SEA Working Paper 99/08
Explaining Non-Adoption of Practices to Prevent Dryland Salinity in Western Australia: Implications for Policy
David J. Pannell
Agricultural and Resource Economics, University of Western Australia, Nedlands WA 6907
Abstract
In agricultural regions of Western Australia in the coming decades, dryland salinity will result in the loss of millions of hectares of productive agricultural land, will severely affect native vegetation and fauna, will continue to salinise almost all waterways and lakes, and will cause great damage to roads, buildings and other infrastructure. Scientists believe that to avert (or even to significantly reduce) this disaster, very large areas of current agricultural land would need to be converted to perennial plant species, either trees or perennial pastures. Although the farming community in Western Australia has become much more aware of issues of natural resource conservation in the past two decades, its response so far to the salinity problem has been on a scale that is orders of magnitude smaller than recommended by scientists. This paper explores reasons for this, based on empirical and theoretical literature concerned with adoption of innovation, decision making under uncertainty, the value of information, the economics of farm management, the theory of market failure, and transaction costs.
Lack of awareness of salinity is probably not a major factor explaining slow and low adoption of the recommended practices. Rather, the major factors relate to the economic costs and benefits of current treatment options, the difficulties of trialling the options, long time scales, externalities, and social issues. This combination of factors means that the problem in many regions is extremely adverse to rapid adoption, probably more so than for any other agricultural issue in Australia. In other words, farmer reluctance to adopt the radical changes being recommended is completely understandable and, indeed, reasonable from the farmers' perspectives. Current policy measures and extension programs are doing little to change the underlying causes of non-adoption. Measures that would begin to do so are urgently needed. Suggestions about what they might include are made.
Introduction
Dryland salinity is considered to be among the most serious environmental problems in Australia (Anonymous, 1999). Of the six Australian states, Western Australia has by far the greatest area of land affected by dryland salinity, with 1.8 m ha out of an estimated national total of 2.5 m ha in 1996 (Anonymous, 1996).
Within the current policy framework, prevention of a predicted further worsening in salinity is substantially dependent on farmers voluntarily changing their farming practices away from a system based almost solely on annual plant species towards much greater use of perennial plant species. Even though rainfall for much of the region is low (ranging from 250mm to 700 mm per annum), enough water evades capture and transpiration by annual crops and pastures to cause naturally saline ground waters to rise steadily in most of the region. A change to perennial species would reduce or eliminate this process of ground water rise.
Although this is well understood and widely discussed, the adoption by farmers of perennial species has been, in most districts, at a scale that is a small fraction of that recommended by hydrologists for prevention of salinity (e.g. Bartle et al., 1996; Anonymous, 1996). This is despite the devotion of substantial resources to attempts to promote farmer adoption, via extension, research, farmer group facilitation, and other similar means.
This paper reviews and discussed reasons for this low response by farmers. It draws on existing literature about adoption of innovations in agriculture, and evidence related specifically to dryland salinity in Western Australia. The aim is to identify reasons why the adoption problem is so much more acute for dryland salinity than for other farming issues.
Adoption of Agricultural Innovations
There is a wealth of empirical evidence on the factors that influence farmers’ adoption of innovations in general (e.g. Feder and Umali, 1993; Feder et al., 1985; Lindner 1987; Rogers, 1995), and some evidence for land conservation practices in particular (e.g. Barr, 1999; Cary and Wilkinson, 1997; Pannell, 1999).
In general, it seems clear that most farmers are cautious in their adoption behaviour. They come to any innovation with skepticism, uncertainty, prejudices and preconceptions and with an existing farming system that may or may not be operating as they would wish, but is at least operating. Unless they are new to farming, they will have trialled other innovations in the past and concluded that at least some of them fell far short of the claims made for them. They will be particularly wary of a system that is radically different from that with which they are familiar and comfortable. They will almost certainly hold an attitude that the people advocating such a radical system do not understand the realities of farming, or at least of their farm.
