Dryland salinisation is a non-point and intertemporal stock externality which requires a dynamic modelling approach to study its long-term management. In this paper a simple dynamic optimisation model is developed and applied to find land-use strategies that maximise benefits from the viewpoints of both individual farmers and the catchment as a whole. Privately optimal land-use may result in an ever-increasing trend in salinity and a declining trend in productivity for the discharge zone of the catchment. Considerable welfare losses may occur under private management when the recharge and the discharge zones are owned by different individuals. These welfare losses are estimated by comparing the value of the stream of benefits obtained by the catchment under private management with those obtained when management is under a common property regime. Difficulties in establishing such a system are discussed, in particular the problem of establishing enforceable common property rights over the groundwater table.


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