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INFFER (Investment Framework For Environmental Resources)

Background and Overview

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Context Budgets small compared to the

problems Environmental protection more

expensive than we’ve often allowed for Spatial heterogeneity Prioritisation is essential but difficult

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Institutional context Concerns about outcomes from regional

investment Treasury, Australian National Audit

Office concerns about value for public money from NRM investment

Greater focus on outcomes in Caring for our Country and by some state governments

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What does INFFER help with? How to get value for money from NRM

budget? What is realistic/feasible? Appropriate delivery mechanisms? Project design Give confidence to funders

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General emphases Natural assets Outcomes Value for money Multiple threats Multiple asset types Technical & socio-economic (equal emphasis) Policy tools/delivery mechanisms Transparency

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Regional testing and use South West (WA) Avon (WA) South Coast (WA) Northern Agric (WA) Rangelands (WA) Perth (WA) Lachlan (NSW) Central West (NSW) Border Rivers/Gwydir

(NSW)

Northern Rivers (NSW) Namoi (NSW) North East (Vic) North Central (Vic) Corangamite (Vic) West Gippsland (Vic) East Gippsland (Vic) Goulburn Broken (Vic) Port Phillip & Westernport

(Vic)

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Based on experience Builds on lessons from previous frameworks

and from use by 15 regions As simple as possible, but comprehensive Highly structured and guided process

Template

Actively supported Help desk Workshops Regular phone-hookup meetings

Fully documented All documents freely available at www.inffer.org

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River reach•Intact native veg•Cultural heritage •Woodland birds

Wetland•Listed on register•Last of its type

Threatened species•Flagship•Critically endangered

Native vegetation•Concentration of threatened species•Near pristine condition•Important location

Asset types

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What is the output? An assessment for each asset

Background information about the asset A specific, measurable, time-bound goal On-ground works that will achieve that goal Delivery actions that will result in those works Information about asset value, threats/damage,

technical feasibility, socio-economic feasibility, urgency, cost, risks

Benefit:Cost Ratio (comparable across projects)

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What sorts of projects? Ones that will deliver NRM outcomes for

identifiable natural assets, which can be large or small degraded or pristine localised or dispersed any sort of natural asset

Not Untargeted capacity building M&E not linked to a specific project R&D not linked to a specific asset

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INFFER Pre-Assessment Checklist Asset focus1. Can you clearly identify the environmental or natural

resource asset? 2. Will it be possible to define a goal for the asset that is

“SMART”? Cost-effectiveness3. Is there evidence to indicate that management actions

can make a real difference? 4. If the desired management actions are mainly on private

land, is it likely that those actions would be reasonably attractive to fully informed land managers when adopted over the required scale?

5. If the project requires change by other institutions is there a good chance that this will occur?

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North Central CMA

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The INFFER Process

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INFFER process Can be applied to individual assets

Run small number of cherry-picked assets through the process

Helps with project development Helps assess whether it is worth pursuing the

project

Better to be a comprehensive process Community consultation + other info sources A more comprehensive look at the project options

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Comprehensive process1. Develop a list of significant natural assets in

the relevant region(s)

2. Apply an initial filter to the asset list, using a simplified set of criteria

3. Define projects and conduct detailed assessments of them

4. Select priority projects

5. Develop investment plans or funding proposals

6. Implement funded projects

7. Monitor, evaluate and adaptively manage projects

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Rationale for the process Starts broad, with far too many

assets Reduce list somewhat with

simplified criteria No point in great sophistication at this

stage

Few enough make it through to make a good assessment practical

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How long does it take? New user: around 5 person-days per

asset to complete Project Assessment Form

Experienced user: 1-2 days per asset, if information and experts accessible

Could be extended to encompass detailed modelling if desired

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What skills needed? Ideally, good knowledge of asset(s) Able to engage with experts Understand NRM projects – some

experience in implementation Capture and interpret technical and

socio-economic information Make judgements based on partial

information

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INFFER and knowledge gaps Makes the best of the available info Captures key knowledge gaps Ratings for quality of information Possible outcomes

