1. Framework for Assessing the Impact of Salinity on Productivity Amy Cheung University of New South Wales Workshop: “Policy Choices for Salinity Mitigation: Bridging the Disciplinary Divides” 1-2 February 2007

2. 1. Introduction Salinity: mobilisation of salt in soil due to rising watertables from increased leakages into groundwater system No fundamental difference in the hydrologic process: whether this rise was caused by reduction in deep-rooted native vegetation, or by natural means

3. 1. Introduction Salinity becomes problematic: damage to built and natural assets (roads, buildings, agricultural production, biodiversity, rivers and water supplies) Threatens sustainability of productive agriculture areas and natural resources Estimates of total cost and impact of salinity varies partly due complexity of the salinity problem, thus reliability of estimates

4. 1. Introduction No single solution can be applied to vastly different conditions across Australia: regional variations in hydrogeology, soil characteristics, climate Effects of salinity: - not felt most severely in immediate vicinity of the activity which generates the degradation - spread throughout the catchment area of a given stream, termed “externalities” or off-site effects

5. 1. Introduction Aim: build a framework for assessing impact of salinity on farm productivity That is, the effect this externality (salt) has on farm productivity Large literature devoted to farm productivity – but production inputs are treated as either discretionary or non-discretionary Salinity is an interesting case: located in between the two cases

6. 2. Formulating the problem Salinity: a bundled input with clean catchment water. Salt + clean catchment water = saline water, z Impact of applying this z to production on three farms, located from upstream to downstream Effect of z on productivity – expect reduction in productivity as quality of water decreases

7. 2. Formulating the problem E.g. Same volume of z on two identical farms, situated upstream and downstream respectively, will not produce the same amount of output. Quality of water deteriorates over time (unless with engineering intervention). The movement of z units of water can be formulated into a network. Begin with figure 1:

8. 2. Formulating the problem Figure 1 3 1 2 Upstream Downstream z z

9. 2. Formulating the problem Shows how much saline water z moves from each farm Farm 1 passes saline water to farm 2, and farm 2 passes saline water to farm 3 Farm 1 can pass saline water to farm 3

10. 2. Formulating the problem z varies in quality as it moves from farm to farm To show quality change, denoting: s = the quality of saline water (the amount of “salt” in the water) v = the quantity of saline water (the volume of water moved), z=f(v, s) Figure 2 illustrates the change in the quantity and quality of saline water in the catchment.

11. 2. Formulating the problem Figure 2 3 1 2 Upstream Downstream z z

12. 2. Formulating the problem Accommodate this “saline water” z variable into formulation (i) Consider including z as discretionary inputs: Then z can be treated as other inputs (x) to produce output (y), that farmer can control over the amount of z into production.

13. 2. Formulating the problem True that farmer i has discretion over the quantity of water applied onto farm But may not be possible to reduce the amount of salt in the water (ii) Perhaps may be better to treat z as a non- discretionary variable since: Farmer can’t alter the quality of the water

14. 2. Formulating the problem Ambiguous direction: z bundles “productive” water and “counter-productive” salt Further complication arises: a multi-period case where the quality of z deteriorates over time (water quality not uniform) Consideration of a network model:

15. 3. Salinity as a network problem Formulate the three farms over time as a network. Begin with attaching a cost c with each movement of z c = combine cost of transporting water and the cost of the change in quality in the water (e.g. cost on the farmer) as it moves from one farm to the next.

16. 3. Salinity as a network problem Assume: c of moving increasing saline water increases from one farm to the next Assuming in any one period, Figure 3 illustrates the different cost across the three farms.

17. Figure 3

18. 3. Salinity as a network problem In the next period, accumulation of salt in the water affects the farms. E.g. Assume the same amount of water passes through the system over three periods, illustrated in figure 4:

19. 3 t-1 1 t-1 2 t-1 z 3t3t 1t1t 2t2t 3 t+1 1 t+1 2 t+1 z c3c3 c2c2 c1c1 c4c4 c8c8 c7c7 c9c9 c5c5 c 11 c 12 c 13 c6c6 c 10 c 14 c 15 Figure 4

20. 3. Salinity as a network problem Each node (e.g. 1 t ) represents a farm in a certain period c n is the cost of farm (due to salinity)

21. 3. Salinity as a network problem Addition of time interdependence allows the model to potentially assess the effectiveness of different policy options over time. E.g. test policy via experiments, simulations Inclusion of uncertainty, such as the weather, water reliability, extent of salt mobilisation in a given catchment

22. 3. Salinity as a network problem c i =f(v i,x i, s i, i, ,) y i =g(c i ) v i, x i discretionary variable s i, i,  = non-discretionary variable

23. 4. Data requirement To test this framework, the following data may be required: Value of farm produce: Prices, quantities Farm inputs: Land, Labour, Capital Water input: v = records of water usage s = the quality (EC levels)

24. 4. Data requirement Type of industry/crops across a catchment Salt tolerance of these crops: At which point will saline water begin to reduce, stun, and terminates growth? e.g. Change plant at times where c for a farm reaches some level to adapt to water quality changes

25. 5. Summary Salinity: a bundled input with clean catchment water. Consideration of a network model: Assume: c of moving increasing saline water increases from one farm to the next Addition of time interdependence allows the model to potentially assess the effectiveness of different policy options over time.