burden on government and the regulatory burden for compliant importers, the new inspection protocol has the potential to influence importer behaviour. Depending on importers’ cost structures and the incentives inherent in the adaptive sampling inspection rules, this behaviour change could support the Australian Government’s overall biosecurity objective and decrease the likelihood of biosecurity hazards being present in consignments. This paper discusses the first stage of a project that investigates the potential for compliance-based inspection protocols to increase the efficiency of Australia’s biosecurity inspection system. It discusses the results of stakeholder consultation, an analysis of the Department of Agriculture and Water Resources’ existing administrative data sources and a theoretical economic framework to assess how to design inspection protocols taking into account stakeholder incentives. It also details recommendations for a field pilot where changed inspection protocols will be trialled on two plant-product pathways.

11:00
Compliance-Based Regulatory Regimes for Biosecurity Border Inspections: An Experimental Investigation

ABSTRACT. We draw on game-theoretic models and economics experiments to investigate the potential behavioural responses of importers to alternative regulatory regimes in the Australian biosecurity inspection context. The focus is on rules from the continuous sampling plan (CSP) family originally that have been implemented recently by the Australian Government Department of Agriculture and Water Resources for border biosecurity inspections of select plant-based products.

We model the biosecurity inspection interactions between the importing country’s regulator and an importer. The regulator has the option to inspect or not inspect a particular consignment -- a decision guided by choosing parameters and the form of the CSP rule. The importer can choose their supplier, where the supplier options differ in terms of the likelihood of biosecurity risk material contamination and the landed cost of the goods.

The presentation first outlines key results from simulations from the inspection game model. These relate to predicted importer behaviour and guidance for the regulator around choosing appropriate inspection rule parameters. It then discusses the results of economic experiments where subjects played the role of importers in an individual-choice setting. The experimental design was informed by current policy settings and was structured to elicit comparisons relating to: * the level of information provided to importers on the inspection rule; * the framing of feedback to importers about their performance; * the sensitivity of decisions to different cost and rule parameters; and * whether menus of regulatory contracts may be of assistance to the regulator.

The presentation concludes with the policy implications for implementing compliance-based regulatory regimes in practice.

11:15
Budgeting and Portfolio Allocation for Biosecurity Measures
SPEAKER: Tom Kompas

ABSTRACT. This paper presents a practical model for optimally allocating a biosecurity budget across: (1) different invasive species and/or different geographical areas occupied by a single species; and (2) different biosecurity measures (e.g., prevention, active surveillance for early detection, containment and eradication). The model is designed to assist in allocating budgets to minimise the expected costs of biological invasions, including damage and control costs, and to allocate a budget appropriately across different invasives and biosecurity measures. The model is applied as a pilot study for allocating a budget optimally (unconstrained and with various fixed budget amounts) among four of Australia's invasive pests and diseases: Red Imported Fire Ants, Foot and Mouth Disease, Papaya Fruit Fly and Hawkweed. The model can readily be extended to consider more species and activities, and more complex settings including the cases where more detailed spatial and temporal information must be considered.

11:30
Incorporating passive surveillance into invasive-species management programmes
SPEAKER: Oscar Cacho

ABSTRACT. Information on the location of pests and diseases often comes from members of the public, industry groups, plant or animal health professionals and their networks, all of whom report suspected detections at their discretion. Surveillance that leads to these ‘passive detections’ is activated and maintained through public- or industry-funded awareness campaigns. While several recent studies have demonstrated the benefits of passive surveillance across a range of pests and diseases, and while public awareness campaigns have become an integral part of invasion management programs, there is still much to learn about this type of surveillance. These include the ‘return on investment’ in the activities that lead to passive surveillance, the size and types of investment required to achieve the desired level of reporting from the public, which parts of the community are more likely to report and whether these reports are reliable. This paper discusses the surveillance continuum, recent findings on passive surveillance, and puts forward a general framework for assessing the cost-effectiveness of passive surveillance.

11:45
Increasing the Robustness of Invasive Species Eradication Programs
SPEAKER: Daniel Spring

ABSTRACT. Invasive species eradication programs can fail after substantial financial costs have been incurred. Despite this risk, such programs can be justified if their estimated benefits are large relative to their costs, and if the risk of failure is both manageable and acceptably small. For these reasons, eradication programs are routinely evaluated by governments before the programs are funded. In Australia, programs are evaluated in terms of their costs and benefits and likelihood of success. These evaluations are carried out using cost-benefit analysis methods and expert scientific opinion. The standard approach to CBA involves the use of predictive models of invasion spread under one or more alternative control strategies. Program net present value is estimated based on the costs and benefits occurring under the "best" strategy considered. An alternative evaluation approach is to determine robust eradication strategies, which can succeed even when invasions are more difficult to control than expected. Using an Australian case study, we demonstrate how this alternative approach could be applied and assess its suitability compared with standard evaluation methods.

10:30-12:15 Session 7F: Water Resources & Management

This session sponsored by the Murray Darling Basin Authority includes a number of presentations drawing in different aspects of the water policy puzzle including information, incentives, institutions and infrastructure. The session will conclude with a panel discussion led by Prof Lin Crase which will allow ample opportunities for audience participation.

 

Chair:
Location: Murrumbidgee Room, Hyatt
10:30
Water property rights in rivers with large environmental water holders
SPEAKER: Neal Hughes

ABSTRACT. This paper considers the design of water property rights in river systems — such as the Australian Murray-Darling Basin (MDB) — where large Environmental Water Holders (EWHs) are active. In particular, it considers the definition of rights to dam storage capacity and to physical river flows. We present a decentralised model of a regulated river system involving a large number of consumptive water users (i.e., farmers) and a single large EWH. These entities each make private water storage and trade decisions, subject to the prevailing property right rules, so as to maximize their own objectives (i.e., farm profits or environmental benefits). We specify broad parameter ranges — reflective of rivers in the MDB — and present the results of a large number of model runs. We find the ideal approach to storage rights is the ‘capacity sharing’ model advocated by Dudley and Musgrave (1988). In contrast, poorly specified storage rights can lead to large external effects on consumptive users. Further, we find that priority flow rights outperform simple proportional flow rights. Low priority water rights are found to be a good match for the demands of EWHs, helping to minimize their exposure to market transaction costs.

10:45
Prices, yields, costs and returns for irrigated crops in the Murray Darling Basin 2006-07 to 2013-14
SPEAKER: Haydn Valle

ABSTRACT. This paper presents estimates of yields, costs and net returns for major irrigated activities in the MDB, using ABARES farm survey data. In particular, this study examines changes in crop returns across time and space: controlling for variation in water availability and prices. Flexible econometric techniques are employed to generate time and location specific estimates of crop unit costs and yield functions (output per land area as a function of water applied). These estimates are useful for monitoring the adjustment of the industry between 2006-07 to 2013-14 in response to policy changes and exogenous fluctuations in water availability. Over the past decade, changes in relative returns have resulted in adjustments in crop mix – including declines in grape production and expansion of cotton. Crop returns are an important indicator of future capital investment trends. By building an understanding of costs, yields and returns and the factors that drive them, this study also represents a step towards an economic micro-simulation model of irrigation production in the MDB, which could be used for policy analysis and monitoring industry performance.

11:00
Modelling future irrigation demand at a statewide level: lessons from Florida USA
SPEAKER: John Fountain

ABSTRACT. Water resource managers must consider supply constraints, planning horizons, climatic trends and competing uses to understand where water will be needed most in the future. Agricultural water demand is an important consideration, with Australian agriculture consuming 10,730,000 ML of water in 2014. While models exist to predict water use for individual farms, predicting future agricultural water use in Australia at the state or national level is more challenging. The Balmoral Group developed a model to predict agricultural water demand for the entire state of Florida, USA as part of the Florida Statewide Agricultural Irrigation Demand (FSAID) project. Balmoral prepared a statewide, parcel-level geodatabase of irrigated agricultural lands using aerial imagery, permit information, and computation of the Normalized Difference Vegetation Index. Water applied for irrigation was estimated by simulating the refined Irrigated Land Geodatabase parcels with an Agricultural Field-Scale Irrigation Requirements Simulation. Special situation water-uses such as frost protection, fertigation and crop establishment water for annuals, were evaluated before preparing agricultural acreage projections and associated water requirements. Water demand was estimated using an econometric model which combined current and historical biophysical factors, irrigation water use data and crop prices at the farm level. Future conditions were simulated using auto-regressive forecasts of net crop revenues to identify potential changes in irrigated land and to generate projected irrigated area and water use. A similar approach could be applied in several regions in Australia to help plan for and manage agricultural water demand.

