Economic viability analysis of agro-economic management of saline drainage

EXECUTIVE SUMMARY This report presents findings and lessons on salinity management technology and research that shows promise in Australia and Pakistan. The aim of the project was to evaluate the economic viability of salinity management at selected sites in Australia and Pakistan, using Serial Biological Concentration (SBC) of salts. The specific objectives were: • To critically evaluate existing salinity management options in Australia and Pakistan. • To determine the technical and economic viability of SBC in Australia and Pakistan, later amended to irrigating from shallow skimming wells in Pakistan, to reclaim abandoned land. • To link the economic analysis with the polluter pays principle, by demonstrating salt management options for public-private investment policy. The analysis focused on Box Creek (Murray Irrigation Area) in the southern Murray Darling Basin of Australia and Nabishah Bala in Chaj Doab (the area between the Jhelum and Chenab Rivers) which is an intensively developed and significantly productive irrigated area of the Indus Basin of Pakistan. SBC in this report has been considered as a saline water management tool for implementation either at the level of individual farms or at a community level within an irrigation area. The results show that SBC offers potential for salinity management in both countries. Its wide adoption requires further analysis on its economic viability on-farm, across a range of biophysical and economic conditions. SBC can be economically viable but the pay back period may be up to 20 years. Salinity credits may reduce the pay back period to below 12 years. Thus, agro-economic management of drainage may become a viable option, given appropriate policy support for productive use of drainage water in saline environments. The polluter pays principle in terms of 'salinity credits' has been used in this economic study to tackle the water salinity issue. In terms of salinity management, it is the amount of money the polluter is willing to pay for treating salt to minimise third party impacts or the acceptable return for treating salt. The application of a polluter pays principle, in terms of a salinity credit for treating a tonne of salt, may encourage public-private investment in salinity management. The study recommends: • Further research is needed to establish the economic and financial viability of SBC on a commercial basis. The concepts and lessons learned, however, are applicable to the management of salinity issues in arid and semi-arid regions. • Market based instruments which can encourage the sharing of salinity management responsibilities among farmers and regulation bodies need to be researched and converted into institutional mechanisms to foster public-private investments in salinity management