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Evidence Based Farmer Decision Models to Assess the Potential for Multiple Benefit Carbon Trading

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Type: Conference Paper
Author: Ward, John R.; Bryan, B.A.; Crossman, N.D.; King, D.
Conference: Governing Shared Resources: Connecting Local Experience to Global Challenges, the Twelfth Biennial Conference of the International Association for the Study of Commons
Location: Cheltenham, England
Conf. Date: July 14-18, 2008
Date: 2008
URI: https://hdl.handle.net/10535/1943
Sector: Social Organization
General & Multiple Resources
Region:
Subject(s): natural resources
resource management
decision making
experimental economics
modeling
IASC
Abstract: "Planning efforts in the SA Murray Darling Basin (SAMDB) have focused on the revegetation of degraded, privately held agricultural land, using locally native species, to meet prescribed resource condition targets of increased biodiversity, carbon sequestration, salinity and wind erosion reductions. Revegetation costs are incurred by the individual, whilst benefits accrue primarily off farm and are shared by the wider public. The multiple benefits of revegetation constitute a common pool resource, characterised by costly exclusion and subtractive consumption. Current fixed or shared payment schemes to compensate individual costs have yielded relatively minor contributions to resource condition targets. "As an alternative, market based approaches are increasingly endorsed as a class of policy instrument to motivate land management actions that are economically rewarding, stimulate persistent innovation and make substantial contributions to policy objectives. Previous research indicates the hypothetical removal of extant institutional constraints, prohibiting access to an international CO2e market, as the most cost effective and feasible instrument to promote large scale revegetation efforts. A priori evaluations of market based policy initiatives are often founded on normative behavioural parameterizations of profit maximization and optimal responses to available information. Failure to account for heterogeneous attitudes and motivations and variable willingness and capacity to participate, manifest as levels of revegetation, may result in reduced instrument performance with an attendant social cost. We paper describe an evidence based calibration of a conceptual simulation of heterogeneous dryland farmer attitudes into landscape scale natural resource management (NRM) planning. Spatially referenced attitude and behavioural profiles at the farm scale were characterized using a combination of spatial correlation, principle components and cluster analysis of survey responses of 593 dryland farmers (N=1084). We identified four significant farmer attitude segments. Regression models and structural equation modelling were unable to reliably establish the influence of attitudes, and as corollary, policy incentives, on revegetation behaviour. As an alternate method, we designed controlled economic field experiments, simulating the biophysical, economic and policy decision environment facing SAMDB dryland land mangers to elicit the magnitude and timing of revegetation of actual landholders subject to controlled framing of visual cues of near neighbour and catchment wide farm actions. Experimental results enabled the estimation of a spatial autocorrelation function of land management actions with near neighbour decision making when that information is made available. "The combined results improved the enumeration of the relationship between statistical attitude and behavioural classes, expressed as farm scale land management actions. We describe a spatially explicit multi-attribute model of farmer utility functions within a dynamic simulation environment. Levels of agent innovation, adoption rates, response to public disclosure of agent actions, near neighbour effect and revegetation efforts were evidence based according to the survey and experimental results. Fifty year landscape futures were simulated by modelling farmer responses to changes in six NRM policies. "These policy perturbations influence attitudes, and in turn revegetation actions, which determine farm economic viability and the magnitude of aggregate contributions to regional natural resource policy targets. Policy models reliant on a single instrument did not optimise for all multiple benefits. We conclude that a portfolio approach combining both market and non-market instruments is the preferred strategy. Modelled combinations maximised individual benefits, multiple common pool resource targets and an attendant global contribution to carbon sequestration. The results provide an evidence based ex ante assessment of the biophysical, economic and social impacts of market based policy initiatives to encourage carbon trading at dryland farm and catchment scale in the SAMDB."

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