In most situations, farmers will not commit to adoption of an innovation without successfully trialling it. If small-scale trials are not possible or not enlightening for some reason, the chances of widespread adoption are greatly diminished. Conducting a trial incurs costs of time, energy, finance and land that could be used productively for other purposes. Clearly, the larger the scale of the trial that is necessary, the larger is the cost of this information, and the less likely the farmer is to make the investment in trialling.
The outcome of a trial is, in most cases, an improved ability by the farmer to judge whether the innovation will advance his or her objectives. Lindner (1987) in a wide-ranging review of the adoption and diffusion literature concluded that the objectives of individual farmers figure centrally in the adoption and diffusion process and that, "the final decision to adopt or reject is consistent with the producer’s self interest" (p. 148). "Self interest" in this context is considerably broader than merely "profit". It may, for example, include objectives related to risk, leisure and environmental protection. Nevertheless, profit is a particularly important element of "self-interest".
Low-Adoption of Salinity Management Practices
Factors with a pronounced negative impact on adoption of salinity management practices are discussed here in three categories: factors relating to the potential to learn from trials of the practices, factors relating to the benefits and costs of the practices, and social factors. The discussion is based on trialling of water-capturing technologies, such as trees, perennial pastures, and drainage systems. Hydrologists believe that perennial plants will need to replace a substantial proportion of existing perennial crops and pastures if the final extent of saline land is to be reduced to any significant extent (e.g. Anonymous, 1996; George et al., 1999). Drainage for management of surface waters will play an important complimentary role but will be insufficient on its own.
Difficulties of trialling for salinity management technologies
For any farming innovation, a farmer’s uncertainty about its performance is initially high. Off-farm information (e.g. from scientists or extension agents) may help to reduce the uncertainty, but the key to reducing uncertainty is on-farm trialling, preferably on the farmer’s own property (Abadi Ghadim, 1999). For most innovations, such trialling is the normal course of action for farmers interested in evaluating a technology, and it leads to a relatively high quality decision about the technology. However, for dryland salinity, there are a number of reasons why trialling is more difficult and less helpful than for other management issues.
Given that the available perennial options are not profitable in their own right in most situations, the focus in this discussion is on trialling to determine the salinity-prevention benefits from perennials or from drainage.
(a) Observability is low or observations are costly
For a trial to be worthwhile, the results of the trial must be observable. In the case of dryland salinity, observability can be a very substantial problem, especially if the practice being trialled is preventative rather than ameliorative. Making observations of the water table at all is difficult. It requires the installation and observation of peizometers, which are costly. Even when a peizometer reading is obtained, given the considerable complexity and heterogeneity of underground geological structures in agricultural regions of Western Australia, it can be difficult to know how representative the observation is.
There is also considerable difficulty in attributing any change in the water table to the practice that is being trialled. One difficulty is the absence of a suitable "control" against which the result can be compared. When trialling an innovation such as a new crop species, it is relatively easy to compare the crop’s performance relative to other traditional enterprises in the same growing conditions, or when trialling an agronomic practice, results can easily be compared with and without the practice. However, for a perennial plant enterprise established in order to prevent rises in the groundwater table, such comparisons are all but impossible. The reasons for this include the following:
It may be that the only available method for assessing the impact of an area of perennials on the water table would be to observe the deviation of the water table from a prior trend. The need to look for a deviation in a historical trend, rather than comparing two current treatments, would add to the delay before any conclusion could be reached confidently. This is because, in the absence of a control treatment, it is more difficult to determine whether any observed deviation is attributable to the new practice or to exogenous factors such as atypical rainfall. Uncertainty about the response lag length adds to the difficulty of interpreting any observed trend deviation.
(b) Long time scales
Even if observability was high, and a "control" treatment was available for comparison, groundwater movements are slow, so it may be a very long time indeed before a farmer’s uncertainty about the soundness of a water-capturing technology is sufficiently reduced to prompt widespread adoption. Generally, salinisation processes are slow relative to the time frames used for most management decision making. Obviously, the slower the salinisation process, the longer it will take to be convinced about differences in salinisation rates. Furthermore, slowness reduces the overall value of trialling and may lead to a judgment that the benefits of the trial do not outweigh the costs.