11:15
Incremental water charging in agriculture. A case study of the Regione Emilia Romagna in Italy

ABSTRACT. This paper explores the role that incremental water charging (temporary levies on water use) can play in preventing the environmental costs that arise during drought events. The paper combines a multi-attribute Revealed Preference Model calibrated at a local level (Agricultural District) and a regionally-calibrated Computable General Equilibrium model to estimate the impacts of incremental water charging on water use, water withdrawals and market income. The methodology is applied to the particular case of the Regione Emilia Romagna in Italy. Results provide a basis for the assessment of tradeoffs in water conservation.

11:30
Optimal taxes and charges in the management and use of water resources
SPEAKER: Tony Webster

ABSTRACT. Water is an unusual resource. When left in its natural environs, water has the characteristics of a public good, for which markets are generally absent. When water is extracted for use on-farm, it is a private good with well established Australian markets—however, a farmer’s use of the resource does not extinguish all of the water’s public utility, with some proportion of the water resource returning to the environment after its on-farm use, creating a range of positive and negative externalities.

Since the 1980s, successive reforms in the agricultural use of water have introduced economic principles to the management of this valuable community resource. Continuing on this tradition, this paper revisits the issues of taxes and charges in the management and use of water resources, taking explicit account of water’s unique economic characteristics within the specific biophysical nature of the Murray-Darling Basin’s rivers and groundwater systems.

Optimal taxes and charges will be considered under two scenarios—public and private ownership of water—before focusing on the specific ownership arrangements for water in the southern connected Basin. We consider whether the endowment of water is a critical determinant of the optimal arrangements, given that water ownership was largely gifted to Basin irrigators at the start of the water reform process.

Finally, the paper will consider possible policy implications, in the context of increasing climate uncertainty.

11:45
Improving ecosystem service values through trade in the Murrumbidgee catchment, Australia
SPEAKER: Claire Settre

ABSTRACT. Protecting water dependent ecosystems without compromising farming livelihoods is a key challenge for many semi-arid regions around the world. As consumptive demands and water scarcity increase due to climate change, this balancing act will likely become more pressing and require innovative environmental policy. An Australian Murray-Darling Basin approach to this challenge involved establishing an Environmental Water Holder (EWH) responsible for purchasing permanent water rights from agriculturalists and managing these rights to maximize ecological benefit. One option open to the EWH is annual water allocation and short term leasing from irrigators to support in-channel and floodplain watering at ecological desirable times and sites, supported with funding raised by leasing EWH water to irrigators when it is less needed for the environment. We build on an existing stylized hydro-economic model of the Murrumbidgee catchment that demonstrated the benefits of such EWH trading policy. The main contribution of this paper is to improve the benefit function in the model. We draw on the ecosystem services framework to describe the ecological benefit and quantify changes in carbon sequestration, native fishery value, tourism, soil fertility and water quality in response to varying policy options over the long term. We discuss the methodological advances and challenges in using the ecosystem service framework to value incremental ecological change and around sensitivity testing with this approach. Overall, initial modelling results suggest positive changes in ecosystem service benefits in the Murrumbidgee can be achieved by increasing flexibility in EWH trading policy.

12:00
Discussion and Q&A
SPEAKER: Lin Crase
10:30-12:15 Session 7G: Climate Effects & Abatement
Location: Centenary 1, Hyatt
10:30
Transforming Agricultural System under Socio-economic Change, Climate Change and Ecosystem Change

ABSTRACT. The purpose of this study investigates behaviors of farmers who are much vulnerable in developing countries to enhance their resilience to respond to Socio-economic change, Climate change and Ecosystem change. Farmers in Hong river basin of Vietnam which is our research area have changed their agricultural system to pursuit economic benefit since launch of the Doi Moi reform program although they have their own traditional mixed agricultural system so called VAC system. The system make livelihood of farmers stable under crisis traditionally. Household data from three districts in Hong river basin of Vietnam were collected through questionnaire survey mainly. Several extreme weather events such as drought and typhoon, insect damage and water intrusion were recognized. Under facing those events, many of them intend to increase number of raising animals to obtain economic benefit. However, it is found through our estimation, multinominal probit model by MCMC, that types of animals they choose are different because of risk preference. While rather risk averter prefers to raise small animal such as chicken and duck, rather risk lover prefer to larger animal such as pig to obtain lager economic benefit. In addition, decreasing ration of agricultural production of risk taker is smaller than risk averter. Those farmers may become leading farmers in the area to increase economic benefit with responding to several extreme events. Through intervene in their farming system to enhance their resilience with economic benefit, those strategy may be spillover amoung farmer in the area to enhance resilience of whole area.

10:45
Options for simultaneous greenhouse gas abatement and profitability on Australian broadacre cropping farms

ABSTRACT. For Australian agriculture to contribute to greenhouse gas emissions reductions, farmers will need to change their practices. We report on a bio-economic modelling exercise that aims to better understand the greenhouse gas mitigation potential and economic implications of a range of practices on broadacre cropping farms in Australia. The Agricultural Production Systems sIMulator (APSIM) was used to estimate the effects of management changes on productivity, soil carbon sequestration, nitrous oxide emissions and net greenhouse gas emissions over time. Using APSIM outputs, we calculate the economic impacts for each of the modelled greenhouse gas abatement practices. We compare the abatement, productivity and profitability trade-offs for cropping farms in the north-central wheatbelt of Western Australia, the Wimmera in Victoria and the Darling Downs, Queensland. Profitability gains are possible under some greenhouse gas abatement practices. Increased use of nitrogen fertiliser, or replacing weedy pastures and fallows with improved, legume pastures, are predicted to increase earnings and reduce greenhouse gas emissions at the West Australian and Victorian farms. In Queensland, faba beans are predicted to increase greenhouse gas abatement and gross margins relative to other legume crops. Results are discussed with reference to Australian agriculture’s capacity to contribute to national emissions reduction targets with or without incentives offered under the Emissions Reduction Fund.

11:00
The stability of mechanisms for matching abatement commitments when not all countries commit
SPEAKER: Peter Wood

ABSTRACT. This paper analyses a matching rates mechanism in the context of greenhouse gas emissions reductions. We use stability concepts to analyse what happens when only a subset of countries can pre-commit to their matching rates in a setting with symmetric countries. In contrast to most literature on international environmental agreements, it is found that significant reductions in emissions can be achieved. It is also found that members of such an agreement would prefer to match non-members rather than each other.

11:15
The importance and challenge of targeting Traditional Farmers in Carbon Farming Initiatives
SPEAKER: Mark Morrison

ABSTRACT. The use of carbon farming initiatives is a central part of the Australian Government’s strategy for reducing carbon emissions. However, relatively little thought has gone into understanding the types of landholders who have the greatest potential for cost-effective mitigation, and the challenges associated with engaging with these landholders. The landholders with the lowest levels of soil carbon, and hence the greatest potential for cost-effective mitigation, are likely to be those who currently have less sustainable soil management practices, such as so called Traditional Farmers. These farmers historically have low trust in government and low engagement in agri-environmental programs. We conducted a segmentation study to investigate landholder engagement in an existing soil carbon pilot program in the Lachlan Valley of NSW. We find that while Traditional Farmers have low awareness and usage of carbon farming practices, as well as engagement in the pilot program, the Traditional Farmers that did engage with the pilot program made substantial changes in practice, and much more than for any other segment. Further information is provided about Traditional Farmer preferences for the design of future programs and other strategies for encouraging the participation of Traditional Farmers in carbon farming.

11:30
Australian Emissions Pricing Policies under Persistent Productivity Shocks: Fixed vs. Flexible Policies

ABSTRACT. The implementation of emissions pricing policies in Australia has experienced significant volatility over the last decade and remains in doubt due to different attitudes towards such policies by policy makers. One of the critical concerns of policy makers is that the costs of such a policy would adversely affect economic activity and result in larger economic volatility. This paper investigates how business cycle fluctuations of the Australian economy arising from productivity shocks would be affected under two types of emissions pricing programs: a fixed policy where the emissions price is constant overtime, and a flexible policy in which the government sets an emissions price at the beginning of each period. To answer this question, a real business cycle (RBC) model is applied. The responses of economic variables to unexpected productivity shocks under each policy are presented and compared to show the influence of each policy on the Australian business cycle fluctuations which provide significant implications for policy in this contemporary key issue.

