THESIS DOCTOR OF PHILOSOPHY NERY DE FIGUEIREDO Thayse 2018

Understanding the determinants of Land-Use and Land-Cover
change as a basis for conservation management in the Warren

River Catchment
Achieve International Excellence
Thayse Nery de Figueiredo
M.Sc. Ecology
University of Basel, Switzerland
This thesis is presented for the degree of
Doctor of Philosophy
of
The University of Western Australia
Faculty of Science
School of Agriculture and Environment
2018
STATEMENT OF CANDIDATE CONTRIBUTION
This thesis contains papers prepared for publication, some of which have been co-
authored. The bibliographical details of the work and where it appears in the thesis are
outlined below.
Chapter 2: Nery, T., Sadler, R., Aulestia, M.S., White B., and Polyakov, M.
Discriminating native and plantation forests in a Landsat time-series for land use policy
design. Under review: International Journal of Remote Sensing 11-Aug-2017. Student
contribution: 70%.
Chapter 3: Nery, T., Sadler, R., White B., and Polyakov, M. Predicting future plantatio n
forest development in response to policy initiatives: A case study of the Warren River
Catchment in Western Australia. Under review: Journal of Environmental Science &
Policy 10-Apr-2018. Student contribution: 80%.
Chapter 4: Nery, T., Polyakov, M., Sadler, R., and White B. Policy influence on forest
plantation development in the Warren River Catchment of Western Australia. Under
review: Journal of Environmental Management 06-Apr-2018. Student contribution: 80%.
I have the permission of all co-authors to include this work in my thesis.
Student’s signature:
Coordinating supervisor’s signature:
iii
CERTIFICATION
I certify that this thesis has been substantially completed during the course of enrolme nt
in this degree at The University of Western Australia and has not previously been
submitted or accepted for a degree at this or any other institution. I certify that help s
received in preparing this thesis and all sources used have been acknowledged.
Thayse Nery de Figueiredo
Perth, August 2018
iv
ACKNOWLEDGEMENTS
I gratefully acknowledge the funding received towards my PhD from the Brazilia n
Federal Support and Evaluation of Graduate Education Agency (CAPES) through the
Ciência Sem Fronteiras Project (CsF). I feel very privileged to have had this financ ia l
support to undertake this study.
I would particularly like to thank my supervisors Associate Prof. Ben White and Dr.
Maksym Polyakov for their guidance, wisdom, time, and most importantly, their
encouragement throughout this journey. Dr. Morteza Chalak’s critical comments and
support also helped a great deal.
My special thanks also goes to Dr. Rohan Sadler who has been a tremendous mentor for
me, thank you for your meticulous support by providing constructive solution and
statistical analysis.
I express my sincere thanks to UWA for accepting me as a PhD candidate in the School
of Agriculture and Environment. I also take this opportunity to thank the entire academic
staff of the School for helping students through periodic postgraduate enhanceme nt
program and interaction opportunities. I feel proud to be part of this School.
I acknowledge my PhD fellows for their support and friendship along this challenging
journey. My special thanks to Maria Solis Aulestia for the pleasant time and valuable
contributions at various stages of this study. Deborah Swindells, Emma Smith, Theresa
Goh and Heather Gordon are acknowledged for administrative support. I extend my
v
thanks to Warren Catchment Council in Manjimup for providing information on river
action plans within the catchment.
I also, and wholeheartedly, acknowledge family support from my beloved mother, my
siblings, and my niece for their love, patience and unending encouragement during this
entire journey. Finally, I would like to thank my adorable daughter Amanda, and my
husband Andre Gomig, who has been an invaluable partner in my achievements. This
accomplishment would not have been possible without (all of) you. Thank you!
vi
DEDICATED TO
My mother, Claudia Batista Nery,

who has continuously inspired and motivated me.
My beloved daughter, Amanda Nery Gomig, who has made me stronger,
better and more fulfilled than I could have ever imagined.
&
My husband, Andre Gomig, for his endless love, sacrifices, support and
advice.
vii
ABSTRACT
Land use policies can have a profound effect on spatial and temporal patterns of Land
Use and Land Cover (LULC) change across a landscape. However, the contribution of
policies in driving landscape changes remains a largely hidden and untested element in
policy analysis. This is especially the case in the Warren River Catchment (WRC) in the
south-west of Western Australia which has undergone extensive LULC conversions in
response to marked changes in economic conditions, biophysical drivers, and land use
policy. The key issue for the WRC has been conversion of natural forested ecosystems to
agricultural land, which peaked at 30% of the total area in 1979. This forest clearance has
come at a high environmental cost, resulting in biodiversity loss, development of dryland
salinity, and consequent degradation of water quality.
In an effort to better understand the factors affecting LULC changes in the WRC and the
potential impact of different policies on land use decisions, this thesis expands upon
existing studies by: (1) providing the first historical analysis of LULC changes in the
catchment to include two spectrally similar but ecologically distinct forest classes, namely
plantation and native forest; (2) identifying the major changes in land use since 1979,
including a comprehensive set of transitions among six LULC classes (i.e., agriculture,
water, sand dunes, native forest, harvested native forest, plantation forest); (3) forecasting
the likely future area of plantation forest under the current policy scenario; and, (4)
determining the dominant driving forces of landscape change over the past 35 years.
By integrating remote sensing data, geographical information systems, and machine
learning algorithms, we reconstructed the trajectories of landscape changes in the
catchment from 1979 to 2014 using aerial photography and Landsat imagery. In
viii
classifying the imagery the Support Vector Machine (SVM) presented an improved fit
over two alternative algorithms: Random Forests (RF), and Classification and Regression
Trees (CART). The most successful approach for consistent historical processing has
involved the combination of SVM classifier, four bands held in common between the four
Landsat Sensors (MSS 1979; TM 1992; ETM+ 2003; OLI 2014), and principa l
components analysis (PCA) of texture features. Further, the sampling strategy used to
collect the training data may also explain the high classification accuracy obtained across
four Landsat sensors. Eucalypt plantation forests reaching full canopy cover presented
the highest rates of misclassification because they share spectral properties with the
Eucalypt dominant native forest. However, the methodology presented here provides a
consistent and accurate means for distinguishing plantation and native forest, particula r ly
where they share similar dominant genera.
Mapping and forecasting the expansion or contraction of plantations is critical if we are
to unpack unintended policy effects (e.g., rising salinity levels in water resources due to
harvesting of plantations). Thus, we also predicted the spatial distribution of LULC
changes for 2025 by integrating Markov transition probabilities with a multila yer
perceptron neural network, cellular automata and spatially explicit socio-economic and
biophysical data. Although a series of policy initiatives have provided subsidies through
tax breaks for plantation forest, this land use was predicted to decrease under the current
policy measures. Large areas of plantations are thus likely to be reconverted to agriculture
due to the harvesting of existing plantations and a lack of new plantings. This finding may
be attributable to the uncertainty surrounding the changes in the taxation laws governing
the Managed Investment Schemes (MIS), the lower profitability of the forestry MIS
compared to agriculture, and the onset of the Global Financial Crisis. These estimates
imply that the government reliance on plantation forest to increase the timber supply and
ix
help arrest the rise in salinity is no longer viable. Ideally, a catchment specific policy
should have been implemented to encourage the retention of plantation forest to manage
salinity.
In addition to the simulation of landscape changes, we estimate an econometric model of
major drivers of LULC changes in the WRC using a spatially explicit Multinomial Logit
Model. Understanding the land use responses to policy is important because many
policies influence land allocation. The key empirical finding was that investment in
forestry is vulnerable to policy changes. While the unprecedented expansion of plantatio n
forest in the late 1990s was spurred by financial incentives (e.g., Plantations for
Australian: The 2020 Vision, and The Managed Investments Act 1998), the considerably
changes in tax deductibility for MIS had reduced investor interest in forestry by the late
2000s. Despite a reduction of stream salinity, this potential co-benefit from plantatio n
seems not to be a driver of plantation expansion as it usually does not contribute to direct
cash-flow and thus, remains largely unvalued by the landholder. This shows that the co-
benefits from growing plantations (e.g., carbon sequestration and water) are not captured
by current policies.
The outcomes of this thesis provide a basis for demonstrating empirically the effects of
past policy initiatives. This evidence-based approach can therefore equip policy-makers
with precise and up-to-date information, and so support the design of new policy
instruments to improve the sustainable use of timber resources and the provision of non-
timber benefits such as salinity mitigation.
x
TABLE OF CONTENTS
Statement of Candidate Contribution ................................................................................iii

Certification...................................................................................................................... iv
Acknowledgements ........................................................................................................... v
Abstract ........................................................................................................................... viii
Table of Contents ............................................................................................................. xi
List of Tables...................................................................................................................xiv
List of Figures ................................................................................................................. xv
Abbreviations and Acronyms ..........................................................................................xvi
1. INTRODUCTION ...................................................................................................... 1
1.1. Background............................................................................................................ 1
1.2. Economic and policy drivers of land use change in Western Australia ................ 6
1.3. Study area ............................................................................................................ 15
1.4. Research objectives and questions ...................................................................... 18
1.5. Thesis Outline...................................................................................................... 19
1.6. References ........................................................................................................... 20
2. DISCRIMINATING NATIVE AND PLANTATION FORESTS IN A

LANDSAT TIME-SERIES FOR LAND USE POLICY DESIGN ........................... 27
Abstract ........................................................................................................................... 27
2.1. Introduction ......................................................................................................... 28
2.2. Study Area and Data Sources .............................................................................. 32
2.2.1. Study Area ..................................................................................................... 32
2.2.2. Data Sources.................................................................................................. 34
2.3. Methods ............................................................................................................... 35
2.3.1. Imagery Pre-Processing................................................................................. 35
2.3.2. Imagery Classification................................................................................... 38
2.3.2.1. Unsupervised Classification................................................................... 38
2.3.2.2. Texture Measurement ............................................................................. 39
2.3.2.3. Image Segmentation ............................................................................... 40
2.3.2.4. Machine Learning Algorithms ............................................................... 41
2.3.2.5. Accuracy Assessment.............................................................................. 44
2.4. Results and Discussion ........................................................................................ 45
2.4.1. Classification Performance ........................................................................... 45
2.4.2. LULC Changes in the WRC.......................................................................... 50
2.4.3. Implications for Land Use Policy.................................................................. 51
2.5. Conclusion ........................................................................................................... 53
2.6. Reference ............................................................................................................. 54
Appendix A2. Sampling Strategy: Two Strata Sampling. .............................................. 60
xi
Appendix B2. Overall classification performance for SVM, RF and CART classifie rs
per Landsat sensors and Models C1 to C4, including Kappa, F-score, Producer (PA)
and user (UA) accuracies. ............................................................................................... 63
Appendix C2. McNemar’s test results for comparison of the difference between
Model C1 and the other classifications schemes (i.e., Models C2, C3 and C4) using
RF, SVM, and CART classifiers..................................................................................... 65
3. PREDICTING FUTURE PLANTATION FOREST DEVELOPMENT IN

RESPONSE TO POLICY INITIATIVES: A CASE STUDY OF THE
WARREN RIVER CATCHMENT IN WESTERN AUSTRALIA .......................... 67
Abstract ........................................................................................................................... 67
3.1. Introduction .......................................................................................................... 68
3.2. Study area and policy context .............................................................................. 71
3.3. Methods................................................................................................................ 75
3.3.1. Data ............................................................................................................... 76
3.3.2. Transition probability matrix ........................................................................ 78
3.3.3. Transition potential modelling using a Multilayer Perceptron (MLP) ......... 79
3.3.4. Cellular Automata (CA) simulation .............................................................. 80
3.4. Results and Discussion ........................................................................................ 82
3.4.1. Analysis of LULC Markov transition probabilities ...................................... 82
3.4.2. Model Calibration and Validation ................................................................ 86
3.4.3. Future Prediction Using Multilayer Perceptron CA-Markov Model (MLP-
CA-Markov)............................................................................................................ 87
3.5 Conclusion ............................................................................................................ 95
3.6. References ............................................................................................................ 96
4. POLICY INFLUENCE ON FOREST PLANTATION DEVELOPMENT IN

THE WARREN RIVER CATCHMENT OF WESTERN AUSTRALIA ............. 104
Abstract ......................................................................................................................... 104
4.1. Introduction ........................................................................................................ 105
4.2. Background: Plantation forest development in Western Australia .................... 107
4.3. Study Area.......................................................................................................... 110
4.4. Materials and Methods....................................................................................... 112
4.4.1. Modelling approach: Multinomial Logit Model (MNL) ............................ 112
4.4.2. Data sources ................................................................................................ 115
4.4.2.1. Land‐Use and Land-Cover dataset ...................................................... 115
4.4.2.2. Other data used for modelling ............................................................. 116
4.4.3. Sample size ................................................................................................. 118
4.4.4. Selection of variables and multicollinearity analysis.................................. 119
4.5. Results ................................................................................................................ 121
4.5.1. LULC trajectories ....................................................................................... 121
4.5.2. Multinomial Logit Model (MNL) of land use change ................................ 122
4.6. Discussion .......................................................................................................... 126
4.7. Conclusion ......................................................................................................... 131
4.8. References .......................................................................................................... 132
xii
5. CONCLUSIONS ..................................................................................................... 138
5.1. Overview ........................................................................................................... 138
5.2. Research Findings ............................................................................................. 139
5.2.1. Research Question 1 .................................................................................... 139
5.3. Study limitations and future research directions ................................................ 150
xiii
LIST OF TABLES
Table 2.1. Satellite data for the study area. ..................................................................... 35
Table 2.2. Landsat spectral bands, principal components analysis (PCA) of texture
features based on grey-level co-occurrence matrices, and NDVI used in each model. .. 37
Table 2.3. Land use classification system....................................................................... 38

Table 2.4. Texture measurements extracted from the Landsat spectral bands. The
subscripts 𝒊 and 𝒋 give the horizontal and vertical coordinates of the co-occurrence
matrix respectively (i.e., a Moore neighbourhood), p is the cell value and µ is the
mean cell value over a local window (Haralick et al. 1973). .......................................... 39
Table 2.5. Final input parameters used to train the algorithms and the out-of-bag
(OOB) estimate of the prediction error for RFs. The CART complexity parameter
(cp) was given as cp = 0.008 across all Models.............................................................. 43
Table 2.6. SVM estimates of historical land use and land cover in the Warre n
Catchment. ...................................................................................................................... 51
Table 3.1. Transitional probability matrix derived from the LULC map for the periods
1979-1992, 1992-2003 and 2003-2014........................................................................... 82
Table 3.2. Comparison of classified and projected LULC classes in 2014 .................... 87
Table 3.3. Estimated area of each LULC class in the Warren River Catchment. ........... 88
Table 3.4. Change in areal proportion of each land use between periods. ..................... 88
Table 4.1. List of prospective explanatory variables for the multinomial logit model. 117
Table 4.2. Marginal Effects of explanatory variables on the transition probabilities of
LULC change. ............................................................................................................... 123
xiv
LIST OF FIGURES
Figure 1.1. Simplified historical overview of the major policies affecting land
management in south-west of Western Australia............................................................ 13
Figure 1.2. Location of the Warren River Catchment in south-east of Western
Australia. ......................................................................................................................... 16
Figure 2.1. Location of the study area within the coastal range of Western Australia. .. 33
Figure 2.2. Flow diagram of pre-processing, processing, classification and evaluatio n

of classifier performance. ................................................................................................ 36
Figure 2.3. Comparison of overall classification performance for CART, RF and
SVM algorithms for each Landsat sensor across Models C1 to C4. ............................... 45
Figure 2.4. Classified imagery for each Landsat sensor (SVM – Model C1). ................ 50
Figure 3.1. Location of the Warren River Catchment in Western Australia. .................. 72
Figure 3.2. Overview of the methodology applied in this study. .................................... 78

Figure 3.3. The most representative areas of changes between 1992 and 2014. ............ 84
Figure 3.4. LULC maps in different years: (a) 1979, (b) 1992, (c) 2002, (d) 2014 and
(e) 2025. .......................................................................................................................... 90
Figure 4.1. Historical land use policies and its effects on LULC changes in WRC. .... 110
Figure 4.2. Location of the study area........................................................................... 111
Figure 4.3. Trends in surface areas and percentage for the three major LULC classes
in the study area............................................................................................................. 122
Figure 4.4. Map of LULC showing the expansion of plantation forest from 1992 to
2014. .............................................................................................................................. 126
xv
ABBREVIATIONS AND ACRONYMS
AIC Akaike Information Criterion

