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Using economic analysis to prioritise improvements in environmental conditions is particularly difficult when multiple benefits are involved. This includes ‘bundling’ issues in agricultural pollution management, where a change in management action or farming systems generates multiple improvements, such as reductions in more than one pollutant. In this study, we conceptualise and compare two different approaches to analysing cost-effectiveness when varying bundles of benefits are generated for a single project investment. Each approach requires data to be transformed in some way to allow the analysis to proceed. The index approach requires the transformation on the benefits side so that the effects of multiple pollutant changes can be combined into a measure for each project which can then be compared to costs. By comparison, the disaggregation approach requires the transformation on the costs side where costs for each project have to be apportioned across the different pollutants involved. The paper provides novel insights with an application to agricultural water quality improvements into the Great Barrier Reef in Australia, demonstrating that while both approaches are effective in prioritising projects by cost-effectiveness, the disaggregation approach provides more insightful results and values that may be relevant for use as upper value guidelines in future project selection.

Funding programs to improve water quality into the GBR are difficult to evaluate, and administering agencies typically need to allocate funds without a clear assessment of the cost-effectiveness of proposals. This is particularly the case for agri-environmental schemes where policy makers set targets for improvements in water quality from agricultural lands and then need to identify funds and programs to encourage changes in practices. The priorities for actions are often driven by bio-physical assessments of risks on the natural environment with little information about the opportunity costs and challenges in changing land management. The goal of the research reported in this paper is to develop a supply function for water quality improvements in agricultural lands in the Great Barrier Reef catchments. Costs of supply have been estimated from multiple sources, including modelling, expert opinion, and the analysis of water quality tenders and Reef Rescue grant programs. The study addresses challenges in reconciling cost estimates from different sources, dealing with heterogeneity across industries and catchments, and managing different influences on costs from factors such as risks, adoption issues and transaction costs.

This study tests the transferability of the nonmarket values of water conservation for domestic and environmental purposes across three south European countries and Australia applying a common choice experiment design. Different approaches are followed to test the transferability of the estimated values, aiming to minimise transfer errors for use in policy analysis, comparing both single- and multicountry transfers, with and without socio-economic adjustments. Within Europe, significant differences are found between implicit prices for environmental water use, but not for domestic water use. In the Australian case study, alleviating restrictions on domestic water use has no significant value. Pooling the three European samples improves the transferability of the environmental flow values between Europe and Australia. Results show that a reduction in transfer error is achieved when controlling for unobserved and observed preference heterogeneity in the single- and multicountry transfers, providing additional support for the superiority of socio-economic adjustment procedures in value transfer.

The design of competitive tenders to purchase environmental services requires judgements to be made about the funding scale and tender scope, with the latter incorporating considerations of geographic area, industries involved and the types of environmental outputs required. Increasing the scale and scope of tenders increases the likelihood that a larger range of proposals will be proposed and cost-effective ones selected. However, the use of larger and more broadly scoped tenders may reduce landholder participation and increase asking bids. In the study reported here, these issues have been tested with a single water quality tender run in north-eastern Australia in 2007 and 2008. Post hoc tests and workshop exercises show that while largerscale and scope tenders can generate efficiency gains, care has to be taken to maintain participation and avoid higher bid levels

Key policy issues relating to protection of the Great Barrier Reef from pollutants generated by agriculture are to identify when measures to improve water quality generate benefits to society that outweigh the costs of reducing pollutants. The research reported in this paper makes a key contribution in several key ways. First, it uses the improved science understanding about the links between management changes and reef health to bring together the analysis of costs and benefits of marginal changes, helping to demonstrate the appropriate way of addressing policy questions relating to reef protection. Second, it uses the scientific relationships to frame a choice experiment to value the benefits of improved reef health, and links improvements explicitly to changes in ‘water quality units’. Third, the research demonstrates how protection values are consistent across a broader population, with some limited evidence of distance effects. Fourth, the information on marginal costs and benefits that are reported provide policy makers with key information to help improve management decisions. The results indicate that while there is potential for water quality improvements to generate net benefits, high cost water quality improvements are generally uneconomic. One implication for policy makers is that cost thresholds for key pollutants should be set to avoid more expensive water quality proposals being selected.

The Great Barrier Reef (GBR) is a vast iconic environmental asset covering an area of approximately 35 million hectares. It is valued by people all over Australia, as well as overseas. Non-market values for the GBR will comprise both use and non-use values. The values of people who live closer to the GBR and who can visit it more frequently are likely to be higher than those who live further away. The aim of this study was to estimate the values to protect the health of the GBR at the national level and to examine the effects of distance decay on valuation estimates. A split-sample choice-modelling experiment was conducted in six locations: a regional town within the GBR catchment area (Townsville); Brisbane, the state capital approximately 450 km from the southern limit of the GBR; and four other capital cities (Sydney, Melbourne, Adelaide and Perth) ranging from 730 km to over 3600 km from Brisbane. The results indicate that the total national value for a 1 per cent improvement in the health of the GBR ranges from between a low of approximately $433.6 million to a high of $811.3 million, depending on the underlying assumptions made. There was some evidence of distance decay in values. Most decline occurred once outside the home state, and little further decline once away from the east coast. There was no evidence to suggest any difference in patterns of use and non-use values. The values of the potential future users were most influential in determining WTP estimates.

