sustainable agricultural systems the economics of improving water quality in the gordonstone creek...
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sustainable agricultural systems
The economics of improving water quality in the Gordonstone Creek Catchment
Fred Chudleigh DPI &FJames Gaffney CQUChris Chilcott DPI &F
The Fitzroy Catchment
Reef Water Quality Protection Plan(Great Barrier Marine Park Authority 2001)Initially seeks
A 50% reduction in sedimentA 50% reduction in phosphorus, andA 33% reduction in nitrogen pollutants
by 2011
Productivity Commission 2003, “Industries, Land Use and Water Quality in the Great Barrier Reef Catchment, Research Report, Canberra”.
Primary cause of the pollution problem
Terrestrial runoff (non-point, diffuse pollution)Cattle grazing and cropping the most
significant contributors to diffuse pollutant discharges into the Great Barrier Reef Lagoon
The Fitzroy River catchment 14.2 million hectares - 8% of Queensland- 35% of the catchment area that flows into the Great Barrier Reef lagoon
Produces 45% of GBR beef43% of GBR crops
(non sugar)45% of GBR coal
Employs20% of GBR
workforce
Produces22% of sediments17% of nitrogen19.5% of
phosphorus
That reach the Great Barrier Reef Lagoon
(Dougall et al., 2004)
Sediment and land use in the Gordonstone Creek Catchment
280 km2 in areaInstrumented with water quality equipment (Dougall et al., 2004)Pollutants of sediment, nutrient & pesticide loads monitored and measuredAt scales from 15 hectares up to 28,000 hectares
April 2000
February 2000
50 km2
Gregory Hwy Site
% Stubble Cover0-10 10-20 20-30 30+
Millar, Dougall, Rohde and Carroll, (NR&M, 2000)
The Cover Story
Impact of ground cover on event mean sediment concentration for the Gordonstone Creek catchment
Gregory Highway
y = 327.24x-1.5234
R2 = 0.5536
0
1
2
3
4
5
6
7
8
9
10
0 10 20 30 40 50 60 70 80 90 100
Mean ground cover (%)
Eve
nt
mea
n s
edim
ent
con
cen
trat
ion
(g
/L)
Series1
Power (Series1)
(Carroll et al 2004)
Catchment modelling and sediment loads
0 2000 4000 6000 8000 10000 12000
ConventionalTillage
Current Practice
Full StubbleRetention
GRMPA Targets(Half of current)
Gordonstone Creek sediment loads (Tonnes per annum)
(Dougall et al., 2004)
Catchment modelling and sediment loadsCatchment modelling is a new science
Sediment and sources not readily linked within the catchmentSediment sources may be managed through
Site specific treatment - some difficulty in knowing which site to treat or the
impact on overall sediment levels of treatment at any particular site
Landscape or catchment wide treatments - requires land use change across the catchment
In this analysis we estimate the opportunity costs at the property level of a landscape or catchment wide treatment applied to manage soil loss
Methodmodelled soil loss and productivity using bio-physical production models (APSIM & GRASP) for the Capella climate (110 years)Chose 3 production scenarios from the modelled outputs to represent typical farming systems in the catchment
CroppingGrazingGrazing with a water quality constraint
Applied the bio-physical outputs to economic models (2000 ha cropping property “at Capella”)
The trade off between production system and soil loss
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 5 10 15 20 25 30
Soil loss (tonnes /hectare /annum)
Cu
mu
lati
ve
pro
ba
bilit
y (
%)
Cropping
Grazing
Grazing with water quality constraint
Conversion from Cropping to Grazing with a water quality constraint
-$4,000,000
-$3,000,000
-$2,000,000
-$1,000,000
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000Ye
ar 0
Year
1
Year
2
Year
3
Year
4
Year
5
Year
6
Year
7
Year
8
Year
9
Year
10
Year
11
Year
12
Year
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Year
14
Year
15
Year
16
Year
17
Year
18
Years
Nom
inal
inflo
ws
& o
utflo
ws
($/a
nnum
)
Cropping Grazing w ith a w ater quality constraint
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 1000 2000 3000 4000 5000 6000
Grain yield (kg/ha)
Cum
ulat
ive
prob
abili
ty (%
)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 200 400 600 800
Number of steers on propertyC
um
ula
tiv
e p
rob
ab
ilit
y (
%)
GRASP Grazing with a water constraint
Property productivity
Cropping Grazing with a water quality constraint
Results – marginal economic analysis for first investment period - NPV for change from Cropping