Project to fill knowledge gaps Data collection/investigation within the project Feasibility assessment as phase 1 of project

Captures risks of project failure

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Project Assessment Form

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Project Assessment Form Completed for every project Could be more than one alternative

project for the same asset Guided process to collect the required

information Detailed instruction manual

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Project Assessment Form Web-based

Instructions hidden until needed Automate calculations Easy navigation FAQs Example responses

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1. The asset Spatial definition of the asset Significance/importance of the asset Key threats Existing projects

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2. Goal, works Setting a specific, measurable, time-

bound goal On-ground actions to achieve goal Actions by other organisations Time lags until benefits Effectiveness of works Risk of technical failure Spin-offs (positive and negative)

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3. Socio-economics Anticipated adoption of works by

private land/water managers Encompasses community capacity and

knowledge

Risk of practice changes for the worse Approvals Socio-economic risks

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4. Budget Delivery mechanisms

Private citizens Other organisations Works, investigation and management

Costs Up front (3-5 years) Long-term maintenance costs

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5. Project info Project title Project summary Funder’s targets and outcomes Outputs and intermediate outcomes

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Public and private benefitsand choice of NRM policy instruments

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Public: private benefits framework

Selects the most appropriate policy tool for a given circumstance

Relevant to change on private land

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Public and private benefits “Private benefits” relate to the

landholder making the decisions “Public benefits” relate to all others

neighbours, downstream water users, city dwellers interested in biodiversity

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Pu

blic

ne

t be

ne

fits

0 Private net benefits

Possible projects

Each dot is a set of land-use changes on specific pieces of land = a project. Lucerne

Farm A

LucerneFarm B

Forestry in water catchment

Current practice

Which tool?• Incentives• Extension• Regulation• New technology• No action

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Category Specific policy mechanisms included

Positive incentives Financial or regulatory instrumentsA to encourage change

Negative incentives Financial or regulatory instrumentsA to inhibit change

Extension Technology transfer, education, communication, demonstrations, support for community network

Technology change Development of improved land management options, e.g. through strategic R&D

No action Informed inaction

AIncludes polluter-pays mechanisms (command and control, pollution tax, tradable permits, offsets) and beneficiary-pays mechanisms (subsidies, conservation auctions and tenders).

Alternative policy mechanisms for seeking changes on private lands

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Simple rulesfor allocating mechanisms to projects

1. No positive incentives for land-use change unless public net benefits of change are positive.

2. No positive incentives if landholders would adopt land-use changes without those incentives.

3. No positive incentives if overall costs outweigh benefits.

Private net benefit

Pu

blic

net

ben

efit

0

A

B

C

D

E

F

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Simple public-private framework

Private net benefit

Pu

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c n

et b

enef

it

0

Positive incentives or technology change

Extension

No action (or flexible negative

incentives)

Negative incentives

No action(or extension or negative incentives)

No action

Technology change (or no action)

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How applied Project Assessment Form collects info Public net benefits

Asset significance Threats, Effectiveness of works Time lags, Risks

Private net benefits Adoption of the required works

Does not dictate mechanisms: you choose

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Benefit: Cost Ratio

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The BCR

An index of benefits from the project

Total costs (project and ongoing)

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BCR = ──────────────────────────────────────────────────

Project cost

Potential project benefits

E(prop’n of required adoption)

(1 Risk of failure

) Discountfactor fortime lags

V W V: asset value

W: effectivenessof works

A B A: adoption

B: compliance

F P GF: feasibility

P: socio-politicalG: long-term funding

1/(1 + r)L

L: time lag to benefitsr: discount rate

C + PV(M+E) G C: project cost

M: annual maintenance costE: polluter-pays compliance costs

PV: summed present value over 20 yearsG: long-term funding

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Flexible Can compare large and small projects Can compare short and long projects Allows comparison of projects for

different types of assets Waterways Wetlands Vegetation Threatened species Agricultural land

