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Joint Media Release
Federal Minister the Environment and Heritage
Dr David Kemp
&
Federal Minister for Agriculture, Fisheries and Forestry
Warren Truss

8 December 2003

Market Based Instruments Fighting Dryland Salinity


Australia's Natural Resource Management Ministerial Council (NRMMC) has given the go-ahead for CSIRO to set up a pilot trading and offset scheme to tackle dryland salinity.

The $360,000 project - announced today by Australian Minister for the Environment and Heritage, Dr David Kemp, and Australian Minister for Agriculture, Fisheries and Forestry - would be headed by CSIRO Land and Water and funded under the first round of the $5 million National Market Based Instruments Pilots Program.

The project - to be based in Victoria's Avoca-Loddon-Campaspe region - will commence at the end of November 2003 and should be completed by mid-2005. It is an addition to the ten projects originally earmarked under the National MBI Pilots Program earlier this year.

Dr Kemp said that market-based instruments (MBIs) investigate ways to use innovative financial arrangements, such as trading mechanisms, auctions and price signals, to encourage better land and water management and to reduce the impact of salinity.

"This project, which was recommended by an independent advisory panel, will give us a much better appreciation of how effective trading mechanisms, in this case recharge credits, can be in reducing the costs associated with tackling dryland salinity," he said.

Dr Kemp said that a re-charge credit scheme involves landholders choosing the most cost effective way to manage salinity levels. To ensure salinity caps or targets can be achieved the landholders themselves can choose to purchase credits from other landholders who may be able to achieve the same results more cheaply, they then receive credits for any extra reductions achieved.

"Avoca-Loddon-Campaspe is one of six Victorian regions singled out for priority treatment under the Howard Government's National Action Plan for Salinity and Water Quality. The area's agriculture and horticulture industries are under threat from salinity, and the lessons we learn there can be applied across the country," said Dr Kemp.

"Total agricultural production for the Avoca-Loddon-Campaspe region in 2001 was over $785 million with the impact of salinity expected to cost $8.13 million per year by 2020 and over $20 million per year by 2050," said Mr Truss.

Mr Truss said the MBI Pilots Program is an excellent example of what can be achieved when the Australian, State and Territory governments, and the private sector, work in partnership to manage important, national natural resource management (NRM) issues that can cause economic loss.

"This project will provide valuable information on how we might go about creating markets to address dryland salinity issues, including reducing recharge to streams and rivers by changing attitudes and farm management practices," Mr Truss said.

"There is a lot of interest - both nationally and internationally - in MBIs. They are seen as offering great potential in the effort to conserve biodiversity, reduce salinity and manage water allocation within environmental limits.

"Most importantly, they examine a range of instruments to encourage improved natural resource management through market signals, rather than only through legislation or regulation.

"By ensuring we examine the full range of options available to us, including MBIs, we can tackle serious NRM issues such as dryland salinity. This project has the potential to foster much greater community and stakeholder support than might be achieved through legislation or regulation."

For detail on the MBI Pilots Program, visit http://www.napswq.gov.au/about/mbi.html

Commonwealth of Australia