Rethinking the externality issue for dryland salinity in Western Australia

Dryland salinity has been conceived of as a problem involving massive off‐site impacts and therefore requiring coordinated action to ensure that land managers reduce those off‐site impacts. In economic terms, salinity is seen as a problem of market failure due to externalities, including external costs from one farmer to another and from the farm sector to the non‐farm sector. In this article, we argue that, at least in Western Australia (WA), externalities are much less important as a cause of market failure than has been widely believed. If all externalities from salinity in WA were to be internalised, the impact on farm management would be small.