The opportunity cost of preservation of woodland on farms

Summary The New South Wales government has been introducing regulations to prevent the clearance of native vegetation on freehold properties. The regulations rest on biological and environmental objectives with little or no consideration of the costs to landholders. These costs are opportunity costs, that is, the losses in income or in land value because woodland cannot be cleared to agriculture. In the present study, these costs are estimated for a sample of farms in NSW in each of three regions which are directly affected by the regulations—Walcha on the tablelands, Moree Plains, and Nymboida on the coastal slopes. The opportunity costs were found to be high, and to vary widely between the three regions. Economically-rational policies would therefore lead to separate plans per region. The opportunity costs also vary widely within a region, and so uniform regulations will impose high costs on some landholders and low costs on others in the same region. Instead of uniform regulations, land-use strategies ...