Invasive species create particular challenges for policy makers .Some deliberately introduced species contribute significantly to agricultural production and other purposes. However, many invasive weed and animal pests generate substantial costs through impacts on agricultural production, biodiversity, ecosystem services, infrastructure and communities. An aggressive ant species, the red imported fire ant was introduced by accident to Australia. Infestations were found in Brisbane in February 2001. Modelling suggested that the pest could invade half of Australia within 35 years if it were not controlled.). Control of the fire ant has reduced the rate of new discoveries but the ant was still not eradicated by 2009. The benefits of controlling red imported fire ants are largely non-use. These include avoiding health and environmental impacts as well as maintaining lifestyle and amenity values. In this report, these benefits are assessed using choice modelling, a non-market valuation technique.

To determine whether the collection mode affects sample characteristics and value estimates, paper-based (using drop-off/pick-up) and web-based (using an internet panel) modes were tested. The exercise elicited values from Brisbane respondents for future environmental improvement of the Great Barrier Reef. The total per survey cost of the paper-based survey was approximately $70 per survey. The survey took three months to complete. In contrast, the online survey cost approximately $15 per survey and took two weeks to complete. The results show there were no differences in gender, education and income levels between the two groups. In the internet group, however, there were more younger and fewer older people. A comparison of the respondents’ willingness to pay (WTP), as well as other model and behavioural indicators, does not indicate major differences between paper-based and web-based collection modes.

Metrics for evaluating environmental trade-offs can be developed with varying levels of consistency across case study sites. A key issue is whether standard evaluation experiments can be conducted over multiple sites, or whether experiments have to be tailored to each case study application. To test how useful a consistent approach is, choice modelling (CM) has been used in a number of countries. Choice modelling assess the trade-offs households are prepared to make between water use restrictions, maintaining environmental conditions in waterways, and increased water costs. This research paper reports the results of the Queensland survey. The results show that it is not possible to downplay case study framing issues and that it is not appropriate to standardise applications across case studies that have different characteristics.

The focus of this paper is to compare different evaluation frameworks for selecting landholder proposals to improve water quality. The case study is a water quality tender performed in the Burdekin region in Northern Australia in 2007/2008 where bids could be assessed using an inputs-based best management practice scorecard or an outputs-based auction metric. The scorecard approach and other variants of multi-criteria analysis are commonly applied in grant schemes, where landholder proposals are rated by a range of inputs-based criteria. Output-based approaches are typically applied in water quality and conservation tenders, where an environmental benefits index is constructed to summarise the cost-effectiveness of each proposal. The case study evaluation reported in this paper demonstrates that multi-criteria analysis type assessments are flawed, and that the efficiency of public funding can be more than doubled by using auction metrics to assess proposals for landholders to improve water quality.

Participation is a relative concept. Too much implies high costs of administration and many losers in a competitive process. Too little implies relatively few gains from trade are accessed. Thus the aim is to optimise rather than maximise participation. In this paper we outline some rules of thumb for setting participation targets and develop a framework for identifying barriers to achieving targets. We use the framework to evaluate six case study tenders covering a variety of land management objectives. These case studies provided pragmatic on-ground lessons in managing participation in real tender applications and resulted in several further lessons for participation management in tender design.

Designing a choice modelling (CM) experiment to place a value on increasing protection of the Great Barrier Reef (GBR) raises complex issues. The size and diversity of the GBR, and the number of different pressures impacting on it, mean protection and improvement scenarios can be drafted in several different ways. This report discusses some of the considerations in selecting, describing and combining choice attributes. It also looks at how to incorporate tests for geographic scale (size) and scope (complexity) differences into the design of the CM survey instrument. The potential to include information about management options designed to achieve increased protection, and the associated risk and uncertainty, is also discussed.

made in one situation to related circumstances. The benefit transfer process is typically reliant on the availability of a number of source studies which have appropriate levels of reliability and relevance to the issue of interest. However, the limited number of non-market valuation studies to draw on for source values currently limits the benefit transfer process. In this paper, an alternative approach to benefit transfer is outlined where a series of valuation studies were specifically performed to build a reference data base of values for benefit transfer purposes. The choice modelling technique was used to estimate community values for protecting soil, water and vegetation stocks in Queensland, Australia, where both state and regional populations were surveyed to generate value estimates in a variety of contexts. The results provide a database where government and natural resource management agencies can access generic estimates of environmental values.

The Fitzroy basin in central Queensland is the largest basin in the Great Barrier Reef catchment area. The large quantities of sediment and nutrient export are of concern and come predominantly from diffuse sources in the grazing industry. The focus of the research reported in this paper was on the potential supply of mitigation actions from this group. This potential supply is very difficult to establish ex ante. However, such information may be crucial to the design of a quantity-based mechanism that requires supply of mitigation actions. In this study, the use of a stated preference technique called “choice modelling” and an experimental economics technique termed “experimental auctions” were applied to ascertain potential supply relationships.

The potential supply of water quality mitigation actions from diffuse sources is difficult to assess, although important for designing policies to encourage such actions. In this paper the design and results of a Choice Modelling(CM) valuation to assess the potential supply of rural mitigation actions from altered grazing management are reported. The valuation was focused on the supply of mitigating services (specified riparian management standards), the total cost of provision, and the extent to which these costs varied between landholders. CM has traditionally been applied to environmental valuation issues, but there is increasing use of the method to design agricultural markets. This study extends that application to markets for environmental actions.