The CFFO Commentary: Evaluating the Value of Dollars spent on Environmental Projects

By Nathan Stevens
June 24, 2011
 
In a world of limited financial resources, choosing the best environmental projects and the targets to be met can be difficult for policy makers. Recently, Dr. Anna Roberts from the Department of Primary Industries in Victoria, Australia, shared an approach to establishing and evaluating environmental improvement goals.
 
The approach is known as INFFER, which is short for Investment Framework for Environmental Resources. The key point of the process is to establish hard targets that have explicit costs and consequences included in the proposal. Furthermore, it contains a solid set of guidelines on which policy tool to use – from incentives, to outreach, to regulation, to times when no action is required or sensible. The key is to pick which targets have the highest benefits for the costs involved.
 
There are two examples that Roberts shared with the group of participants. The first was an application of INFFER to a small-scale wetland restoration project. In this instance, INFFER was able to target a small region and establish a plan that will see a cost-effective project come to fruition with the landholders fairly compensated for lost productive land.
 
The second example was to take an established policy goal and use INFFER to determine how costly the project would be to hit the desired target, as well as present other scenarios that would meet other targets. By way of example, Gippsland Lake is an important environmental area in Australia that is facing serious phosphorus problems. In 2002, the Australian government mandated that there would be a 40 per cent reduction in phosphorous over 20 years. The INFFER model has been applied to this scenario and it came up with the following:
·         A 40 per cent reduction would cost $994 million dollars and require full adoption of best management practices, stringent enforcement of effluent regulations and the retirement of roughly 2,500 hectares of dairy land.
·         However, a more modest goal of a 20 per cent reduction in phosphorous would cost just $80 million over 20 years through best management practices, enforcement of the effluent regulations and no land taken out of production.
 
INFFER is far from the only method of establishing and prioritizing which environmental goals to pursue. However, it does focus on the key point of using limited environmental budgets in the most effective way possible. This is a lesson that could serve Ontario well in its future decisions for maximizing its ability to make environmental improvements.
Nathan Stevens is the Research and Policy Advisor for the Christian Farmers Federation of Ontario. The CFFO Commentary represents the opinions of the writer and does not necessarily represent CFFO policy. The CFFO Commentary is heard weekly on CFCO Chatham, CKNX Wingham, and UCB Canada radio stations in Chatham, Belleville, Bancroft, Brockville and Kingston. It is also archived on the CFFO website: www.christianfarmers.org. CFFO is supported by 4,200 family farmers across Ontario.