ALUM Australian Land Use and Management Classification Maps
ATO Australian Taxation Office
CA Cellular Automata
CART Classification and Regression Trees
DEM Digital Elevation Model
DOS Dark-Object Subtraction
DT Decision trees
EROS Earth Resources Observation and Science
ETM+ Enhanced Thematic Mapper Plus
FSS First Sampling Stratum
GIS Geographic Information Systems
Gl Gigalitres
GLCM Grey-Level Co-occurrence Matrices
GRASS Geographic Resources Analysis Support System
GSS Group Settlement Scheme
IID Identically and Independently Distributed
ISODATA Iterative Self-Organizing Data Analysis Technique
(ISODATA)
ITAA Income Tax Assessment Act
LSMS Large-Scale Mean Shift Segmentation
LULC Land Use and Land Cover
MIA Managed Investments Act
MIS Managed Investment Schemes
MLA Machine Learning Algorithm
MLP Multilayer Perceptron
MNL Multinomial Logit Model
MOLUSCE Modules for Land Use Change Evaluation
xvi
MSS Multispectral Scanner
NDVI Normalized Difference Vegetation Index
OBIA Object-Based Image Analysis
OLI Operational Land Imager
OOB Out-Of-Bag
PA Producer Accuracy
PCA Principal Components Analysis
PRS Product Ruling System
RF Random Forest
RFA Regional Forest Agreement
RPART Recursive Partitioning and Regression Trees
SAP Salinity Action Plan
SLIP Shared Location Information Platform
SRTM Shuttle Radar Topography Mission
SSS State Salinity Strategy
SVM Support Vector Machine
TDS Total Dissolved Solids
TM Thematic Mapper
TR Taxation Ruling
UA User Accuracy
USGS United States Geological Survey
VIF Variance inflation factors
WA Western Australia
WRC Warren River Catchment
WRRC Water Resource Recovery Catchments
WRS World Reference System
WSLSS War Service Land Settlement Scheme
xvii
Chapter 1. Introduction
1. INTRODUCTION
1.1. B ACKGROUND
The rapid growth in the world’s population over the last century has resulted in an
increased exploitation of natural resources (Lambin, Geist and Lepers 2003; Meyer and
Turner 1992). Indeed, with natural ecosystems degrading at unprecedented rates, a clear
scientific consensus has emerged that Land Use and Land Cover1 (LULC) has reduced
the capacity of land to provide ecosystem services at a global scale (Lambin et al. 2001;
Lambin et al. 2003; Manandhar, Odeh and Pontius 2010). The majority of LULC change
is anthropogenically driven and includes deforestation through the expansion of
agricultural and urban lands (Barron et al. 2012; Etter et al. 2006). LULC change is thus
the key source of anthropogenic change on the environment (Polyakov, Majumdar and
Teeter 2008; Meyer and Turner 1992).
LULC has also transformed Australian ecosystems. Despite most of Australia’s land area
(~75%) being deserts or arid lands usually unsuitable for forest growth, a rapid decline in
forest cover has been observed in the most fertile regions close to the coastal periphery
(Bradshaw 2012; Lunt 1998). Those LULC changes have produced significant economic
effects such as the development of agricultural and forestry enterprises. However, there
are also adverse social and environmental impacts, including habitat fragmentation, loss
1Land Cover is defined as the biophysical state of the earth (e.g., water and native forest); whereas Land
Use is the underlying exploitation of land cover (e.g., forest used for timber production; Braimoh 2004).
1
of biodiversity, decline in soil fertility and water quality. These changes have several
policy implications, including mitigation of dryland salinity, protection of wildlife
habitat, and carbon sequestration. Policies related to agricultural production, native forest
management and plantation forestry have attracted significant attention in Australia. The
Plantations for Australian (The 2020 Vision; Commonwealth of Australia 2002)
exemplifies it well due to its role in promoting an increase in Australia’s plantatio n
resources. However, in addition to the environmental impacts that differ for each land
class conversion, the costs of achieving a given policy goal such as The 2020 Vision
might vary depending on whether policy instruments target land retention, conversion, or
a combination of both (Plantinga and Ahn 2002). Therefore, understanding the drivers of
human decisions to alter the landscape as well as responses to the policies intended to
change these decisions is important for the development of more targeted environme nta l
and land use policies (Hobbs et al. 2016).
The conversion of the south-western Australian landscape from deep-rooted native
vegetation to shallow-rooted crops and pastures has come at a high environmental cost
(George et al. 2012). The effects of regional-scale deforestation have led not only to
widespread degradation of water quality, but have also contributed to significa nt
biodiversity loss (Myers et al. 2000), the development of dryland salinity (Graham,
Pannell and White 2010; Pannell and Roberts 2010) and the subsequent loss of productive
farming lands (Ridley and Pannell 2005). This is especially the case in the south-west of
Western Australia which experienced its most rapid deforestation rates between the 1920s
and 1980s, prior to its designation as a Global Biodiversity Hotspot due to its high number
of endemic and threatened plant species (Myers et al. 2000; Bradshaw 2012). Despite the
region’s high biodiversity and economic value, the dynamics of its LULC is not well-
2
understood. Burvill (1979) provides a broad summary of land clearing in south-west of
Western Australia.
Understanding the causes and the effects of LULC changes on the environment depends
on the availability of accurate historical information (Lambin et al. 2001), including the
detection of the types of changes occurring, where and when they occur, and the rates at
which changes occur (Lambin 1997). Currently, remote sensing and geographic
information system (GIS) technologies have been widely used as a base tool to identify,
monitor and analyse the spatio-temporal dynamics of LULC conversions. Also, various
change detection techniques have been developed to identify the extent and location of
environmental changes, with the conventional method involving a cross-tabulation matrix
obtained from the comparison of two or more temporal LULC maps (Braimoh 2006).
A key component in the production of LULC maps for change analysis is a machine
learning algorithm (MLA), or classifier, to predict LULC for the whole region from a
subset of ground-truthed data. A number of recently developed MLAs provide accurate
predictions for LULC mapping. Examples include Support Vector Machines (SVM),
Random Forests (RF) and Classification and Regression Trees (CART) (Kotsiantis 2007;
Otukei and Blaschke 2010; Sesnie et al. 2010; Shao and Lunetta 2012; Zheng et al. 2015).
Importantly, the selection of a suitable classifier is essential to improve upon
classification results (Lu and Weng 2007; Otukei and Blaschke 2010).
However, in spite of the development of MLAs, the classification of spectrally similar
classes using moderate resolution, remote sensing imagery (e.g., Landsat and MODIS
imagery) remains a challenging task (Marcos-Martinez and Baerenklau 2015; Wardlow
and Egbert 2008; Melgani and Bruzzone 2004). For instance, distinguishing between
3
forest types in south-western Australia. Mapping and evaluation of spectrally similar but
ecologically distinct classes is crucial for many ecological and forestry applicatio ns
(Shang and Chisholm 2014), and therefore should be considered as an essential
component of land use and conservation monitoring and management.
As we seek to develop our further understanding of the land use changes we are
confronted with the question of what are the major drivers of LULC changes. The basic
premise is that the landowners allocate private land among alternative uses to maximise
returns, which are determined by biophysical, economic, and policy factors. The changes
in land allocation are driven by the interaction and combination of various actors (e.g.,
landholders, policy-makers) and factors (e.g., policies, climate) at different spatial and
temporal scales (Lambin et al. 2001; Veldkamp and Lambin 2001). In this regard,
understanding and predicting the dynamic processes and driving forces of LULC change
implies a multi-disciplinary approach that integrates the knowledge of biophysical, socio-
economic and ecological factors (Irwin and Geoghegan 2001; Wu et al. 2008; Agarwal et
al. 2002). Although the design of spatially explicit models of LULC change has recently
gained considerable attention in a number of fields (Paiboonvorachat and Oyana 2011),
less thought has been given to the development of these models to understand the
economic and political processes that underlay landscape changes (Irwin and Geoghegan
2001).
In this context, economic theory is often used to support the model development,
including the selection of explanatory variables. However, to date, there is no single
unifying theory of LULC change. The two principal economic theories to explain spatial
patterns of LULC changes have been the Ricardian and von Thünen theories. Both the
Ricardian and von Thünen models are based on land rent theories that state that any parcel
4
of land will be used in the way that earns the highest rent. The Ricardian theory states that
land use relates mainly to the physical and immutable qualities of land (e.g., soil fertility;
Ricardo 1817). Therefore, the input of labour per hectare is greatest on land parcels that
possess the highest intrinsic land quality. In contrast, the von Thünen theory extends the
Ricardian’s proposition by adding location-specific characteristics and transportatio n
costs to the model. In this model, rent (i.e., profit) is primarily a function of distance from
the center of economic activity (Thünen 1966), and assumes that the landscape is a
homogenous and “featureless plane”. Especially in cases of large public land, we can
assess the distance from public transportation infrastructure.
A further in-depth analysis would also consider the causal mechanisms behind land use
transitions as involving two forces. The first force is motivated by the desire to achieve
new economic opportunities through socio-economic changes, innovations or policy
incentives. The second force is driven by the need to respond to resource scarcities and
ecological constraints that were caused by past land use practices (Lambin and Meyfroidt
2010). Based on those theories, LULCs are therefore driven by landholders’ choices
among economic opportunities, political factors, specific characteristics of a landscape,
or a landholder’s attitude to risk and financial situation. Such considerations should not
be overlooked when a structural framework is designed to address the subtle political and
economic processes underpinning land conversions. Hence, it is important to develop
modelling techniques that are sufficiently general that they can be used to test alternative
paradigms.
The Multinomial Logit Model (MNL) allows flexibility in behavioural assumptions while
explaining complex spatial-temporal patterns in the distribution of a set of land use
alternatives (Bockstael 1996; Chomitz and Gray 1996; Lin et al. 2014; Polyakov and
5
Zhang 2008). In general, MNL allows researchers to focus on developing a model of the
individual landowner’s choice. As such, an MNL is appropriate for understanding the
driving forces of landscape changes in the south-west of Western Australia as it can be
structured to account for location in a landscape and the response of LULC change to
spatial variation in other variables of interest (Chomitz and Gray 1996; Irwin and
Geoghegan 2001). The MNL can, therefore, be used to build an understanding of human
decisions in response to a set of predictor variables (drivers). This step of model building
is critical to LULC responses to policies, not only to predict their potential impact on the
environment but also to avoid repeating past policy mistakes.
1.2. ECONOMIC AND POLICY DRIVERS OF LAND USE CHANGE IN WESTER N
AUSTRALIA
Regions of south-western Australia experienced extensive clearance stimulated initia lly
by the Group Settlement Scheme (GSS) in the 1920s, and later on by the War Service
Land Settlement Scheme (WSLSS) in the 1950s. The GSS was an assisted migratio n
scheme instigated after World War I, and was aimed at developing dairy farms within
Australia's South West, hence reducing the reliance of geographically isolated Western
Australians on imported dairy products (Brunger and Selwood 1997). Similarly, the
WSLSS was created to accommodate and provide employment to soldiers returning from
service in World War II. Originally, it was intended to develop farms on already cleared
land that was deemed to be suitable for agriculture (Sanders 2005). However, governme nt
investment through various taxation concessions, training, infrastructure development
6
and loan incentives provided economic drivers for further land clearing (Australia n
Greenhouse Office 2000).
As a result, deforestation and forest degradation issues have been the focus of a number
of policy initiatives in Western Australia, as exemplified by The State Salinity Strategy
(SSS) and The Country Areas Water Supply Act of 1947 – Part IIA “Control of
Catchment Areas” (1947 Act). The 1947 Act was amended in 1976 and 1978 by the
Western Australian State Government to control further clearing of native vegetation in
five potential water supply catchments in the south-west: the catchments of Wellingto n
Dam, Mundaring Weir, Denmark River, Kent River Water Reserve, and Warren River
Water Reserve (Smith et al. 2006; Government of Western Australia 2015). In 1990 the
Harris River Dam Catchment was also proclaimed under the 1947 Act (Government of
Western Australia 2015).
Initially referred to as Clearing Controlled Catchments, and in 1996 renamed as Water
Resource Recovery Catchments (WRRC), portions of those key catchments affected by
salinity were designated as a part of a state-level salinity strategy with a 30-year vision
termed the Salinity Action Plan (SAP; Government of Western Australia 1996).
However, through a process of review of the SAP and public consultation, the strategy
was redeveloped to become the State Salinity Strategy (also known as Western Australia
Salinity Strategy) in 2000 (State Salinity Council 2000).
As salinity is the greatest threat to sustainable land use and conservation of biodivers ity
in south-west Western Australia (Wallace 2001), the main goal of the State Salinity
Strategy (SSS) is to reduce the economic damage caused by salinity to agriculture,
buildings and infrastructure in rural areas, and the environment. The SSS is managed by
7
the Recovery Teams through a strategic partnership approach, led by the Department of
Water and State Salinity Council, providing key stakeholders with a role in salinity
management within their catchments (State Salinity Council 2000).
Research has shown that significant investment is needed to reduce, or stop, the impact
of salinity on water resources across south-west Western Australia, with 1.8 millio n
hectares already affected by salinity (Wallace 2001). The scale and type of interventio n
required to achieve a potable water standard of 500mg/L Total Dissolved Solids (TDS) is
unique for each catchment. The interventions usually address the following manage me nt
options: deep-rooted perennial shrubs and trees, including large-scale planting of
previously pastoral land with commercial or non-commercial shrub or tree plantatio ns;
phase farming (rotations which include a perennial phase); pumping groundwater; and,
divert saline water through shallow drains and other means (Government of Western
Australia 1996). Currently, the state government contributes about $40 million a year to
salinity management, and the Commonwealth Government has also contributed
significantly. However, the largest investment has been funded by private landholders
(State Salinity Council 2000).
Although LULC changes have been recognised as a key element that substantially affects
ecosystem functioning, accurate understanding of historical landscape changes is not
usually addressed when an agri-environmental policy is implemented. For instance, the
SSS for the Warren River Catchment was developed in 2000 to recommend mechanis ms
to achieve the stream salinity goal of 500mg/L TDS by 2030. However, according to
Smith et al. (2006) the Warren River will only achieve the stated goal if additiona l
interventions, such as upper catchment reforestation or engineering works, are applied.
More in-depth analysis revealed that this policy was implemented without knowing the
8
historical rate of land transitions, and without the accurate use of socio-economic
information.
One of the key management options proposed by the SSS was commercial plantatio n
forest. In the late 1990s commercial plantations spread across previously cleared lands in
south-west Western Australia. A number of contingent circumstances and policies
combined to drive this plantation establishment, as illustrated by the Income Tax
Assessment Act of 1997 (ITAA 1997), Plantations for Australian (The 2020 Vision), and
The Managed Investments Act 1998 (MIA 1998). The ITAA 1997 was released in 1997
to replace the Income Tax Assessment Act 1936, and is one of the main regulations under
which income tax is calculated in Australia. The Commonwealth Government recognised
in the ITAA 1997 that the main impediment to strengthening plantation forests within
Australia was that investment in plantations would not produce revenue for between 8
and 25 years. Consequently, the Government established immediate tax deductibility for
investments in plantation forest. Like forestry agribusiness, non-forestry investme nts
were also structured around a tax benefit received at the point of initial investment (ATO
2017a). However, the lead time for returns on non-forestry investments was much shorter
than for investments in forestry.
The 2020 Vision was subsequently launched in 1997 by the Ministerial Council on
Forestry, Fisheries and Aquaculture, and aimed to treble Australia’s plantation area by
2020 to a total of 30,000 km2 . The benefits of The 2020 Vision would be a reduction of
Australia’s reliance on native forest products sourced either domestically or overseas, an
enhanced capability to compete internationally for a share of the wood product market,
and a reduction of the trade deficit of around $2 billion in wood and paper products in
1995 (Commonwealth of Australia 1995). Additionally, by increasing plantation forest
9
environmental benefits such as salinity mitigation would be favoured as an indirect effect
of landscape-scale reforestation (Townsend et al. 2012; Department of Water 2012). To
achieve this target, diverse initiatives to stimulate plantation development were proposed,
including tax incentives (e.g., ITAA 1997; Commonwealth of Australia 2002) as a well-
known practice to encourage the supply of desirable ecosystem services from agro-
ecosystems through incentivising changes in land use (Bryan 2013; Plantinga and Wu
2003).
Similarly, the MIA 1998 responded to the timber supply shortage by creating a retail
investment structure whereby investors could achieve a personal tax deduction for the
expense of investing in agribusiness development activities through Managed Investme nt
Schemes (MIS). Agribusiness MIS at this time were assigned to one of two categories:
forestry or non-forestry2 . In general, an MIS arrangement is where investors are brought
together to pool their funds for the common interest of financing an agribusiness project.
The funds are then managed by a 'responsible entity' who operates the scheme
(Mackarness and Malcolm 2006). Currently, Australia’s total plantation area is about
20,125 km2 , and Western Australia contains the nation’s second largest area of plantatio ns
(4,029km2 ; Gavran 2014). Nonetheless, a secondary objectives of the tax scheme in
promoting plantations (e.g., Eucalyptus globulus - Tasmanian bluegum) was the
enhancement of rural economies through the provision of employment, and to potentially
meet social and environmental objectives, such as enhancing biodiversity through
2Non-forestry MIS activities are primarily focused on the horticulture industry (e.g., wine grapes, almonds
and olives), but also encompass other primary industries such as beef cattle, aquaculture and poultry.
10
reconnecting a fragmented landscape of remnant vegetation, and water quality through
forestry based mitigation of landscape-scale salinity.
Furthermore, another relevant factor to the afforestation investments was the introductio n
of the Product Ruling System (PRS) by the Australian Taxation Office (ATO) in 1998.
The PRS clarifies the taxpayer’s obligation, and specifies the tax deductibility status of
each afforestation project for investors. Before PRS was introduced, investors relied
heavily upon a seller’s description of the taxation benefits of a particular investment. If
the seller was wrong, taxation penalties would be applied to investors. Thus, the PRS has
become a crucial component in MIS by providing tax certainty to both investors and MIS
industry, given the scheme proceeds according to the plan submitted to the ATO (The
Treasury 2008). A further event with an effect on MIS investments was the release of Tax
Ruling TR 2000/8 in 2000, which focused almost exclusively on investment schemes
(ATO 2000). Hereupon, the ITAA 1997, PRS and TR 2000/8 provided certainty to
investors that their investment in MISs were an allowable tax deduction, in alignme nt
with The 2020 Vision.
As the agroforestry investments were deemed to be profitable under the new tax regime ,
several companies became involved in domestic agroforestry activities, both Australia n
and overseas owned3 . Most Eucalyptus plantations have been undertaken on previous
agricultural lands regardless of their actual potential for forest productivity, and therein
lies a problem. Significantly, MIS companies had to acquire land assets which led to
substantial bank debt as tax deductibility under the MIA was not applicable for buying
3The main companies involved are New Forests, Integrated Tree Cropping Ltd., Green Triangle Plantation
Forest Company of Australia Pty Ltd. (owned by a Japanese co nsortium), and Global Forest Partners.
11
land. What followed was a rapid expansion of forestry MIS, with demand from investors
exceeding planned expectations. In this case, commercial plantation forests was used as
a potential response strategy to reduce salinity and enhance water quality in the WRRC.
The forestry MISs were then sold as ethical investments, whereby desirable
environmental goals could be satisfied through forestry MIS over the long-term.
Between 1997 and 2007, the expense of establishing, managing, harvesting and
transporting the outputs of forestry and non-forestry investments were considered as a
non-capital business expenditure and were thus fully tax deductible in the year the
business incurred the expense (under Division 8 Section 1: General Deductions of the
ITAA 1997). However, over the past ten years, the taxation laws governing MIS
operations in Australia have been subjected to successive changes. These changes
generated significant uncertainty among MIS investors, with the eventual downfall of the
MIS industry attributable in part to this uncertainty. In the mid-2000s the Governme nt
questioned the effectiveness of the MIS, as the tax-driven strategies of the MIS activities
could lead to irrational investment and perverse outcomes (e.g., new investors were the
only source of revenue for previous investors until the trees matured). Thereafter, in 2006,
the MIS industry was dealt a severe blow when the ATO notified that any contributio ns
paid into non-forestry and forestry MIS instruments would no longer be tax deductible
from 1 July 2007 (this was later postponed to 1 July 2008).
After much lobbying by the MIS industry, Division 394 was inserted into the ITAA 1997
in 2007 to provide tax certainty for forestry MIS investors (ATO 2017b). This tax change
allowed immediate tax deductions for expenditure incurred in forestry MIS, provided the
schemes complied with certain conditions. From this date, any change in the general
taxation rules did not apply to forestry MISs as this industry is protected under Divis io n
12
394 of the ITAA 1997. The main reason for providing this concession was to continue
the expansion of Australia’s plantation forestry. Controversially, MIS for non-forestry
agribusiness was to be taxed under the general income taxation rule (The Treasury 2008).
Those changes led to the development of a new TR 2007/8, replacing the TR 2000/8, and
