Time to rethink farmland environmental policies

Mick Keogh, Australian Farm Institute

According to scientists and environmental groups, the current environmental policy settings in Australia are inadequate to prevent accelerating and irreparable damage to the environment. They variously claim that species loss is continuing and perhaps increasing, land degradation is endemic, native vegetation is being destroyed, and water use is unsustainable. If these claims are correct, then perhaps it’s time to consider a radically different set of policies, and not more of the same. Perhaps it’s time to recruit private landholders to help with these challenges, rather than treating them as the main culprit.

The State of the Environment (SOE) report that is prepared every five years by the Australian Government is an attempt to benchmark the state of the Australian environment, and provide some objectivity in what is a sea of opinions, claims and counter claims. As a general rule, the authors of the SOE try to be objective about environmental trends. In the most recent report in 2011, it was concluded that while some progress has been made in restoring the Australian environment:

  • pressures of past human activities and recent droughts are affecting our inland water systems
  • Australia’s land environment is threatened by widespread pressures
  • threats to our soil, including acidification, erosion and the loss of soil carbon, will increasingly affect Australia’s agriculture unless carefully managed
  • our unique biodiversity is in decline, and new approaches will be needed to prevent accelerating decline in many species. 

It is worth putting these conclusions in context. They were reached at a point in time that is some 30 years after legislation was put in place to protect threatened species in most states. They were reached between 10 and 20 years after laws and regulations were enacted to prevent the clearing of native vegetation on farm land. They were reached some 30 years after the development of the concept of Landcare, under which there has been an enormous effort made to restore landscapes and plant millions of trees. They were reached at the end of a 40 year period during which some 100 million hectares of land (20% of the national landmass) that was previously used for farming has been added to the Australian conservation estate. And they were also reached during a period in which water extractions for agriculture were capped, and have since been reduced by about 20%.

The SOE authors acknowledged that the data used to reach these conclusions is limited, and not comprehensive. As the authors stated:

Assessing the state of Australia’s environment is inherently difficult. Australia is a big country, with a wide variety of ecosystems and heritage. There are many unconnected means by which we gather and store information on our environment, and accessing this information at a national scale is tremendously complicated and not always possible.

Leaving aside this qualification, if these conclusions are even moderately accurate then it is a very clear indication that the current policy approaches are no longer working, or have reached the limit of their effectiveness, and different approaches are now required.

Despite this, many environmental scientists, and groups like the Total Environment Centre, the Australian Conservation Foundation and the Wilderness Society are demanding more of the same. More legislation and regulations governing how private landholders can manage their land, more areas set aside for conservation, more allocations of water for the environment, and more controls over the harvesting of forests.

This leads to a fairly obvious question, along the lines of: ‘How much more does the environment need, and will increasingly stringent regulatory measures actually achieve any additional benefits?’ At what point will it be deemed that sufficient areas of Australia’s land, and sufficient amounts of water and other natural resources are being managed to preserve the environment, that regulatory controls are sufficiently stringent, and there is no need for additional controls, or the allocation of additional public resources to this task?

The suspicion of many is that this point will never be reached, particularly under the current policy approach, because those advocating for additional resources to be allocated to the environment actually have a vested interest in continuing to highlight and even exaggerate environmental damage. Donations and research grants are triggered by disasters and predictions of doomsday, not reports of environmental successes.

This is confirmed to some extent by some of the commentary associated with the most recent SOE. In summarising the outcomes, the SOE authors noted some significant improvements in environmental indicators, but then stated: 

However, the resources required to reverse or reduce historical impacts are in many cases beyond the means of even a wealthy nation like Australia. Conservation investments and interventions tend to focus on our environmental and heritage assets that are of greatest value and under greatest threat. With this focus, significant restoration of the environment towards its pre-settlement condition will continue to be elusive.

Put simply, this last sentence suggests that the SOE authors consider restoration of the environment to its pre-settlement state is the ultimate objective. Exactly what should happen to the 23 million residents of the nation that would need to be removed to enable this to happen remains unstated!

If the Australian environment is continuing to decline despite all the measures that have been implemented over the past 20 years, and despite the huge amount of the nation’s land and water resources that have been reserved for conservation, then perhaps part of the answer is that the current policy approach has reached the limits of its effectiveness.

For example, there is almost universal recognition that simply locking up land and assuming that somehow it will revert to its pristine, pre-settlement condition is a fallacy. Even the most ardent environmentalists recognise that without management of feral plants and animals, and without the development of appropriate measures to manage fires, conservation areas simply become havens for pests and infernos. Ironically, every new addition to the conservation estate inevitably results in governments spreading available management resources even more thinly, reducing the standard of management on existing conservation areas, and creating more problems for neighbouring landholders. Both the environment and private landholders are worse off as a consequence.