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-$4,500,000 -$3,000,000 -$1,500,000 $0 $1,500,000
Net Present Value ($)
Cu
mu
lati
ve p
rob
ab
ilit
y (
%)
No land value change Reduced residual land value
The trade off between production system and soil loss
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 5 10 15 20 25 30
Soil loss (tonnes /hectare /annum)
Cu
mu
lati
ve
pro
ba
bilit
y (
%)
Cropping
Grazing
Grazing with water quality constraint
The trade off between production system and soil loss
0
20
40
60
80
100
120
140
160
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Hectares per steer
Wei
gh
t gai
n (p
er a
nn
um
)
0
200
400
600
800
1000
1200
1400
1600
So
il lo
ss (k
g/h
a/an
nu
m)
Steer weight gain (kg/head) Steer weight gain(kg/hectare) Soil loss
Grazing trial results agree with the model Link between cumulative soil loss and
cattle production on poplar box country
0
100
200
300
400
500
Excl Low Med High
Grazing pressure
Kg
/ ha
LWt Gain
Soil loss /10
Link between cumulative soil loss and cattle production on ironbark country
0
100
200
300
400
500
Excl Low Med High
Grazing pressure
Kg
/ ha
LWt Gain
Soil loss /100
Cumulative surface soil movement and beef production over 7 years at (a) the ironbark site and (b) the poplar box site, as grazing pressure increased from zero to high.Richard Silcock, Trevor Hall, Paul Jones & David Waters (2005)
The trade off between production system and soil loss at the property level
0
20
40
60
80
100
120
140
1.5
0
2.0
0
2.5
0
3.0
0
3.5
0
4.0
0
4.5
0
5.0
0
Hectares per steer
We
igh
t g
ain
(to
nn
es
pe
r a
nn
um
)
0
200
400
600
800
1000
1200
1400
1600
So
il lo
ss
(k
g/h
a/a
nn
um
)
Property beef output Soil loss
Models indicate managing grazing pressure can reduce soil loss
0
5001000
1500
20002500
3000
3500
40004500
5000
1891
1896
1901
1906
1911
1916
1921
1926
1931
1936
1941
1946
1951
1956
1961
1966
1971
1976
1981
1986
1991
1996
Years
Soil
loss
(kg/
ha)
Grazing Grazing w ith a w ater quality constraint
Conversion from Grazing to Grazing with a water quality constraint
-$3,000,000
-$2,000,000
-$1,000,000
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000Y
ea
r 0
Ye
ar
1
Ye
ar
2
Ye
ar
3
Ye
ar
4
Ye
ar
5
Ye
ar
6
Ye
ar
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Ye
ar
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ar
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Ye
ar
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Ye
ar
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Ye
ar
12
Ye
ar
13
Ye
ar
14
Ye
ar
15
Ye
ar
16
Ye
ar
17
Ye
ar
18
Ye
ar
19
Ye
ar
20
Years
An
nu
al in
flo
ws
an
d o
utf
low
s (
$)
Grazing Grazing with a water quality constraint
Steer numbers on the property
0
200
400
600
800
1000
1200
140018
91
1897
1903
1909
1915
1921
1927
1933
1939
1945
1951
1957
1963
1969
1975
1981
1987
1993
1999
Years
Num
bers
of s
teer
s (p
er
annu
m)
Grazing Grazing w ith a w ater quality constraint
Property productivity
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-10
00
00
-75
00
0
-50
00
0
-25
00
0 0
25
00
0
50
00
0
75
00
0
10
00
00
12
50
00
15
00
00
17
50
00
Kilograms of weight gained (kg/annum)
Cu
mu
lati
ve
pro
ba
bili
ty (
%)
GRASP Grazing with a water constraint GRASP Grazing
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 200 400 600 800 1000
Number of steers on property
Cu
mu
lati
ve
pro
ba
bil
ity
(%
)
GRASP Grazing with a water constraint GRASP Grazing
Results – marginal economic analysis for first investment period
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-$2,0
00,0
00
-$1,5
00,0
00
-$1,0
00,0
00
-$500,0
00
$0
$500,0
00
Net Present Value ($)
Cu
mu
lati
ve p
rob
ab
ilit
y (
%)
No land value change Reduced residual land value
NPV for change from Grazing
ConclusionThere is a very close relationship between productivity and profitability within any broadacre agricultural investmentAny constraint to productivity across a property will significantly impact on profitabilityManaging at the catchment or landscape scale to control the sources of diffuse pollutants will cause rural investors to incur significant opportunity costsCombining bio-physical models with economic models allows estimates of the opportunity costs incurred at the property level to be more accurately estimated
Questions?