Economics, agriculture and native vegetation in NSW

by Rod Campbell and Andrew Scarlett

Native vegetation and regulations relating to its management have a minimal economic effect on agriculture in New South Wales (NSW). The state produces between $10 and $16 billion in agricultural output per year, dependent largely on rainfall and commodity prices. When rainfall is good and commodity prices are high, output is high. Less rainfall and lower commodity prices means agricultural production in the state is of far lower value.

A study by the Australian Bureau of Resource and Agricultural Economics (ABARE) found that vegetation density was the least important influence of all factors measured on farm productivity. Part of the reason for this is that native vegetation has both positive and negative economic impacts on farms. While vegetation can reduce production area and make use of machinery less efficient, it can also provide shade and shelter, reduce erosion and increase land values through amenity.ABARE studies suggest that a strong majority of landholders support native vegetation management regulations. Such regulations are an issue for a small minority of landholders in particular parts of NSW.

Conservation of native vegetation brings benefit to the community through improved biodiversity and environmental conservation. Existing regulations support these benefits and minimal cost to the vast majority of landholders. Where particular landholders are heavily affected and community gains from conservation on their land are large, existing regulations may not provide incentive for compensation and some policy change may be required. This is unlikely to be the case across most of NSW.

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