Environmental Policy Implementation Challenged by some Land Management Realities

John Cary [1]

Bureau of Rural Sciences, Australia

T.S. Eliot observed that humankind cannot bear too much reality. Ignorance of the realities that motivate changes in land management practices in Australia will endanger the development of appropriate policy approaches. A recent large-scale study of human and social aspects of capacity to change to sustainable management practices, undertaken for the National Land and Water Resources Audit (NLWRA), identified some important realities that confront aspirations for significant and speedy landscape change.

Let us consider some of these realities as well as the place of community consensus and participation within the wider instruments of policy for managing land degradation. Concern about land degradation problems amongst Australian landholders is now well established. While many landholders may not recognize subtle or insidious manifestations of land degradation, most landholders recognize significant degradation problems. In most areas of Australia some form of 'landcare' related work [2] is undertaken on more than a third of farms ( Cary, Barr, Aslin, Webb and Kelson 2001 ).

The nature of management 'technologies'

Polices to improve the management of degrading land include land use change and the encouragement of change to more sustainable management practices within given land uses. Encouragement of landholders to adopt more sustainable management practices is easy where, financially, they believe they will be better off or no worse off by the change. If, however, landowners believe that they will be worse off financially there is a serious impediment to adoption.

Sustainable practices, which provide economic and other advantages, will generally be adopted more rapidly. In most cases, any economic advantage will be influenced by commodity prices, which are outside the control of farmers and can fluctuate significantly. Ideally, sustainable practices should provide observable and positive consequences for land managers over a short time frame rather than depending on pro-environmental values of land managers.

Landholders generally seek to reduce the risk of adopting a new practice. In a forthcoming publication Mara, Pannell and Abadi Ghadim (2002) review the influence of uncertainty and risk on adoption decisions. They emphasize the importance of personal experience, experimentation and learning in the adoption process, reflecting associated uncertainty and the adaptive nature of an adoption decision for the decision-maker. Sustainable practices which are observable, able to be experimented with and less complex will be more quickly adopted than practices which are complex or where the outcomes are not able to be observed or have long time lags before being observed.

Very often the economic advantage of a particular sustainable management practice varies with location. It is to be expected therefore that rate of adoption will vary between districts and regions. This common-sense observation was first demonstrated for the adoption of hybrid corn in regions of the United States by Zvi Griliches in the 'sixties'.

Cary, Webb and Barr (2001) confirmed this locality effect for nine resource management practices in Australia. It makes no sense to assume that a practice with advantages in one location will yield the same advantages elsewhere. Given Australia's diverse environment few sustainable practices have universal applicability. Sustainable practices with wider geographic applicability, such as deep-rooted perennials (which usually need to be accompanied by other complementary inputs), often provide only moderate advantage to the landholder. Increased effort needs to be applied to identify and develop locally applicable sustainable practices. Effort also needs to be made to resist the temptation to promote these practices beyond localities where their advantage has been established.

Resource and social capacity

Farmers vary in their capacity to change management practices. The linkages between socio-economic characteristics of land managers and the use of sustainable practices were explored by Cary et. al. (2001) . This analysis was based, in part, on data collected in the Australian Bureau of Agricultural and Resource Economics (ABARE) annual resource management survey undertaken in conjunction with the Australian Agricultural and Grazing Industries Survey and the Australian Dairy Industry Survey. This research showed that it is difficult to predict which landholders are more likely or less likely to change land management practices.

The NLWRA study found the following factors were useful as indicators of landowner capacity to change to sustainable management practices:

• participation in occupation-related training
• level of farm income
• optimism about future farm income
• having a documented farm plan
• membership of Landcare
• age.

