Lingering effects and greater visibility

Australia’s environmental degradation from agriculture: lingering effects and greater visibility

Bengt Hyberg

Australia’s Environmental Degradation from Agriculture: Lingering Effects and Greater Visibility

Abstract: Past agricultural practices encouraged by government settlement and agricultural policies have altered the environment and will have a continuing effect on the condition of Australia’s resources. The condition of Australia’s land and water will in turn affect future productivity. Better knowledge of agriculture’s effects on the environment and growing demand for environmental quality due to increased affluence can be expected to influence Government policies in the future.

Keywords: Agricultural policy, agricultural production, environmental quality, soil erosion, salinity, input subsidies.

Agriculture has been a prominent sector of Australia’s economy since the first European settlers arrived. Suitable agricultural systems were required for survival and then became a critical element in the successful colonization of the Australian continent. After World War II, manufacturing and service sectors increased, and agricultural production practices intensified as export markets expanded.

However, little attention was paid to the environmental consequences of the farm practices employed until Australia’s population expanded, the importance of other economic sectors increased, and the effects on soil and water resources became more widely known.

Agriculture and Environmental

Change in Australia

In 1788 the first fleet landed, and Australia was established as a British convict settlement. During the first several decades of the settlement, difficulties in establishing agriculture meant that Australian farms were only able to supplement the supplies provided by Britain. As colonization progressed, agricultural systems developed that permitted Australia to become an exporter, first of wool, then of wheat, and eventually of other cereals, sugar, beef, cotton, fruits, and wine.

Australia’s climate has strongly influenced the interaction between agriculture and environmental damage. Australia is the second driest continent, only Antartica is drier. The dry climate has caused hardships and economic disruptions leading numerous chroniclers to characterize Australia as a harsh, dry, and rugged continent. The dry climate is an integral component in the set of conditions that make Australia a fragile continent. The lack of precipitation means that underground salts have not been leached away as normally would occur in a climate with a higher rainfall. In addition, the dry climate means that water is less available to break down the bedrock so soils form more slowly. Thus, Australia has generally shallow soils and delicately balanced hydrologic conditions.

Australian agriculture has three broad zones: pastoral, wheat-sheet, and high rainfall (map 1). The pastoral zone covers the low-rainfall area in northern and central Australia. Agricultural production consists of extensive sheep, cattle, or sheep-cattle farms. The wheat-sheep zone includes the moderate rainfall, inland areas of eastern, southeastern, and southwestern Australia. The wheat-sheep zone is where farm production can shift quickly from wheat and other grains to sheep in response to market prices. Some portions of this zone that lie close to water sources produce high-value irrigated commodities such as fruit, cotton, and rice. Mountains separate the wheat-sheep zone from the high-rainfall zone, where production is more varied, including dairy, sheep, vegetables, sugarcane, and fruit. As Australian agriculture developed, increasing amounts of native vegetation were replaced by crops and pasture. This change of vegetation disturbed the natural hydrologic equilibrium associated with the native plant species and increased the rate of soil erosion (see box). In addition, farming practices associated with more intensive agriculture, such as irrigation and fertilization, led to difficulties with salinity, waterlogging, and soil acidity. In some cases, the environmental damage from agriculture was sufficient to cause the abandonment of farming.

Australian Agricultural Programs and

Land Degradation

Government policies, such as subsidies or restrictions on management practices, can change the crops and livestock farmers produce and the way they produce them. Thus, changes in government policies can have a significant impact on the environment.

Australian policies affecting agricultural commodity markets tend to be less direct than those of the United States. For instance, rather than using support prices, export subsidies, and import barriers to stabilize farm incomes, Australia uses state and national marketing boards for grains, wool, and livestock. Intervention has also focused on land use, land tenure systems, irrigation programs, and input subsidies. Although these latter policies do not directly affect agricultural commodity markets, they do change economic incentives, and exert a substantial impact on agriculture and the environment.

The policies governing land settlement in Australia were designed to encourage economic and agricultural development. There were numerous variations on the theme, but most settlement policies required the clearing of a prescribed portion of land within a stated period of time to demonstrate the farmer’s stewardship (1, 2, 3). Landowners often cleared land more rapidly than they could establish crops or improve pasture, leading to poor management practices (3). Frequently, shallow-rooted vegetation was substituted for the native deep-rooted species and the replacement of permanent ground cover with agricultural systems that periodically exposed the soil to erosive forces. In some instances, the introduced plant species could not survive the periodic drought conditions that are characteristic of western Victoria, New South Wales, and Queensland.

Another example of government land settlement programs were those that established farms of “an area sufficient to sustain a family in average seasons and conditions” (5). Unfortunately, in many cases the farms were not large enough to be operated efficiently and failed. The environmental degradation on these farms tends to be greater than on larger farms in the same area, probably because of overstocking the land in an effort to keep the farm solvent (13).

Over the years, Australia has subsidized irrigation water, and nitrogen and phosphate fertilizers to stimulate agricultural production. The subsidies lower the cost of these inputs relative to land rental, labor, and other inputs, increasing their use. Shifting relative costs can change the optimal rotation and production practices, which in turn can change physical and biological processes affecting hyrologic conditions, chemical reactions, and soil movement.

