An overview of resource economics John Rolfe

What do economists do? 1. Identify why problems exist – eg public good aspects not provided by markets 2. Evaluate tradeoffs between production and environment 3. Identify whether it is worth addressing the problems – eg use cost benefit analysis 4. Design solutions – eg market based instruments 5. Identify roles for governments and markets 6. Evaluate the economic impacts of different policies on various groups in society

Evaluating tradeoffs between production and environment  Tradeoffs often complex Sometimes synergies between production and environmental condition Sometimes tradeoffs Usually large time lags Effects vary over time and space Effects not linear Often threshold effects involved Large knowledge gaps

Who needs the information?  In the past, mostly by government Interested in broad analysis to evaluate policies, often at regional and state level  New NRM models mean Regional bodies need information to be able to address issues A lot of focus at the individual farm level Need information to be transparent and build trust

Why is it worth doing?  Landholders are unlikely to engage with processes where there is no recognition of the costs that may be incurred by them.  Need to understand production tradeoffs to design mechanisms and incentives for landholders to change management actions.  Production losses tend to be associated with socio-economic impacts, so an analysis of potential production losses can help to design mechanisms that avoid or avert these impacts.

The economic toolkits  Production models Build a model of farm operations, then adjust a condition (eg environmental factor) and identify change in outputs Variety of models of varying complexity  Analysis of land prices Expectations about future profitability Identify how land values change as influencing factors change  Methods to estimate values directly from landholders

The purpose of today  Display a range of economic tools and approaches to production/environment tradeoffs  Establish networks Between economists and NRM groups Between economists and economists Between economists and other groups  Develop products Materials from the workshop to be published in a guide that NRM users can use

Evaluation  Need your help to identify: What we can do better The future for these types of workshops The structure and content of the subsequent publication  Evaluation and feedback process A form in your conference bag to complete today A followup where you can give more considered opinions

Acknowledgements  Principal support for today comes from AGSIP program  Also support from the Qld Branch of the Australian Agricultural and Resource Economics Society  Steering group members include: George Anthony, Jim Binney, Peter Donaghy, Sally Dryml, John Rolfe, Trevor Wilson, Mal Wegener