One of the most fascinating presentations at GITA was delivered by Gary Stoneham of the Department of Sustainability and Environment (DSE) of the Government of Victoria.

Gary is an economist who focuses on creating new markets.

Markets

Markets are an efficient, decentralized way of selecting efficient producers, each of whom has its own cost structure and private information.   Examples of new markets that have been created include landing slots at airports and electric power markets.  Markets that are being created include cap and trade markets for emissions, such as has been introduced in British Columbia this year.  Australia intends to introduce a cap and trade market in 2010.

Market for Conservation Contracts

Gary had been involved in developing a market for conservation contracts.  The concept is that a land owner is paid for implementing measures that conserve the land, such as preventing grazing.  The amount that the farmer receives is determined by an auction, in which land owners bid for conservation contracts.  The market ensures that the most efficient “conservers” are rewarded.  The DSE has defined an objective function that is used to estimate conservation value comprised of a spatial database on a grid with 20 m x 20 m cells that includes things like rainfall, demographics, and land use that allows the DSE to simulate the impact of remediation and estimate the value to the State of Victoria.  This represents a new role for geospatial information systems.  Several pilots have already been successfully run in Victoria, and it appears this program may be implemented across the State.

Agricultural Subsidy Programs

It appears to me that this market-based program is in direct contrast to government subsidy programs like CAP in the European Union, which distributes billions of Euros in farm subsidies to farmers based on a system of tying payments directly to an assessment of the agricultural suitability of land.  For example, Sitewell has implemented a web-based LPIS system for the Ministry of Agriculture in the Czech Republic to allow the on-line assessment of agricultural suitability with direct payment to the farmer.