2010, Volume 13, Paper 85

Exceptional Persistence: Drought and Drought Policy

Bill Malcolm – Department of Agriculture and Food Systems, University of Melbourne
Kristoffer Larson

The authors would like to acknowledge Anna Heaney, Bob Douglas, Bill Fisher and Ismo Rama for their insightful and helpful comments. Any errors, omissions or other faults are the responsibility of the authors.

Abstract

Drought policy in Australia has a long history of being criticized for muddling means and ends, and for being inefficient and inequitable. The broad proposition of this paper is that analysing agricultural policy, such as drought policy, is likely to be more productive if analysts went further than the common approach of describing the situation as failure of markets, with the implication that once recognising this, government will implement efficiency‐oriented policy. Better can be done. Rather, defining the genuine benefits, costs and transfers, using a few simple figurings to estimate the magnitudes of benefits, costs and transfers, where possible, and making the results of the policy benefit‐cost analysis approach transparent and widely known, should not be a ‘step too far’ to contribute to forming policy. Taking this step would add significantly to public debate and, maybe, edge policy further towards betterdefined ends and means, improving efficiency and equity.

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