Policy perspectives on rural practice change

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Information about Policy perspectives on rural practice change
Education

Published on November 14, 2008

Author: ruralpracticechange

Source: slideshare.net

Description

by Prof David Pannell
Full details see: http://www.ruralpracticechange.org/

Policy perspectives on rural practice change David Pannell ARC Federation Fellow School of Agricultural and Resource Economics University of Western Australia

Key messages Think systematically about choice of policy mechanism for practice change The public: private benefits framework can help choose Focus extension efforts onto practices that are adoptable

Think systematically about choice of policy mechanism for practice change

The public: private benefits framework can help choose

Focus extension efforts onto practices that are adoptable

Practice change: Why worry? Why not leave the whole thing up to farmers and their business advisors?

Why not leave the whole thing up to farmers and their business advisors?

Market failure Externalities Relative advantage diverges from public benefit Public goods – free rider problems e.g. Weak incentives for private sector to research practices that can be easily copied Information asymmetry Government may have better knowledge about a practice Mainly relevant to new practices

Externalities

Relative advantage diverges from public benefit

Public goods – free rider problems

e.g. Weak incentives for private sector to research practices that can be easily copied

Information asymmetry

Government may have better knowledge about a practice

Mainly relevant to new practices

Importance of adoption factors by adoption phase *** * Disadoption * *** * Revision * *** * Adoption *** ** ** Trial eval. ** * *** Non-trial evaluation *** Awareness Technology: trialability Technology: relative adv. Social

Choosing policy mechanisms Public: Private Benefits Framework

Definitions “ Private benefits” relate to the landholder making the decisions (internal) ≈ relative advantage or “adoptability” “ Public benefits” relate to all others (external) neighbours, downstream water users, city dwellers interested in biodiverity

“ Private benefits” relate to the landholder making the decisions (internal)

≈ relative advantage or “adoptability”

“ Public benefits” relate to all others (external)

neighbours, downstream water users, city dwellers interested in biodiverity

Possible projects Each dot is a set of land-use changes on specific pieces of land = a project. Which tool? Incentives Extension Regulation New technology No action Lucerne Farm A Lucerne Farm B Forestry in water catchment Current practice

Which tool?

Incentives

Extension

Regulation

New technology

No action

Alternative policy mechanisms for seeking changes on private lands A Includes polluter-pays mechanisms (command and control, pollution tax, tradable permits, offsets) and beneficiary-pays mechanisms (subsidies, conservation auctions and tenders). Informed inaction No action Development of improved land management options, e.g. through strategic R&D Technology change Technology transfer, education, communication, demonstrations, support for community network Extension Financial or regulatory instruments A to inhibit change Negative incentives Financial or regulatory instruments A to encourage change Positive incentives Specific policy mechanisms included Category

Simple rules for positive incentives 1. No positive incentives for land-use change unless public net benefits of change are positive. 2. No positive incentives if landholders would adopt land-use changes without those incentives. 3. No positive incentives if costs outweigh benefits overall.

1. No positive incentives for land-use change unless public net benefits of change are positive.

2. No positive incentives if landholders would adopt land-use changes without those incentives.

3. No positive incentives if costs outweigh benefits overall.

Simple rules for extension 4. Not extension* unless the change being advocated would generate positive private net benefits (the practice is ‘adoptable’). 5. Not extension* where a change would generate negative net public benefits * Extension as the dominant tool

4. Not extension* unless the change being advocated would generate positive private net benefits (the practice is ‘adoptable’).

5. Not extension* where a change would generate negative net public benefits

* Extension as the dominant tool

Simple public-private framework

That was based only on simple rules The following version accounts for additional complexities Costs of learning/transition Lags to adoption Partial effectiveness of extension Transaction costs Need for higher BCR

That was based only on simple rules

The following version accounts for additional complexities

Costs of learning/transition

Lags to adoption

Partial effectiveness of extension

Transaction costs

Need for higher BCR

Complex version

Implications for policy Choice of policy tool depends on individual situation Best projects have private net benefits around zero (+ve incentives) or slightly positive (extension) Relative advantage (“Adoptability”) is a key

Choice of policy tool depends on individual situation

Best projects have private net benefits around zero (+ve incentives) or slightly positive (extension)

Relative advantage (“Adoptability”) is a key

Adoptability Is the innovation adoptable? Yes. Then why is it not adopted? No. What to do? It is new. Adoption will occur. Promote Awareness. Learning failure. Target that failure. Lack skills, resources. Training. Wait for good year. Develop a better technology: one that is adoptable. Public benefits? Financial payments. Regulation. No action.

Implications for policy Don’t default to extension to promote practice change First check adoptability Promoting practices with poor adoptability … erodes credibility wastes time and resources burns up good will

Don’t default to extension to promote practice change

First check adoptability

Promoting practices with poor adoptability …

erodes credibility

wastes time and resources

burns up good will

Key messages Think systematically about choice of policy mechanism for practice change The public: private benefits framework can help choose Focus extension efforts onto practices that are adoptable

Think systematically about choice of policy mechanism for practice change

The public: private benefits framework can help choose

Focus extension efforts onto practices that are adoptable

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