Encouraging Revegetation in Australia with a Groundwater Recharge Credit Scheme

Wendy Proctor (), Jeffery D Connor, John Ward and Darla Hatton MacDonald ()
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Darla Hatton MacDonald: CSIRO Land and Water, Australia

No 2007-06, Socio-Economics and the Environment in Discussion (SEED) Working Paper Series from CSIRO Sustainable Ecosystems

Abstract: This paper describes a comprehensive method to design, test and then implement a Payments for Ecosystem Services (PES) framework to combat the environmental consequences of extensive native vegetation clearance in Australia. Clearing of vegetation, primarily due to the expansion of farming areas, has often resulted in regional dryland and irrigation salinity. The market based approach adopted ? a groundwater recharge credit trading scheme ? was designed using empirical data from a social survey and experimental economics. The objective of the trial is to test the cost effectiveness of an incentive based recharge credit trade scheme designed to engage landholders in establishing and managing deep rooted pasture and woody perennials to reduce these adverse salinity impacts. The scheme, based on a voluntary ?cap and trade? approach, allows farmers to meet recharge obligations by land management actions or by trading credits. Assessment of the scheme so far suggests that an incentive for aggregate group outcome achievement included in the design may have motivated higher enrollment rates than would have otherwise resulted. A schedule has been developed relating land management practices and recharge credits. The audited performance based payment system, has provided increased motivation to manage for environmental outcomes compared to the previous policy.

Keywords: Payments for Ecosystem Services (PES); market based instrument; cap and trade; salinity credit; revegetation; experimental economics (search for similar items in EconPapers)
JEL-codes: Q57 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2007-05
New Economics Papers: this item is included in nep-agr and nep-env
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