11:45
The Effect of Extreme Weather and Climate Anomalies on U.S. Wheat Production
SPEAKER: Jan Orlowski

ABSTRACT. Crop yield distributions have shown to differ greatly between alternate stages of El Nino Southern Oscillation (ENSO), the same is true for corresponding crop loss patterns. The aim of the research is to define the relationship between Sea Surface Temperatures and crop yields, which in turn can be utilized in a variety of agricultural uses. Annual Winter Wheat yields are selected from the 10 dominant wheat producing US states. Aiming for precise weather control variables (degree days thresholds and non linear affects of precipitation), monthly data is fine-tuned based on each states individual growing season. County level temperature data permits the formation of a sound temperature distribution, retaining the effects of lower and upper extremes. The study builds upon the framework established by Schlenker and Roberts (2009), aiming to establish inferable regression results for a geographically diverse and precise (county level zones) set of yield observations. Furthermore an lag wheat price includes as an additional control variable, controlling for yield variability’s derived from known prices prior to the growing season. Issues regarding multicollinearity are addressed, as well as concerns arising from weather control variables influencing yields in the same direction as ENSO. Nonetheless this caveat does not neglect the meaningful inferences derived from the regression. With the current and potentially record breaking El Nino in 2015-2016, isolating ENSO effects provides a foundation for measuring weather anomalies effects on downside crop risk and exploring the effectiveness of mitigation techniques (i.e. use of water markets and optimal crop choice).

12:00
The Effect of ENSO on World Cereal Production

ABSTRACT. The El Niño Southern Oscillation (ENSO) anomalies are responsible for medium-frequency climate fluctuations across many regions of the world. ENSO induces temperature and precipitation variability in the affected regions, which directly impact agricultural production. Although ENSO impacts on a global scale are infrequent, understanding the overall impact of ENSO on major grain production will be an important tool for managing global food security. This study uses a combination of extensive climatic and economic data spanning the years 1962-2009 to empirically measure the impact of ENSO on rice, wheat, and maize production. This research contributes to the literature in a number of directions. Firstly, it incorporates expected price, in the regression setting, thus controlling for the important economic variable affecting crop supply. Secondly, it allows for the threshold-like effect of ENSO. Finally, it incorporates the largest possible panel of countries, to analyze the region-specific peculiarities of the ENSO—production relationship. The results reveal particularly strong effects in Southeast Asian and Central American countries. On a global scale, findings suggest that during El Niño years, rice and maize production decrease by approximately 0.5 percent, while wheat production increases by approximately 0.8 percent. In contrast, La Niña episodes result in a reduction of wheat production (0.72 percent) but in an increase of rice production. These results can provide implications for food policy makers to develop temporary economic policy to take advantage of ENSO positive impact or cope with production shock to ensure food availability.

13:00-14:45 Session 8A: Invited papers A - The emerging Face of Australian Agriculture: Investment and Policy Issues in a changing world

This session is sponsored by CSIRO Water for a Healthy Country Flagship

Discussant:
Location: Federation Ballroom North, Hyatt
13:00
Productivity
13:25
Developing northern Australia’s agriculture: potential scale, location, benefits and costs
SPEAKER: Peter Stone
13:50
Tropical agricultural development: managing expectations for food, incomes and the natural environment
SPEAKER: Allan Dale
14:15
Lead discussant
SPEAKER: Paul Morris
14:25
Panel Discussion
SPEAKER: Open
13:00-14:45 Session 8B: Invited papers B - Resources and Environment in the Region
Location: Federation Ballroom South, Hyatt
13:00
Challenges for Australia in mining investment: lessons learned from mega-projects in small developing countries
SPEAKER: Brian Fisher
13:30
Risks, Resilience and Resource Management
14:00
Challenges and Opportunities for Energy and Food Security
14:30
Panel Discussion
SPEAKER: Open
15:15-16:30 Session 9A: CP 3 Efficiency & Productivity
Location: Federation Ballroom North, Hyatt
15:15
Big Data Applications and Prospects in Precision Agriculture

ABSTRACT. With today’s rapid advances in communication, electronics and sensing technologies into agriculture, the ’Big Data’ revolution is on its way in precision agriculture (PA). By revolution, we mean the phenomenon of acquisition of vast amount of data at high resolution and frequency, and in several formats. Big Data presents both exploitable potentials and challenges for practical and cost-effective use. According to Matt Darr of Iowa State University, Big Data in agriculture is focused on unlocking the economic value of improved farm management decisions. We perceive that PA will flourish as a Big Data business as availability of data from local, regional, state and federal agencies increases. More than ever, data has become critical for competitiveness and we expect it to be more so in the future. The practical challenge is to choose relevant piece of data and make sound economic decision. In cropping, this calls for the development of decision support systems that can adequately predict variability in weather, crop and soil conditions based on machine learning algorithms. In this paper the emphasis is on exploring potential benefits that agriculture can exploit from the data revolution and also the perspectives for Big Data in farm management. To date, methodological developments to analyze data are far behind the data revolution. Hence, development of new methodologies for automated micro decisions in farm management based on diverse sensor data linked with preference and market information is needed.

15:30
Profit Efficiency of Chinese Pear Farmers
SPEAKER: Shamim Shakur

ABSTRACT. Pear production in China has been increasing to a point where it already has the largest cultivation area and output in the world. However, sustainability to such eminence cannot be maintained without economic viability. In this research we investigate profit efficiency of Chinese pear farmers. Primary data for the study was collected from a survey on 184 Chinese pear farmers from eight pear-producing provinces. Conducted annually from 2011 to 2014, our survey contains detailed information on production, cost, price, pear variety and many socio-economic variables like age and experience, selling channel and participation in farmers’ organisation. Initial data analysis from survey returns indicate that the industry, in general, is not profitable with 45% of pear farmers operating at a loss. While some of the loss or lack of profit can be rationalised by the use of family labour as input, we comprehensively identify factors contributing to their profit inefficiency and suggest remedial measures. The profit function we construct is transformed from a stochastic production frontier function where profit inefficiency effects are specified as a series of social and economic variables. Estimates of our stochastic profit frontier and inefficiency effects are obtained by Maximum-likelihood method. As per expectations, for our stochastic profit frontier we obtain significantly negative coefficients of wage, land rent and famers’ working days; and positive coefficients for pear orchard area. In terms of efficiency factors, farmers’ age, experience and training has significant positive effects while schooling year and non-farm income share has negative but insignificant influences on profit efficiency.

15:45
Structural change, farm adjustment and profitability in Australia
SPEAKER: unknown

ABSTRACT. There is a large body of literature on how farmers respond to structural change, but there is little evidence about the relative effectiveness of individual adjustment strategies. Using a structural equation modelling approach and the 2013 Regional Wellbeing Survey (consisting of responses from 1278 dryland farmers and 755 irrigators), this paper examines how adjustment strategies mediate the impacts on farm profitability of external shocks experienced during the period 2008-2013 . Our initial results show that although they were little affected by water-related challenges, dryland farmers faced non-water related issues (rising input cost, reduced demand/prices) to a similar extent as irrigators, all of which reduced farm productivity. Both dryland farmers and irrigators adopted mixed adjustment strategies to cope with these challenges, but not all strategies were equally effective. Pro-active strategies such as investing in new technologies or purchasing / leasing additional land were found to mediate the impacts of structural change on profitability while many reactive responses (e.g. postponing investment in farm capital and reducing hired labour) reportedly worsened farm profitability.

16:00
Agricultural productivity, poverty and inequality in Indonesia
SPEAKER: Peter Warr

ABSTRACT. It is often said that raising agricultural productivity is important for reducing poverty in developing countries, especially among people living in rural areas. Propositions of this kind seem reasonable but they are seldom backed by solid empirical evidence. The present study examines this issue empirically, in the context of Indonesia, where reduction of poverty incidence in both rural and urban areas has been an extraordinary success story. The present study compiles data on rural and urban poverty incidence at a provincial level and relates it to data on productivity growth in agriculture and also data on food relative to non-food prices, all at a provincial level, over time. It is found that both higher rates of productivity growth in agriculture and lower prices of food contribute significantly to poverty reduction in rural areas. The study also examines the effect of agricultural productivity growth on economic inequality in rural Indonesia and again finds the effects to be highly significant.

