23An Economic Evaluation of Research into the Improved Management of the Annual Grass Weed Vulpia in Temperate Pastures in South-Eastern Australia

Vere DT, Jones RE and Dowling PM (2004) An Economic Evaluation of Research into the Improved Management of the Annual Grass Weed Vulpia in Temperate Pastures in South-Eastern Australia, Economic Research Report No.23, NSW Department of Primary Industries, Orange.

Executive Summary

NSW Agriculture has a history of research investment in managing weed problems in the temperate pasture areas. One focus of that research has been on the development of improved management practices for the major annual grass weed vulpia. Recent surveys have found that weeds comprised up to 80% of pasture biomass in some temperate areas and that typical vulpia contents are between 30 and 40% of pasture biomass. Livestock producers perceive weeds to be the major symptom of pasture decline in this part of the state. Temperate pasture degradation is recognised as being a major contributor to the wider environmental problems of soil erosion, salinity and acidity.

This evaluation related to an industry funded project that ran between 1996-2002 (DAN158) that focussed on the vulpia problem in the New South Wales temperate pasture areas. The benefits of that research were measured as the difference in the economic returns from the project (the with-research scenario) and those that would have resulted if the project had not been initiated (the without-research scenario). The latter recognises that there has been a past investment in vulpia research by NSW Agriculture and other organisations.

Approach to the evaluation

Vulpia and other weeds impose costs on livestock producers and their industries, and economic benefits result from improved management that reduces weeds. The main task was to determine the extent to which the project was expected to reduce the vulpia problem. The baseline that typified the problem was set at 36% vulpia composition after recent weed survey results. Under strategies involving tactical grazing and fertiliser use, the vulpia content could be reduced to less than 15% and maintained there with good grazing management. This was the maximum benefit that could be achieved from the research. To recognise the uncertainty that is associated with the estimation of the benefits and their realisation by producers, minimum (25%), most likely (20%) and maximum (15%) benefit values were elicited from the project staff for the with-research scenario. The without-research scenario involved a maximum benefit of 20% vulpia biomass (from 36%), most likely of 25%, and a minimum of 35% biomass. The difference between the simulated benefits of both scenarios represented the benefits from vulpia research that can be attributed to the DAN158 project. Adoption values were also elicited and simulated as a probability distribution, with the most likely level of adoption being 35% of the wool industry on the tablelands for the with-research scenario, and 30% for the without-research scenario.

DAN158 was largely conducted under the auspices of the Weeds CRC. The total costs of vulpia research were determined as being $2.1 million which was the amount of DAN158 funding and the value of by NSW Agriculture’s in-kind contributions to the Weeds CRC. An additional cost of $6.6 million was allowed for vulpia extension activities by NSW Agriculture over the 24-year period (1996 to 2020) of the benefit-cost analysis.

Economic, social and environmental effects

The results indicated high levels of economic benefits from the vulpia project. The annual net project benefit had a mean value of $58 million. The benefit-cost analysis generated a mean NPV of $196.9 million and a mean BCR of 22.2. These results demonstrate that research by NSW Agriculture into the improved management of vulpia has the potential to generate substantial long-term economic benefits. These benefits are equivalent to the value of the livestock production increases (in this case, wool) that result from reducing the vulpia and increasing the perennial grass content in a pasture. Other socio-economic aspects of the results showed that wool producers outside the New South Wales temperate areas lost economic surplus (from a mean -$21.7 million to -$47.8 million) because they were unable to adopt the cost-reducing technology and faced a reduced wool price. All wool consumers gained from vulpia research because of expanded wool production and lower wool prices. Improved vulpia management is also considered to produce important environmental benefits by encouraging a greater use of deep-rooted perennial grasses and the beneficial effects of these on mitigating soil problems and reducing water table discharges.

Funders and beneficiaries

The financial costs of DAN158 were met by the International Wool Secretariat with in-kind contributions from NSW Agriculture. The wool industry has been the principal beneficiary of the vulpia research and has appropriately provided about one third of the funding. All sections of the state’s community will benefit in the long term from the environmental improvements that will result from increasing the perennial content of temperate pastures. These benefits are mainly expressed through reduced soil erosion and salinity and the reduced discharge of salts into waterways. However it would seem that the focus of this research has been on productivity gains and hence it seems appropriate the share of industry funding be half or more in the future implying that industry support of future extension programs is required.