(c) Externalities
In a survey of farmers in the upper Kent River catchment, Kington and Pannell (1999) found that 62 percent of farmers believed that their neighbours are contributing to their salinity problem. While the survey did not explore the proportion of the problem that was attributed to inter-farm flows, it appears that farmers are significantly over-rating the extent of the externality problem (R. Ferdowsian, Agriculture Western Australia, pers. comm., 1999). Indeed, Pannell et al. (1999) argue that farm-to-farm externalities have generally been over-emphasized as a cause of dryland salinity and of farmers’ failure to prevent it. Reasons why externalities are not as critical as some have portrayed include both hydrological and socio-economic reasons:
If farmers believe incorrectly that the rise in their water table is due to the management practices of their neighbours, their motivation to trial a water capturing technology is reduced. One reason for this is that the observed water table level in a region adjacent to a treated area may be considered to be attributable to a neighbour, rather than the treatment, so the relevance of the observed information to management decision making is reduced. Secondly, in an extreme case, there may be fears that the trial would be salted out due to a recalcitrant neighbour. A third reason for reduced motivation to trial is that the value of information from a trial is related to the profit advantage of the new practice. To the extent that the profit advantage is perceived to be reduced by externalities from a neighbour, the incentive to trial may be reduced.
(d) Necessary scale of implementation
One element of the difficulty of trialling is the size of trial that is necessary. The larger this is, the less likely the farmer is to make the investment in trialling. In this regard, water-capturing technologies are a particular concern. Such technologies clearly require a minimum scale for their effects to be apparent and hydrological evidence indicates that the necessary scale for impacts to be apparent at any distance from the trial is very large relative to the usual size of trials (George et al., 1999). Indeed, it would appear that in at least some situations, little short of full adoption is necessary.
(e) Quality of implementation
For the information from a trial to have value for decision making, the trial needs to be indicative of the innovation’s performance in the long run. If the technology used in the trial is implemented poorly, then the trial will clearly be less likely to meet this requirement. Poor implementation is more likely when the innovation is radically different from technologies with which the farmer is familiar, and this does appear to describe the situation when an annual crop/livestock farmer is trialling a tree-based enterprise.
(f) Resources required for trialling
We have noted already that where a large-scale trial is necessary, the cost of trialling is correspondingly larger, and trialling is therefore less attractive. A large trial consumes not only land but also labour and finance which could otherwise be used productively on the farm. Indeed the demands on labour and finance may be relatively large even on a per hectare basis, given the labour intensity and high up-front costs associated with establishment of trees.
(g) Risks of trial failure
It was noted earlier that farm-to-farm externalities may threaten the very survival of trees in a trial. Other threats might include drought, diseases and pests, each of which would pose a threat of uncertain magnitude given the farmer’s lack of familiarity with the tree enterprise. Trials of any innovation always face a risk of failure, but given the large scale over which a trial of a tree enterprise appears necessary to discern water table impacts, and the large levels of other resources invested in such a trial, the potential losses from a trial failure are substantial. This provides further discouragement to a risk-averse farmer considering such a trial.
Finally, it should be noted that this dismal picture does not apply to all types of technologies relevant to salinity. In particular, items (a) to (d) would not apply to trials of plant species intended to make productive use of saline areas, such as salt bush. For these, the aspects of interest would be the direct plant productivity of the species and perhaps its value to stock, and these would be readily observable and measurable in a short time frame. The issues related to the difficulty of learning about impacts on groundwater would also be of less significance if the technologies were profitable in their own right, so that they might be adopted despite continuing uncertainty about their benefits for salinity prevention.
Economic costs and benefits of current treatment options
The discussion thus far has focussed on perceptions, but the only way to create enduring positive perceptions about a practice is for the practice to be beneficial in fact. With large amounts of energy and resources devoted to persuasion, it may be possible to temporarily create an overly-optimistic perception of a system, but once farmers have personal experience with the system, they will certainly put more weight on this than on any amount of persuasion or exhortation. Thus, successful trials or successful adoption are necessary for favourable perceptions in the medium to long term.