15:15-16:30 Session 9B: CP 4 Water Management
Chair:
Location: Murrumbidgee Room, Hyatt
15:15
Estimating supply functions for agri-environmental schemes: Water quality and the Great Barrier Reef
SPEAKER: John Rolfe

ABSTRACT. Funding programs to improve water quality into the GBR are difficult to evaluate, and administering agencies typically need to allocate funds without a clear assessment of the cost-effectiveness of proposals. This is particularly the case for agri-environmental schemes where policy makers set targets for improvements in water quality from agricultural lands and then need to identify funds and programs to encourage changes in practices. The priorities for actions are often driven by bio-physical assessments of risks on the natural environment with little information about the opportunity costs and challenges in changing land management. The goal of the research reported in this paper is to develop a supply function for water quality improvements in agricultural lands in the Great Barrier Reef catchments. Costs of supply have been estimated from multiple sources, including modelling, expert opinion, and the analysis of water quality tenders and Reef Rescue grant programs. The study addresses challenges in reconciling cost estimates from different sources, dealing with heterogeneity across industries and catchments, and managing different influences on costs from factors such as risks, adoption issues and transaction costs.

15:30
Ex-post evaluation of a water quality tender
SPEAKER: Romy Greiner

ABSTRACT. This paper reports the results of an ex-post evaluation of a water quality tender. In 2007-08, a water quality tender was trialled in the Lower Burdekin River area within the Great Barrier Reef catchment. The tender had a funding scope of $600,000 and attracted 88 submissions from cane growers and graziers, of which 34 bids were selected for funding. The principal research methodology was a survey of tender participants, which (a) explored whether and to what extent the funded activities have persisted and continue to make a positive contribution to water quality in the GBR, and (b) ascertained whether other tangential benefits have arisen from the tender, for example in the form of additional private investment made to achieve water quality improvements. Survey results are presented and general conclusions drawn for the design of tenders, as well as operational, administrative and other matters relating to the implementation of tenders.

15:45
Socio-economic evaluation of water sharing plans - A case study of the Murrumbidgee Valley.
SPEAKER: Graham Carter

ABSTRACT. This paper considers the performance of water sharing plans (WSPs) in the Murrumbidgee Valley in NSW. Data from the NSW Irrigators’ Surveys of 2006, 2009, 2010 and 2013 are analysed for changes in selected socio-economic indicators and insights into licence holders’ knowledge and attitudes.

The survey data found that in the Murrumbidgee Valley during 2006-2013 there were no significant changes in licence holders’: • income from farming and/or irrigation activities as percentages of total income; • perceptions about impacts of WSPs on their farming business; and • knowledge of water markets

Significant positive changes were reported for 'intention to trade over the next 12 months' for the regulated and unregulated rivers licence holders in the valley. The groundwater licence holders were found to have a significant decline in their knowledge of their WSP.

16:00
Tactical horticultural water decisions in northern Victoria: fruit tree irrigation options and economic responses

ABSTRACT. Northern Victoria's horticultural industries make significant economic contributions to the economy. All orchards depend on irrigation water but water supplies and water prices fluctuate with drought. Tactical water decisions are very important under water scarcity. When do the price/cost relativities threaten farm profitability, and can consumptive water-saving and tree management help financial sustainability? Perennial horticultural production requires irrigation for the current year’s saleable fruit but the trees must also be maintained. In times of severe water shortage, tactical decisions could involve sacrificing fruit and applying minimum irrigation for tree survival. Memories of the Millennium Drought (2004 -2009) are still vivid although water supplies have been more plentiful since. In the future horticulturalists will have competing demands for water from alternative uses such as the environment and industry. This paper considers typical commercial pome- and stone-fruit orchards in the Goulburn Valley and assesses short-term water management for horticulture against possible future drought scenarios. Tactical water management options of Regulated Deficit Irrigation, Postharvest Deficit Irrigation, Sustained Deficit Irrigation, and ‘Parking the tree’ or Survival irrigation were investigated. Fruit load (yield and quality) responses for apple, pear and peach trees under plentiful water and the above tactical managements were determined. Using market prices and farm-level variable cost estimates we developed activity budgets for use in a representative whole-farm model. A constrained optimising (Linear Programming) model was solved as the limited water supply was varied. The viability of alternative tactical water management options was assessed and this will be presented in a management economic framework.

16:15
Investigating factors affecting customers’ decisions to switch to different water tariffs

ABSTRACT. Tariff innovation in the urban water sector in Australia has arisen from several sources. First, one of the legacies of drought in the 2000s was the realisation that tariffs structured with a higher proportion of the volumetric component had the capacity to send clearer signals to limit demand. Second, there is increased interest from regulators in tariff innovation as a source of engendering customer satisfaction. Third, enthusiasm on the part of managers within water utilities to experiment with new challenges that go beyond the standard elements of the national reform agenda is encouraging change. Nonetheless, questions remain about the willingness of water users to switch from one tariff to another. The underlying concept of a 100% volumetric tariff policy is that it offers customers the greatest reward for limiting consumption and also affords more ‘control’ over their water bills. However, the extent to which such an approach to water pricing is attractive to customers and their willingness to switch has not been researched. This project aims to investigate the influences over customers’ decisions to switch tariff and identify barriers. Push-pull mooring theory (PPM) from human demographic migration theories are used as the foundation of the research. The intention is to empirically apply this approach to tariff switching behaviour. The data for this project are derived from Yarra Valley Water (YVW), a large water utility serving the north of Melbourne. The research fills a unique gap in the PPM literature and also shed light on the prospect of introducing additional competition via tariff innovation in the water sector in Australia.

15:15-16:30 Session 9C: CP 5 Resources & Environment
Location: The Assembly, Hyatt
15:15
Using choice modelling to estimate PES scheme benefits in Lao PDR

ABSTRACT. The design of a Payment for Environmental Services (PES) scheme that involves setting a ‘pseudo market price’ per unit of environmental service requires the estimation of demand and supply. This paper presents the results of a sequence of Choice Modelling applications aimed at estimating the demand for environmental services generated by a wildlife protection PES scheme in the Phou Chomvoy Provincial Protected Area, Lao PDR. The environmental services valued were species diversity, poaching reduction and tourist access. Because the PES scheme will involve local subsistence farmers being paid to conduct anti-poaching patrols, a further benefit attribute included in the choice models was improvements in their living conditions. The Choice Modelling applications targeted international tourists sampled at Vientiane airport and the urban Lao population sampled in Vientiane as potential buyers of the environmental and social services provided by the PES scheme. The marginal benefits so estimated will be used conjointly with the estimated marginal costs of environmental services supply to set the ‘price’ per anti-poaching patrol with a bio-physical model being used to convert patrol effort into environmental service outputs.

15:30
Accounting for Social Relations in Group Choice: Eliciting Willingness to Pay for Clean Energy
SPEAKER: John Gibson

ABSTRACT. Choice modelling is widely used in environmental economics. In many applications the choices of survey respondents are treated as independent of choices made by other respondents. Yet social relations often matter, and choices made by prominent members of a community may influence the choices of others. These social relations in group choice are often valuable for interventions that are rolled out first to key stakeholders in a community in anticipation that this will speed up diffusion compared with more randomly placed interventions. In this paper we study the impact of social relations and social influence in choice modelling, as part of an investigation of the willingness to pay for clean heating sources, such as heat pumps. We start with a standard choice experiment applied to a sample of Pacific Islanders in the upper North Island of New Zealand. This is a high risk group for respiratory disease, who typically rent crowded and inadequately heated dwellings, and whose country of origin gives them little experience of the link between housing, heating and health. After the initial choices were made, focus groups of between six to 13 respondents were formed to discuss the heating and humidity control options covered in the choice experiment and each participant privately rated the input of the other participants in the focus group. The original choice tasks were then repeated, and an average of two out of the nine choices changed after the focus group discussion. Our results show how social influence may alter choices in settings where independence is unlikely.