also the release of the Product Ruling PR 2007/71 in 2007.
However, following the outcome of a test case in 2009 regarding non-forestry
agribusiness the Government withdrew its decision, and TR 2007/8 was abolished.
Subsequently, PR 2007/71 Addendum A1 was provided to re-allow non-forestry
agribusiness MIS an up-front deduction for their investments, subject on the facts of each
situation, under Section 8-1 of the ITAA 1997 (ATO 2017a). In contrast, forestry MIS
continues to rely on Division 394 to the present day (ATO 2017b). The foregoing is
summarised in the timeline presented in Figure 1.1.
Figure 1.1. Simplified historical overview of the major policies affecting land
management in south-west of Western Australia.
13
Before those major tax revisions were introduced, MIS investments were at their peak,
with AUD 1.2 billion placed in MIS in 2006 (The Treasury 2008). However, MIS sales
had decreased drastically by 2010 to AUD 100 million (NewForests 2015), leading to the
near collapse of agribusiness MIS in Australia. The drivers of this collapse may be
attributable to the uncertainty surrounding the changes in MIS legislation, the lower than
expected profitability of the forestry MIS, poorer quality wood due to underinvestment in
good management practice, an underestimation of the component costs of plantatio n
forestry, and the onset of the Global Financial Crisis. The risk of investing in forestry
MIS had been highlighted since the late 2000s (ASIC 2012; Brown, Trusler and Davis
2010), with six high-profile agribusiness companies operating in Australia having failed. 4
This is particularly the case for Great Southern Group and Timbercorp Limited, the two
major agribusiness companies operating in the south-west of Western Australia. Both
were estimated as having around 40% of all MIS business in Australia (Brown et al.
2010), but they folded in 2009 with a multi- million dollar debt. These agribusiness
companies focused on negotiating the tax benefits rather than on profitable commodity
production, resulting in an unsustainable business model that was supported solely by
MIS concessions. Investments driven by the demand for tax minimisation, and not by
sound plantation management practices, are more closely associated with a higher risk of
collapse (Ajani 2008).
Now more than ever the question arises as to the future of Western Australia’s plantatio n
forestry following the downfall of MIS investments. The serious flaws intrinsic to the
4Environinvest Limited, FEA Plantations Limited, Great Southern Group Limited, Rewards Projects
Limited, Timbercorp Limited, and Willmott Forests Limited.
14
MIS instruments resulted in severe losses for investors, jeopardising not only the future
of MIS plantations in Western Australia, but also the efforts to decrease the water salinity
levels of the recovery catchments, especially the Warren River Catchment. The collapse
of the industry, and the lack of economic certainty given possible future changes of
forestry MIS tax laws by the government, is likely a deterrent to further investment in
forestry MIS, at least not at the scale observed prior to 2007. This has significa nt
consequence for policy outcomes under the Commonwealth Government’s 2020 Vision
and the state government’s SSS. These policy outcomes may largely be measured through
the LULC changes towards agroforestry with the rise and fall of forestry MIS
investments. Studying the LULC changes as a response to the policy will assist in
evaluating the role of government policy incentives on land manageme nt.
1.3. STUDY AREA
This thesis uses a case-study area in the south-west of Western Australia to examine the
implication of past and present LULC change patterns (Figure 1.2). The Warren River
Catchment (WRC) is located about 300 km south-east of Perth, and extends from near
Kojonup on the north-east of the catchment to the south coast of the state, encompassing
the small towns of Manjimup and Pemberton. The region experiences a warm temperate
Mediterranean climate, with long, hot, dry summers and cool, wet winters. The WRC is
one of the largest surface water resources in the south west of Western Australia with a
mean annual flow of 291 Gl (1990-2001; at the Barker Road Crossing gauging station;
Smith et al. 2006). The mean annual rainfall ranges from 550 mm/year in the north-east
of the catchment to over 1200 mm/year in the coastal south-west, with most rain falling
15
during winter and early spring (Townsend et al. 2012). Situated in a high rainfall zone,
the WRC is highly suitable for investments in MIS forestry, especially for the Tasmania n
bluegum species.
Figure 1.2. Location of the Warren River Catchment in south-east of Western Australia.
The WRC covers an area of 4,416 km2 which is geographically divided into upper and
lower catchments. The upper catchment comprises the Tone River, Perup River and
Wheatley Farm sub-catchments. Tone and Perup rivers rise in farmland in the south-west
of Kojonup, and both join to form the Warren River east of Manjimup. The lower
catchment resides below this confluence, and the river then flows through mainly native
forest before reaching the Southern Ocean south-west of Pemberton (Smith et al. 2006).
16
The soil types in the upper catchment are typically gravelly ironstone over a hard lateritic
duricrust. Around Pemberton, in the lower catchment, the soil type changes to heavy red,
or karri, loams, which significantly favours horticulture and supports tall karri forest
interspersed with jarrah and marri open forest (Munro 2006).
State forest reserves that are subject to commercial logging are the main LULC in the
lower catchment, alongside agriculture, horticulture and plantation forest. In contrast, the
upper catchment has largely been cleared primarily for farmland, including broad-acre
agriculture (annual crops and livestock). The development of the agricultural land use
began in the 1920s as part of the GSS (Munro 2006) and continued in the 1950s with the
WSLSS. Cleared areas for agricultural use jumped from about 20% in 1950 (Collins and
Barrett 1980) to 30% in 1979 (see 2.4.2. LULC Changes in the WRC). The pattern of
deforestation in the upper catchment has resulted in the fragmentation of the native forest
across the landscape.
The WRC provides a number of highly prized ecosystem services, such as its water
resources, rich biodiversity, and the surrounding forests that support both timber
production and a vibrant tourist industry. Therefore, since 1978, the WRC is recognised
as a clearing control catchment under the Country Areas Water Supply Act 1947 and is
referred to as a WRRC (Government of Western Australia 2015). Additionally, major
timber plantations began in the 1990s, spurred on by the changes to the tax legisla tio n
described above (e.g., ITAA 1997, PRS, and TR 2000/8) and the introduction of two
federal policy initiatives: The 2020 Vision and MIA 1998. Since then, there have been
high levels of conversion of agricultural land into commercial plantation forest.
As a result of this extensive clearing, salinity in the Warren River exceeded 500 mg/L
17
TDS in the 1960s (Munro 2006). Between 1993 and 2004, the average annual salinity in
the upper parts of the catchment was around 1015 mg/L, with most of the salt load, around
74%, coming from the Tone and Perub Rivers (Platt 2007). Despite its high salinity level,
the Warren catchment remains significant for the provision of both economic and
ecosystem services. Unfortunately, those essential services remain under threat from
dryland salinity and the consequent stream quality. Land-use policies and incentives
promoting the sustainable use of the catchment’s resources can potentially influe nce
future LULC change and the impact of that LULC change on the quality of those
resources.
1.4. RESEARCH OBJECTIVES AND QUESTIONS
Given the importance of the Warren River as the third largest river and potential water
supply for the south-west of Western Australia, there is an urgent need to identify the
processes driving the evolution of the current pattern of LULC. Therefore, the objective
of this dissertation is twofold. First, to develop methods to classify and simulate spatial-
temporal Land Use and Land Cover change patterns, targeting two spectrally similar but
ecologically distinct LULC classes namely plantation forest and native forest. The second
objective is to identify the dominant driving forces behind the historical evolution of the
LULC pattern, whilst focusing on the effects of government policies influencing land use
management. These objectives will be achieved through addressing the following five
research questions:
18
1. Which classifier exhibits better learning rates for discriminating spectrally
similar classes of a time-series of Landsat imagery? (That is, between plantatio n
forest and native forest).
2. What are the main changes in LULC that have occurred since 1979? (That is,
since the start of the Landsat record).
3. Given the current policy scenario, what is the likely future of plantation forest?
4. What were the main drivers of LULC change over the past 35 years (i.e., 1979-
2014)?
5. What is the role of government policy incentives in the establishment of
plantation forest?
This research will go beyond previous analyses of landscape changes conducted in the
WRC by linking the historical spatio-temporal LULC transformation with their main
drivers. In so doing, economic theories of agricultural land use allocation will have been
included in the model. In this context, this study will identify some of the main societal
responses in terms of LULC transitions in response to policy incentives, and supply policy
makers with a better understanding and framing of what has historically driven land use
change within the Warren River Catchment.
1.5. THESIS OUTLINE
This thesis consists of 5 chapters based on papers. This introductory chapter provides a
broad overview of the thesis, of the problem statement and of the research questions to
19
be addressed. Chapters 2 to 4 are based on scientific papers which have either been
published or have been submitted for publication in refereed journals. Each research
chapter contains an independent introduction, data description, methodology, results and
discussion, followed by a conclusion. In addition, each chapter is independently
referenced. As the papers are all closely connected by the overall research objective s,
there is some unavoidable repetition within thesis across the different chapters,
particularly with regard to descriptions of the data and the case study area. Finally, chapter
5 provides a summary of the main conclusions and the implications of the study for
agroforestry policy.
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25
Chapter 2. Discriminating native and plantation forests
2. DISCRIMINATING NATIVE AND PLANTATION FORESTS IN
A LANDSAT TIME-SERIES FOR LAND USE POLICY DESIGN
Abstract
The Warren River Catchment of south-western Australia is an area of high biodivers ity
threatened by the loss of native vegetation and dryland salinity. Over the last 20 years it
has been the target of a series of policies that encourage conversion of agricultural land
to plantation forest. Remote sensing has a key role in measuring trends in the area of
plantation forest observed across the landscape and hence the effectiveness of policy
initiatives. Despite its importance to land use policy, accurate data on historical land use
and land cover (LULC) dynamics of two spectrally similar but ecologically distinct forest
types such as native forest and plantation forest are not readily available for south-western
Australia, largely due to prohibitive data delivery costs. However, we argue that regular
low cost monitoring of long-term change in the spatial distribution of plantation forest
through remote sensing is a critical input into environmental policy for the catchment. To
this end, a 35 year time-series of Landsat imagery was acquired, and three differe nt
classifiers were tested (Support Vector Machines – SVM; Random Forests – RF; and
Classification and Regression Trees – CART) on spectral and textural indices applied to
four spectral bands. The six major LULC classes considered were agriculture, water,
native forest, sand dunes, plantation forest and harvested native forest. In classifying the
imagery the SVM and RF outperformed the CART across all classes. However, the SVM
classifier gave a slightly higher F-score for most individual classes than the RF. Eucalypt
dominated plantation forest reaching full canopy cover was subject to the highest rates of
27
misclassification inasmuch as they share spectral properties with the Eucalypt dominant
native forest. When applied to Landsat time-series imagery, SVM classifier combined
with four bands held in common between the four Landsat Sensors (MSS 1979; TM 1992;
ETM+ 2003; OLI 2014), and derived textures metrics are valuable in classifying
plantation and native forest, particularly where these share similar species. The
differences in prediction accuracy when including additional Landsat bands were not
statistically significant, as demonstrated by the McNemar test. Thus, we achieved a trade-
off in reducing processing time without significantly impacting on classification accuracy
(≥86%). The relatively high accuracy of the proposed method enables the effects of past
policy initiatives to be observed, and hence the efficient design of environmental and
conservation policy in future.
Keywords: Land Use Policy; Plantation Forest; Support Vector Machines; Landsat;
LULC Classification.
2.1. INTRODUCTION
Sustainable land management is critical to protect ecosystems and provide ecosystem
services (Lambin et al. 2001; Lambin, Geist and Lepers 2003; Manandhar, Odeh and
Pontius 2010). An essential element of an effective land management policy is Land Use
and Land Cover (LULC) monitoring. Of the tools available, there is a scientific consensus
that satellite data provide the most cost-effective and comprehensive means of observing
LULC change. There are of course many different types of satellite sensors, whose
capabilities to monitor the land surface have been increasing rapidly in recent years.
28
A common problem in LULC monitoring is the difficulty to distinguish between
spectrally similar classes (Marcos-Martinez and Baerenklau 2015; Chan and Paelinckx
2008). Very high-resolution (<5 m resolution) and/or hyperspectral imagery (>10 spectral
bands) can provide better discrimination than medium-resolution imagery (30m
resolution; Govender, Chetty, and Bulcock 2007; Melgani and Bruzzone 2004). However,
these technologies are relatively recent and do not provide the length of time-series or
global coverage required for a historical analysis of the slow rates of LULC change found
in agricultural regions such as the Warren River Catchment in south-western Australia.
Instead, the Landsat family of moderate resolution sensors (4-11 bands, 30m resolutio n)
provides the longest and most consistent archive of historical imagery, and so this archive
is often the only one available to measure long-term LULC changes (Wulder et al. 2016;
Sesnie et al. 2010).
The sensors impose constraints on how well LULC (e.g., commercial plantation forest
and native forest) with similar spectral signatures can be differentiated, as the sensors
map the full spectral signature into a finite number of bands, thereby limiting the level of
differentiation that can practically be achieved. Whether this ‘upper’ constraint on
achievable classification accuracy is realised depends much on the application of Machine
Learning Algorithms – MLA (or classifiers). In general, classifiers do not make
distributional assumptions about the data, and have been shown to significantly reduce
computational effort in developing class predictions when data measurement spaces are
large and complex (Foody 2003). See Kotsiantis (2007) for a general review of these
algorithms and Lu and Weng (2007) and Rogan et al. (2008) for a review of their
application to LULC assessments. Recent research has demonstrated that non-parametric
classifiers (e.g., Support Vector Machines – SVM; Random Forests – RF; and
29
Classification and Regression Trees – CART) compare favourably with more established
parametric classifiers such as maximum likelihood (Otukei and Blaschke 2010; Rogan et
al. 2008; Shao and Lunetta 2012; Szuster, Chen and Borger 2011). While SVM, RF and
CART have been applied in a wide range of classification problems (Adam et al. 2014;
Herold, Koeln and Cunnigham 2003; Lemon et al. 2003; Sharma, Ghosh and Joshi 2013;
Vayssières, Plant and Allen-Diaz 2000; Wardlow and Egbert 2008), it is only recently
that they have been trialled for discriminating spectrally similar land cover classes from
medium resolution data (Brandt et al. 2012; Rodriguez-Galiano et al. 2012).
Most tests of SVM, RF and CART to date have been applied to either only a single time
period (Li et al. 2014), or to analyse changes in cropping patterns (Devadas, Denham and
Pringle 2012; Löw et al. 2013; Wardlow and Egbert 2008; Zheng et al. 2015; Shao and
Lunetta 2012), and natural vegetation classes (Singh et al. 2014; Im, Beier and Li 2013).
Few previous published studies focusing on the classification of plantation forest has been
mostly constrained to a single set of imagery (Sesnie et al. 2010), to high resolutio n
imagery of limited spatial extent (Fagan et al. 2015; Rapinel et al. 2014; Adam et al.
2014), or not include the most recent Landsat OLI sensor (Brandt et al. 2012). As to our
knowledge, there have been no studies focused on the performance of these algorithms in
classifying Eucalyptus plantation with low inter-class separability from its surrounding
native forest, as captured by Landsat time-series imagery (i.e., MSS; TM; ETM+; OLI).
Consequently, this study sought to explore the complex process associated with mapping
a Eucalypt dominated plantation forest from adjacent Eucalypt native forest across the
landscape and through time.
LULC classes that are difficult to distinguish may be important to regional and local land
use policy. This is the case for the Mediterranean landscapes of south-western Australia,
30
a Global Biodiversity Hotspot that hosts a large number of endemic and threatened plant
species (Myers et al. 2000) and sustained large-scale destruction and fragmentation of
forest cover over the past 60 years (Bradshaw 2012). Regions within this Mediterranean
biome, such as the Warren River Catchment (WRC), were widely cleared for agriculture
in the 1950s (Smith et al. 2006). Consequently, these regions have been the focus of a
number of policy initiatives to primarily address the resulting biodiversity loss and land
degradation (e.g., Country Areas Water Supply Act 1947 in 1978 and Water Resource
Recovery Catchments in 1996). More recently, pulpwood plantations were established on
private land across the WRC following the introduction of government tax subsidies (e.g.,
Plantations for Australia – The 2020 Vision in 1997; and The Managed Investments Act
1998 – MIA 1998). A secondary objective of the tax scheme in promoting plantatio ns
(predominantly Eucalyptus globulus - Tasmanian bluegum) was to reduce stream salinity
and, thereby enhance the ecosystem health of neighbouring Eucalypt dominated forest
and aquatic ecosystem (Smith et al., 2006). Measuring the LULC change observed under
the policy initiatives may be used to inform future land use policy for the region. Since
the majority of plantations were established on private lands, they were not systematica lly
mapped by the government agencies. Most LULC change maps developed for Australia
at regional scales (ABARES 2016) do not provide consistent monitoring of a region
through time (Caccetta et al. 2012), and thus are not suited to studying the historica l
development of a plantation forest locally. For instance, the availability of detailed land
use maps in Australia was limited before the Australian Collaborative Land Use Mapping
Program was established in 2000.
Despite the limitations of remote sensing data (given spectral, spatial, and radiometr ic
resolutions), its use is growing in environmental policy analysis (e.g., Pandit, Polyakov,
31
and Sadler 2014; White and Sadler 2012; Martinez et al. 2017; Summers et al. 2015) and
there is a need to develop robust classifiers to make important distinctions between
spectrally similar but ecologically distinct LULCs. Hence, the main objective of this
paper is to classify 35 years of LULC change in the Warren River Catchment. In
undertaking the classification we will assess: (i) the ability of Landsat time-series imagery
to discriminate plantation from native forest; (ii) the consistency and accuracy of three
different classifiers (SVM, RF and CART) in addressing the low inter-class separability
between native and plantation forest; (iii) different combinations of spectral bands for
enhancing the classification accuracy; and, (iv) the possible implications of classifier
performance for land management policy. The open-source methods applied here are
sufficiently general to have potential application to similar scenarios elsewhere.
2.2. STUDY AREA AND DATA SOURCES
2.2.1. Study Area
The Warren River has a mean annual flow of 291 Gl (1990–2001; Smith et al. 2006;
Figure 2.1), and annual rainfall ranging from 550 mm/year in the north-east of the
catchment to over 1200 mm/year in the coastal south-west (Townsend et al. 2012). The
WRC covers 4,416 km2 , and includes the small towns of Manjimup and Pemberton. At
the 2011 census, these towns had a population in the urban centre of 4,164 and 777
respectively (ABS 2011).
32
Figure 2.1. Location of the study area within the coastal range of Western Australia.
Extensive LULC change intensified in the 1950s following the War Service Land
Settlement Scheme and was concentrated in the upper (north-east) Warren catchment.
This LULC change consisted primarily of the conversion of native woodlands, scrublands
and heath to rain-fed cereal production, followed by sheep and cattle pastures. The
primary land use in the lower (south-west) Warren catchment has, for over a hundred
years, been the selective logging and clear-felling of native forest, and significa nt
horticultural production around Manjimup and Pemberton. However, with increasing
environmental concerns over the loss of native vegetation and increasing dryland salinity
in the upper catchment, the State Government of Western Australia identified the Warren
River as a potential source of potable water. Hence the State Government enacted clearing
control legislation in 1978 (Country Areas Water Supply Act – Part IIA; Government of
33
Western Australia 2015) to prevent further loss of native vegetation, and thereby reduce
the threat of salinization of the river. In the 1990s, large-scale tree planting had
commenced on previously cleared lands in response to new tax incentives provided within
managed investment schemes. These tax incentives had largely been withdrawn by the
late 2000s. Logging of native forest is enacted through the Conservation and Land
Management Act (WA), and through the Western Australian Regional Forest Agreement
(RFA) since 1999.
2.2.2. Data Sources
An image series was constructed over the study area from four Landsat sensors: Landsat
3 Multispectral Scanner (MSS), Landsat 5 Thematic Mapper (TM), Landsat 7 Enhanced
Thematic Mapper (ETM+) and Landsat 8 Operational Land Imager (OLI; A in Figure
2.2). The Landsat imagery were obtained from the United States Geological Survey
(USGS) Centre for Earth Resources Observation and Science (EROS). Up to two scenes
were selected from the World Reference System (WRS2; Table 2.1). Cloud-free images
taken in the summer (December to February) were selected to maximize the potential
separation between native forest, commercial plantation forest and dryland agriculture.
Other reference data (A in Figure 2.2) includes: a digital elevation model (DEM) from
the Shuttle Radar Topography Mission (SRTM; 1 Arc-Second Global available by
USGS); the Australian Land Use and Management Classification Maps (ALUM;
1:1000,000 scale; ABARES 2016); plantation forest maps from the Department of Water
WA and Forest Products Commission WA from 1978 onwards (accuracy mostly of +/-
15 m from ortho-photo updates); and, aerial photographs taken in 2000 (10m resolutio n),
34
2004, 2013 and 2015 (5m resolution) from Landgate's Shared Location Informatio n
Platform (SLIP).
Table 2.1. Satellite data for the study area.
Acquisition data Sensor Path/Row Resolution

