Dryland salinity, coordinating action and economic policy: a role for contracts?

The problem of addressing dryland salinity at a landscape is considered in the context of using economic incentives to encourage change in land use by individual landholders to adopt salinity mitigating actions where a public asset of significant value is threatened. This paper reviews the principal-agent problem and looks at mechanisms which give incentives to address natural resource management problems, and in particular, the role of contracts between the Government and the landholders for achieving environmental objectives. Consideration is then given to the potential for empirical analysis of these policies in practice and their effectiveness in achieving the desired environmental outcomes.