29An economic evaluation of a pest management control program: 'Outfox the fox'

Jones R, Saunders G and Balogh S (2006) ‘An Economic Evaluation of a Pest Management Control Program: ‘Outfox the Fox’, Economic Research Report No.29, NSW Department of Primary Industries, Orange.

Executive Summary

The European Red Fox (Vulpes vulpes) is a pest animal widely distributed across Australia. First introduced in the 1840’s in southern Victoria for recreational hunting, foxes are now estimated to occupy 98% of New South Wales. Foxes result in substantial environmental damage through competition and predation of wildlife, as well as spreading weed seeds. The main agricultural impact from foxes is predation on lambs and goat kids. Although it is difficult to measure impact, foxes may prey on 10-30% of lambs in some areas.

The most commonly used fox control techniques are lethal baiting, shooting, trapping, den fumigation, den destruction and exclusion fencing. Fertility control through immunocontraception has been investigated as an alternative or supplementary means of fox control, as has chemical fertility control. Other measures such as the use of guard animals has been promoted in recent years but not yet fully evaluated in Australia.

The ‘Outfox the Fox’ program is a large strategic, coordinated fox baiting program in New South Wales that involves 20% of the State’s Rural Land Protection Boards. The program was established by the former NSW Agriculture (now part of NSW Department of Primary Industries) with an extension focus to improve the efficacy and cost-effectiveness of landholder fox baiting practices by promoting best practice techniques, and specifically to encourage landholders to group bait. The major feature of this program is that it involves a coordinated and community based approach to managing foxes using an existing technology. Consequently, the benefits arise from coordinated action, with the benefit rising with the number of participants until some asymptote is reached.

Approach to the evaluation

The primary economic outcome from the program is reduced mortality of juvenile livestock from fox predation. The lamb market is likely to benefit most from the program given that fox predation is a significant source of lamb mortality. Predation by foxes directly reduces the number of lambs weaned and marketed, thus reducing the supply of lamb in the sheep meat market. An economic surplus model of the Australian lamb industry was developed to estimate the economic benefit of the program. The model had a dissagregated regional form, with separate regions for the area under review, the rest of Australia, and the rest of the world. Due to uncertainty in the impacts of the program and a number of the adoption parameters, a stochastic analysis was adopted whereby the marking percentage of lambs, lamb price, maximum adoption and the period of maximum adoption were specified as random variables. The shift in the commodity supply function was estimated directly from changes in lamb marking percentages, which were assumed to increase by (in absolute values) between 1 and 5% due to the program.

A benefit-cost analysis model was developed to measure the return on investment from the ‘Outfox the Fox’ program. The annual benefit estimated using the model was the total change in economic surplus due to the program, adjusted by the annual level of adoption. The costs of the program comprised various salary and operational expenditures incurred by NSW Agriculture, Rural Land Protection Board’s and other state government agencies.

Economic, social and environmental effects

The economic surplus model indicated that the ‘Outfox the Fox’ program has the potential to generate a mean increase in annual economic surplus of $3.36m. This is comprised of a gain to producers in the study region of $2.44m, a $2.75m loss to producers in the rest of Australia, and gains to consumers within the region and rest of Australia of $0.05m and $2.55m respectively. There were also distribution impacts outside of Australia to international consumers (gain of $33.41m) and international producers (loss of $32.35m). There was significant variation in the total change in economic surplus represented by the standard deviation of $1.10m compared to the mean $3.36m, implying a coefficient of variation of 32.7.

The benefit-cost analysis model indicated that public investment in the ‘Outfox the Fox’ program provides a positive economic return. The analysis resulted in a mean NPV of $9.83m, and a mean BCR of 13.0:1. Although there was a large range in the NPV, with a minimum of $1.22m and a maximum of $28.54m, there were no negative returns. Likewise, the BCR results indicate that the program would always result in a reasonable return on investment, with a minimum value of 2.5:1 and a maximum of 35.8:1.

Foxes are one of the major exotic predators that threaten the survival of Australian fauna, and have contributed to the decline of many species of reptiles, mammals and birds. Consequently, any large-scale reduction in fox densities as a result of the ‘Outfox the Fox’ program could generate significant environmental and biodiversity benefits. To achieve any environmental benefit would require that the reduction in fox density from the program occurs in areas where there is wildlife as well as agricultural impact.

The economic benefits of a program such as ‘Outfox the Fox’ are shared by graziers, agribusiness and consumers in the form of increased income and can have important social consequences for regional communities. However, because of the small size of the program the social impact is likely to be marginal. One area of potential positive social impact from the program is the success of the community based integrated management approach that was taken to the problem. Community based approaches to managing problems (eg. Landcare, Bushcare) have been claimed to have a positive impact on social capital.