(meters)
10/01/1979 MSS 119/84 60
30/01/1992 TM 112/84 30
07/01/1992 111/84
05/02/2003 ETM+ 112/84 30
13/02/2003 111/84
27/02/2014 OLI 112/84 30
04/02/2014 111/84
2.3. METHODS
2.3.1. Imagery Pre-Processing
All Landsat images underwent atmospheric correction to convert digital number values
into surface reflectance using dark-object subtraction (DOS 4; Moran et al. 1992).
Topographic correction was through the Minnaert algorithm as applied to the SRTM
elevation data (Moran et al. 1992; B in Figure 2.2). Both correction methods were applied
using GRASS GIS (Geographic Resources Analysis Support System; GRASS 2015).
After these corrections, the MSS image was resampled from the original 60m to a 30m
spatial resolution. From a statistical and policy analysis perspective, it is preferable that
the data are as consistent across the different sensors as possible.
35
Figure 2.2. Flow diagram of pre-processing, processing, classification and evaluation of

classifier performance.
36
Hence, firstly, only the four bands from each sensor sharing similar spectral ranges to the
MSS sensor were considered (Model C1 and C4 in Figure 2.2). Then, Model C1 was
augmented by grey-level co-occurence matrix (GLCM) derived textural metrics applied
to those bands (Haralick, Shanmugam and Dinstein 1973; Hurni et al. 2013; Lu and Weng
2007), as described in section 2.3.2.2 below. The accuracy of the four-band classificatio ns
was then compared to classifications applied to imagery with up to 7 Landsat bands (i.e.,
bands 1 to 5 and 7 of the TM and ETM+ sensors, and bands 1 to 7 of the Landsat OLI;
Table 2.2), including derived textures metrics (Model C2 in Figure 2.2). To suppleme nt
these raw Landsat bands, the Normalized Difference Vegetation Index (NDVI) was
included to examine the ability of NDVI to differentiate two spectrally similar classes
(i.e., native and plantation forest; Model C3 – D in Figure 2.2), over and above the non-
linear transforms applied to the raw bands by the SVM and tree-based classifiers. The
steps in image pre-processing, sampling and classification are summarized in Figure 2.2.
Table 2.2. Landsat spectral bands, principal components analysis (PCA) of texture
features based on grey-level co-occurrence matrices, and NDVI used in each model.
Model Spectral Bands 5 PCAs NDVI Total of

Textures Bands used
MSS 4–7 Yes No 9
C1 TM / ETM+ 1–4 9
OLI 2–5 9
TM / ETM+ 1 – 5, 7 Yes No 11
C2 OLI 1–7 12
MSS 4–7 Yes Yes 10
C3 TM / ETM+ 1 – 5, 7 12
OLI 1–7 13
MSS 4–7 No No 4
C4 TM / ETM+ 1–4 4
OLI 2–5 4
37
2.3.2. Imagery Classification
2.3.2.1. Unsupervised Classification
Initially, an unsupervised classification based on the ISODATA algorithm (a Self-
Organizing Data Analysis Technique; Ball and Hall 1967) was performed with a 95%
convergence threshold, to identify potential target LULC classes (E in Figure 2.2). Our
target classes were then utilised in our stratified random sampling strategy for test and
training data to ensure an appropriate coverage over the range of possible spectral values.
Twenty unsupervised classes were allowed, with each class assigned to one of the six
targeted LULC classes through visual inspection of aerial photos and overlay of a coarse-
scale land use map (Table 2.3). The plantation forest class was not present in the MSS
1979 imagery, with the 1979 classification providing a base-line reference to the other
classifications containing plantation forestry. Urban areas were not included as a target
class as they represented a small proportion of the landscape (<0.4%). The sampling
strategy is discussed in detail in the Appendix A2.
Table 2.3. Land use classification system.
Class Description
Agriculture Cleared areas for pasture or cropping.
Water Water bodies including ephemeral water in lakes, rivers and dams.
Native Forest Indigenous plants (e.g., trees and shrubs).
Sand Dunes Ridge of sand especially on the coast.
Plantation Forest Commercial plantation trees consisted of closed monocultures
Harvested Native Forest Native forest recently cleared for timber extraction (clearcut logging) or to
improve forest health.
38
2.3.2.2. Texture Measurement
To increase the separability between LULC classes, texture metrics were calculated for
each model (i.e., Models C1 to C3) using grey-level co-occurrence matrices (GLCM;
Zvoleff 2015; G in Figure 2.2), computed using R (R Core Team 2016). The seven texture
metrics applied are described in Table 2.4, and in more detail by Haralick et al. (1973).
Table 2.4. Texture measurements extracted from the Landsat spectral bands. The
subscripts 𝒊 and 𝒋 give the horizontal and vertical coordinates of the co-occurrence matrix
respectively (i.e., a Moore neighbourhood), p is the cell value and µ is the mean cell value
over a local window (Haralick et al. 1973).
Texture measures Equation
Mean 𝑀𝐸 = ∑ 𝑖(𝑝𝑖,𝑗 ) (2.1)

𝑖,𝑗
Variance 𝑉𝐴 = ∑(𝑖 − 𝜇) 2 𝑝(𝑖, 𝑗) (2.2)

𝑖,𝑗
Homogeneity 1 (2.3)
𝐻𝑂 = ∑ 𝑝(𝑖, 𝑗)
1 − 𝑖 − 𝑗) 2
(
𝑖,𝑗
Contrast 𝐶𝑂 = ∑|𝑖 − 𝑗|2 𝑝(𝑖, 𝑗) (2.4)

𝑖,𝑗
Dissimilarity 𝐷𝐼 = ∑|𝑖 − 𝑗|𝑝(𝑖, 𝑗) (2.5)

𝑖,𝑗
Entropy 𝐸𝑁 = ∑ 𝑝 (𝑖, 𝑗) 𝑙𝑜𝑔(𝑝(𝑖, 𝑗)) (2.6)

𝑖,𝑗
Second Moment 𝑆𝑀 = ∑{𝑝(𝑖, 𝑗)}2 (2.7)