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Example BCR rankingProject Benefit: Cost Ratio Budget

4 10.0 $3m

2 8.1 $13m

5 7.2 $1m

1 4.0 $0.5

6 1.1 $1m

3 0.8 $9m

If budget = $17m, preferred projects are 4, 2 & 5

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Advantages of the BCR Avoids common problems in metrics

used for ranking environmental projects Add when they should multiply variables Fail to divide by project costs (e.g. subtract costs,

or just leave it out!) Omit key variables (common to ignore adoption

and technical feasibility) All three

Cost of poor metrics is huge Benefits of investment roughly halved BCR can easily double environmental benefits

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Interpretation and use of results

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Project assessment report Title, summary, etc. Benefit: Cost Ratio Time lag until benefits delivered Risks of project failure Spin-offs Quality of information Key knowledge gaps

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Principles The info is an input to decision making BCR is not to be used mechanistically All-things-considered judgement Other things may matter Need a process of QA to give the

decision makers confidence

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Challenges

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Challenges For many environmental managers it’s

a very different way to do business Having to provide comprehensive info Particular concepts new to people Ideally, need an asset expert with

comprehensive knowledge

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Typical problems for new people Difficulties with “asset” and goal Poor link between threat and works/actions Required land-use changes not quantified Tend to stick with comfort zones Unrealistic expectations of adoption Not adequately costed Insufficient detail to judge the project

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Requirements to get through Training One-to-one support

INFFER team offers training and one-to-one support

Getting to resource limits Vic govt planning to provide a training/support

Clear signals from government that there will be benefits to those managers who do it well

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Project Examples

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Example

Upper Lachlan River

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Upper Lachlan River Goal – improve condition and connectivity,

protect fish Threats – loss of habitat (riparian and in

stream), sediments –nutrients, sand slugs Management – fencing, grazing exclusion,

habitat restoration, sediment slug control, gully control, groundcover

Moderate impact on threats

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Upper Lachlan River (cont’d) Adoption

Little/none without incentives Standard CMA cost sharing ~50% adoption Achievable for some elements, unlikely for larger

management changes (gully, groundcover)

Overall cost around $3 million BCR 3.6 (pretty good)

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Lachlan Ranges

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Lachlan Ranges High value, but not a ‘jewel’? Goal – high conservation vegetation

Maintain extent and condition

Threats – weeds, invasive native species, ag impacts Reduce threat from high to medium

Management – grazing management, direct weed/pest control, reveg

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Lachlan Ranges (cont) Adoption

Little/none without incentives Standard CMA cost sharing anticipates >50%

adoption Analysis recommended

stewardship payments 7 landholders Overall cost $1.81 million BCR 4.65

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Patho Plains

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Patho Plains Very high value

Small remnants dispersed over large area

Goal – high conservation vegetation Maintain extent and condition

Threats – weeds, over grazing, cultivation Reduce threat from high to medium

Management – grazing management, direct weed control

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Patho Plains (cont) Adoption

Little/none without incentives Current MBI payments 25-50% adoption 100+ landholders Overall cost $5 million BCR 1.75

-100

-50

0

50

100

-100 -50 0 50 100

Private net benefit ($/ha/year)

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$/h

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Positive incentives or tech change Extension

No action

Negative incentives

Technology change (or no action)

No action(or extension or negative incentives)

No action (or flexible negative incentives)

No action

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Acknowledgements Affiliations of the INFFER team

University of Western Australia Department of Primary Industries, Victoria North Central Catchment Management Authority Future Farm Industries CRC

Other key funders Australian Research Council (Federation Fellow Program) Department of the Environment, Water, Heritage and the

Arts (CERF Program) Department of Sustainability and Environment , Victoria