Sustainability and economics of temperate perennial Australian grazing systems

The replacement of perennial grass species by undesirable annual grass weeds not only results in lower productivity but also contributes to a range of external costs. In particular, shallow rooted annuals result in greater deep drainage and therefore a greater potential for development of salinity and acidity, and greater volumes of runoff of poor quality water to streams. In this paper an economic framework for examining the sustainability issues of a perennial grazing system on the New South Wales Central Tablelands, Australia, is presented. This involves a combination of simulation and dynamic programming models, with the state of the system represented by variables for the perennial grass composition and soil fertility. The paper examines a range of management strategies that increase the perennial grass composition in terms of net income from grazing, and the impact upon the externalities. The paper determined that economic benefits are derived from the adoption of a grazing rest technology that increased the optimal level of perennial grass composition. There were also associated reductions in deep drainage, runoff and soil loss with this increase in perennial grass composition. However, the imposition of policy options aimed at reducing the external costs associated with grazing management did not influence the optimal grazing decisions.