𝑖,𝑗
39
Each set of texture images was calculated for 3×3 (90 x 90m) and 7×7 (210 x 210m)
window sizes to potentially capture texture at two different level of details (~1 ha and ~4
ha, respectively). Textural metrics captured at different scales have been shown to
improve low inter-class separability and consequently, increase classification accuracy
(Hurni et al. 2013; Rodriguez-Galiano et al. 2012). Small windows sizes provide a more
accurate representation of the local variance, allowing us to capture plantations of
different spatial extent. The texture calculation generated 14 additional bands for each
spectral band per capture date. Since the dimensionality of the imagery was significa ntly
increased by applying textures, the texture metrics were reduced to the first five
components of a principal component analysis (PCA; G in Figure 2.2), representing more
than 98% of the total variation across the textural bands. These five components were
then stacked with the raw spectral bands (Table 2.2), on which the image segmentatio n
was conducted.
2.3.2.3. Image Segmentation
An object-based image analysis (OBIA) was undertaken to segment the landscape into
homogeneous objects that represent real-world landscape elements (H in Figure 2.2). The
segmentation was conducted through mean shift clustering, as applied in the Large-Scale
Mean Shift segmentation workflow (LSMS) provided by the Orfeo Toolbox (Michel,
Youssefi, and Grizonnet 2015; OTB 2016). The segmentation quality was evaluated by
visually comparing reference aerial photos with corresponding image segments. Then,
values for three key parameters were selected, namely the spectral range (colour), range
40
radius (pixel) and minimum region size. This single set of parameter values were applied
to the segmentation of the images at each capture date.
2.3.2.4. Machine Learning Algorithms
Model building, parameter tuning and accuracy assessments for each of the SVM, RF and
CART models were performed through the Caret package implemented in the R Software
environment (Kuhn 2016). Here, the methods 'rpart' (Recursive Partitioning and
Regression Trees) and 'rf' fit the classical Breiman’s CART and RF respectively, whereas
'svmRadial' implements a classic SVM model (K in Figure 2.2). Tuning parameters for
each algorithm were selected through a grid search seeking to minimise the prediction
error, as derived from 15-fold cross-validation (repeated 5 times with the folds selected
randomly).
SVMs generate a hyperplane that optimally splits different classes by a decision boundary
defined by a kernel function that is applied to the training data (Vapnik 2000). The
decision boundary is specified by the subset of the training sample that lies closest to the
decision boundary (i.e., the support vectors), yet which maximise s the distance between
the boundary and the support vectors in regularized space. For a Gaussian kernel two
pairs of tuning parameters, namely cost 𝐶 and the hyperparameter kernel specific functio n
Σ, need to be defined: C is a penalty parameter that controls the trade-off between training
error and model complexity; whereas Σ controls the shape of the kernel. Generally, these
parameters are found through a cross-validation procedure. Multi-class classifica tio n
problems are emulated by a voting rule, given the SVM is a binary classifier. Here, a one-
versus-one approach is adopted in which a SVM is developed for each pairwise
41
comparison between any two LULC classes; each SVM then assigns a datum to one of
two classes, termed a vote, and the class with the most votes across the different SVMs
assigns its class label to the datum (Hsu and Lin 2002). For the SVM algorithm, the final
range of tuning parameters were defined as Σ ∈ [1,4] and ∈ [1,35], with the Gaussian
radial basis function selected as the SVM kernel.
Decision trees (DT) are one of the most widely used methods for inductive inference
(Mitchell 1997). A DT is made of nodes and branches. A node is a point where a choice
must be made; whereas decision branches are generated by a node’s choice. Each branch
represents one set of possible preferences, with the set of alternatives mutually exclusive
and collectively exhaustive. There are many algorithms for constructing decision trees,
and, we apply Breiman’s Classification and Regression Trees (CART; Breiman et al.
1984). CART has been one of the most popular classifiers for MODIS and Landsat
imagery (Herold et al. 2003; Shao and Lunetta 2012). The advantage of this algorithm is
that significant predictor variables are automatically determined through entropy
reduction. To improve the CART model, the complexity parameter (cp) was tuned to
optimize the value by which splitting a node improved the relative error, with cp=0.008
selected.
A Random Forest (RF) is an ensemble of decision trees built from multiple bootstrapped
(i.e., random) samples of the training data. Bagging in RF automatically generates new
training sets by randomly resampling with replacement 63.2% of N, with N being the
number of samples in the original training set. The RF can be reduced to two tuning
parameters, namely the number of trees (ntree) and the number of predictor variables
considered for each split (mtry). Three different ntree values were tested for each Landsat
imagery (𝑛𝑡𝑟𝑒𝑒 = {100,500,1000}), along with the full set of mtry numbers (e.g.,
42
𝑚𝑡𝑟𝑦 = {1,2, . . . ,9}). Table 2.5 summarises the final input parameters selected to train
the algorithms to classify the six LULC classes.
Table 2.5. Final input parameters used to train the algorithms and the out-of-bag (OOB)
estimate of the prediction error for RFs. The CART complexity parameter (cp) was given
as cp = 0.008 across all Models.
SVM RF
Model 𝑪 mtry OOB %
MSS 24 2 7.94
C1 TM 35 4 10.46
ETM+ 34 3 17.86
OLI 34 6 19.08
TM 15 2 10.19
C2 ETM+ 19 1 19.27
OLI 32 4 17.84
MSS 30 2 8.76
C3 TM 20 1 11.05
ETM+ 35 5 18.94
OLI 32 2 15.78
MSS 35 2 12.16
C4 TM 34 2 14.44
ETM+ 35 4 25.90
OLI 34 2 20.53
An out-of-bag (OOB) estimate of the prediction error is then constructed over the
expected 36.8% of observations that will not be sampled with each resampling instance.
Through a majority vote the predictions of the individual random forest trees are
combined and a final class value is determined. The OOB estimate value was used to
select the ‘best’ model. Further, the prediction error of this ‘best’ model was
independently tested against the test set for the performance comparison of the differe nt
classifiers.
43
2.3.2.5. Accuracy Assessment
Evaluation criteria to compare the performance of the SVM, RF and CART classifiers are
required to be unbiased and independent of the method used to develop a particular model
(Kotsiantis 2007; Vayssières et al. 2000). Thus, performance of the classifiers were
evaluated on a test set that was independent of the training set on which those classifiers
were developed. The ground-truth data were randomly split into training and test sets,
comprising 80% and 20% of the available ground-truth data, respectively (J in Figure
2.2). The performance metrics applied included the Kappa coefficient, overall accuracy,
McNemar's test, F-score, the producer’s and the user’s accuracy (L in Figure 2.2; Foody
2002; Singh et al. 2014; Smits, Dellepiane, and Schowengerdt 1999). These metrics were
derived from the error (or confusion) matrices resulting from each of the LULC maps that
were produced: MSS 1979, TM 1992, ETM+ 2003, and OLI 2014. Performance metrics
take on the range of values [0, 1], where 1 indicates perfect classification performance for
all metrics apart from the p-value of the McNemar’s test.
We hypothesised that four bands held in common between the four Landsat Sensors (MSS
1979; TM 1992; ETM+ 2003; OLI 2014), and their derived textures (Model C1) are
capable of consistently classifying historical landscape transitions, particularly wher e
these share similar species. Thus, the alternative hypothesis implies that neither the
incorporation of more information (i.e., additional spectral bands or NDVI – Models C2
and C3) nor the classification of only four bands (Model C4) significantly increase
classification accuracy of a time series Landsat imagery. For this reason, we assessed the
superiority of the proposed null hypothesis against the alternative hypotheses through
McNemar’s test.
44
2.4. RESULTS AND DISCUSSION
2.4.1. Classification Performance
Landsat time-series imagery combined with RF and SVM produce satisfactory results for
monitoring historical landscape changes at regional scale (Figure 2.3; Appendix B2),
including in the case of low inter-class separability (i.e., native and plantation forest;
overall accuracy > 75%). Generally, SVM performed similarly across Models C1 to C3
(accuracy >84%), and performed slightly better than RF (accuracy >80%). CART
produced the lowest classification performance across all Models (> 69%).
Figure 2.3. Comparison of overall classification performance for CART, RF and SVM
algorithms for each Landsat sensor across Models C1 to C4.
45
At individual class levels, SVM, RF and CART varied in their ability to classify
commercial plantation forest from adjacent native forest. However, the SVM classifier
produced a slightly higher F-score for most individual classes (F-score ≥0.734 and ≥0.829
for plantation forest and native forest respectively). The F-score, and user’s and
producer’s accuracy measurements are related to commission and omission errors at the
individual class level (Appendix B2).
Both RF and SVM were able to successfully separate agriculture and sand dunes from the
other LULC types for all scenes (F-score ≥0.767 and ≥0.824 for agriculture and sand
dunes, respectively), except for Model C4. These results support previous studies that
have demonstrated the potential of SVMs to identify different crops (Bahari, Ahmad, and
Aboobaider 2014; Devadas, Denham, and Pringle 2012; Löw et al. 2013; Zheng et al.
2015).
Although the SVM classifier achieved a higher performance for most individual classes,
the overall accuracy statistics did not clearly reveal major map differences of one thematic
map over another (i.e., Models C1 to C3). Thus, the McNemar’s test was applied to
evaluate the statistical significance of the difference in accuracy performance (Appendix
C2; Foody 2004). The McNemar’s test suggests that the SVM classifications derived
from Model C1 generated significantly (p < 0.05) better performance outcomes than the
CART algorithm across all models and sensors.
For the sensors MSS 1979 and TM 1992, slightly higher overall accuracies or kappa
values were obtained with Model C1 classified with SVM. However, the McNemar’s test
did not indicate significantly different performances at the 5% significance level between
the different models, for both the RF and SVM classifiers. This suggests that includ ing
46
more spectral bands from the latest Landsat sensors, or their derivatives such as texture
or NDVI, do not increase dramatically the classification accuracy of those sensors when
discriminating between the LULC classes considered here.
The LULC maps from the ETM+ 2003 and OLI 2014 sensors classified with SVM and
Model C1 were found to have a significantly higher accuracy (McNemar’s test p < 0.05)
in comparison to their corresponding RF classifications. This confirms the consistency of
the SVM classifier in providing superior classification accuracy for spectrally similar
vegetation covers (i.e., native and plantation forest). Appropriate selection of machine
learning algorithm, rather than of more spectral bands, has been found here to be more
important in the successful classification of historical land use and land cover.
As demonstrated by the results, we achieved a useful trade-off by reducing the number of
spectral bands, and hence processing time, without significantly impacting on
classification accuracy. Sometimes a slightly improvement in performance outcome can
be obtained by using more Landsat bands (i.e., maximum of 1% enhancement of overall
accuracy and 2% kappa value for ETM+ 2003 using SVM – Model C3 instead of Model
C1). However, this marginal improvement is not statistically significant. Additionally, we
minimise the bias in any following statistical modelling that would be engendered by the
different classification accuracies arising from applying of different band combinatio ns
across multiples classifications. Most Landsat time-series studies to date have utilised the
maximal number of spectral bands available to increase classification accuracy (Ramita
Manandhar, Odeh, and Ancev 2009; Zheng et al. 2015; Muller and Zeller 2002; Zhang,
Zhengjun, and Xiaoxia 2009). However, in the historical analysis of landscape change
the consistency of the underlying data through time may be argued to be just as important
as the need for greater spectral resolution (i.e., more spectral bands) to improve
47
classification accuracy. In the simplest case, the error term in a statistical model can
account for much of the error arising from misclassification of the LULC classes, but only
if an assumption of homogeneity (i.e., consistency) of error terms through time can be
applied.
Following the widespread establishment of plantation forests during the late 1990s it is
apparent that overall classification accuracy declines, and there is an increased differe nce
in accuracy between the classifiers (Figure 2.3). For instance, user's accuracy decreased
by 0.049 for native forest from 1979 to 2014 for the SVM classifier ( Model C1), whereas
user’s accuracy for plantation forest decreased from 1.000 in 1992 to 0.797 in 2014
(Appendix B2) as the plantations from the 1990s matured (with similar trends in
classification success over time for CART and RF). The decline in performance may be
explained by the absence of the plantation forest class from the base-line MSS 1979
imagery, resulting in higher separability between the target LULC classes for the base-
line classification. Evidently, the spectral variation found within a given land use class is
a function of its intrinsic physical and spectral attributes, and of the environme nta l
context. For example, the spectral response of plantation forest in an image may vary as
a function of time since last fire, density of cover, seasonal drought stress, disease events,
topographic position and sensor view angle. In contrast, commercial plantation forest is
usually comprised of tree monocultures that are uniform across space; however, when
plantations are at maturity they can be dominated by dense-canopied trees, showing only
minor spectral differences from mature native forest, particularly when dominant species
are of the same genus (i.e., Eucalyptus). Further, E. globulus has quite different juvenile
and adult foliage, which difficult classification. Little harvesting of the plantation forest
had occurred before 2003, given commercial tree plantations were widely established in
48
the late 1990s, and the key plantation species (Tasmanian bluegums) tends to be harvested
for pulpwood on a 10–12 year rotation (Smith et al. 2006). Once plantations were
introduced into the landscape the spectral similarity of plantation and native forest has
led to greater overall misclassification.
This difficulty in discriminating between the plantation forest and native forest classes
also explains the differential performance of the machine learners, with the benefit of
deploying SVMs over RFs increasing as the separation problem becomes more diffic ult.
The RFs are constructed to minimize the overall error rate, therefore, it tends to focus
more on the prediction accuracy of the majority classes such as agriculture and native
forest (which together account for more than 90% of the landscape; Figure 2.4),
potentially masking the poor discrimination of the minority LULC classes, such as
plantation forest. We believe that SVM’s superior predictive ability was due to its
capability in selecting a more efficient weighting of the training samples in the
classification. SVMs assume that training samples lying on the class boundaries are more
spectrally similar than those lying further away, therefore those border training samples
are the most useful for SVM classification (Foody and Mathur 2004). Hence, the high
weighting attributable to the data points comprising each support vector, relative to the
RF, generates a hyperplane that more efficiently separates the plantation forest land use
from the native forest. This may explain in part the low relevance of NDVI to successful
classification in general, as at least part of the non-linearity captured by a vegetation index
may be supplanted by the non-linearity of the support vectors themselves. Machine
learners may thus be largely agnostic to the theoretical importance of vegetation indices
in informing vegetation state, if the raw bands underpinning those indices are made
49
available to the learner. Figure 2.4 shows the LULC classification maps resulted from the
best performing classifier (SVM – Model C1).
Figure 2.4. Classified imagery for each Landsat sensor (SVM – Model C1).
2.4.2. LULC Changes in the WRC
The overall pattern of the LULC change observed between 1992 and 2003 is consistent
with the introduction of the 2020 Vision and MIA 1998. Both policy initiatives were
supported by a favourable federal government tax treatment associated with forestry
Management Investment Schemes (MIS; Warman and Nelson 2016). Plantation forest
areas subsequently increased from 0.44% in 1992 to 4.36% in 2003 and 2014 due to
extensive plantations in the upper Warren. Table 2.6 presents the estimated areas of
LULC classes in WRC, using Model C1 classified with SVMs at four points in time.
50
Table 2.6. SVM estimates of historical land use and land cover in the Warren Catchment.
1979 1992 2003 2014
LULC class Area Area Area Area
km2 % km2 % km2 % km2 %
Agriculture 1326.52 30.04 1234.72 27.96 1176.53 26.64 1112.56 25.19
Water 24.52 0.56 18.15 0.41 22.86 0.52 21.54 0.49
Native Forest 2996.79 67.85 3059.00 69.26 2911.84 65.93 3023.08 68.45
Sand Dunes 38.82 0.88 30.30 0.69 35.27 0.80 25.40 0.58
Harvested Native Forest 29.86 0.68 54.98 1.24 77.44 1.75 41.41 0.94
Plantation Forest 0.00 0.00 19.36 0.44 192.58 4.36 192.53 4.36
Total area 4416.52 4416.52 4416.52 4416.52
The proportion of cleared areas for agriculture in the catchment has declined from 30%
in 1979 to 25% in 2014 (Table 2.6). The direction of change is consistent with that
reported by other authors (Collins and Barrett 1980; Smith et al. 2006), while the
magnitude of the estimates differs. Specifically, Smith et al. (2006) reported the decline
of the proportion of cleared lands from 36% in 1978 to 24% in 2000. However, their
estimates for different years come from different sources and may be inconsistent, while
our estimates are obtained by applying the same method to each snapshot in time. In
addition to an improved consistency of classification across time, the benefits of applying
machine learners within a largely automated workflow enables rapid updating of LULC
maps, at relatively low cost.
2.4.3. Implications for Land Use Policy
The historical land use and land cover dynamics are not well reported at local level,
despite their recognized importance for land use policy. This lack of information is not
51
only related to LULC changes, as Harper, Sochacki, and McGrath (2017) have described
the limitations of inventory data around carbon forestry programs in Australia.
Although considerable effort has been made to reduce stream salinity in the WRC to
potable standards (500mg/L) by 2030 (Smith et al. 2006), the State Salinity Strategy
(Government of Western Australia 1996; State Salinity Council 2000) does not seek to
refer to updated and more accurate LULC maps when designing management actions. It
is possible that local governments (e.g., Shire of Manjimup) have more detailed
information, however it is not publicly available. Plantation extent may be considered a
key performance indicator on which evidence-based policy can be formed, given the area
of plantations are a key surrogate variable for improvement in water potability (more
forest areas increase groundwater draw down, leading to a reduction in dryland salinity).
Classifying the land use class associated with the recent tax subsidy scheme is of great
significance for the design of future land use policy within this region. For instance, if the
forest cover classification is oversimplified into one broad forest class (and not separate
native and plantation forest classes) then key ecological differences that inform effective
forest and biodiversity management in the region may well be ignored. The approach
presented in this paper is suitable not only for identification of new forest plantation areas
through ongoing monitoring, but also for calculating their life span. Harvested forest areas
are readily detected within a couple of years of harvesting, even if harvested areas are
located within an agricultural land use. Estimating the rate of plantation harvest is just as
important as estimating the rate of plantation establishment for policy directed towards
timber supply and/or delivering environmental co-benefits. Hence, remote monitoring of
the spatial and temporal changes in commercial plantation forest should be considered a
crucial component of forest management at the regional scale. Only then may we
52
understand the role of plantation forest development in combatting a variety of large-scale
environmental issues, and how best to design environmental policy and tax incentives to
achieve desirable land use objectives.
2.5. CONCLUSION
Although the classification of plantation forest by itself is of great significance for the
design and application of regional and local land use policies, much of the LULC research
to date has not addressed the spectral separability of plantation forest from their
neighbouring environment. We have therefore presented methods to discriminate
plantation forest from native forest. These methods address the increasing importance of
developing robust and cost-effective methods to monitor the historical development of
commercial timber plantations. Successful discrimination required a minimal informa tio n
set when SVMs and RFs were applied, as the McNemar tests demonstrated that accessing
further spectral bands from the Landsat OLI offered little improvement in classifica tio n
success. Importantly, the SVM classifier outperformed the RF machine learner when
considering the low separability of the plantation and native forest classes. Future
improvements in classification accuracy above our baseline will likely come from higher
spatial and spectral resolution imagery. Accurate classification of LULC classes from
snapshots enables the monitoring of LULC change. Thus we consider accurate LULC
classification a necessary first step in designing efficient policy targeting both timber
supply and environmental co-benefits. Subsequent remote sensed monitoring of policy
outcomes will then embed future policy development within a strict evidence-based
framework. In Western Australia, information regarding the historical plantation forest
53
development is publicly lacking. In evaluating future plantation policy there is an urgent
need to better coordinate the existing datasets and analysis across different agencies (i.e.,
local, State and Federal governments) to improve the delivery of information on policy
outcomes.
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Chapter 2. Discriminating Native and Plantation Forests
Appendix A2. Sampling Strategy: Two Strata Sampling.
An augmented two strata sampling strategy was adopted to form the sample of ground -
truthed data, with the segments derived from the segmentation procedure applied as the
sampling frame (termed here as 𝑆; F in Figure 2.2). The first sampling stratum (FSS)
divides the study area into six large grid cells where 𝐺𝑘 is the 𝑘 𝑡ℎgrid cell, 𝑘𝜖{1,2, … , 𝐾}
and 𝐾 = 6. The sample size for each grid cell was calculated as proportional to the
intersection between these grid cells and the study area:
𝐴𝐺 𝑘∩𝑆
𝑁𝐺𝑘 = 𝑀𝑅𝑚𝑖𝑛 (A1)
𝐴𝑆
where 𝐴 is the area (km2 ), 𝑁 is the sample size, and 𝐺𝑘 ∩ 𝑆 is the grid cell constrained to
the study region 𝑆. To simplify the notation 𝐺𝑘 ∩ 𝑆 is give as 𝐺𝑘. The total number of
segments contained within the study region 𝑆 is given by 𝑀 = 256,704. 𝑅𝑚𝑖𝑛 is a
minimum sampling rate, and set here as 𝑅𝑚𝑖𝑛 = 0.5% of all segments falling within each
target class. The FSS ensures that all land uses will be represented as evenly as possible
across the landscape thus ensuring spatial evenness, given that land uses tend to cluster
spatially while image quality may vary spatially. This reduces the risk that a land use will
be sampled predominantly from a small number of locations.
The second stratum sampling was designed to ensure spectral evenness. The 20
unsupervised classes were initially assigned to one of the six target land use classes by
visual assessment for sampling purposes. Segments from these 20 unsupervised classes
were then pooled into these preliminary target classes to select proportionately a simple
random sample from each preliminary target class within each grid cell, based on the total
area of the segments falling within each class:
60
𝐴𝐶𝑆 ∩𝐺 𝑘∨𝐶𝑆 =𝑐
𝑁𝐺𝑐𝑘 = 𝑚 𝑚
𝑁𝐺𝑘 (A2)
𝐴𝐺 𝑘
where 𝐶𝑆𝑚 is the land use class of a set of segments 𝑆𝑚 indexed by 𝑚 ∈ {1,2, … , 𝑀}, with
the realised class 𝑐 ∈{Agriculture, Water, Native Forest, Sand Dunes, Plantation Forest,
Harvested Native Forest}. Hence 𝐴 𝐶𝑆𝑚∩𝐺𝑘∨𝐶𝑆𝑚=𝑐 states the total area of all segments
belonging to class 𝑐 and contained within grid cell 𝐺𝑘.
This sample was then augmented in two ways. The first augmentation was to satisfy the
recommendation of Van Niel et al. (2005) to provide a training sample of size no less
than 10-30 times the number of bands for each target class. Hence, we define a minimum
training sample size of 𝑁𝑚𝑖𝑛 = 100 and augment 𝑁𝐺𝑐𝑘 with:
𝑐
𝑁𝐺 𝑁𝑚𝑖𝑛
⌈ 𝑘
⌉ , 𝑤ℎ𝑒𝑟𝑒 ∑𝐾 𝑐
𝑘=1 𝑁𝐺𝑘 < 𝑁𝑚𝑖𝑛
𝑁𝐺𝑐∗𝑘 = { ∑𝐾 𝑐
𝑘=1 𝑁𝐺 𝑘 (A3)
𝑁𝐺𝑐𝑘 , 𝑜𝑡ℎ𝑒𝑟𝑤𝑖𝑠𝑒
where ⌈∙⌉ denotes the ceiling operator. The second augmentation addressed the fact that
native forest and plantation forest were difficult to distinguish spectrally. The visual
quality of the land use map, produced by the supervised classification described below,
was examined in an iterative manner with respect to these two land use classes by
overlaying higher resolution aerial imagery and LULC maps. The sample size for each of
these two land use classes was increased until the resulting land use map was deemed
suitable (i.e., without an excess of 'salt-and-pepper' noise). The total sample sizes for the
training and test sets are reported in Table A1.
Ground-truthing was then conducted, through interpretation of aerial imagery, to assign
a target land use to each segment comprising the training set (I in Figure 2.2). Of the
61
training set, 20% was randomly set-aside as the test set to be subjected to the out-of-box
assessment of classification accuracy.
Table A1. Total sample sizes for the training and test sets.
Training set Test set
LULC class 1979 1992 2003 2014 1979 1992 2003 2014
Agriculture 222 232 285 353 66 52 71 95
Water 126 150 110 123 33 33 28 21
Native Forest 336 388 516 528 88 98 149 146
Sand Dunes 157 128 123 130 33 32 24 30
Harvested Native Forest 129 126 126 112 23 31 22 29
Plantation Forest 0 123 245 258 0 41 58 55
Total 970 1147 1405 1504 243 287 352 376
62
Appendix B2. Overall classification performance for SVM, RF and CART classifiers
per Landsat sensors and Models C1 to C4, including Kappa, F-score, Producer (PA)
and user (UA) accuracies.
C1 C3 C4
F- F- F-
LULC classes
PA UA score PA UA score PA UA score
Agriculture 0.867 0.897 0.881 0.854 0.932 0.891 0.868 0.825 0.846
Water 0.933 1.000 0.966 0.846 0.917 0.880 0.789 0.938 0.857
Native Forest 0.952 0.878 0.913 0.924 0.871 0.897 0.914 0.892 0.902
SVM
Sand Dunes 1.000 0.946 0.972 1.000 0.931 0.964 0.958 1.000 0.979
Harvested Native Forest 0.829 0.967 0.892 0.826 0.826 0.826 0.862 0.862 0.862
Overall accuracy 92% 89% 89%
Kappa 89% 86% 85%
Agriculture 0.900 0.844 0.871 0.854 0.953 0.901 0.895 0.773 0.829
Water 0.933 0.966 0.949 0.846 0.957 0.898 0.789 0.938 0.857
MSS 1979
Native Forest 0.904 0.872 0.888 0.939 0.861 0.899 0.938 0.916 0.927
RF
Sand Dunes 0.971 0.971 0.971 1.000 0.964 0.982 0.833 1.000 0.909
Kappa 87% 87% 84%
Agriculture 0.900 0.806 0.850 0.729 0.921 0.814 0.895 0.739 0.810
Water 0.833 1.000 0.909 0.885 0.920 0.902 0.579 1.000 0.733
Native Forest 0.916 0.864 0.889 0.939 0.827 0.879 0.901 0.869 0.885
CART
Sand Dunes 0.943 0.917 0.930 0.889 0.889 0.889 0.792 1.000 0.884
Kappa 84% 81% 78%
C1 C2 C3 C4
F- F- F- F-
LULC classes
PA UA score PA UA score PA UA score PA UA score
Agriculture 1.000 0.938 0.968 0.915 0.977 0.945 0.956 0.956 0.956 1.000 0.891 0.942
Water 1.000 1.000 1.000 1.000 1.000 1.000 1.000 0.963 0.981 1.000 1.000 1.000
Native Forest 0.882 0.909 0.896 0.971 0.835 0.898 0.985 0.807 0.887 0.941 0.800 0.865
SVM
Sand Dunes 1.000 0.963 0.981 1.000 0.966 0.982 1.000 1.000 1.000 1.000 1.000 1.000
Harvested Native Forest 0.733 0.710 0.721 0.640 0.842 0.727 0.600 1.000 0.750 0.519 0.824 0.636
Plantation Forest 0.900 1.000 0.947 0.852 0.958 0.902 0.778 1.000 0.875 0.654 0.944 0.773
Overall accuracy 92% 91% 91% 88%
Kappa 90% 89% 89% 85%
Agriculture 0.983 0.952 0.967 0.979 0.902 0.939 0.978 0.936 0.957 0.959 0.887 0.922
Water 0.974 0.974 0.974 1.000 0.955 0.977 1.000 1.000 1.000 0.944 1.000 0.971
Native Forest 0.892 0.910 0.901 0.897 0.847 0.871 0.985 0.788 0.876 0.912 0.838 0.873
TM 1992
Sand Dunes 1.000 1.000 1.000 0.964 0.964 0.964 0.964 1.000 0.982 1.000 1.000 1.000
RF
Kappa 89% 85% 87% 84%
Agriculture 0.917 0.917 0.917 0.851 0.851 0.851 0.889 0.889 0.889 1.000 0.803 0.891
Water 0.949 0.974 0.961 0.857 1.000 0.923 0.846 0.917 0.880 0.889 1.000 0.941
Native Forest 0.853 0.870 0.861 0.868 0.843 0.855 0.868 0.766 0.814 0.912 0.747 0.821
CART
Sand Dunes 0.962 0.926 0.943 0.964 1.000 0.982 0.964 1.000 0.982 0.964 0.964 0.964
Kappa 83% 79% 79% 75%
63
C1 C2 C3 C4
F- F- F- F-
LULC classes
PA UA score PA UA score PA UA score PA UA score
Agriculture 0.897 0.854 0.875 0.907 0.875 0.891 0.940 0.825 0.879 0.922 0.839 0.879
Water 0.875 0.913 0.894 0.556 0.833 0.667 0.611 0.917 0.733 0.692 0.900 0.783
Native Forest 0.829 0.877 0.852 0.880 0.786 0.831 0.902 0.856 0.878 0.909 0.769 0.833
SVM
Sand Dunes 0.920 0.920 0.920 0.952 1.000 0.976 0.950 0.950 0.950 0.955 0.913 0.933
Kappa 81% 79% 83% 79%
Agriculture 0.782 0.753 0.767 0.833 0.900 0.865 0.880 0.830 0.854 0.745 0.809 0.776
Water 0.875 0.875 0.875 0.556 1.000 0.714 0.556 0.909 0.690 0.538 0.700 0.609
ETM+ 2003
Native Forest 0.849 0.832 0.841 0.891 0.719 0.796 0.891 0.759 0.820 0.870 0.698 0.775
Sand Dunes 0.880 0.880 0.880 0.905 0.950 0.927 0.950 0.950 0.950 0.864 0.864 0.864
RF
Kappa 73% 74% 77% 67%
Agriculture 0.808 0.649 0.720 0.722 0.780 0.750 0.900 0.726 0.804 0.784 0.727 0.755
Water 0.792 0.826 0.809 0.556 1.000 0.714 0.556 0.833 0.667 0.385 0.714 0.500
Native Forest 0.760 0.782 0.771 0.837 0.636 0.723 0.793 0.702 0.745 0.870 0.620 0.724
CART
Sand Dunes 0.880 0.880 0.880 0.905 0.905 0.905 0.850 0.944 0.895 0.727 0.800 0.762
Kappa 63% 60% 66% 58%
Agriculture 0.902 0.943 0.922 0.837 0.854 0.845 0.804 0.804 0.804 0.872 0.891 0.882
Water 0.963 0.867 0.912 0.824 0.933 0.875 0.714 0.833 0.769 0.667 1.000 0.800
Native Forest 0.885 0.829 0.856 0.888 0.888 0.888 0.924 0.867 0.895 0.870 0.792 0.829
SVM
Sand Dunes 1.000 0.871 0.931 0.889 0.842 0.865 1.000 0.818 0.900 0.895 0.850 0.872
Kappa 82% 83% 80% 77%
Agriculture 0.837 0.917 0.875 0.796 0.929 0.857 0.870 0.870 0.870 0.851 0.870 0.860
Water 0.926 1.000 0.962 0.882 1.000 0.938 0.643 1.000 0.783 0.667 1.000 0.800
Native Forest 0.908 0.753 0.824 0.955 0.833 0.890 0.913 0.792 0.848 0.859 0.738 0.794
OLI 2014
Sand Dunes 0.889 0.800 0.842 0.778 0.875 0.824 0.944 0.850 0.895 0.842 0.842 0.842
RF
Kappa 76% 83% 77% 69%
Agriculture 0.837 0.906 0.870 0.796 0.796 0.796 0.696 0.800 0.744 0.894 0.808 0.848
Water 0.852 1.000 0.920 0.824 1.000 0.903 0.714 1.000 0.833 0.667 1.000 0.800
Native Forest 0.924 0.661 0.771 0.854 0.710 0.776 0.837 0.726 0.778 0.826 0.710 0.764
CART
Sand Dunes 0.852 0.793 0.821 0.667 0.750 0.706 0.889 0.640 0.744 0.684 0.929 0.788
Kappa 67% 66% 64% 62%
64
Appendix C2. McNemar’s test results for comparison of the difference between
Model C1 and the other classifications schemes (i.e., Models C2, C3 and C4) using
RF, SVM, and CART classifiers.
MS S 1979 TM 1992 ETM+ 2003 OLI 2014

