 According to Dr Robert Waschik of La Trobe's Department of Economics and Finance, this win-win-win situation could be achieved if graziers in these zones embraced the Federal Government's National Reserve System (NRS) program by which land is removed from direct production and set aside for ecological purposes.
Dr Waschick bases this claim on research he has carried out with former La Trobe colleague, Dr Iain Fraser, who now works at Imperial College, University of London. Their study is to be published in a forthcoming issue of the journal, Land Economics, (University of Wisconsin Press, US).
As Australia produces 74 per cent of world raw wool exports, they argue that any reduction in wool production would reduce world supply - and under the basic rule of supply and demand, the price would rise.
For example, if production fell by 10 per cent, prices would rise by the same figure - and at the same time the environment would benefit as the land removed from direct economic production would recover over time and become a better habitat for native fauna and flora.
The researchers used a computer model known as Computable General Equilibrium to examine the economic implications for biodiversity of agricultural land retirement from wool production in Australia.
Earlier research by Dr Fraser had indicated that agricultural land retirement might offer in some circumstances a means of achieving NRS objectives cost effectively.
So the researchers were not surprised that their modelling confirmed the economic benefits to arid and semi-arid zone graziers from the Australian Government's stated objective of ensuring that a comprehensive, adequate and represented system of protected areas that contain samples of all regional ecosystems be established.
In 1996 Federal Government established the NRS program to achieve this. Between 1996 and 2001 the Government allocated $85 million to buy land - but funding since 2001 has been significantly reduced.
Dr Waschik said that the modelling encompassed the three main wool producing zones, Pastoral (the arid and semi-arid inland), Wheat-Sheep (central NSW and south-west Qld) and High Rainfall (between the Great Diving Range and the east coast).
The model showed that arid and semi-arid zone graziers would benefit most because wool and sheep meat were their only products. There was much less direct economic advantage to farmers in wheat-sheep and high rainfall areas because their land use was much more diversified.
For example, if farmers in the wheat-sheep zone reduced wheat production, it would have minimal effect on world wheat prices because Australia was only one of a number of major producers.
Dr Waschik said there appeared to be only one reason why land retirement in arid and semi-arid zones might not have the desired economic effect. This would be caused by 'slippage' - farmers clearing and bringing into production more land to make up for that retired under NRS or increasing production on their reduced holdings by more efficient use of available resources including labour.
This would have the effect of elevating production to the previous level, in turn reducing the price of wool.
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