The same observation is relevant to current policies that attempt to protect native species that are deemed to be threatened or facing extinction. The minute a species is declared threatened, its presence on privately owned land becomes a potential liability for that landholder. While often the potential liability is not immediately apparent, as soon as the landholder seeks to make a change to current land use, the liability emerges. Perhaps not surprisingly, many landholders choose to conceal the presence of those species on their land, and in some cases even take actions to remove those species – the exact opposite of the intent of government policies.

This is a major weakness, given that farmers are the managers of approximately 403 million hectares of Australian land – more than half the total landmass, and almost four times the area of land currently in conservation reserves.

There is nothing particularly new or insightful about the above observations. Some environmental scientists and many private landholders have long argued that there are serious limits to the effectiveness of environmental policies that rely heavily on locking up land, and regulatory controls on private landholders.

What is new in Australia at present is the fact that a number of state governments have initiated serious reviews of current environmental policies, amid growing concerns about their current and potential future effectiveness. The review of Wild Rivers declarations and land clearing regulations in Queensland is an obvious example, as is the current biodiversity legislation review in New South Wales, and proposed changes to the Environmental Protection and Biodiversity Conservation Act by the Australian Government. These reviews are also occurring during a period when national and state governments are under considerable fiscal pressure, and are more likely to substantially reduce funding for environmental programs, than to increase them.

This realisation should surely trigger a desire for some new approaches and new thinking by environmental scientists and environmental groups, rather than repeated calls for more of the same.

The starting point in developing new policies to address the future management of the Australian environment must be the need to have clear objectives in mind, and processes in place to measure performance in achieving that objective.

Agreeing on an overall objective is clearly not a simple process, but surely it is time to recognise that an objective that seeks restoration of the Australian environment to a pre-1788 state is utopian, unrealistic, and unachievable. A much more realistic objective would be to implement policies that seek to optimise the future productive capacity of Australia’s natural resource base, acknowledging the need to consider economic, social and environmental impacts, and recognise that the environment is dynamic and constantly changing.

Being clear on objectives and agreeing on appropriate indicators is a good starting point, but when it comes to future legislative or regulatory measures, some home truths are very evident.

The first is that neither the Australian nor state governments have any appetite to lock up substantial areas of additional land for conservation, and nor are they willing to pay for its maintenance over the longer term. This means that the role of private landholders, and especially farmers, will be critical to any future improved environmental outcomes.

The second, and related home truth is that implementing a regime of regulatory controls over private land that impose all of the costs of public good conservation outcomes on farmers will never result in improved environmental outcomes. In fact, all it will do is seriously alienate the very group that the community will increasingly rely on, in the absence of government resources, in order to achieve improved outcomes.

To be effective, future policies will need to clearly differentiate between regulations that seek to achieve a private or landholder good – such as the prevention of erosion or soil degradation, and regulations that seek to achieve a public good, such as the conservation of biodiversity in general or a particular threatened species. Private landholders should be required to manage land in a sustainable manner, but should not have the cost of achieving a desired public good imposed on them.

Ultimately, the Australian community will need to understand that improvements in public-good environmental outcomes on private land impose a cost on the owner of that land, and that at the very least that cost for the landholder will have to be shared, if not fully recompensed.

Those who counter-claim that Australian farmers should expect to bear this cost as part of their ownership responsibilities need to understand that continuing to impose increasingly restrictive controls over landuse on farms will impede both farm productivity and environmental outcomes, will be increasingly unenforceable, and will also ratchet up administrative and regulatory costs.

They might also like to reflect on the fact that Australian farmers receive virtually the lowest levels of taxpayer funding of any farmers globally, and are currently required to carry the full cost burden of environmental regulations impacting on private land ownership, something that no other farmers internationally are required to do.

The approaches to achieving public good conservation outcomes on private land that have been adopted by governments internationally focus on creating long-term ‘markets’ for the provision of environmental services by private landholders. These approaches create real financial value for landholders who deliver environmental services, while at the same time require governments and the community to make decisions about the trade-off between preserving the environment and using the land for other productive purposes.

There has been some trials of these models in Australia, including the Bush-tender program in Victoria, and the Environmental Services Schemes that have been run by various governments at different times. Invariably, these programs have been ad hoc and short lived, have been subject to excessive trials and bureaucratic and scientific meddling, and have only been able to be taken up by very small numbers of landholders, with limited overall impact.

