[MUSIC PLAYING] Resource conservation in agriculture is an important concern of farmers. There's a range of resources that they use, that they need to protect for their future use. So for example, soil conservation. Farmers practice soil conservation through reduced tillage methods, so reducing cultivation of the soil when they plant their crops; through retaining crop residues on the soil surface; and sometimes through rotating between different types of crops, where some crops provide high levels of nutrition. Legume crops might provide nitrogen to subsequent cereal crops. Water conservation-- through repairing vegetation, with protecting water quality in rivers, through establishing vegetation along river banks, and through repairing erosion gullies. Biodiversity conservation-- through revegetating natural habitat; through excluding stock, livestock from that natural habitat; and through control of certain types of pests that's environmentally damaging. And pesticide conservation, particularly the preservation of herbicides before they develop herbicide resistance-- through rotating herbicides and through developing pesticide zones. So adopting resource conservation is a tricky decision. A farmer's decision to adopt is complex and multifaceted-- depends on various things. One factor is the profitability of the practice, but it's not the only consideration. Other factors include convenience, personal preference, and the attitude of the farmer to the particular issue with a particular practice. So the economics of these conservation practices are important in the decision making. All farming practices have benefits and costs, and they include financial benefits and costs and potentially non-financial benefits and costs. And part of what we're interested in as economists is how do these benefits and costs stack up. It's not necessarily the case that financial benefits have to exceed financial costs for a particular purpose to be attractive enough to a farmer, but it certainly helps. So let's look briefly at the example of planting native trees on a farm. There's a variety of costs and benefits involved in this practice to farmers. There are financial costs-- you can see several listed there-- and financial benefits-- again, several listed. But there are also non-financial benefits that a farmer might gain by their satisfaction and happiness, utility from the fact that they are doing good for the environment. Now, there are a number of challenges to the adoption of conservation practices, typically. So they include things like the fact that conservation practices often have delayed benefits. You have upfront costs, but the benefits don't occur until sometime in the future. They may be considered to be more risky or more uncertain by the farmer, compared to the practices that they normally do on the farm. And there may be impacts on other enterprises on the farm. So let's talk a little bit more about each of those three, starting with delayed benefits. So costs of conservation are usually incurred up front. There may be ongoing costs, but the bulk of the costs usually occur at the start of the use of a conservation practice. On the other hand, benefits are often delayed. So trees grow slowly, and the take time before they would deliver the benefits that they were planted for. So for example, they take time before they become useful habitat for wildlife. Or the degradation that you are hoping to prevent-- such as soil degredation-- is predicted to occur sometime in the future, and you're planting trees now to prevent that future degradation. But there's a lag before the benefits are realized because the damage wouldn't have occurred 'til sometime in the future. So how should this be considered in economic analysis? That's something that we'll be talking about later on in this series of talks. Let's look at risk and uncertainty. Conservation practices can be quite unfamiliar and may involve sizable management changes for farmers. And so the benefits and costs that they'll get from adopting these practices could be quite uncertain. So they plant trees for wildlife, but they're unsure how much difference they'll make to the local wildlife that they're hoping to help. Or they may plant trees to reduce future dry land salinity, but they're not sure how much salinity would occur in the future-- or when it would occur. So conservation practices may be perceived as being more risky. Seedlings might die, or trees might be lost in bushfires or wildfires. So some farmers may prefer to avoid those risks and that uncertainty. And this is called risk averse. There's lot of study in agricultural economics in the risk attitudes of farmers. And it's been found that most farmers have a degree of risk aversion. Finally, there may be impacts on other farming enterprises. Conservation practices might affect other enterprises, such as there may be obstruction to farming machinery-- moving around the farm. Or if we're planting trees, that might provide habitat which causes an increase in the number of pests. They might shelter pests, which then increase in number and move on to the rest of the farm. On the other hand, there could be spin-off benefits from planting trees through shelter that's provided to livestock or reduced wind erosion of soils. So in summary, profitability helps to make practices more attractive to farmers, although non-financial factors also play an important role. Resource conservation practices often have delayed benefits. They're often somewhat risky and uncertain, and they may have impacts on other enterprises. And so these can be key barriers to their wider adoption by farmers. [MUSIC PLAYING]
