I’m going to make a couple of comments on the recent report. I’m writing this as I generally find this an area that is poorly understood. I used to work for the CRC for Tropical Pest Management (1994-99), and this is an area where the economics could be improved. However, notable economic contributions to this area have been made by Clem Tisdell and David Pannell.
Before we get started, some terminology:
Hopefully this terminology clarifies some of the language and illustrates how changing density within a pest-load alters costs, and/or entrance of a new pest doesn’t necessarily mean that more costs are required as existing strategies could deal with the entrance of a new species.
The Murray-Darling Basin (MDB) has the second most variable inflows in the world, and this uncertainty provides complexity in managing the outputs generated from the application of water to either environmental or agricultural production systems. This uncertainty in water supply results in irreversible capital losses (natural, social and economic). During the Millennium Drought the area irrigated in the MDB essentially halved from 1.8 million Ha in 2000-01 to 900,000 Ha in 2006/07 (ABS data various).
We can simplify the environmental outcomes from developing a set of environmental rights and the problems of dealing with supply uncertainty in the following chart.