An economic analysis of farm forestry as a means of controlling dryland salinity

Large areas of agricultural land under conventional crops and pastures are at risk of dryland salinisation in Australia. The salinisation problem can be controlled by strategic and large-scale planting of trees; however, farm forestry enterprises evaluated with conventional discounting techniques do not generally rank as an attractive alternative to annual crops on product ive land. In this article, an optimal control model that explicitly account s for decline or improvement in land quality over a period of 40 years is p resented. The optimal area planted to trees and the optimal groundwater-tab le trajectory through time are determined under a variety of scenarios. Imp lications of the results for policy design are discussed.