15:45
Preference for sustainable and liveable features of the neighbourhoods and homes

ABSTRACT. In the near future, the average Australian household will be faced with increasing cost of utilities due to increasing energy costs, and the environmental costs that are being internalised into the cost of providing necessary utilities e.g. carbon tax. Additionally, households are faced with increasing occurrences of extreme weather events, such as hail storms and heat waves, due to the effect of climate change. Consequently, there has been increasing effort into designing homes and neighbourhoods that have built-in or retrofitted sustainable features such as solar panels and greywater systems to ensure that households are able to secure their own supply of electricity and water in times of shortages, as well as save on utility bills. The objective of this paper is to present a summary from a review of the literature on the willingness to pay for sustainable features of homes and neighbourhoods around the world. Additionally, we present findings from a survey of ACT residents on their preferences for characteristics of sustainable neighbourhoods and homes. Three groups of participants (or market segments) were surveyed: 1) those buying homes as owner-occupied, 2) those buying homes as an investment property, 3) and those not buying homes. Findings from this survey can be used to inform the design of future housing estates or suburb developments that want to pitch towards the ‘green’ consumer market.

16:00
Valuing urban riparian corridors: The interaction of riparian buffers and channel condition and their influence on property prices
SPEAKER: Buyani Thomy

ABSTRACT. This study investigates the economic value of urban stream health on nearby house values in southern Sydney, NSW, Australia. The cumulative impact from urbanisation has led to degradation of many urban streams. Yet, in the southern Sydney metropolitan area, there are many stretches of streams that are still in a relatively good condition and could benefit from protection. Furthermore, even in those areas where urban streams are degraded there is pressure from the public, often supported by water managers and urban planners, to improve the stream geomorphic condition and the ecological condition of riparian vegetation and buffers. However, there is limited ability to demonstrate the value of investments on urban stream. Furthermore, urban stream health projects face competition for funds from other projects as well as competition among themselves. The findings from our spatial hedonic valuation model show that while homebuyers generally prefer more riparian vegetation to less, this preference is not linear, as has been assumed by earlier studies. Additionally, the effect of vegetation on house values is moderated by the condition of the channel. The highest house price premiums are achieved when both vegetation and channel condition are improved. While the benefits from fixing the channel exceed those of revegetating riparian zones, the decision to prioritise channels over revegetation will also depend on costs. Our results serve as evidence of local communities’ willingness to pay for urban streams. The results may be used to rank public works on streams based on economic values, as well as help increase community and government support for investments in urban streams.

15:15-16:30 Session 9D: CP 6 Animal Health & Welfare
Location: Mount Ainslie Room, Hyatt
15:15
Bioeconomic modeling of zoonotic disease transmission: A case study of Bovine Johne’s

ABSTRACT. Mycobacterium avium subspecies paratuberculosis (MAP) causes Johne’s disease (JD) in dairy cows and has been cultured in milk-based products sold for human consumption. The zoonotic potential of MAP to trigger Crohn’s disease in humans makes JD control a significant and ongoing public health issue. This paper examines the economic viability of farm level control of MAP to show that low milk prices are a deterrent to investment in JD control and that a government subsidy of control costs may be warranted. This study develops a dynamic deterministic economic epidemiological model within the generalised class of problems concerning the optimal management of negative stock externalities. This is used to assess the broader social welfare implications of possible government intervention strategies to encourage farm level MAP eradication. Results indicate that a subsidy applied directly to appropriate vaccines or implementation of a price floor in the milk market can induce MAP abatement behaviour. When the public health implications of MAP are considered, the facilitation of these strategies through a cost sharing approach between the farm and society can result in overall gains to net social welfare.

15:30
Compensation Payments and Animal Disease: Incentivising Farmers Both to Undertake Costly On-farm Biosecurity and to Comply with Disease Reporting Requirements
SPEAKER: Robert Fraser

ABSTRACT. This paper examines the issue of compensation payments for farmers affected by an animal disease outbreak, and their role in incentivising farmers both to undertake costly on-farm biosecurity measures and to comply with disease reporting requirements. The paper is itself incentivised both by the observation of Hennessy and Wolf (JAE, 2015) that “compensation must be sufficient to encourage early reporting but not so large as to discourage appropriate levels of biosecurity effort” (p 1), and by their subsequent conclusion that “a single one-size-fits-all indemnity payment could not deal with both problems” (p 9) – a conclusion which they note was at odds with practice whereby “Animal health authorities have relied on a single mechanism – indemnities – to facilitate both ex ante biosecurity efforts and ex post reporting” (p 10). As a consequence, the aim of this paper is to develop a simple model of farmer decision-making in the presence of the threat of animal disease with a view to throwing some light on this conflict between the practice of animal health authorities and the conclusions of the existing literature regarding the scope for the “single mechanism” of compensation payments to incentivise farmers both to undertake on-farm biosecurity and to comply with disease reporting requirements. In addition, consideration is given to the issue of differences among farmers in the base line likelihood of a disease outbreak, such as would arise if an endemic animal disease had spatially differentiated levels of disease prevalence. In this case it is shown that a relatively high base line likelihood of a disease outbreak discourages farmers from incurring the cost of on-farm biosecurity measures because such an action was risk-increasing. As a consequence, there may be no level of compensation payments which incentivises such farmers both to comply with disease reporting requirements and to undertake on-farm biosecurity, thereby casting doubt on the viability of the “single mechanism” of compensation payments to incentivise both farmer actions. However, in this case the appropriate policy response would seem to be not to discard the “single mechanism” of compensation payments, but rather to supplement it with region-specific subsidies towards the cost of undertaking on-farm biosecurity measures which apply in those areas with high disease prevalence.

16:00
Consumer Willingness to Pay for Farm Animal Welfare in New Zealand

ABSTRACT. Animal welfare and consumer willingness to pay for welfare attributes are subjects of recent concern the world over. As incremental gains in welfare become increasingly costly and food security concerns among the lower income deciles deepen, however, it is important to consider how much consumers value these credence characteristics. In this study consumer willingness to pay for farm animal welfare is estimated within the context of layer hens, using a hedonic analysis of egg prices. The data set is comprised of weekly scanner data for different SKUs of eggs, collected from major retail markets in New Zealand, and includes a range of egg attributes such as colour, size, packaging, brand label, and production method. The hedonic method investigates the price differentials for different features and their levels to infer the implicit value of the underlying characteristic. The objective is to ascertain as to how much of the price premium can be attributed to production method, which is one of the prime animal welfare concerns. Observations about differences in price premium across locations, if any, will be investigated further.

16:15
The Economics of Farm Animal Welfare and Consumer Choice – Evidence from Australia

ABSTRACT. Public concerns over the welfare of farm animals have intensified across Australia, Europe and North America. The 2011 suspension of live cattle exports to Indonesia and cases of unethical treatment of farm animals, brought forward by activist groups and in social media campaigns, have impacted meat markets and public opinion. The farm animal welfare issue serves as an example of the renewed societal interest in where our food comes from and how it is produced. This paper presents one of the first attempts to quantify the extent of farm animal welfare concerns in the Australian consumer market. Data was collected in 2015 from a representative sample of Australian meat consumers using a comprehensive online survey instrument and discrete choice experiment. Using this data, we are able to estimate the impact of various socio-economic variables, consumption habits, understanding of existing retail product labelling, and knowledge of livestock production practices on Australian consumers’ willingness-to-pay for animal welfare certified meat products (beef, pork, chicken, lamb). The contribution of this paper lies in expanding our understanding of how psychological factors and consumers’ experience with agriculture influence views, concerns and ultimately value of farm animal welfare. The impacts of differences in beliefs and value systems and the extent to which consumers know and understand livestock production systems remains unexplored to date. The representative nature of this research is well positioned to inform policy makers and stakeholders in meat markets tasked with labelling and information policies aimed at maintaining Australian consumers’ trust in the livestock industry.

15:15-16:30 Session 9E: CP 7 Agri-management
Location: Black Mountain Room, Hyatt
15:15
Reducing soil erosion on grazing land in catchments adjacent to the Great Barrier Reef

ABSTRACT. Poor management practices on grazing land can lead to increased bare ground which contributes to soil erosion and sediment loss to waterways. High sediment loads emitted from grazing lands contribute to the decline in health of the Great Barrier Reef. In order to reduce sediment rich run-off, management practices need to improve.

The aim of this study was to establish the relationship between land management practices and soil erosion and to identify knowledge gaps regarding the adoption of improved practices by landholders.