C1 C1 p-value C1 C1 p-value C1 C1 p-value C1 C1 p-value
SVM RF 0.3428 SVM RF 1.0000 SVM RF 0.0101 SVM RF 0.0141
SVM CART 0.0442 SVM CART 0.0080 SVM CART 0.0000 SVM CART 0.0000
C1 C3 C1 C2 C1 C2 C1 C2
SVM SVM 0.1003 SVM SVM 0.7277 SVM SVM 1.0000 SVM SVM 1.0000
C1 C4 C1 C3 C1 C3 C1 C3
SVM SVM 0.1508 SVM SVM 0.7277 SVM SVM 0.3960 SVM SVM 0.6025
C1 C4 C1 C4 C1 C4
SVM SVM 0.1547 SVM SVM 1.0000 SVM SVM 0.2530
SVM RF 0.1093 SVM RF 0.0279 SVM RF 0.0121
SVM CART 0.0008 SVM CART 0.0003 SVM CART 0.0002
65
Chapter 3. Predicting future plantation forest in response to policy
3. PREDICTING FUTURE PLANTATION FOREST
DEVELOPMENT IN RESPONSE TO POLICY INITIATIVES: A
CASE STUDY OF THE WARREN RIVER CATCHMENT IN
WESTERN AUSTRALIA
ABSTRACT
The Warren River Catchment in the south-west of Western Australia exemplifies how
inconsistent forestry investment policies can have adverse environmental effects
especially related to dryland salinity. This region experienced a rapid expansion of
plantation forest in the late 1990s mainly due to tax incentives for forestry Managed
Investments Schemes. Thus, understanding how the current policy scenario can impact
the future of plantation forest is necessary to adequately inform future policy makers. The
objective of this study is to address this gap in knowledge by applying a spatial modelling
procedure that integrates Markov transition probabilities, Multilayer Perceptron neural
network and Cellular Automata to provide an accurate forecast of LULC change. In the
first stage, geospatial analysis determines the spatial drivers of LULC conversions.
Second, Markov transition probability matrices are estimated, and the Multila yer
Perceptron was trained to determine a model for every transition based on spatial drivers.
Finally, a Cellular Automata model was applied to forecast spatially explicit changes in
LULC to 2025 under the current policy regime. The predictive power of the model was
validated with a Kappa coefficient of 72% and a Kappa location of 74%. The simula tio n
forecasts an increase in the agricultural areas by 2025 compared to 2014; whereas
67
harvested native forest areas were predicted to decrease, contributing to a slight increase
of the native forest areas. Despite government efforts to increase the areas of plantatio ns,
the model predicts a decrease in this land use. These results will assist decision- makers
in improving policy, by working through the long term implications of policy incentives
for forestry in terms of broader landscape objectives related to salinity and conservation.
Keywords: Land Use Policy; Plantation Forest; Multilayer Perceptron; Cellular
Automata; Western Australia.
3.1. INTRODUCTION
Land use and land cover (LULC) change is one of the most important threats to the natural
environment globally. LULC is driven by market forces and policy (Lambin et al. 2001).
The Warren River Catchment in the south-west of Western Australia has undergone rapid
plantation forest expansion since the introduction of the Federal Government’s policy
Plantations for Australia (The 2020 Vision; Commonwealth of Australia 2002) in 1997
and The Managed Investments Act 1998 (MIA 1998).
A key difficulty in measuring the effect of policy on LULC change is the need to
differentiate between policy responses and LULC changes resulting from other economic,
social and environmental drivers. Limited monitoring of both the change process and the
drivers can hamper the understanding of policy impacts. This key process becomes
increasingly difficult with low levels of spatial resolution of the available information and
increasing spatial extent of the study area (Veldkamp and Lambin 2001). Spatially
explicit LULC models are powerful tools for policy development and analysis by
68
providing a solution to this attribution problem by quantifying policy responses, and by
predicting future LULC changes (Veldkamp and Lambin 2001; Li and Yeh 2002;
Corbelle-Rico et al. 2015).
A number of modelling approaches have been developed to analyse, understand, and
predict LULC changes. These models divide into three categories: machine learning,
statistical, and spatially disaggregated economic models (Otukei and Blaschke 2010;
Polyakov and Zhang 2008; Chomitz and Gray 1996; Ellis et al. 2010; Resler et al. 2014;
Lewis and Plantinga 2007); agent based and Cellular Automata (CA) models (Arsanjani,
Kainz and Mousivand 2011); and integrated models (e.g., Conversion of Land Use and
its Effect, and Land Change Modeler) (Han, Yang and Song 2015; Megahed et al. 2015;
Veldkamp and Fresco 1996). However, many CA models may be considered to be
Markov chain models, with a probabilistic rule set defining class transitions in a local
neighbourhood. A review of the most commonly used approaches can be found in Aburas
et al. (2016), Agarwal et al. (2002), Baker (1989), Irwin and Geoghegan (2001), and Sohl
and Claggett (2013).
Markov chain models, characterised by class-dependent transition matrices, have been
widely used to determine the probabilities of LULC change between two time periods.
These models assume that the future class of a given LULC type is entirely determined
by its immediately preceding class (i.e., the process is memoryless) (Baker 1989; Bell
and Hinojosa 1977; Murayama 2012). However, Markov chains in their simplest forms
are not spatially explicit and thus cannot provide a spatial distribution of future LULC
changes (Halmy et al. 2015; Li and Yeh 2002). In contrast, CA are spatially explicit, with
future classes of a landscape element dependent only on the previous class of the elements
contained within its local neighbourhood. Markov chains can be integrated into CAs (i.e.,
69
termed stochastic CAs, or CA-Markov) (Al-sharif and Pradhan 2014; Halmy et al. 2015)
to include a stochastic component into the CA models (Myint and Wang 2006).
CA-Markov models incorporating remote sensed LULC data have been used to forecast
urban land use changes in Portugal (Araya and Cabral 2010), Japan (Guan et al. 2011)
and Australia (Deilami and Kamruzzaman 2017). Kamusoko et al. (2009) used a similar
approach when forecasting future LULC changes in rural areas of Zimbabwe in southern
Africa. However, a crucial issue remains in the definition of the CA-Markov transitio n
rules (Park et al. 2011; Li and Yeh 2001). Namely that when multiple LULC classes are
present, the transition rules of conventional CA models become substantially more
complex: the model includes a much larger set of uncertain parameters defining the
transition rules, and requires additional spatial variables to be included in the model (Li
and Yeh 2002).
To address this curse-of-dimensionality problem, machine learning methods such as
Multilayer Perceptron (MLP) neural networks may be combined with CA-Markov to
identify the most likely transition rules between LULC classes. The advantages are two-
fold: firstly, neural networks such as the MLP can effectively capture non-linear, complex
features in modelling processes to increase prediction accuracy (Li and Yeh 2002;
Pijanowski et al. 2002; Cooner, Shao and Campbell 2016); and, secondly, the relative
importance of various biophysical, social and economic factors in LULC change can be
quantified through spatially explicit transition potential maps, which are the derivation of
weights representing the relative importance of each factor in relationship to a given
LULC change (Hosseinali and Alesheikh 2008). The optimal weighting of these transitio n
potential maps, through the MLP’s backpropagation algorithm, is applied to determine
the overall probability of transition between any two LULC classes within the CA-
70
Markov model, thus leading to spatially explicit LULC predictions (Baysal 2013; Mishra
and Rai 2016; Ahmed and Ahmed 2012; Wang and Li 2011; Park et al. 2011; Li and Yeh
2002).
In this research, the Warren River Catchment in the south-west of Western Australia was
chosen as a case study due to the unprecedented and rapid expansion of plantation forest
since the late 1990s. The objectives of this study are therefore: i) to understand the pattern
of LULC change in the catchment from 1979 to 2014; and, ii) forecast future LULC
change for 2025 through the CA-Markov-MLP modelling, assuming only that the land
use policies in operation in 2014 continue over the subsequent 11 years. Predicting land
use changes in environmentally relevant areas is essential because there are some land
policies that influence those decisions over an extended time period (Bockstael 1996;
Bustamante et al. 2014).
3.2. STUDY AREA AND POLICY CONTEXT
The Warren River Catchment (4,416 km2 ) is the third largest river in the south-west of
Western Australia with a mean annual streamflow of 291 Gl (1990-2001; at the Barker
Road Crossing gauging station; Smith et al. 2006), and annual rainfall ranging from 550
mm/year in the north-east of the catchment to over 1200 mm/year in the coastal south-
west (Townsend et al. 2012). The catchment encompasses the small towns of Manjimup
and Pemberton (Figure 3.1). From the 2011 census, these towns had a population of 4,164
and 777 (ABS 2011). The study area is in a Biodiversity Hotspot which hosts a large
number of endemic and threatened plant species (Myers et al. 2000). The economy of the
Warren largely depends upon tourism, agriculture, and plantation forest, with the latter
71
two largely supported by Managed Investment Schemes (MIS).
Figure 3.1. Location of the Warren River Catchment in Western Australia.
The catchment is composed of two distinct areas: nearby the coast (south-west) is
dominated by native forests (i.e., jarrah and marri forest) alongside agriculture,
horticulture and plantation forest, while the north-east has been subject to large-scale
clearing and fragmentation of forest cover over the past century as the catchment
transitioned from wilderness to a mixed agricultural and forestry landscape. The
expansion of extensive agriculture in the north-east was accelerated in the 1920s with the
Group Settlement Scheme and later in the 1950s with the War Service Land Settlement
Scheme. These policy driven LULC changes consisted primarily of the conversion of
72
native woodlands, scrublands and heath to rain-fed cereal production and grassland. As a
result, cleared areas for agricultural use increased from about 20% in 1950 (Collins and
Barrett 1980) to 30% in 1979 (see 2.4.2. LULC Changes in the WRC).
Since the late 1970s this region has been the focus of policy initiatives to primarily
address the resulting biodiversity loss, land degradation and water salinity issues (e.g.,
Country Areas Water Supply Act 1947, known as 1947 Act, amended in 1978, and Water
Resource Recovery Catchments in 1996). For instance, the 1947 Act was created to
control further clearing of native vegetation in five potential water supply catchments in
the south-west, which includes the Warren (Smith et al. 2006). By the early 1980s it had
become apparent that clearing controls alone were not capable of maintaining potable
water supplies in most catchments, and thus, a series of reforestation programs were
implemented within the Water Resource Recovery Catchments. In the late 1990s,
commercial tree plantations were widely established on previously cleared agricultura l
lands mainly boosted by two federal policies directed at increasing the area of plantatio n
forest: The 2020 Vision and MIA 1998.
The 2020 Vision aims to treble Australia’s plantation area to 30,000 km2 by 2020
(Commonwealth of Australia 2002). Western Australia’s forest industry supplies over
20% of the nation's timber, and includes the largest area of hardwood plantations in
Australia with 2,989 km2 (31%; Gavran 2014). The most widely planted hardwood
species is the Tasmanian bluegum (Eucalyptus globulus) a fast growing species suitable
for high-rainfall zones (> 600 mm per year) such as the Warren. It is managed for
woodchips on a 10-12 year rotation, while other hardwood species (Eucalyptus
cladocalyx, Eucalyptus saligna or Corymbia maculata) are managed for sawlogs on a 20-
25 year rotation.
73
The MIA 1998 incentivises commercial tree plantations by creating a retail investme nt
structure that entitles investors to claim an up-front tax deduction for the expense of
investing in timber plantations and agribusiness development activities through MIS. As
a structure, MIS allows a large number of investors to pool funds, or invest in a common
enterprise that are administered by the Managed Investment Act (Parliament of Australia
2017). Under this scheme, the MIS manager usually takes little risk whereas the investor
is exposed to different types of uncertainty (e.g., market and production risks) (Lacey,
Watson and Crase 2006). The Australian Taxation Office considered that investors in
most MIS are carrying on a business and thus able to claim a full tax deduction for
expenditure, provided the Scheme’s Responsible Authority conforms to the Scheme’s
Product Disclosure Statement (Mackarness and Malcolm 2006). Both The 2020 Vision
and the MIA 1998 were designed to address a national shortage in native timber supply,
while delivering indirectly positive environmental externalities such as river salinity
mitigation.
Indeed, the tax advantages assured by the Taxation Ruling 2000/8 was crucial for the
attractiveness to investors of all MIS schemes in the 2000s (ATO 2000). However, in the
mid-2000s the government debated the appropriateness of the tax treatment of MIS, and
decided to curtail this sector. In 2006 the Australian Taxation Office revised its view of
the MIS’s deductibility for forestry and non-forestry, and notified that from 1 July 2008
contributions paid by MIS investors would no longer be tax deductible. However, after
much lobbying by the forestry industry, in 2007 the government withdrew its decision
and Division 394 was inserted into the Income Tax Assessment Act 1997 to support
forestry MIS (ATO 2017b; The Treasury 2008). In 2007 under the revised policy scenario
a statutory deduction for expenditure incurred in forestry MIS could be claimed, while
74
non-forestry MIS investors were deprived of it as they were considered passive investors
in a trust (The Treasury 2008).
Currently, an initial participant in both MIS investments can claim tax deductions in the
year of payment provided the schemes complies with certain conditions (ATO 2017a;
ATO 2017b; Thompson 2010). While investors in forestry MIS enjoys a statutory
deduction under Division 394 to the present, investors in non-forestry rely on the Section
8-1 under the Income Tax Assessment Act 1997 since 2009. Based on this current policy
scenario, we simulated the effects of MIS tax incentives on land use changes in terms of
quantity of future change and spatial distribution.
3.3. METHODS
This study integrates Markov transition probabilities, Multilayer Perceptron (MLP)
neural network, Cellular Automata (CA) and spatially referenced socio-economic and
biophysical data to quantify historical LULC change and predict the spatial distributio n
of future LULC changes. The methodological steps are illustrated in Figure 3.2. Firstly,
Markov transition matrices were calculated from the LULC maps derived from remotely
sensed imagery covering the period from 1979 to 2014. Secondly, random training
samples from multiple classes of LULC and factor variables were drawn. Third, using the
extracted variables as input, the network model was trained to determine the optimal
transition potential maps. Finally, future LULC classes for 2014 and 2025 were projected
using the CA approach. The simulation of future LULC was made available in Quantum
GIS using the plugin MOLUSCE (Modules for Land Use Change Evaluation; NextGIS
2016; QGIS Development Team 2016).
75
3.3.1. Data
A multi-temporal remote sensing dataset was constructed of imagery captured from the
Multispectral Scanner, Thematic Mapper, Enhanced Thematic Mapper, and Operational
Land Imager. Imagery (30m resolution) were acquired across the summer (December to
February), to increase the separability between agricultural and forestry land uses, and
over four years (1979, 1992, 2003, 2014). The imagery from 1979 is the base-line map to
assess potential forest clearance after the amendment of the Act 1947; whereas we
selected imagery from 1992, 2003 and 2014 as they are evenly 11 years apart and thus
enabled land change patterns to be monitored before and after the introduction of the key
policies: The 2020 Vision in 1997, the Managed Investments Act in 1998, and the revised
Taxation Ruling 2007/8 for MIS in 2007. Limited resources were available for image
processing in this study, and hence only four images were captured. If the imagery had
been acquired more frequently we would have observed more closely the rate of LULC
change following the MIS. However, this finer rate of change would have been diffic ult
to reliably measure given the relatively high error rates in the LULC classification itself.
A supervised LULC object-based classification approach was conducted using a Support
Vector Machine (SVM) classifier (A in Figure 3.2). The overall accuracies for the
classifications were ≥ 86% (Kappa ≥ 81%). Details about the classification are given in
the section 2.3 Methods. The LULC maps discriminate the following classes: agriculture
(cleared areas for pasture or cropping), water bodies (lake, river and dams), native forest
(indigenous plants such as trees and shrubs), sand dunes (ridge of sand especially on the
coast), harvested native forest (clearcut logging that is not yet regenerated), and plantatio n
forest (commercial plantation trees).
76
In this study, six biophysical and socio-economic factors were identified as potential
drivers of LULC transitions in the study area. Respective spatial datasets were derived
from the publicly available vector and raster data: (1) the distance from each map location
to the nearest road (including railways, highways and country roads; Government of
Western Australia 2016), representing the potential accessibility of a location; (2)
distance from each map location to the nearest water body (BOM 2014) which may
indicate the potential water availability for a new land use; (3) organic carbon (CSIRO
2016) which is an indicator of soil health, representing the potential establishment of
agricultural land use; (4) annual rainfall (long term average from 1961 to 1990; BOM
2016) which shows the potential for conversion to land uses suitable for rainfall zones
above 600 mm (e.g., Tasmanian bluegum plantation); (5) slope which may constrain some
land use practices as its gradient can impact drainage, crop productive and soil proprieties;
and finally (6) water flow direction, representing the variation of water direction across
land use types. Both of these latter variables were calculated from a digital elevation
model (DEM; 1 Arc-Second Global) with the R statistical software (R Core Team 2016)
to represent the geomorphology of the study area (B in Figure 3.2.).
77
Figure 3.2. Overview of the methodology applied in this study.
3.3.2. Transition probability matrix
The first modelling step was to develop a transition probability matrix for each of the
three intervals between image captures: 1979-1992, 1992-2003, 2003-2014 (E in Figure
3.2). Markov transition matrices have been widely used to quantify LULC changes
between discrete time periods, and to describe the transfer rate among different land use
classes (Wu et al. 2006; Lambin 1997; Mirkatouli, Hosseini and Neshat 2015; Sang et al.
2011). The Markov transition matrices were used in the validation (1992 to 2003), and in
78
the prediction (2003 to 2014) of the CA model to constrain the maximum number of
transitions (36) between any two states.
3.3.3. Transition potential modelling using a Multilayer Perceptron (MLP)
There are a number of artificial neural networks types, of which Multilayer Perceptron
is one of the most commonly used to forecast LULC changes (Mas et al. 2014; Megahed
et al. 2015; Bernetti and Marinelli 2010; Pijanowski et al. 2002; Khoi and Murayama
2012). A neural network consists of interconnected processing elements (neurons),
arranged in layers (Hassoun 1995; Lipták 1999). An MLP is a feed-forward (i.e., directed)
neural network which may include more than one hidden layers between the input data
and the machine learning output (i.e., prediction of LULC class) (C in Figure 3.2;
Kotsiantis 2007). In this application the MLP calculates a set of ‘transition potential
maps’ (TPM; D in Figure 3.2), which is a weighted score of how likely a map location
transitions to one of six different states from the current state. This probability is based
on both the normalised values of the driving factors in the local size 2 neighbour hood
(i.e., 5x5 pixels), and the current LULC states observed in that neighbourhood, thereby
forming the input layer of the MLP (C in Figure 3.2). Based on the first law of geography
pixels nearby have a greater influence on a land cover class than pixels at a greater
distance (i.e., land use/neighbourhood interactions), thus we applied a neighbourhood size
of 5x5 pixels to provide a more accurate representation of the local variance, allowing us
to capture land uses at small scales (~2 ha).
The MLP calibration begins with assigning values to the parameters (i.e., momentum,
learning rate, neighbourhood and weights that connect the different layers). Then a
79
sample of 25,000 randomly selected pixels was divided into a test subset (20%) and a
training subset (80%). The MLP model operates in loop for calibrations, and an evaluatio n
is performed over the independent test subset. The initial weights are updated with each
iteration of the back propagation algorithm, either until the error of the model achieve a
certain threshold or until it reaches the maximum number of iterations.
A hidden layer consisting of 6 neurons was chosen, for parsimony of computation and
with minimal loss in prediction accuracy. The number of neurons in the output layer
equate to the six possible LULC states. The logistic function formed the activatio n
function of the MLP. Within the MLP network, the neurons of each layer have a weighted
connection to neurons in the immediately previous and/or following layers. The
weightings are multiplied by the input values relating to a neuron’s incoming connections,
with the product summed over those connections. The activation function then transforms
this summed product to a value between 0 and 1, and for the output layer this defines the
TPM for each LULC state.
3.3.4. Cellular Automata (CA) simulation
The CA model for a given time period consists of four elements: 𝐶𝐴 ~(𝐶, 𝑛, 𝐾, 𝑅) ; where
cells 𝐶 are represented by pixels, with each pixel having a 5x5 Moore neighbourhood of
size 𝐾 = 2; a finite number of possible LULC classes 𝑛 = 6; and 𝑅 are the TPMs as an
ad hoc measure of the likelihood of state change from 𝑛𝑡 to 𝑛𝑡+1 .
The CA model identifies for each pixel the two states 𝑖 and 𝑗 with the highest TPM values
(G in Figure 3.2). A ‘certainty’ map that is the difference in TPM values for those two
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states are then calculated. The pixels are ordered in terms of their certainty, and a number
of pixels are assigned a state change 𝑖−> 𝑗, equal to the number implied by the
corresponding transition probability given by the Markov transition matrix associated
with that period of transition. Hence, we do not use explicit user-defined transition rules
for the CA simulation (Li and Yeh 2001), but instead applied the MLP to develop a ranked
scoring by which LULC transitions were assigned. This ranked scoring depends on the
non-linear interaction between driving factors and the array of LULC states over a local
neighbourhood. This model of transitions may be repeatedly applied to generate a set of
LULC predictions.
To validate the CA predictions, the total number of conversions for each transition 𝑖−> 𝑗
was given by the Markov transition matrix for the 1992-2003 period (F in Figure 3.2).
LULC predictions were then constructed for 2014, and the Kappa statistic for the
predicted map compared to that of the classified LULC map for 2014 (H and I in Figure
3.2). Once the model validation process was assured, LULC map was predicted for 2025
using the same set of parameter values and including the transition probabilities from
2003 and 2014 as initial and final grid input respectively. A prediction for 2025 is then
performed similarly, but without the validation, by applying the MLP-CA trained on the
2003-2014 data, and with the 2003-2014 Markov transition matrix and 2014 LULC map
as inputs (J and K in Figure 3.2). Note that the period of 1979-1992 was not included in
the MLP-CA-Markov model because the plantation forest class was not classified for the
1979 imagery as there were no visible instances of this class at that time.
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3.4. RESULTS AND DISCUSSION
3.4.1. Analysis of LULC Markov transition probabilities
Most areas under native forest cover remained stable from 1979 to 1992 and from 2003
to 2014 (94%), with only a slight decrease of 4% observed between 1992 and 2003 (Table
3.1). This decrease in native forest cover was reflected in the probability of this class
being converted to either agriculture (6%) or harvested native forest (2%). The most likely
transition among all three periods is from the class harvested native forest to native forest
(above 85%), due to natural regrowth following timber harvesting.
Table 3.1. Transitional probability matrix derived from the LULC map for the periods
1979-1992, 1992-2003 and 2003-2014.
LULC 1992
Harvested
Native Sand Native Plantation
LULC 1979 Agriculture Water Forest Dunes Forest Forest
Agriculture 0.8435 0.0019 0.1462 0.0000 0.0012 0.0071
water 0.0469 0.4180 0.5052 0.0237 0.0009 0.0052
Native Forest 0.0380 0.0017 0.9399 0.0001 0.0170 0.0033
Sand Dunes 0.0095 0.0063 0.2272 0.7556 0.0013 0.0000
Harvested Native Forest 0.0147 0.0000 0.9078 0.0000 0.0775 0.0000
Plantation Forest 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
LULC 2003
Harvested
Agriculture 0.7948 0.0018 0.0799 0.0000 0.0017 0.1217
Water 0.1409 0.5311 0.3179 0.0075 0.0001 0.0024
Native Forest 0.0610 0.0033 0.9007 0.0022 0.0222 0.0105
Sand Dunes 0.0032 0.0191 0.0471 0.9306 0.0000 0.0000
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LULC 2014
Harvested
Agriculture 0.8027 0.0047 0.1275 0.0004 0.0061 0.0586
Water 0.0919 0.5525 0.3363 0.0006 0.0037 0.0149
Native Forest 0.0380 0.0011 0.9402 0.0003 0.0087 0.0117
Sand Dunes 0.0001 0.0021 0.3184 0.6786 0.0007 0.0000
Despite Lothian and Conacher (2005) affirmation that the clearing controls embedded by
the 1947 Act have not been effectively enforced, and so far, only one landholder has been
fined for illegal clearing, our classification did not identify any major clearing of native
forest in the catchment since the introduction of the amendment to the 1947 Act in 1978.
This is consistent with Smith et al. (2006) who reported a decrease in cleared areas of
around 36% in 1980 to 24% in 2000. For monitoring the dynamics of LULC changes at
smaller spatial scales, satellite or aerial imagery with higher spatial and spectral resolutio n
would better identify where illegal clearing may have taken place.
Prior to the introduction of policy incentives for plantation forest there were very few
plantations in the catchment at the time the 1979 base-line image was captured. From
1992 onwards, we observed a substantial increase in the conversion of agriculture to
plantation forest. As can be seen in Figure 3.3, the establishment of forest plantations was
centred on the north-east of the catchment where most of the land clearing for agriculture
had occurred since the 1950s. This area of plantation forest development is associated
with higher salinity concentrations than elsewhere because of the widespread clearing for
agriculture (Munro 2006; Platt 2007).
83
Figure 3.3. The most representative areas of changes between 1992 and 2014.
Salinity in the Warren River Catchment exceeded 500 mg/L Total Dissolved Solids
(TDS) in the 1960s (Munro 2006), and achieved its highest average annual salinity of
1015 mg/L between 1993 and 2004. Most of the salt load, around 74%, comes from the
Tone and Perup Rivers located in the upper catchment (Platt 2007). This spatial pattern
of plantation forest development is compatible with the State Salinity Strategy which
suggests commercial plantation forest in the already cleared areas as a key manage me nt
option in reducing salinity within the catchment.
The important transitions in the 1992-2003 period from a policy perspective were from
agriculture to plantation forest (12%), and from plantation forest to agriculture (26%).
Plantation forests increase significantly in extent during this period, with the majority of
the plantation forests established only in the 1990s (Smith et al. 2006) following the
84
introduction of the tax incentives. Thus, the 11 year period between image captures is
sufficient for a significant proportion of the 1992 plantations to be both harvested and re-
planted by 2003.
For the period 2003 to 2014 the rate of transition from agriculture to plantation forest
slowed to 6%, corresponding to the changes to the tax inducements associated with the
MIS schemes between 2006 and 2009. Further evidence of this is the strong decline in
MIS subscription from its peak in 2006 (Brown, Trusler and Davis 2010). The rate of
harvesting of commercial plantation forest and reconversion to agriculture mainta ined
itself at 27%. The net change of conversion of water bodies to other LULC classes
represented only 0.11% between 1992 and 2003, and -0.03% between 2003 and 2014
(Table 3.4). This result is likely a reflection of the total water exposure at time of acquiring
the Landsat imageries. For instance, variation in rainfall and drought are natural events
which can lead to a decrease in water availability, and consequently, more exposure of
low lying riparian vegetation. Moreover, the continued decrease in water body extents
may well be a reflection of long-term drying associated with global warming as well as
with decrease in rainfall and water supply in other areas of Australia’s south-west (Gove
et al. 2013).
A possible confounding feature of the analysis is the misclassification error resulting from
the derivation of LULC maps from remotely sensed imagery (Marcos-Martinez and
Baerenklau 2015). It is uncertain whether transitions from sand dunes to native forest
(32% transition rate between 2003 and 2014) are in part an artefact of misclassificatio n,
despite dune systems potentially being highly mobile over time relative to other
ecological systems. However, the net change of conversion revealed that less than 0.25%
of this land use actually transitioned to other LULC classes. More significantly, the
85
classification accuracy rate for plantation forest is low for the 2003 and 2014 imagery
(~60%; see 2.4. Results and Discussions), with mature plantations likely confounded with
native vegetation given both are dominated by eucalypt species.
3.4.2. Model Calibration and Validation
Tuning parameters for the MLP–CA–Markov model, namely the learning parameter (set
to 0.01) and the maximum number of iterations (500), were chosen by maximising the
overall classification accuracy. The model was validated by cross comparing of actual
(classified) and simulated LULC maps for 2014. The simulated map for the year 2014
was evaluated based on the Kappa statistics to check the validity in terms of quantity and
location (Pontius 2000). The MLP-CA-Markov model performed well with a Kappa
standard coefficient of 72%, and a Kappa location coefficient of 74%.
Table 3.2 compares the area of each LULC for both the simulated and classified maps for
2014. In general, we consider the simulated map provides an acceptable forecast (less
than 5% difference between maps on average) of the classified map. However, it is
important to note there is some discrepancy between the classified and simulated LULC,
most significantly for the dune systems. Apart from misclassification errors between
remotely sensed scenes, the source of the discrepancies may include the available
selection of factors for the transition potential maps or the size of the neighbour hood
windows, which are both crucial for success in forecasting LULC classes. Nevertheless,
we conclude the MLP-CA-Markov model produced satisfactory results that permit LULC
changes to be projected for 2025.
86
Table 3.2. Comparison of classified and projected LULC classes in 2014
2014 Classified 2014 Simulated Absolute Error