In fact, most of these variables are not particularly strong or reliable predictors (Table 1). For example membership of community landcare was one of the 16 independent variables that were explored. For 15 practices investigated, membership of community landcare was found to be significantly associated with the adoption of only three management practices. [3]

Age is an important social characteristic because it is an indicator of the structure of the agricultural workforce that is changing in Australia, and changing differentially in different localities. Farmer age seemed to have little influence on individual adoption of management practices in the models tested (Table 1). It is unlikely that any age relationship with adoption is linear. In other studies the influence of age is often contradictory. However those who retire from farming are usually older farmers and those approaching retirement age are less likely to be making large environmental investments, particularly if they have also been receiving lower incomes.

Table 1 Characteristics significantly associated with practice adoption

Table 1 summarises the frequency with which the characteristic variables demonstrated statistically significant associations with practice adoption in 15 logit regression models for the use of 15 sustainable practices recorded in the ABARE resource management survey.

Landholders' expectations of their future financial situation was one of the better predictors of the adoption of sustainable management practices. In fact, financial outlook was more often associated with practice adoption than were objectively measured indicators of financial position. Similar associations between financial perceptions and business behaviour can be observed in the wider economy. This highlights the importance of perception in adoption behaviour. Farmers who feel secure in their financial future are more likely to invest resources in adopting new resource management practices. Feeling financially secure is an outcome not just of current financial circumstances, but of future expectations and psychological disposition.

These findings suggest strong limitations in the utility of community landcare alone to drive the adoption of sustainable land management practices. Generally, financial incentive and financial capacity, skill capacity and appropriate useful technology are necessary concomitants for changes in resource management behaviour. Stewardship values and care about environmental ideals, on their own, are unlikely to bring about effective change in resource management behaviour.

The influence of changing environmental values

Pro-environmental values have been important in fostering awareness of land degradation, but they have a relatively minor influence on the adoption of sustainable practices. For the most part, stewardship and landcare values have more significant indirect than direct effects on resource management behaviour. They provide a consensus for community action (and for the imposition of informal or formal social constraints) but they have a much weaker direct influence on individual action.

The effect of positive environment values is constrained by the influence of prevailing incentives or disincentives to adopt a sustainable practice. Positive environment values interact with external incentives or disincentives (such as costs, benefits, convenience, or uncertainty of outcome of a given practice) to determine adoption behaviour regarding sustainable practices. The effect of strongly positive environmental attitudes on sustainable practice adoption tends to be influential when there are no strong external incentives or disincentives for undertaking the practice. (An urban example is kerbside recycling of domestic waste.) Positive environmental attitudes have much less effect on behaviour when external incentives or external disincentives are strong (for example forgoing the convenience of the private automobile in favour of public transport). In the latter case it is the external factors which usually compel or prohibit the behaviour in question.

The strength of the external conditions determines the bounds of influence of positive environmental attitudes and values ( Cary, Webb and Barr, 2001 ). In situations where the private benefits are negative, or in open access common property situations, the expectation that farmers will make significant investments in public good activity for little or negative financial return is usually doubtful. To paraphrase latter day philanthropist George Soros, where there is a conflict between the common good and self-interest, self-interest is likely to prevail. Policies to change motivation via changing the stewardship ethic in the absence of other enabling conditions are likely to achieve relatively little.

The economic rationale for cooperative action

In confronting the realities facing policies that rely on increasing environmental awareness to counter land degradation, the implication is that there are strong limitations to what Landcare and community action can achieve. However, inadequate information on which to base localized action and high transaction costs for action suggest there is frequent failure of markets. This works against individuals acting independently and encourages some form of cooperative action to ameliorate land degradation problems.

Local information and knowledge needed for tackling land and water degradation is often deficient. It is often abstract and catchment-based rather than based on concrete local empirical information at the farm level. End of catchment discharge indicators of soil and river salinisation may be known, but local impacts within catchment recharge and discharge areas are generally inadequately identified. In situations where externalities exist and individuals are unlikely to capture sufficient benefits to act optimally, the externalities are likely to be complex with the knowledge of external benefits and private costs rudimentary.

