Determining non-market benefits in environmental management in the sugar industry: concepts and applications

Long-term profitability of sugarcane production systems is dependent on the management of natural resources that support industry output. An increasing scarcity of quality arable land, environmental problems associated with intensive farming, and differences of opinion among different kinds of land users are affecting industry decisions. Unlike the income from sugar sales, the benefits of environmental management are hard to quantify. Resource economists have identified several categories of non-market values in attempting to evaluate environmental assets. These economic measures of environmental value are based on the principle of scarcity and their estimation involves identifying trade-offs and balancing competing objectives. Establishing such values allows discussion of natural resource policy in terms of balancing the benefits and costs to the community, private individuals and industry of developing land for cane production or retaining it as a conservation area. This paper explains the economic basis for environmental valuation and demonstrates how the value estimates derived by economists can help the sugar industry in managing its environmental responsibilities. Recent Choice Modelling studies conducted in the Herbert River District, as well as a Contingent Valuation study in the Innisfail District, are used to demonstrate the concepts and their application in land use planning.