LULC class Area Area Area
km2 % km2 % km2 %
Agriculture 1112.56 25.19 1170.74 26.51 58.18 5.23
Water 21.54 0.49 20.72 0.47 -0.81 -3.78
Native Forest 3023.08 68.45 2956.20 66.94 -66.88 -2.21
Sand Dunes 25.40 0.58 35.25 0.80 9.84 38.75
Plantation Forest 192.53 4.36 191.88 4.34 -0.65 -0.34
3.4.3. Future Prediction Using Multilayer Perceptron CA-Markov Model (MLP-CA-
Markov)
The MLP-CA-Markov model was used to predict the six different LULC classes for 2025
in response to six potential driving factors, based on LULC changes from 2003 to 2014.
All the projections from the model are only one of multiple possible scenarios under the
current policy regime. Table 3.3 reports the classified area of each LULC class, and
includes the prediction results for 2025. The 2025 estimate for native forest was 69.17%,
revealing a 1.31% increase compared to the 1979 base-line. This increase may be
explained in part by the decrease in harvested native forest areas which were 0.94% in
2014 and are expected to decline to 0.14% in 2025. Table 3.4 presents the percentage of
change between each period for ease of comparison.
87
Table 3.3. Estimated area of each LULC class in the Warren River Catchment.
1979 1992 2003 2014 2025

LULC class Area Area Area Area Area
km2 % km2 % km2 % km2 % km2 %
Agriculture 1326.52 30.04 1234.72 27.96 1176.53 26.64 1112.56 25.19 1183.42 26.80
Water 24.52 0.56 18.15 0.41 22.86 0.52 21.54 0.49 17.94 0.41
Native Forest 2996.79 67.85 3059.00 69.26 2911.84 65.93 3023.08 68.45 3054.84 69.17
Sand Dunes 38.82 0.88 30.30 0.69 35.27 0.80 25.40 0.58 25.36 0.57
Harvested Native Forest 29.86 0.68 54.98 1.24 77.44 1.75 41.41 0.94 6.01 0.14
Plantation Forest 0.00 0.00 19.36 0.44 192.58 4.36 192.53 4.36 128.95 2.92
Table 3.4. Change in areal proportion of each land use between periods.
Change in Change in Change in Change in

