An overview of resource economics

1. An overview of resource economics John Rolfe

2. What do economists do? • Identify why problems exist – eg public good aspects not provided by markets • Evaluate tradeoffs between production and environment • Identify whether it is worth addressing the problems – eg use cost benefit analysis • Design solutions – eg market based instruments • Identify roles for governments and markets • Evaluate the economic impacts of different policies on various groups in society

3. Evaluating tradeoffs between production and environment • Tradeoffs often complex • Sometimes synergies between production and environmental condition • Sometimes tradeoffs • Usually large time lags • Effects vary over time and space • Effects not linear • Often threshold effects involved • Large knowledge gaps

4. Who needs the information? • In the past, mostly by government • Interested in broad analysis to evaluate policies, often at regional and state level • New NRM models mean • Regional bodies need information to be able to address issues • A lot of focus at the individual farm level • Need information to be transparent and build trust

5. Why is it worth doing? • Landholders are unlikely to engage with processes where there is no recognition of the costs that may be incurred by them. • Need to understand production tradeoffs to design mechanisms and incentives for landholders to change management actions. • Production losses tend to be associated with socio-economic impacts, so an analysis of potential production losses can help to design mechanisms that avoid or avert these impacts.

6. The economic toolkits • Production models • Build a model of farm operations, then adjust a condition (eg environmental factor) and identify change in outputs • Variety of models of varying complexity • Analysis of land prices • Expectations about future profitability • Identify how land values change as influencing factors change • Methods to estimate values directly from landholders

7. The purpose of today • Display a range of economic tools and approaches to production/environment tradeoffs • Establish networks • Between economists and NRM groups • Between economists and economists • Between economists and other groups • Develop products • Materials from the workshop to be published in a guide that NRM users can use

8. Evaluation • Need your help to identify: • What we can do better • The future for these types of workshops • The structure and content of the subsequent publication • Evaluation and feedback process • A form in your conference bag to complete today • A followup email where you can give more considered opinions

9. Acknowledgements • Principal support for today comes from AGSIP program • Also support from the Qld Branch of the Australian Agricultural and Resource Economics Society • Steering group members include: • George Anthony, Jim Binney, Peter Donaghy, Sally Dryml, John Rolfe, Trevor Wilson, Mal Wegener