A new approach

Taking all this into consideration, how might such a model operate in relation to issues such as native vegetation and threatened species conservation, which are two of the most contentious environmental issues that have impacted on landholders in Australia over the past two decades? A pragmatic approach could be to develop bioregional level targets for the amount of land that needs to be reserved purely to maintain the sustainability of farm land. This would, in effect, determine the minimum proportion of land that each farmer owns which they would be required to prudently retain in a largely natural state in order to maintain the sustainability of their land (the private benefit component).

Within that constraint, farmers would then be free to manage their own land optimally, identifying those areas they believe are best suited for conservation, and those areas best suited to production, and having the flexibility available to change these over time as situations dictate. This requirement would give effect to existing obligations that apply in most states under legislation such as the soil conservation or erosion prevention legislation, as well as obligations to manage pests and weeds, but would not include current restrictions imposed by native vegetation and threatened species legislation on privately-owned farmland.

Landholders with insufficient areas set aside for conservation, or who did not wish to set aside some of their own land could, over time, either be encouraged or eventually required to purchase or lease extra areas of conservation land, owned by other landholders in that region, in order to meet their minimum sustainability requirements. Under such arrangements, existing areas of land maintained for conservation purposes and not used for farming would gain value, restoring equity between farmers who have conservatively managed their land, and those who have cleared ‘fence-to-fence’. Under such a model in Brazil, land retained for conservation purposes sells for virtually the same value as farming land.

Simply requiring landholders to retain areas of land under conservation in order to ensure the land is managed in a sustainable fashion will not necessarily result in improved biodiversity outcomes. Landholders might decide, for example, that an area that currently has high biodiversity values might be preferable to utilise for crop production, and other areas set aside as the required area of conservation.

The approach used to address this problem in many jurisdictions involves the development and use of an environmental benefits index or biodiversity points system. This is a standardised environmental scoring system that allocates points for the environmental characteristics of a particular area of land. For example, an area of land that contains habitat for threatened species or on which threatened species are known to exist would score high points using such an index.

In the United States (US), the Conservation Reserve Program has operated using an Environmental Benefits Index for more than 30 years. The Victorian Government has developed the concept of ‘habitat hectares’ using such a system, the result being that an area of high conservation land is credited with more habitat hectares than the same area of land that does not have high conservation value.

Policies adopted to achieve desired public good environmental outcomes can incorporate the environmental value of specific areas of land in a number of ways. One approach could be that a landholder who owns an area of conservation land with higher biodiversity values gains some discount on the proportion of total area of land that is required to be retained for conservation.

The option also exists that governments could implement incentive schemes that financially reward landholders who enter into long-term conservation agreement under mutually agreeable funding arrangements. Land with high biodiversity values can be given preference in assessing tenders for land to be included in such schemes. This is the approach used under the Conservation Reserve Program operated by the US Government. Under that scheme, landholders can enter into conservation agreements of 15 years in duration, and land that has a high Environmental Benefits Index generally receives a higher per acre rental payment than other land.

A consequence of the adoption of policies such as this is that, over time, land with high biodiversity values increases in value, and this provides an incentive for landholders to protect the biodiversity on their land, or to take action to encourage threatened species or improve biodiversity.

Importantly, the change in value for land retained for conservation purposes will only occur over time, as landholders become confident that available incentives will persist. The usual government approach of announcing short-term or ‘trial’ initiatives that are only funded for a limited period of time will not create sufficient confidence amongst landholders, and equally importantly, does not fit in with the normal investment horizon for managers of a farm business, which is between 10 and 15 years.

A key requirement for any environmental scoring system is that it is transparent and robust, with independent third-party assessment processes based on published guidelines. Just as importantly, the environmental scoring system does not need to be perfect from the outset. It can be adjusted over time and refined based on experience. Making changes such as are proposed here would require a pragmatic approach by both governments and landholders, and ideally a staged implementation so that lessons could be learnt and progressively incorporated.

Critics will undoubtedly claim it gives too much freedom to farmers, and places at risk the changes that have been made over the past 20 years. Yet the fact remains that despite almost 100 million hectares (20%) of Australian agricultural land being converted from agricultural to conservation use over the last thirty years, and despite the heavy-handed and cumbersome regulatory arrangements under current biodiversity legislation, experts and conservation groups still claim that species are becoming extinct and the environment is suffering. If this is correct, then to argue for a continuation of these existing regulations in the expectation of a different outcome surely meets the definition of insanity.

Policy settings that create a long-term market for the provision of conservation services and place real financial value on the environmental outcomes achieved by landholders, while at the same time addressing the inherent inequity of current policies, seem to be a much more logical and effective way to address these issues. 

Images:  Little River Landcare Group, Stefano Lubiana, Reilly.

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