A review of the literature revealed a complex interrelation between land management practices and soil erosion. Findings suggest that improved gazing practices, such as moderate stocking rates, as well as soil stabilisation and remediation activities (e.g., streambank protection) are equally important to decrease water course sedimentation on grazing land.

Furthermore, we found that adoption rates of improved land management practices by landholders remained relatively low despite a range of policy mechanisms being implemented. Although comprehensive literature exists about the factors that influence the adoption of improved practices, limited information is available about their private costs and benefits.

The review concluded by offering a list of research needs. For example, economic research focus should be put on developing a range of mechanisms that target minimising the potential barriers (e.g., lack of information, capital and transaction costs for remediation work) for landholders to adopt grazing practices and erosion remediation activities that prevent soil loss.

15:30
Prioritising neighbourhood catchments in the Fitzroy basin to achieve cost effective outcomes.
SPEAKER: Megan Star

ABSTRACT. The decline in health of the Great Barrier Reef and the pressure on allocating funds efficiently has resulted in the catchments adjacent to the reef revising their Water Quality Improvement Plans. The Fitzroy basin is 143,000km2 in size, and geographically diverse. Past work has identified the need to prioritise funds to achieve cost effective outcomes. For this paper we aim to present an alternative approach to effective prioritisation of sediment reductions. This approach integrates spatial information regarding the sediment source and process, levels of adoption, bare ground cover, and cost into a function that will rank neighbourhood catchments. The results identify particular areas of the catchment for the allocation of funds and also demonstrate the complexity of the issue and the challenge faced by the Fitzroy Basin Association when selecting where to target funds. It does however demonstrate that there are opportunities for effective intervention in particular areas of the catchment, proving it to be a useful approach in understanding where in the catchment to focus efforts for different sediment reductions.

15:45
Assessing risk preferences of smallholder farmers: A case study from Nepalese coffee producers

ABSTRACT. Using a household survey data of two coffee producing districts in the mid hills of Nepal, we estimate risk preferences of smallholder coffee producers and examine relationships between risk preferences and resource allocations. The risk preferences estimated using psychometric and hypothetical methods mostly correlate positively and significantly. The ordered probit model is more consistently explaining risk preferences by their determinants for the risk preferences estimated using hypothetical elicitation methods than for the risk preferences estimated using general psychometric methods. Risk preferences contribute to explain shifting of the labor from crop to coffee specific farms and also allocating more lands for coffee for households with relatively low and no off-farm incomes while shares of land allocation increase initially then drop down with risk preferences.

16:00
The El Nino Southern Oscillation and Growth in the Developing World
SPEAKER: Sarah Smith

ABSTRACT. The El Nino Southern Oscillation (ENSO) cycle has widespread influence on regional climatic conditions and agricultural production, which has consequences for food and commodity prices, inflation and social conditions. Using an autoregressive distributed lag modelling framework, the aggregated effect of ENSO on GDP per capita growth has been found for 78 low-income countries. Several other papers have used the same approach, but none with the same breadth of countries or examination of structural change. The findings are that a number of countries' GDP per capita growth are significantly and robustly influenced by ENSO fluctuations. These include China, Costa Rica, Dominica, Ecuador, El Salvador, Fiji, Ghana, Guinea-Bissau, Indonesia, India, Lesotho, Nicaragua, Kiribati, Thailand and Zambia. A further 18 countries recorded a significant GDP per capita growth response to ENSO anomalies after allowing the relationship to change with time. A majority of the countries that exhibited structural change also experienced a decoupling of growth volatility and ENSO. The findings are of significance given the expected intensifying of ENSO events with climate change.

16:15
Investigating variable rate nutrient application on sugarcane farms in the Mackay Whitsunday region.
SPEAKER: Andrew Law

ABSTRACT. Dissolved inorganic nitrogen in agricultural runoff from sugarcane production in the Mackay Whitsunday area runs directly to the Great Barrier Reef lagoon. Elevated levels of nitrogen have the potential to cause eutrophication and have also been linked with outbreaks of the damaging crown-of-thorns star fish, which has contributed significantly to the decline of the reef. Precision agriculture, in particular variable rate nutrient application (VRA), has been identified as an option to reduce the level of nitrogen applied in the region. In this study we investigate the change in yield, sugarcane quality and the whole of farm gross margin that arises due to a shift from a conventional nutrient application practice, which utilises the industry’s standard ‘Six Easy Steps’ (6ES) programme, to a VRA system. The 6ES programme represents a uniform rate of nutrient applied in each sugarcane block, based on the block’s assumed yield potential and the measured soil mineralisation index. The VRA system, on the other hand, aims to match nutrient application to the yield potential of identified management zones within the block. A preliminary analysis suggests that the VRA system is approximately 3.7% more profitable than 6ES, and decreases nitrogen use by 14%, on the trial farm.

15:15-16:30 Session 9F: CP 8 Trade & Commodities
Location: Federation Ballroom South, Hyatt
15:15
The role of reputation in explaining wine clusters: A spatial analysis of Hunter Valley wine producers

ABSTRACT. Wineries are often located in close proximity to each other. Obvious reasons include geographic features and climate, or the terroir of a region. However, other factors may also be important determinants of geographical concentrations of wineries because of the spatial dependencies or ‘spillover’ effects arising from cluster specific resources. In this paper we apply spatial analysis techniques on 72 wineries in the Hunter Valley wine growing region of New South Wales to assess cluster formation and to examine the spatial relationships among them. In particular we explore the role of winery reputation in geographic clustering and discuss the ‘clustering’ benefits that may result. Results indicate the existence of localised spatial concentrations among similar rated wineries. Proximity to ‘first family’ wineries is shown to be positively correlated with winery rating.

15:30
Using BWS and DCEs to understand the grain functionality preferences of Australian export grain markets.
SPEAKER: Chris Carter

ABSTRACT. The Australian grain industry could benefit from improved quantitative information regarding their market's preferences for grain quality and functionality. The international millers and purchasers of Australian grain indicate a willingness to pay premiums and preferentially select grain with processing and functional attributes that they require for their specific end products. A better understanding of the willingness to pay for these attributes, combined with mechanisms to provide preferred grain into these markets, could provide a mechanism to improve the competitive advantage of the Australian industry. This paper is derived from a project in which we model the preferences of active participants in markets for Australian grain. This paper will present the process we have used to undertake this study, including the series of best worst scaling studies, followed by discrete choice experiments.

15:45
Fundamental Determinants of World Food Demand and Supply

ABSTRACT. Income growth in the developing world causes food demand to rise. While direct calorie consumption rises, this increase is relatively small and effectively plateaus at a relatively low level of income. A much larger source of increase in demand for agricultural resources is the shift in diets from focused on basic staples to diets including animal products. The result is a demand curve for agricultural effort that, while still concave in income, continues to rise over a much wider range. Income growth also involves an increase in production as agricultural productivity rises, but this growth is constrained by declining availability of land. The resulting pressures on food demand and prices depend on how many economies are in the range where demand is growing rapidly and on the rate of output growth. This paper uses simple models of cereal equivalents of food demand and supply to compare the underlying determinants of demand and supply, and hence the pressures on world food prices.

16:00
Food Security Impacts of Productivity and Trade Policy Changes in Selected African Countries
SPEAKER: Signe Nelgen

ABSTRACT. Policy measures applied to the agricultural sector in Sub-Saharan African (SSA) countries are often aimed at protecting vulnerable domestic consumers or producers. However, the impacts of such measures are complex and may include impacts on other countries’ agricultural sectors and food security, which in turn may respond with policy changes. The current study addresses the important issue of how food security in SSA is impacted by such trade and agricultural policy actions.

The focus countries in this study are part of the Monitoring and Analysing Food and Agricultural Policies (MAFAP) Program, initiated by the FAO, providing data on policy measures that affect key agricultural value chains. The complex interactions between these countries, including inter-sectoral and inter-regional linkages, are analysed using the GTAP model, which is augmented with nutrition data from the FAO. Agricultural trade, market and price distortions from individual country data provided by MAFAP are incorporated into the modelling.

The first policy simulation analyses the impact of productivity improvements in the staple food sector. The second scenario considers the impact of quantitative export restrictions on the access of staple foods. Finally we consider the impacts of tariff reduction. The focus is on availability of staple foods and changes in nutrition, both in the country implementing the policy and other countries of focus.