(a) Costs
One potential threat to the actual profitability of a new, complex system is that there are likely to be substantial costs in establishing and maintaining the new system. This is particularly true of systems involving trees. Even if labour and finance availability are not absolutely constrained, their high requirements are costs which must be at least offset by the benefits.
Secondly, perennial systems occupy land that would otherwise have generated income from traditional crops or pastures, and this "opportunity cost" must be added to the direct establishment costs and set against any benefits from the new practice. It is often not recognised that the opportunity costs of lost income involved in establishing trees are of a similar order to the substantial establishment costs, and for perennial pastures opportunity costs are by far the major cost.
Thirdly, trees may compete directly with crops and pastures for light and nutrients.
Fourthly, trees may physically obstruct other farm activities (e.g. preventing easy movement of agricultural machinery, or constraining grazing by livestock in order to avoid damage to seedlings).
Fifthly, the loss of flexibility involved in committing large areas of land to trees can be very costly. In Western Australia, a majority of agricultural profits are generated in a minority of very productive years. Farmers typically move to exploit these years by allocating more land to crops. If they are prevented from doing this because the land is occupied by trees, or because the available financial resources have been invested in tree establishment and so are unavailable for purchase of cropping inputs, the impact on farm viability could be fatal.
Whether or not they are fatal, these problems, and any others, must be set against the expected long- and short-term benefits of the new system to reach a realistic assessment of its value. For Western Australia, apart from high rainfall areas on the south coast, there are currently no tree enterprises that are clearly profitable to individual farmers even in the long run. There are prospects, particularly oil mallees (Cooper, 1999) and Pinus pinasta, but substantial further development work is required to generate a range of profitable tree options suitable for all regions and soil types.
(b) Long time scales and discounting of benefits
Tree-based systems are characterised by high up-front costs, and benefits that occur some time in the future. If farmers have to borrow money to pay the up-front costs, it is obvious that any direct comparison of the up-front costs with the eventual benefits will not be valid without allowing for the cost of interest. This is a simple version of the rationale which economists use for discounting future benefits in order to make them comparable to current costs. Discounting is not about allowing for inflation; it is about allowing for the benefits that funds invested could have generated if invested instead in the best alternative use.
The impact of discounting on distant future benefits can be very large, making it difficult for individuals to justify investments with long-delayed paybacks. For example, suppose a farmer’s discount rate is 10 percent. The farmer is considering a tree crop that is not harvested for 30 years (e.g. Pinus pinasta). Establishment and opportunity costs amount to the equivalent of $2000 per hectare up front. In order to cover these costs, the value of harvested products at year 30 would have be at least $35,000 per hectare.
There is some controversy about the appropriate discount rate, with some arguing that high rates discriminate against future generations by discouraging investments with long pay-off times (e.g. Pearce and Turner, 1990). This is a complex, philosophical argument about what is in the long-term public good. However, it relates only to public investments or public policies. For a private individual farmer, discounting is absolutely uncontroversial and will inevitably affect their investment decisions.
(c) Externalities
It was noted earlier that the importance of externalities as a cause of dryland salinity has been greatly over-stated by some (e.g. by Hayes, 1997), but it is nevertheless true that externalities can mean that the benefit-cost trade-off considered by an individual farmer is different to the trade-off facing the community as a whole. Therefore the net benefits of adopting perennials as perceived by the farmer can be less than they would be from a community-wide perspective. This applies particularly to externalities from the farming sector to the natural resources or environmental resources valued highly by the community. For example, the Kent River is a potential source of potable water for residents of the south coast of Western Australia, but it faces a serious salinity problem arising from farms in its upper catchment. Most official reserves of native habitats in the agricultural region of Western Australia are under severe threat from rising saline water tables.
Social factors
The National Landcare Programme has attempted to harness social processes to promote adoption of changed practices. On the other hand, some other social processes do not act in favour of adoption of salinity prevention practices.