Australia subsidized nitrogen and phosphate fertilizers between 1966 and 1984, underwriting from 3.4 percent (1980-82) to 46.8 percent (1968-69) of the farmer’s cost of nitrogen, and between nothing (1974-75) and 80.5 percent (1969-70) of the farmer’s cost of phosphate (10). These subsidies increased fertilizer applications above what farmers would have used if they had had to pay the full market cost. During 1969-73, the subsidy may have increased phosphate use as much as 35 percent (6). Given the increase in soil acidity associated with the use of nitrogen and phosphate fertilizers and the increased use of fertilizers due to the subsidies, the subsidization of fertilizers may have contributed to the soil acidification observed in the 1980’s.

While the subsidies for fertilizers have ended, those for irrigation continue. Irrigation projects constructed with federal funds provide water at rates that frequently do not cover the variable costs of delivery (11). In Victoria and New South Wales, a farmer with water entitlement can have a certain amount for a flat annual fee, whether the water is used or not. Because the farmer must pay a lump sum for the initial water allotments, the marginal cost of water approaches zero for those who use only their basic water allotment (3). This results in inefficient water use when the allocation provides more water than would be used under a unit pricing schedule. In periods of surplus flow, above-allocation water may be available to irrigators. This water is not free, but the price is usually subsidized.

The rules governing irrigation often act along with the pricing system to promote economic inefficiency. Irrigation permits are granted by the state on an annual basis, and technically renewals are not automatic. Water entitlements can be revoked for a number of reasons, the most significant being failure to establish a beneficial use for the water (9). This, coupled with the water rate structure, serves to encourage the full use of a farm’s irrigation allotment.

Until recently, the irrigation rights were fixed and non-transferable, which led to economically inefficient use of the water. Producers with irrigation entitlements who faced low marginal returns from irrigation were encouraged to irrigate because they were prevented from transferring water to producers who are able to make better use of it. The regulations that have prevented the transfer of irrigation water are slowly changing, but curtail the movement of water beyond catchment boundaries. This prevents the purchase of irrigation water by municipalities, the users with the greatest water demand.

The combined effect of these incentives to use water increased the water table in some irrigation districts and areas, resulting in waterlogging of some soils. It has also increased salinity in the irrigation tail water and reduced the water quality for irrigators and other users downstream.

The Future

Many factors will influence the relationship between agriculture and the environment over the foreseeable future. Three of the most important are: technological change, the effect of past agricultural practices, and increasing demand for environmental quality.

Technological change will most likely enable farmers to adopt more environmentally sound practices while increasing their net revenues. Recent examples are the introduction of minimum tillage in grain production and water conserving irrigation methods.

Australia has eliminated most of the agricultural programs affecting crop and sheep production, and with them a number of the unintended incentives to degrade the land. However, programs which have been terminated will continue to affect agriculture through their effects on the resource base. The changes in land and water quality have altered agricultural productivity and production practices.

Demand for environmentally sound agricultural production practices can be expected to follow the increasing trend displayed over the last several decades. Agriculture may be constrained through regulation, taxation, community pressure, or redefinition of property rights. This is particularly likely for practices such as irrigation and land clearing, which have an impact on neighboring communities.

References

[ 1.] Bradsen, J. and R. Fowler. “Land Degradation: Legal

Issues and Institutional Constraints” in A. Chisholm

and R. Dumsday (eds.) Land Degradation: Problems

and Policies. Cambridge University Press, Sydney,

1987. Pp. 129-67.

[ 2.] Campbell, K.O. “Problems of Adaption of Pastoral

Businesses in the Arid Zone.” Australian Journal of

Agricultural Economics, 10 (1966), pp. 14-26.

[ 3.] Center of Policy Studies. Victoria’s Irrigation Systems:

Study of the Distribution of Costs and Benefits. Center

of Policy Studies, Monash University, Melbourne,

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[ 4.] Conacher, A. J. “Salt of the Earth: Secondary Soil

Salinization in the Australian Wheat Belt.” Environment,

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[ 5.] Davidson, B.R. European Farming in Australia: An

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[ 6.] Hyberg, B. “Interactions Between Agricultural Policies

and the Environment.” Presented at the Australian

Agricultural Economics Society Meetings, Brisbane,

February 13-15, 1990.

[ 7.] Moncrieff, I.J. and R.G. Mauldon. “The Effect of Land

Clearing Regulations on the Rate of Farm Development:

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[ 8.] New South Wales Water Resources Commission.

Water Logging and Land Salinization in Irrigated Areas

of New South Wales. 1985.

[ 9.] Randall, A. “Property Entitlements and Pricing Policies

for a Maturing Water Economy.” Australian Journal of

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[10.] Rose, R.N., Moir, B.G., Farquharson, R.J. and Vanzetti,

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of Fertilizers. BAE submission to the IAC, AGPS,

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[11.] Watson, W. D. and R. N. Rose. “Irrigation Issues for

the Eighties: Focusing on Efficiency and Equity in the

Management of Agricultural Water Supplies.” Paper

presented at the 24th Annual Australian Agricultural

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[12.] Woods, L.E. Land Degradation in Australia. Canberra:

Australian Government Printing Service, 1984.

[13.] Young, M. “Land Tenure: Plaything of Governments

or an Effective Instrument?” in A. Chisholm and R.

Dumsday (eds.), Land Degradation: Problems and

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Pp. 175-86.

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