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Assessing cost-effectiveness when environmental benefits are bundled: agricultural water management in Great Barrier Reef catchments

Rolfe, J., Windle, J., McCosker, K. and Northey, A. (2018) Assessing cost-effectiveness when environmental benefits are bundled: agricultural water management in Great Barrier Reef catchments. Australian Journal of Agricultural and Resource Economics, 62 (3). pp. 373-393.

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Article Link(s): http://dx.doi.org/10.1111/1467-8489.12259

Publisher URL: https://onlinelibrary.wiley.com/doi/abs/10.1111/1467-8489.12259

Abstract

Using economic analysis to prioritise improvements in environmental conditions is particularly difficult when multiple benefits are involved. This includes ‘bundling’ issues in agricultural pollution management, where a change in management action or farming systems generates multiple improvements, such as reductions in more than one pollutant. In this study, we conceptualise and compare two different approaches to analysing cost-effectiveness when varying bundles of benefits are generated for a single project investment. Each approach requires data to be transformed in some way to allow the analysis to proceed. The index approach requires the transformation on the benefits side so that the effects of multiple pollutant changes can be combined into a measure for each project which can then be compared to costs. By comparison, the disaggregation approach requires the transformation on the costs side where costs for each project have to be apportioned across the different pollutants involved. The paper provides novel insights with an application to agricultural water quality improvements into the Great Barrier Reef in Australia, demonstrating that while both approaches are effective in prioritising projects by cost-effectiveness, the disaggregation approach provides more insightful results and values that may be relevant for use as upper value guidelines in future project selection.

Item Type:Article
Business groups:Animal Science
Subjects:Agriculture > Agriculture (General) > Agriculture and the environment
Agriculture > Agriculture (General) > Agricultural meteorology. Crops and climate
Agriculture > Agriculture (General) > Agricultural conservation
Agriculture > Agriculture (General) > Conservation of natural resources
Deposited On:14 Aug 2018 04:34
Last Modified:14 Aug 2018 04:34

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