Choice modelling in the development of Natural Resource Management Strategies in NSW catchments

Abstract

Australian public awareness of natural resource management (NRM) issues relating to environmental conditions has been heightened in recent years. However, due to government budget limitations only some of the environmental problems can be addressed. This raises the question of how available funds should be allocated in order to achieve improved resource use efficiency. The motivation for this research arises from the need for a better understanding of how non-market values can be used in the NRM investment prioritisation processes to enable a comprehensive cost benefit analysis of different resource allocation options. The objective of this research was to explore the application of choice modelling (CM) to elicit the values of New South Wales (NSW) residents for a range of environmental and social changes provided by potential NRM investments in NSW catchments. The estimated environmental and social values are inputs to bio-economic optimisation modelling tools used by Catchment Management Authorities to determine land use changes that can provide improved net benefits to society over time. A further objective of this research was to explore scope, scale effects, the distance effect and ways of improving incentive compatibility of the CM technique. These three methodological issues were investigated to ensure an appropriate use of non-market values for NRM assessments at both catchment and farm levels as well as more accurate extrapolations of non-market values from the case studies to wider application. In order to provide improved result credibility for the policy process, the inclusion of a provision rule directed at incentive compatibility was also tested. Fourteen sub-samples for three case study catchments - Namoi, Lachlan and Hawkesbury-Nepean - were used for the analysis. The results of this study highlight the importance of accounting for variations in values held by different respondent community locations. Most of the differences in preferences for NRM changes were found between rural and urban communities. The semi-rural characteristics of the Hawkesbury-Nepean catchment community and the close proximity of this catchment to the Sydney urban centre exhibit similar views on NRM actions in this catchment. The results show a higher per unit willingness to pay for a greater scale of provision of non-market attributes, as well as when the good is presented at a smaller scope. The results of this study have not shown a significant impact for including a provision rule on respondent preferences, suggesting a further investigation of a stronger provision rule with a combination of different elicitation formats. The CM application presented for NRM and the three methodological issues investigated in this study provide a significant contribution to more comprehensive and accurate cost benefit analyses of NRM investments in NSW catchments and beyond. The CM approach to eliciting non-market values is suitable for NRM assessments and provides a basis for benefit transfer of these values to similar studies across Australia. Clarifications of scope, scale, location and distance effect terminologies contribute to non-market valuation knowledge of the use of these terminologies so often confused in the literature and provide a clearer understanding of their practical implications in NRM assessments. Investigation of new ways of dealing with incentive compatibility in CM field experiments undertaken in this study also opens opportunities for future research in this area.