(a) Concern about the social fabric
The scale of change implied by hydrologists’ recommendations is so profound that it implies significant alterations to the social fabric of rural society. Farmers are understandably resistant to embracing changes that they see as threatening further declines in rural populations and concomitant declines in rural services. We can see this clearly in the south coast region, for which a profitable tree-based enterprise is available. Blue gums (Eucalyptus globulus) are now substantially more profitable than traditional agricultural enterprises on suitable soils with adequate rainfall. In some districts, many farmers have sold out to tree production companies. Many of the remaining farmers in these districts are fearful and resentful of the changes that are occurring, and are resistant to the planting of trees for this reason, despite their evident profitability.
(b) High transaction costs
In some cases, externality problems could be solved by direct negotiation between farmers. However there are costs of various types in any negotiation for which the stakes are high:
Collectively these are transaction costs, where the transaction in this case is an agreement.
In some catchments, the process of negotiation is particularly difficult because there are multiple sources of the problem, or there is uncertainty about who is the source. In such a case, the transaction costs outlined above are likely to be substantially greater. High transaction costs mean that any externality problem is unlikely to be solved without outside government intervention.
(c) Fairness
Because of the existence of substantial off-farm impacts of salinity, there are serious questions about who benefits from salinity prevention, and who should pay for it. Most of the off-farm benefits do not accrue to easily identifiable individuals or groups, but to the community as a whole. Therefore, it is very difficult for individual farmers to resolve concerns they have about the fairness of the allocation of benefits and costs. It is likely that such concerns will remain unresolved without specific attention from government, with the result that farmers choose not to adopt.
This has not been a complete list of the factors affecting adoption of innovations generally, but a review of factors that make adoption unusually difficult for adoption of salinity prevention practices. Other factors are outlined in the more general adoption literature cited earlier.
Policy Implications
The National Landcare Program (NLP) started with the premise that land degradation in agriculture could be solved by awareness-raising and education programs for farmers (Curtis and De Lacy, 1997; Vanclay, 1992, 1997). This paradigm has been the dominant force in Australia shaping policies for prevention of natural resource degradation in agriculture. The NLP approach has been very successful in raising awareness of resource conservation issues among farmers, and in some cases this awareness has led to changed practices. However, for dryland salinity in Western Australia, the changes have been much too small to prevent the steady increase in area of saline land.
There are at least three major flaws embodied in the thinking that has led to the current structure of salinity policy, at least in relation to Western Australia.
(a) Flaw 1: "The key factor inhibiting change is farm-to-farm externalities, because these mean that farmers need to act in a coordinated way in order to manage salinity". In reality, even if we could completely internalise all existing farm-to-farm salinity externalities, the impact on incentives faced by farmers would be sufficient only to prompt minimal changes in management (Pannell et al., 1999).
(b) Flaw 2: If we could overcome or dismiss the externality problem, we have viable solutions that farmers could beneficially adopt if they chose to. The persistence of this view must be due either to negligence among policy makers in failing to conduct proper economic evaluations of the available practices, or willful self-deceit. It is remarkable the extent to which one still hears the view expressed that there must surely by now be sufficient information out there, and we just need to make sure it gets to farmers. In reality, the problem is not lack of information, but lack of options. We have enough information about the existing options to know that in most cases they are not sufficiently beneficial to individual farmers even in the long run to offset their direct and indirect costs.
(c) Flaw 3: Even if economically viable solutions do not exist, farmers will voluntarily make the sacrifices involved in adopting changed management if we can raise environmental awareness among them and inculcate a stewardship ethic. Such a view fails to take account of the level of sacrifice that is implicitly being expected of farmers – it is very substantial indeed. Barr (1999) emphasises the inadequacies of relying on voluntarism and a stewardship ethic. He comments that, "There is a significant body of research that demonstrates that links between environmental beliefs and environmental behaviour are tenuous," (p. 134). He notes that the NLP involves only a minority of farmers (albeit a "substantial" minority), and that, "It is probably unrealistic to expect any voluntary policy to achieve any greater degree of penetration of the farming community than has been achieved by Landcare," (p. 135).