Even for the apparently straightforward task of evaluating the use of perennial plants to control groundwater levels in regions at risk of dryland salinisation Pannell (2001) identified a wide range of 'information' difficulties facing landholders. He identified that observability of treatment impacts on groundwater levels is low and observations are costly; there are long time lags between treatment and effect; and, in a common property groundwater problem, the effectiveness of a local trial by an individual farmer may be compromised by non-trialing neighbors.

While economists commonly favour the use of market-based instruments to coordinate individual behaviour, in resource management situations many transactions involve more complex relationships, reflecting the inadequacy of information and the risks associated with the transaction. Typically, these consequences give rise to transaction costs and unequal distribution of knowledge between agents.

Transaction costs include the costs of search and information, of safeguarding an agreement; of monitoring and enforcement, and of adaptation for particular circumstances. When transaction costs are high, businesses seek to internalize and reduce them, such as, by use of formal contracts or business integration. Sometimes when transaction costs are high economic transactions are facilitated by less formal, or other socially institutionalized, arrangements.

Land degradation problems are frequently characterised by low 'agreed knowledge'. For example, ground water that is transmissive between properties or the degradation of a stream flowing through several properties. The required inputs and likely consequent outputs (the transformation process) may not be known or be understood by all parties. The process is not often repeated and thus requires intense discussions, negotiations and personal trust ( Mahoney 1992 ).

In transactions of this type there is typically an inability to determine the rewards amongst participants because the efforts of one party cannot be separated from those of another and, because outcomes occur over a long period, output is difficult to monitor. Mahoney calls this 'low separability'. Even if the transformation process is understood, because of common property characteristics, the knowledge that an outcome will be achieved is not assured.

Because reward cannot be based on output, behavior or effort must be monitored. Resource management arrangements with these transaction characteristics are commonly best undertaken by cooperative arrangements or relational contracts where obligations of parties are specified and self enforced ( Cary 2001 ). Thus, there seems to be a place for manageably scaled community or clan action that has yet to be fully developed.

There is a need to recognize the potential contribution of community action for tackling land degradation problems. However, it needs to be appreciated that community action is not a panacea without other conditions necessary to bring about effective management action. As appropriate cooperative arrangements and relational contracts evolve, or are developed by groups of individuals, these need to be documented and disseminated to reduce the transaction costs for others.

References

Cary , J.W. 2001, 'Institutional innovation in natural resource management: A conceptualization and some Australian examples', in Wolf, S. and Zilberman, D. (eds.), Knowledge Generation and Technical Change: Institutional Innovation in Agriculture, Kluwer, Boston.

Cary , J., Barr, N., Aslin, H., Webb, T. and Kelson, S. 2001, 'Human and social aspects of capacity to change to sustainable management practices', Report for the National Land and Water Resources Audit Theme 6 Projects 6.2.2 and 6.3.4, Bureau of Rural Sciences, Canberra.

Cary , J.W., Webb, T. and Barr, N.F. 2001, The adoption of sustainable practices: Some new insights, Bureau of Rural Sciences, Canberra.

Mahoney , J.T. 1992, 'The choice of organizational form: Vertical financial ownership versus other methods of vertical integration', Strategic Management Journal, vol 13, pp. 559-584.

Marra , M., Pannell, D.J. and Abadi Ghadim, A. 2002, 'The economics of risk, uncertainty and learning in the adoption of new agricultural technologies: Where are we on the learning curve?' SEA Working Paper 01/10, Agricultural and Resource Economics, University of Western Australia. http://www.general.uwa.edu.au/u/dpannell/dpap0110.htm

Mues , C., Chapman, L. and Van Hilst, R. 1998, Landcare: Promoting Improved Land Management Practices on Australian Farms: A Survey of Landcare and Land Management Related Programs , ABARE, Canberra.

Pannell , D.J. 2001, 'Explaining non-adoption of practices to prevent dryland salinity in Western Australia: Implications for policy', in Conacher, A. (ed.), Land Degradation , Kluwer, Dordrecht.

Footnotes