Provision of environmental goods on private land: a case study of Australian wetlands

The management of natural resources located on private lands often involves aperceived conflict between the mix of private and public benefit outputs they produce.Governments have tended to respond through legislation to restrict and redirect privatedecisions about resource management. However, the legislative response faces a lack ofinformation about the costs and benefits of alternative management and policyinstruments. A pertinent example of this debate is the management of wetlands onprivate lands.The goal in this thesis is to advance the design of policy relating to the production ofenvironmental outputs on private lands. This goal is achieved by first estimating thewelfare impacts of alternative private land management strategies on the widercommunity. These estimates are used as inputs into the development of alternativepolicy instruments that are then evaluated in terms of their potential cost-effectivenessin influencing private management. Two case studies of wetland management onprivate land in Australia are presented – the Upper South East Region of SouthAustralia, and, the Murrumbidgee River Floodplain in New South Wales.The conceptual approach described in the first part of the thesis includes a description ofthe resource management problem and the strengths and weaknesses of the alternativedecision frameworks widely employed in Australia. Identification of the cause andnature of transaction costs in the management process is the focus in this discussion.The welfare impacts of alternative wetland management strategies are investigatedthrough the construction of a bio-economic model for each of the case study areas. Theapproach integrates biophysical analysis of changing wetland management with thevalue society places on wetlands. Outputs from this process are used in thedevelopment of a range of policy instruments directed towards influencing wetlandmanagement. The impact of poorly quantified and uncertain transaction costs on thepotential cost-effectiveness of these options is evaluated using threshold policy analysis.The empirical results show that the perception of a conflict between the private andpublic values generated by resource management is accurate. For example, scenarioschanging wetland management in the Upper South East of South Australia on theMurrumbidgee River floodplain in New South Wales were shown to generate netbenefits of $5.2m and $5.1m respectively. Hence, changing wetland management couldgenerate increased community welfare. The potential for these findings to be translatedinto wetland policy is less conclusive. Policies directed towards wetland management(in part or in whole) incur a range of transaction costs and deliver differential wetlandprotection benefits. Ten ‘best bet’ policies are identified, but more information isrequired to determine conclusively whether a net benefit results to the wider communitywhen transaction costs are included