by Joshua Goldstein
Australia's Five-Million Dollar Experiment with Market-Based Instruments
Australia launched the National Market-based Instruments Pilots Program two years ago with a five million dollar investment in eleven pilot projects designed to explore the utility of market-based conservation mechanisms on agricultural land.
If environmental policy-makers in Australia are successful, a revolutionary kind of farm may be just over the horizon. Alongside golden fields of wheat, Australia's "farms of the future" would employ the latest-and-greatest technologies to maximize yields for a very different variety of ecosystem service-based commodities: carbon, salinity, and biodiversity credits.
Afloat in a sea of environmental ills -- from salinity poisoned agricultural fields to concrete covered coastlines -- Australia has become a world leader in pioneering bold new approaches to tackle environmental problems. While great problems certainly exist, so do exciting opportunities for solving them. In this high-stakes gamble, Australia anteed up and launched the National Market-based Instruments Pilots Program (NMBIPP) with $5-million in funding provided by Commonwealth, State, and Territory Governments in April 2003.
The goal of the NMBIPP is to "investigate ways to use innovative financial arrangements to encourage better land and water management and to reduce salinity in irrigation-based agriculture." To advance this plainly stated but ambitious goal, the government funded eleven two-year pilot projects, ranging from a cap-and-trade system designed to tackle salinity problems to an innovative auction of contracts to support biodiversity. As these projects draw to a close, policy-makers in Australia and across the world are eager to decipher what happened with this bold national-scale experiment in environmental problem solving. Which market-based instruments (MBIs) worked? Which did not? And where will Australia go from here?