Dynamic General Equilibrium Analysis of Improved Weed Management in Australia's Winter Cropping Systems

A recent analysis indicated that the direct financial cost of weeds to Australia's winter grain sector was approximately $A1.2bn in 1998-1999. Costs of this magnitude represent a large recurring productivity loss in an agricultural sector that is sufficient to impact significantly on regional economies. Using a multi-regional dynamic computable general equilibrium model, we simulate the general equilibrium effects of a hypothetical successful campaign to reduce the economic costs of weeds. We assume that an additional $50m of R&D spread over five years is targeted at reducing the additional costs and reduced yields arising from weeds in various broadacre crops. Following this R&D effort, one-tenth of the losses arising from weeds is temporarily eliminated, with a diminishing benefit in succeeding years. At the national level, there is a welfare increase of $700m in discounted net present value terms. The regions with relatively high concentrations of winter crops experience small temporary macroeconomic gains. Copyright 2005 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Asia Pty Ltd..