On the efficient use of a catchment's land and water resources: dryland salinization in Australia

Abstract This paper presents an investigation into the questions of long-term Pareto-optimal use of a catchment's land and water resources in the face of encroaching dryland salinization. An optimal control approach is adopted for problem analysis and translated into a dynamic catchment optimization model of salinity management. Model results suggest that, for the catchment under consideration, it is economically efficient to restrict soil salinization to a fraction of the area at risk. In the model, large-scale land-use changes, as required for maximization of the present value of the catchment, are implemented within a decade. Optimal control activities focus on the areas potentially affected by salinity rather than the ‘recharge areas’ of the catchment, suggesting that upstream recharge is largely Pareto irrelevant. Pigovian and Coasean policy approaches are discussed under specific consideration of: (1) salinization as a stock externality; (2) the non-point source pollution character of recharge; and (3) the isolation paradox surrounding salinity management.