Management of the environment using a combination of policy instruments: a case study of farm dams in Victoria

© 2016 Dr. Carlo MorrisDiffuse environmental problems arise from a series of actions that individually have minor impacts but cumulatively have considerable environmental effects. Governments have implemented environmental policies using a variety of policy instruments. One of the most commonly used is direct regulation. However, some researchers have argued that direct regulation is less effective when used to solve diffuse environmental problems. In response to such criticism, alternative policy instruments have been proposed and applied. It is common for governments to address environmental problems using combinations of instruments. This thesis investigates: “To what extent can policy instrument mixes that include direct regulation address diffuse environmental problems?” The question is investigated using a case study of the management of farm dams in the state of Victoria, Australia. Farm dams are useful as a water supply but they also impact on the environment because they capture water that may otherwise flow into streams. There are hundreds of thousands of farm dams across Australia, and although a single dam has a minor impact, the cumulative impact of many dams can be substantial. To address the problem posed by the growth in dam construction, in 2002, the Victorian Government passed the Farm Dams Act, which expanded the farm dam licensing system. The evaluation focuses on a particular catchment, the Woori Yallock catchment. Map analysis was used to measure the rate of dam construction before and after the policy was implemented. Hydrological modelling was used to estimate the impact of dams on streamflows, and interviews with 40 landholders were conducted to investigate whether the Farm Dams Act had influenced farmers’ behaviour. Results show that while the construction rate of large dams decreased after the Farm Dams Act was implemented, the total number of dams increased at relatively constant rates. This result could indicate that the Farm Dams Act failed to achieve its purpose; however, it is likely the number of dams built would be greater had the changes to the licensing system not occurred as the Millennium Drought of 1997 – 2009 would have prompted many farmers to build more dams. Modelling shows that the Farm Dams Act had a small effect in lessening the impact of dams on streamflows. Although the impact of dams increased over time, it is likely that without the new licensing system, greater increases would have resulted. Interviews with landholders reveal the expansion of the licensing system created obstacles that made it more difficult for farmers to build new dams for irrigation. The particular combination of direct regulation and economic instruments in the Farm Dams Act was not only effective in reducing the rate of dam construction but also increased the political acceptability of the changes. Consultation and education complemented the other policy instruments used to implement the Farm Dams Act by increasing both community support for the policy and compliance. The evaluation shows that a combination of policy instruments which includes direct regulation can indeed effectively address a diffuse environmental problem