Our results suggest that policies which improve agricultural productivity lead to a range of positive food security outcomes. Retaliatory trade policies tend worsen the outcomes, particularly for the country imposing them. Results differ significantly by region and sector and detailed decomposition is required to analyse the results.

16:15
Winners and losers: Another look at the potential impacts of a Doha Round agreement on agriculture

ABSTRACT. In 2008, ACP countries as a group did not stand to gain much from a negotiated outcome on agriculture within the WTO Doha Round because of an erosion of preferences. Since then there has been little progress in the agricultural negotiations, although the trading environment has changed. Emerging economies are assuming greater importance. Agricultural prices have risen and become more volatile, and there are greater concerns about food security and the need to improve farm productivity. Preference erosion has occurred as a result of policy changes outside the WTO. Exports taxes, safeguards from import surges and domestic support for agricultural productivity and public stockholding are issues receiving greater prominence. More recently, new proposals have been informally presented to break the deadlock in the negotiations. One such proposal is a simplified tariff cutting formula specifying a 54 per cent average cut with a 20 per cent minimum for developed countries. In this analysis, we show how application of the formula would impact on ACP country tariffs and the tariffs they face in their export markets, and compare these results with the 2008 formula. The results show similar outcomes. Many ACP countries would be net losers because of preference erosion and higher prices on imports of temperate products. However, the impacts are quite modest, less than one per cent change in imports and exports. Nonetheless, ACP countries would be favoured by a less ambitious outcome. In agriculture, tariffs are more important than domestic support or export subsidies, but industrial tariff negotiations are as important as agriculture.

15:15-16:30 Session 9G: CP 9 Rural Adaptation
Location: Centenary 1, Hyatt
15:15
Uncertainty, Ambiguity and implications for Coal Seam Gas development: An experimental investigation
SPEAKER: Tiho Ancev

ABSTRACT. Development of Coal Seam Gas (CSG) extraction in Australia has been contested on the basis of significant environmental concerns, and the negative effects it may have on agriculture. Current legal arrangements that purport to address these concerns are in place: prior to commencement of CSG operations it is required that an access arrangement (AA) be negotiated between the CSG miner and landowners. However, these arrangements have had very limited effectiveness. One important reason for this may be that the level of compensation offered under the AAs does not adequately reflect the risk imposed on landowners. The law only allows the assessment of compensation under AAs to reflect “loss caused or likely to be caused”. However, given the inherently uncertain, or even ambiguous nature of losses to agriculture attributable to CSG this formulation may be inadequate.

This paper examines the effects of uncertainty and ambiguity on AA negotiations between CSG developers and agricultural landholders. The investigation was conducted using economics laboratory experiments. Three experimental treatments were conducted along a spectrum of perceptions of risk from CSG development: control (certainty), uncertainty treatment, and ambiguity treatment. The key findings are that compensation offers made under AA negotiations in uncertainty and ambiguity treatments are higher than under the control treatment, and that they are more likely not to be accepted. However, we did not find statistically significant difference of offers or rejection rates between the uncertainty and ambiguity treatments.

These findings provide evidence in support of proposals for reform of the current legal arrangements under which AAs for CSG development are negotiated and determined.

15:30
Economic Complexity and Regional Resilience
SPEAKER: Stephan Goetz

ABSTRACT. Despite the strong role of economic complexity in stability, no empirical study has yet accounted for the effect of the complexity of economic activities on how an economy responds to a shock. In this paper we estimate the level of economic complexity for each county from the national industry Input-Output account and industry employment data. We then test empirically whether more complex economies exhibited greater resilience in the 2007-2009 Great Recession. The results suggest that our new measures provide a complementary framework for planning local development strategy and designing policy to enhance post-shock recovery. More specifically, resilience-related concepts from the study of complex networks are of practical use and yield new insights when applied to the field of regional science and economics.

15:45
You always take the weather with you: The role of climate in determining rural land values in New Zealand
SPEAKER: Corey Allan

ABSTRACT. We investigate the role that climate plays in determining rural land values. We estimate a Ricardian model using a national meshblock level cross section of land values. A Ricardian model stipulates that the value of land is equal to the present value of expected future rents from land ownership. We use a framework that separates rents from land ownership into three categories: rents from agricultural production, amenity or lifestyle rents, and option values. We control for three different option values: the option to install irrigation, the option to change land use to a more intensive agricultural land use, and the option for urban conversion. We also attempt to separate the productive and amenity effects of climate. Consistent with previous Ricardian studies, we find that the land values increase with temperature up to a point, beyond which warmer areas have lower land values. The relationship between land values and rainfall follows a similar pattern. We find that irrigation is valuable in MBs that are particularly dry, although there is no significant option value for irrigation. Land values carry an intensification option, where land that can used more intensively than it is currently is worth more. There is also evidence consistent with both amenity and urban conversion option values, although we are unable to separately identify the two effects. We provide tentative evidence that we are able to separate the productive effects of climate from the amenity effects. We find that the productive relationship between rainfall and land values has an inverted U-shape, while the amenity effect is negative.

16:00
Could a resource export boom impede poverty alleviation? The labor market channel in Indonesia
SPEAKER: Ian Coxhead

ABSTRACT. From 2002-2010 Indonesia experienced a boom in natural resource exports, due mainly to robust Chinese demand. Aggregate income rose at a healthy rate. However, data from the labor market tell a strikingly dissonant story of stagnating real earnings and rising dependence on employment in sectors where skill premia are low and informal employment arrangements are prevalent. These data provoke us to ask how, and how effectively, the gains from the resource boom might have changed the earnings of Indonesia’s working class and its future prospects for economic and social mobility.

We explain broad sectoral trends in a Dutch Disease model, then by integrating individual and district data from several national surveys, we estimate sources of variation in labor earnings during the boom. We use an instrumental variables approach to address endogeneity and selection problems in the earnings equations.

Opportunities for skilled jobs and formal employment (which pays more, offers greater security and benefits, and rewards additional schooling investments) fell in relative terms during the boom. We find that access to formal jobs is substantively explained by individual and family characteristics, district-level features, and the sectoral structure of labor demand. The intensity of oil palm production – a key resource export – is a district-level predictor of diminished access to formal employment, even after controlling for other district features. Formal employment in turn is a key predictor both of higher earnings and of incentives for educational attainment. Our findings provide a structural dimension to ongoing debates in Indonesia over persistent poverty, rising inequality, and lack of progress in educational attainment.

16:15
Spatial Spillover effect in the Adoption of Conservation Agriculture in Nicaragua

ABSTRACT. Rural development projects promote adoption of conservation agriculture practices with the aim of increasing agricultural income by improving soil stability and decreasing yield variability. However, adoption decisions depend on many interrelated factors such as farm size, costs of inputs, time to learn the new technologies, and the risk entailed in trying something new. These decisions may also be influenced by neighbours’ adoption of the new technology. We apply a spatial regression model to estimate the spill over effects of a rural development project that promoted the adoption of conservation agriculture practices. We use a difference in difference spatial probability model to estimate direct project impacts and indirect project impacts measure by spatial spillovers, while controlling for selection bias due to purposive program placement. Our results suggest strong evidence of learning from neighbours leading to significant and positive spatial spill over effect from the project intervention. In particular the results from the spatial autoregressive model (SAR), the spatial Durbin model (SDM), and the SAC model all indicate positive and significant treatment effect, along with positive and significance spatial spill over effects associated with adoption of conservation agriculture practices. Farmers’ adoption behaviour is explained both by participation in the project intervention and by proximity to others who have adopted the technologies. Our results suggest that indirect effects of rural development interventions should be taken into account in order to design more cost effective development programs.

15:15-16:30 Session 9H: CP 10 Marketing
Location: Centenary 2, Hyatt
15:15
The Role of Food and Ag Based Tourism in the Western US
SPEAKER: Kynda Curtis

ABSTRACT. This study examines the characteristics, behaviors, and interests of tourists who visit Utah by creating consumer profiles. Factor and cluster analysis were used to group tourists according to demographic variables and participation in food and agriculture related activities when at home and while traveling. Data were collected from Utah tourists in 2013-2014 through an in-person survey in various locations throughout Utah, including places such as national parks, visitors’ centers, convention centers, and ski areas. Seven factors underlying respondents’ perceptions of food and agriculture related practices when at home and while traveling were identified from 26 original variables. The at home factors were labeled Local Foods, Food Experiences, Do It Yourself, and Food Connections. The while traveling factors were labeled Food Tourism, Agritourism, and Local Foods. Four consumer segments were then constructed using cluster analysis. The resulting consumer segments were labeled as Large Family Trip, Outdoor Enthusiasts, Sophisticated Food Travelers, and Food and Culture Pilgrimage. This study compares the differences in activities, spending, interests, and perceptions among consumer groups. Results suggest that marketers, tourism industry providers, businesses, and local governments may improve their operations through a better understanding of the characteristics and behaviors of specific consumer segments. The importance of quality food and agriculture related offerings in the Utah tourism experience are also highlighted.

