Evaluation of the Private and Social Costs of an On-Farm Biodiversity Conservation Program in Western New South Wales

Abstract

Native vegetation, and its associated biodiversity, are becoming scarce in Australia and therefore valued resources to society. A significant quantity of native vegetation exists on privately managed farmlands, and so these landholders can play an important role in management and conservation. They do not, however, always conserve biodiversity at a level society desires because they do not receive the appropriate market signals. Consequently, regulations and other policy measures to protect native vegetation on farms have been introduced in all jurisdictions of Australia. But these regulatory policies can impose substantial costs to landholders, and may be ineffective in the provision of biodiversity and environmental outcomes, so they need to be continually reviewed. Recently the use of Market Based Instruments (MBI's) has received considerable attention. These instruments are based on the premise that the socially optimal level of biodiversity is not being conserved due to market failures. They are used to create a market that provides both incentives and signals to farmers to produce improved levels of environmental goods and services. The Western Division of New South Wales has primarily been used for grazing sheep on native pasture, and is characterised by large properties and marginal climatic conditions. Environmental issues in the region include soil erosion, encroachment of woody weeds and the decline of the pasture and groundcover conditions. Currently less than eight per cent of the Western Division is formally managed with conservation objectives, however the Western Catchment Management Authority hopes to raise this to 25 per cent conservation by 2035. This, amongst other factors has led to an interest in MBI's as a method of increasing conservation outcomes in this region.