Perhaps even more importantly, the proposition that we should encourage farmers to adopt practices that are not in their own best interests raises serious ethical and moral questions. Even if it somehow were made practically effective in promoting adoption, the fairness of such a policy would require serious consideration.
(d) Flaw 4: Group-based extension methods, based on joint decision making to create catchment plans and harnessing of peer pressure are sufficient. While group-based approaches undoubtedly do have important advantages, they do not in themselves address the fundamental difficulties involved in learning about the on-farm performance of salinity management practices, as described earlier. They also do little if anything to alter the financial incentives for adoption faced by farmers. To the extent that benefits for salinity prevention are an important and necessary feature of a particular practice, its promotion to the farming community will require innovative new methods to facilitate farmer observation and learning from trials. This seems to be an area ripe for further research.
I will comment briefly on the emphasis given to the development of catchment plans; many Landcare officers devote a substantial proportion of their time to this task. In my observation, and from discussion with Landcare officers, the elements that go into most catchment plans have not been properly evaluated in terms of their likely economic benefits. In this situation, it is not surprising that farmers’ commitment to implementation of the plan is difficult to maintain once they are faced with the reality of the time and expense involved. This reality is faced outside the public glare and peer pressure of the group. It is naïve to expect that a mere plan, even if agreed to verbally by members of the farm group, will be implemented unless farmers believe that it is in their interests to do so. In relation to salinity, the difficulties for farmers in coming to believe that any plan could be in their interests have been presented at length earlier.
It is clear that by far the most important need from salinity policy is to alter the financial incentives for adoption of perennial production systems. Persuasion, education and extension will remain inadequate while the available options are so financially unattractive. A small minority of public resources devoted to the salinity problem is now allocated to development of new, profitable perennial enterprises. Given the critical importance of this activity, it has been, and continues to be, grossly under-funded. It should be recognised that such development work is not certain to succeed, but without it we seem certain to fail in our battle against salinity.
Apart from its increased attractiveness to farmers, a perennial species that is profitable in its own right has an additional important advantage: it can avoid some of the major difficulties of trialling that arise when the objective is focused on water table management. If the focus is on profitable production of perennials, impacts on the poorly observable groundwater table can be accepted as a beneficial side benefit whose magnitude does not need to be determined accurately before adoption can be justified. Growth of above-ground plant material is much more observable than are below ground processes, and less confounded by factors such as geological complexity. Observations are not limited to discrete points, so spatial heterogeneity can be readily assessed.
A second method by which incentives could be altered would be through means such as subsidies and taxes. Such measures have not been seriously evaluated for salinity, and their current extent is minimal. Given current technologies, the magnitudes of subsidies or taxes necessary to achieve widespread adoption in all regions are probably too large to be politically feasible. However, if combined with successful development of new perennial plant types, direct financial incentives could potentially play a very important role. Given the substantial costs of salinity to the non-farm sector (both man-made infrastructure and natural resources) the introduction of such direct measures does seem potentially justifiable.
Acknowledgements
The author is grateful to Sally Marsh, Ruhi Ferdowsian, Don McFarlane, Elizabeth Kington, Dan Carter, Steven Schilizzi, Nicole Glenn, Simone Blennerhassett, Bob Lindner, and Ted Lefroy for helpful discussions or advice. The funding support of the Grains Research and Development Corporation and the Rural Industries Research and Development Corporation is gratefully acknowledged.
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Citation: Pannell, D.J. (1999). Explaining Non-Adoption of Practices to Prevent Dryland Salinity in Western Australia: Implications for Policy, Presented at COMLAND, University of Western Australia, September 21-25 1999. (SEA Working Paper 99/08, Agricultural and Resource Economics, University of Western Australia).
Published after review and revision as: Pannell,D.J. (2001). Explaining non-adoption of practices to prevent dryland salinity in Western Australia: Implications for policy. In: A. Conacher (ed.), Land Degradation, Kluwer, Dordrecht, 335-346.
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