15:30
Sustainable Green Market Consumption in Thailand: Teenagers’ Perception and Attitudes

ABSTRACT. This study aimed to investigate teenagers’ preferences, attitudes, and purchasing power towards organic foods in green markets and to explain influences of consumers’ choice and purchasing intentions on organic foods. The study found relationships between consumers’ food choice motives and their economic conditions and the premium quality healthy food products. Surveys were conducted with 517 college teenagers in Bangkok area. A probit model was used to identify factors influencing decision in buying. The study found that teenaged consumers were likely to purchase organic vegetables and organic ready-to-cook foods instead of conventional foods while concerned about health and food safety under their budget constraint. Attitudes and behaviours’ characteristics were analysed. Attitudes towards organic foods were major decisions for purchasing. The relationships between attitudes and behaviours of individual food personalities were based on socioeconomic status, social position, and food appealing. A good quality and convenient products were suitable for teenagers’ healthy food preferences. In addition, this study showed a better understanding of organic foods’ attitudes, consumers’ expectation, and their behaviours towards teenagers. It suggested that teen generations had an impact on food demands in supermarkets and convenient stores, because teenagers’ attitudes and behaviours in purchasing will determine desired food characteristics in future markets. The results suggested that there will be an increase in consumption of organic products in the near future; and hence, green suppliers should prepare for producing and marketing premium quality products in green markets. Supported organic and healthy foods market policies are recommended for sustainable green products farmers and consumptions in the markets among teenagers.

15:45
Consumption Pattern of the Poor Households in Jambi Province, Indonesia

ABSTRACT. Adequate food for every person and every time a decent human rights, therefore food for all at all times is a cornerstone of governments. Since the large share of expenditure spent by the poor is for food, this is important to study further on the pattern of food consumption by poor households; influencing factors of food consumption patterns of the poor households and analyze changes in the food consumption of poor households due to changes in prices, income, and socio-demographic characteristics. To find out the answers, this study used the data of National Socioeconomic Survey (SUSENAS) March 2008-2010. The selected area is Jambi Province since this province experiences a high economic growth but poverty incidence still being a problem. The model of Linier Approximation- Almost Ideal Demand System (LA-AIDS) is applied to analyze a substitution or complementary of selected staple food commodities. The results shows that the share of food expenditure of the poor households was still high around 72 percent in 2008 and slightly decrease became 71 percent in 2010. Analysis by spatial approach shows that the share of food expenditure in 2008 was higher in rural area (81,39 percent) compared to urban area (75,99 percent). In addition, the phenomenon of volatility in food prices and consumption of cigarettes/tobacco among the poor should also be a concern. One of the important implications of high food consumption of the poor is the government's attention to secure the need for food mainly for the poor.

16:00
Price Variations of Cattle Grades: How Are Quality Attributes Related?

ABSTRACT. Fluctuations in agricultural prices of different quality grades have attracted attention due to its effects on quality differentiation and competitiveness of agri-food chains. Previous research has investigated whether quality attributes of agricultural products are perceived as complements or substitutes by consumers. In the case of the Australian beef cattle industry, quality attributes including certified grain feed and quality guaranteed cattle graded using Meat Standards Australia (MSA), are expected to add value to the final cattle price. But, are these product quality attributes adding value independently or there is a degree of relationship between their values? Using weekly cattle prices in Queensland (QLD) for the period August 2014 to August 2015, we examine the impacts of shocks on cattle prices among different quality grades. Bayesian vector autoregression (BVAR) with unrestricted signs shows that shocks on prices in one quality grade are partially transmitted contemporaneously on prices of all grades over the time. Impulse responses detected that positive shocks on cattle prices of a specific quality grade are associated with positive changes on prices in all grades, which supports a certain degree of relationship between product quality attributes.

16:15
Measuring Efficiency in the Electricity Sector: Evidence from SIDS

ABSTRACT. Electric utilities in small island developing states (SIDS) have some of the highest electricity prices in the world and while inefficiency may be one factor that explains this situation, very little is known about relative efficiency performance. In this paper I apply a two-stage data envelopment analysis (DEA) method to a sample of 32 electricity distribution utilities in SIDS for 2010. I estimate the efficiency scores in the first stage with 2 inputs and 3 outputs, and apply a truncated regression with bootstrap in the second stage. To explain the variation in efficiency scores, I divide utilities into the Caribbean and the Pacific region, and include criminality and population density to account for differences in environmental operating conditions. The overall results suggest that there are major differences in efficiency performance with only 5 utilities on the frontier. The results of the second-stage regression analysis reveal that on average, utilities in the Caribbean were significantly more efficient than those in the Pacific region. I also find evidence that the efficiency of these utilities is positively related to population density, but there is no evidence to suggest that it is inversely related to criminality. Notwithstanding the paucity of publicly available data, these results advance the idea that utility benchmarking is possible and can be used to set feasible efficiency targets for electricity networks in SIDS. Additionally, the poorer performance of the Pacific utilities presents an important opportunity in which policymakers can forge important relationships with Australia and New Zealand through capital investment and capacity building to improve efficiency.

16:45-17:15 Session 10: Presidential address

Renewable energy sources including hydro, wind, solar, geothermal, biofuel, are used in many countries to provide power (typically electricity), fuel and heat. Very many countries have policies targeting increased renewable energy capacity and consumption. The merits of renewable energy, of targeted renewable energy policies, and appropriate evaluation methods, are each hotly contested at various levels including national politics and in energy policy literature. I briefly review the range of renewable energy goals sought and the policies directed at achieving those goals. Secondly, the arguments advanced to support use of renewable energy policies in many nations are critiqued. Third, some principles are proposed for design of renewable energy policies. Context often matters, and it is essential to consider energy, economic, and geography opportunities and constraints before developing renewable energy policies. To ensure renewable energy policies contribute towards attainment of high level national goals, a decision support approach is outlined that considers the energy context, and asks a series of evaluation questions to aid identification of first best policy measures. Barriers to and benefits from implementation of appropriate renewable energy policies are briefly reviewed.

Location: Federation Ballroom, Hyatt
16:45
Evaluating renewable energy policies
SPEAKER: Ross Cullen

ABSTRACT. Emeritus Professor, Lincoln University, New Zealand

Renewable energy sources including hydro, wind, solar, biofuel, are used in many countries to provide power (typically electricity), or fuel. Very many countries have policies targeting increased renewable energy capacity and consumption. The merits of renewable energy, of targeted renewable energy policies, and appropriate evaluation methods, are each hotly contested at various levels including national politics and in energy policy literature. I briefly review the range of renewable energy goals sought and the policies directed at achieving those goals. Secondly, I critique arguments advanced to support use of renewable energy policies in many nations. Third, I set out some principles for design of renewable energy policies. Context often matters, and I ask where and when it is appropriate to introduce renewable energy policies. To ensure renewable energy policies contribute towards attainment of high level national goals, I propose a decision support approach that commences with the policy target, considers the renewable energy context, before selecting first best policy measures. I illustrate use of the decision support approach by evaluating renewable energy policies in selected countries. I conclude by considering barriers to implementation of appropriate renewable energy policies.

Keywords: Renewable energy, goals and policies, evaluation, decision support approach, implementation

17:15-18:00 Session 11: AARES Strategic Planning - Help shape the future of AARES

This interactive session will allow all members and well-wishers to join in with the AARES Council and Members of the Strategic Planning Committee to contribute to the Strategic Planning project being undertaken by the AARES Federal Council. President, and Strategic Planning Committee Chair, Ross Cullen will outline progress made to-date and Deborah Peterson will facilitate an open discussion with members.

Location: Federation Ballroom, Hyatt
19:00-23:00 Session : Conference Dinner and Presentations

Speaker: Angus Taylor, MP

Location: National Arboretum Canberra