LULC class % % % %
1979-1992 1992-2003 2003-2014 2014-2025
Agriculture -2.08 -1.32 -1.45 1.60
Water -0.14 0.11 -0.03 -0.08
Native Forest 1.41 -3.33 2.52 0.72
Sand Dunes -0.19 0.11 -0.22 0.00
Harvested Native Forest 0.57 0.51 -0.82 -0.80
Plantation Forest 0.44 3.92 0.00 -1.44
Historically, the occurrence of clearcut logging was concentrated in the south-west of the
catchment, where the main land cover was state forests, and relatively small extents of
agriculture and plantation forest. In the catchment, timber harvesting operations are
carried out within state forests in line with the State Government’s Forest Management
Plan 2014-2023 (Conservation Commission of Western Australia 2013), in consultatio n
with the Forest Products Commission – the statutory authority tasked with delivering a
sustainable timber supply. The potential decrease in harvesting of native forest likely
reflects the increasing conflict between timber production and environmental values such
as biodiversity, clean air and water. For example, the Conservation Commission of
Western Australia (2013) emphasizes the need to address the potential adverse effects of
88
the harvesting of native forest on stream salinity, by recommending that harvesting
activities be located in parts of the landscape that do not risk an increase in groundwater
salinity level.
The model also revealed a slight decrease in water area (0.41%) in 2025. However,
significant inter-year variation in yearly and summer rainfall has led to the area of
standing water in natural wetlands and artificial dams varying widely among the four
different dates of image capture. There are 921 farm dams documented for irrigation and
stock use in the catchment (Bari, Silberstein and Aryal 2012). The results also
demonstrated that sand dunes will occupy 0.57% of the Warren landscape in 2025. High
Pleistocence era sand dunes extend for approximately 8km inland from the coast, with
the majority of the sand dunes located within the D'Entrecasteaux National Park near the
mouth of the Warren river (Munro 2006).
The key change predicted for 2025 across the catchment is a substantial reduction of
plantation forest area (Figure 3.4). The simulation predicts that this land use will decrease
from 192.53 km2 in 2014 to 128.95 km2 in 2025. This decline is reflected in an increase
of the area of agricultural land use, which will reach 1183.42 km2 . As a result, the area of
forest plantations is predicted to be the smallest since the introduction of the governme nt
tax incentives for forestry MIS in the late 1990s.
89
Figure 3.4. LULC maps in different years: (a) 1979, (b) 1992, (c) 2002, (d) 2014 and (e)
2025.
In Western Australia between 2012 and 2013 a decline in plantation areas (0.55%) was
already reported by Gavran (2014), unless action is taken this trend is forecast to continue
90
(Forest Industries Federation 2015). This concern extends to the whole of Australia where
existing area of plantations is under threat with a contraction in the area of short rotation,
and no increase in long rotations (FWPA 2012). Although studies have shown that MIS
companies were financially unsustainable in the long-run (Brown, Trusler and Davis
2010; Mackarness and Malcolm 2006), the successive reformulation of MIS legisla tio n
might make the scheme vulnerable to policy changes, leading to a weakness in investor
interest in forestry MIS. Thus, given the tax-driven nature of investment in MIS, and the
lack of government action on further enhancing investment security in forestry, modelling
the spatial distribution of different land uses by classes utilizing historical land use data
is necessary to forecast future land use changes in the catchment.
The MIS sector initially grew quickly in Australia as it offered full tax deductions up-
front for investment in timber plantation and agribusiness development activities (The
Treasury 2008). The tax treatment was especially attractive for high income earners.
However, the alteration of the MIS legislation combined with a stock market contraction
contributed to a near collapse of the MIS industry in Australia (NewForests 2015;
Thompson 2010), and lead to uncertainty about forestry MIS. This was the case of the
multi-billion dollar failure in 2009 of two high-profile agribusiness companies operating
in the south-west of Western Australia: the Great Southern Group and Timbercorp
Limited. These two companies were estimated as having captured 40% in total of all MIS
business in Australia (Brown, Trusler and Davis 2010).
With the predicted decline of plantation forest areas a key environmental concern for
clean water may regain prominence through increased dryland salinity – large areas of
plantation forest can lower the water table at the landscape scale, thereby keeping the
highly saline ground-water from mixing with fresh water river flows. Importantly, Cleary
91
et al. (2010) have modelled the impact of plantation forest on stream salinity reductions.
Their results suggest that strategically tree planting in the upper Warren Catchment would
be effective in reducing the groundwater levels and thus lower stream salinity in the study
area. Townsend et al. (2012) extended this analysis by valuing the restored water quality
from increased plantation activity. Currently, the catchment is managed under State
Salinity Strategy to achieve potable water levels of 500 mg/L TDS by 2030 (State Salinity
Council 2000). However, additional management strategies are required for the
successful achievement of this potable water standard, with the State Salinity Strategy
having identified increased commercial plantation forest as a potential aid in reducing
stream salinity. The State Salinity Strategy forecast of a continuous increase in plantatio n
forest within the catchment (State Salinity Council 2000) now looks to be overly
optimistic, given the strategy forecast predates the collapse of investments in plantatio n
forest following the failure of the MIS.
A decrease in plantation forest areas will not only impact Western Australia’s pulpwood
production, but may also jeopardize efforts to reduce annual average water salinity levels
over the long-term. Significantly, the State Salinity Strategy has not been updated to
consider the failure of MIS-driven plantation forest, with the State Salinity Strategy
assumption of relying on commercial plantation forest to deliver success in reducing
water salinity levels in the catchment now out of date. Land use policy in Australia has
been criticised previously for the lack of reliable information (Hobbs et al. 2016), and for
not considering detailed subject knowledge when a policy is designed (Pannell and
Roberts 2009). In this instance, current land use policy may be failing due to policy not
being adapted in a timely fashion to changing patterns of land use and policy incentives.
Moreover, the fact that MIS-driven investments for forestry did not persist for much more
92
than a decade suggests that more rigour is required in the scenario testing of key
assumptions underpinning policies impacting on land use change, and on their possible
follow-on effects, such as the reduction in water salinity envisaged under the State
Salinity Strategy.
The Australian government has typically used incentives such as personal tax deduction
and low interest loans to accelerate plantation and agriculture development, thus MIS
structures have been the biggest source of investment in Australian agriculture and
forestry in the past decade (Commonwealth of Australia 2002; The Treasury 2008;
Mackarness and Malcolm 2006). Although forestry MIS arrangements were designed to
provide an ongoing mechanism for attracting investors, there is speculation that at least
30% of plantations may not be re-planted after harvesting (FWPA 2011). This might be
the case of the Warren River Catchment which has recently not established any significa nt
area of new plantations, and the simulation revealed a potential increase in agricultura l
areas following plantation harvesting. Plantation MIS is quite different to some non-
forestry MIS investments, with large up-front expenses at the time of establishment and
lengthy periods between planting and harvesting. By contrast, some agricultura l
commodities have annual production cycles which favours cash-flow pattern and
adoption of non-forestry MIS. Thus, the net present value of forestry investment without
the tax break is less than the present value of returns from agriculture.
In the next few years, it is unlikely that the government will take action toward improving
the actual MIS taxation to avoid the decline in establishment of new plantations (MIS
related) and retention of existing ones due to relatively profitability based on yield and
production price. Thus, our model is based on the current policy scenario where investors
in forestry MIS relies on a statutory deduction under Division 394 (ATO 2017b).
93
Nevertheless, in the past few decades Australia has seen a range of public policies
emerging that target environmental benefits such as climate change mitigation (e.g.,
Carbon Farming Initiative, and Direct Action Plan), and salinity abatement (e.g., State
Salinity Strategy). Those policies might re-incentivise plantation forestry. However,
external benefits from growing plantations are not captured by current policies
(Thompson 2010). Western Australia attracted around $64m for reforestation project, but
this was not focused on the WRRC. An obvious policy would be to compensate
landowners for not clear-felling plantation forestry especially where hydrologica l
modelling indicates that it would have an adverse effect on salinity. Future policies will
need to address the economic aspects of plantations, while also targeting multiple benefits
(e.g., carbon sequestration, and water quality), and community goals (Barlow and Cocklin
2003; Williams 2014). Townsend et al. (2012) suggested charging those who caused
salinity in the catchment while using the proceeds to pay for local reforestation.
By taking a strategic partnership between the forest industry and government, plantatio n
forests could be seen as a valued land use that could provide both commercial and
environmental benefits, the tax subsidy may be viewed as a contribution to the external
benefits. These results highlight the need for policy makers to be cautious when relying
on temporary incentives to achieve long term aims, such as salinity abatement. Pannell
and Roberts (2010) emphasized that where conservation practices are sufficie ntly
attractive to landholders, government does not need to employ incentive-based
mechanisms to encourage adoption. Specifically, past investment in plantation forest in
the catchment appears to have been driven more by a demand for tax minimization than
by market returns on investment.
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3.5 CONCLUSION
In this paper we assessed and modelled the future trend of LULC change in the Warren
River Catchment using an integrated approach combining Markov transitio n
probabilities, Multilayer Perceptron and Cellular Automata. The simulation technique
employed produced satisfactory results allowing us to project LULC changes for 2025.
Results predict that agriculture areas will increase slightly in the future, while plantatio n
forest areas will decrease. Significantly, large areas of plantation forest are likely to be
reconverted to agriculture as a legacy of failed forestry MIS investments driven mainly
by taxation benefits and optimistic claims about profitability.
There is an urgent need for balancing the expectations of temporary tax incentives with
long-term conservation strategies in the design of effective land use policies. MIS is
undoubtedly an important vehicle for the establishment of new plantations, however
periodic changes in policy might create serious problems for the forestry sector, while
also impacting management strategies for preventing and managing dryland salinity.
Future conservation planning will need to be more sensitive to case-specific
circumstances when targeting environmental goals, as is the case for landscape-scale
plantation development via a tax incentive, to ensure effective and persistent results with
low conservation impacts. More specifically, understanding how the potential future
changes in the landscape might influence river and forest health can likely assist future
conservation planning for the third largest river in the south-west of Western Australia,
the Warren. Further detailed studies are needed to document the effect on water and
dryland salinity of the widespread reclamation of agricultural lands from diminis hing
plantation forests if plantation forest is a linchpin for reducing that salinity.
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Chapter 4. Policy influence on forest plantation development
4. POLICY INFLUENCE ON FOREST PLANTATION
DEVELOPMENT IN THE WARREN RIVER CATCHMENT OF
WESTERN AUSTRALIA
ABSTRACT
The Warren River Catchment is a region within the south-west Australia Biodivers ity
Hotspot that has undergone a profound landscape transformation since the 1920s. In the
last two decades, plantation forest has emerged as a major land use within the catchment
in response to a mix of land use policies and tax inducements, with the established broad-
acre agriculture and pastoral land use shifting towards predominantly Eucalyptus
plantations. However, the spatial effects of government policy incentives on land
management is not well understood, and our intention here was to elucidate the linkage
between policy and land use change. This paper presents an empirical analysis of major
drivers of Land Use and Land Cover (LULC) changes in the Warren River Catchment
from 1979 to 2014, using a spatially explicit Multinomial Logit Model. The results
indicate that land use policies associated with tax benefits, phosphorus and soil organic
carbon in the topsoil layer, distance to nearest town, past land uses, spatial lags and private
land tenure were strong influences in the policy-driven transition towards plantatio n
forest. Regardless, the restructuring of tax deductions from the Management Investme nt
Schemes investments in the late 2000s slowed the conversion of agriculture to plantatio n
forest and reduced the retention of existing plantation forest areas. This illustrates the
sensitivity and vulnerability of investments in plantation forest to policy, with respect to
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changes in the tax incentives. Understanding the extent of policy-driven LULC change in
the catchment will be crucial for the effective design of future public policies.
Keywords: Multinomial Logit Model; LULC; Land Use Policy; Plantation Forest;
Western Australia.
4.1. INTRODUCTION
Broad-scale changes in Land Use and Land Cover (LULC) are usually the result of
complex, multi-dimensional interactions that produce important effects with implicatio ns
for climate change, soil degradation, biodiversity loss, watershed hydrology, and human
welfare (Lambin et al. 2001; Lambin, Geist and Lepers 2003; Lubowski, Plantinga and
Stavins 2008). An understanding of such interactions can be described in terms of drivers
(e.g., climate change, soil degradation, and socioeconomic) of LULC changes, and is
necessary for policymakers concerned with a variety of land use management, and
environmental planning policies (Bell and Irwin 2002; Marcos-Martinez et al. 2017).
Since the begin of nineteenth-century LULC changes occurring in the south-west of
Western Australia were primarily stimulated by the introduction of several land use and
land management policies, as exemplified by the Group Settlement Scheme in the 1920s,
which was largely focused on agricultural expansion to reduce dependence on food
imports from the interstate. While the outcomes of land clearing lead to economic
development (e.g., farm production, rural towns, and improved livelihoods), it resulted in
extensive biodiversity loss (Myers et al. 2000), land degradation, dryland salinity
(Graham, Pannell and White 2010; Pannell and Roberts 2010), and decreases in water
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quality. Consequently, since 1970s this region has been the focus of a number of
management strategies and policies to reduce the magnitude of actual and threatened
impacts of salinity on water and soil quality (e.g., Country Areas Water Supply of 1947
– 1947 Act amended in the 1970s, and Water Resource Recovery Catchments – WRRC
of 1996 ).
The last two decades has seen a rapid expansion of commercial tree plantations in
Western Australia, especially of the Tasmanian bluegum (Eucalyptus globulus). As a
result, Western Australia now hosts the largest area of hardwood plantations in Australia,
containing 31% (2,989 km2 ) of the nation's hardwood plantations in 2013 (Gavran 2014).
This expansion has been particularly pronounced within the Warren River Catchment
(WRC) that feeds the third largest river in the south-west of Western Australia. From
2002 to 2014, the area of forest plantations increased from 19 km2 to 193 km2 in the WRC
(see 2.4.2. LULC Changes in the WRC ). This unprecedented expansion has followed the
introduction in the late 1990s of the Federal Government’s policy Plantations for
Australia (The 2020 Vision; Commonwealth of Australia, 2002), and extensive tax
incentives offered by The Managed Investments Act 1998 (MIA 1998) to investors in
Management Investment Schemes (MIS) (Cummine 2008; Ajani 2008; FWPA 2011).
However, while some studies have examined LULC transitions in the catchment (Smith
et al. 2006), and the impact of reforestation on water resources (Bari, Silberstein and
Aryal 2012; Townsend et al. 2012), none have provided robust information on the role
of those policies in driving the historical LULC change.
To address these issues, this study is partially framed within the classic nineteenth-centur y
land use theory that attributes changes in land use to the difference in relative rents of
alternative uses. These rents vary according to intrinsic land characteristics (e.g., soil
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fertility) and location (e.g., accessibility to the market) as first emphasized by David
Ricardo (1817) and Johann von Thünen (1966), respectively. Other factors (e.g., socio-
economic factors, and policy variables) could also influence land use decision for a given
land parcel (Chakir and Parent 2009), and so flexibility in behavioural assumptions for
LULC modelling is required. This flexibility may be achieved through the use of
Multinomial Logit (MNL) models.
This paper provides novel insights regarding the determinants of LULC change in the
WRC by identifying the major driving forces of plantation land use over the last 35 years.
We hypothesise that the conversion of agricultural land to plantation forest was spurred
by government policies and incentives associated with the introduction of the MIS.
Subsequently, a decline in plantation forest may be related with the restructuring of these
policies incentives in the late 2000s. Therefore, the specific aims of this paper are, firstly,
to develop a MNL model to identify the spatial determinants of LULC changes between
1979 and 2014, and secondly to examine the role of government policy incentives in land
management. A good understanding of how government policies influence land use
patterns over time would help policy-makers and other stakeholders to better design new
public policies.
4.2. B ACKGROUND: P LANTATION FOREST DEVELOPMENT IN WESTER N
AUSTRALIA
Following the Group Settlement Scheme (GSS) in the 1920s and later on the War Service
Land Settlement Scheme (WSLSS) in the 1950s, regions within south-west of Western
Australia (e.g., Wheatbelt and Warren) experienced extensive LULC change with the
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clearing of native forest for the establishment of agriculture, and the accelerating
expansion of urban areas (Australian Greenhouse Office 2000). As a result, the Warren
River Catchment was declared a clearing control catchment under the 1947 Act in 1978
to prevent the rise in salinity (Government of Western Australia 2015). In 1996 this key
catchment was nominated as WRRC, and later in 2000 were prioritised for action as a
part of the State Salinity Strategy (SSS; or Western Australia Salinity Strategy), owing to
continuing salinity and resultant water quality concerns (State Salinity Council 2000).
By the late 1990s plantation forest in the WRC, which was one of the management options
proposed by SSS, had begun to spread rapidly across previously cleared agricultura l
lands. This LULC conversion was a result of substantial plantation investment in the
region from international groups (i.e, Oji International), and also due to an agribusiness
scheme market proposed by the Government, with the establishment of The 2020 Vision
in 1997 and MIA 1998, and their associated income tax subsidies introduced by the
Income Tax Assessment Act of 1997 (ITAA 1997) and Product Ruling System (PRS) of
1998. In this sense, The 2020 Vision and MIA 1998 were directed to increase a domestic
plantation forest industry, enhance rural economies and potentially assist in salinity
amelioration, carbon sequestration and other environmental issues. However, despite the
potential of reforestation to provide a set of environmental services (George et al. 2012),
these possible co-benefits generated by tree plantations were not clearly emphasized in
those policies.
For instance, The 2020 Vision aims to treble the area of Australia’s plantation forest
between 1997 and 2020 to a total of 30,000 km2 . To achieve this target, diverse initiatives
to stimulate plantation development have been proposed, including tax inducements (e.g.
Taxation Ruling TR 2000/8; Commonwealth of Australia 2002). On the other hand, the
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MIA 1998 created a retail investment structure that allowed investors to take an up-front
tax deduction for the expense of investing in timber plantations and agribusiness
development activities through Managed Investment Schemes (MIS). Hereupon, the
ITAA 1997, PRS and TR 2000/8 lent support to The 2020 vision by providing certainty
to investors that investments in MIS were an allowable deduction, whilst simultaneo us ly
ensuring the continued expansion of agribusiness and plantation forest.
Consequently, the MIS industry was seen as a direct product of tax legislation with
demand from investors above government expectations. Therefore, the Federal
Government of Australia attempted to limit the growth of MIS schemes by revising the
deductibility of MIS investor contributions through the Australian Taxation Office (ATO)
in 2006. According to this revision, from 1 July 2008 contributions paid by non-forestry
and forestry MIS investors would no longer be tax deductible. However, in 2007, the
Government revised its decision about forestry MIS, and Division 394 was inserted into
the ITAA 1997 to provide tax certainty for forestry MIS arrangements (ATO 2017b; The
Treasury 2008). In the same year, the TR 2007/8 was released replacing the TR 2000/8.
Whereas investors in forestry MIS could still claim an immediate tax deduction for
expenditure incurred in the scheme under Division 394, non-forestry MIS relied on the
same tax legislation as other businesses.
In 2009, once again, the Government withdrew its decision, and since then investors in
non-forestry MIS can continue to claim deductions in accordance with the relevant terms
under section 8-1 of the ITAA 1997, depending on the facts of each situation (ATO
2017a). Although forestry MIS is protected under the Division 394 of ITAA 1997 since
2007, past adjustments to the taxation status of these MIS have now generated significa nt
uncertainty among investors. The subsequent lack of growth in MIS may be attributab le,
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at least in part, to reduced investor confidence resulting from the continued restructur ing
of the MIS. To summarise the foregoing, a timeline of selected land use policies, taxation
rules and historical aspects of LULC changes in the WRC is presented in Figure 4.1.
Figure 4.1. Historical land use policies and its effects on LULC changes in WRC.
4.3. STUDY AREA
The Warren River Catchment is about 300 km south-east of Perth in Western Australia,
with the Tone and Perup Rivers as headwaters (Figure 4.2). It is located within the
Southwest Australia Ecoregion, representing one of the 34 Global Biodiversity Hotspot
(Myers et al. 2000), and covers an area of 4,416 km2 which extends from near Kojonup
on the north-east of the catchment to the south-coast of the state encompassing the small
towns of Manjimup and Pemberton. The region experiences a warm temperate
Mediterranean climate, with long, hot, dry summers and cool, wet winters. It has a mean
annual flow of 291 Gl (1990-2001; at the Barker Road Crossing gauging station; Smith
et al. 2006) and the mean annual rainfall ranges from 550 mm/year to over 1200 mm/year,
110
with most rain falling during winter and early spring (Townsend et al. 2012). Situated in
a high rainfall zone, the WRC is considered highly suitable for a predominate ly
Tasmanian Bluegum (Eucalyptus globulus) hardwood forestry.
Figure 4.2. Location of the study area.
Native forest of marri and wandoo dominated the upper catchment until the 1920s (Beard
1981). However, following the GSS, and later on with the WSLSS, extensive land
clearing occurred in this region, resulting in a significant increase in stream salinity. Prior
to clearing, salinity levels varied between 120 to 350 mg/L TDS (Total Dissolved Solids;
Smith et al. 2006). However, the salinity level exceeded 500 mg/L TDS by the late 1960s
(Munro 2006), with the current average annual salinity of around 1000 mg/L at Barker’s
111
Road Crossing gauging station (Townsend et al. 2012). Most of this salt load, around
74%, is from the Tone and Perup rivers located in the heavily cleared upper catchment
(Platt 2007).
In the late 1990s, an extensive and growing Eucalyptus plantation industry emerged on
already cleared lands in WRC, following the introduction of tax concessions and
incentives by the Federal Government. Since then, the proportion of cleared areas for
agriculture dropped from a total of 30% in 1979 to 25% in 2014 (see 2.4.2. LULC
Changes in the WRC). These changes, especially the conversion of agricultural and
pastoral areas to plantation forest, have the potential to significantly reduce the water
salinity in the catchment over the long term (Cleary et al. 2010; Smith et al. 2006), to
support the SSS. As demonstrated, the WRC offers a unique context in which to
disentangle the major drivers of landscape changes due to its complex mosaic of protected
natural forests and agriculture, very high biodiversity values, and shifting land use and
land management policies over time.
4.4. MATERIALS AND METHODS
4.4.1. Modelling approach: Multinomial Logit Model (MNL)
Our modelling approach assumes that LULC spatial patterns and their changes result from
landowners’ choices, in which they select an optimal LULC to maximise his or her utility.
We assume that utility 𝑊𝑛𝑡𝑗 , derived from the parcel of land 𝑛 in land use 𝑗 at time 𝑡 is
equal to the present value of future streams of return to this parcel of land. This return
depends on four groups of factors: biophysical land features (e.g., phosphorus), locations
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(e.g., distance to the nearest town), socio-economics (e.g., land use policies), and spatial-
temporal controls (e.g., previous LULC). If the landowner converts a parcel of land from
use 𝑖 to any alternative use, they will incur conversion cost 𝐶 𝑛𝑡𝑗|𝑖 , which depends on
biophysical, locational and socioeconomic factors, and is specific to land uses 𝑖 and 𝑗.
The landowner will chose to convert the parcel of land currently in land use 𝑖 to a new
land use 𝑗 if 𝑊𝑛𝑡𝑗 − 𝐶𝑛𝑡𝑗|𝑖 ≥ 𝑊𝑛𝑡𝑘 − 𝐶𝑛𝑡𝑘|𝑖 for all possible uses 𝑘, including the current
𝑖 (Bockstael 1996).
Here we define utility of converting a parcel 𝑛 from land use 𝑖 to land use 𝑗 as 𝑈𝑛𝑡+1𝑗|𝑖 =
𝑊𝑛𝑡𝑗 − 𝑊𝑛𝑡𝑖 − 𝐶𝑛𝑡𝑗|𝑖 . The expected utility of land use conversion is not observable
directly, but can be expressed as a representative utility 𝑉𝑛𝑡+1𝑗 |𝑖 that captures the factors
affecting utility, and random part 𝜖𝑛𝑡𝑗 . Assuming these errors have an IID (identically and
independently distributed) Type 1 Gumbel distribution, the probability can be specified
as a multinomial logit model (MNL; McFadden 1973). The observed response 𝑦𝑛 is a
vector of probabilities (of length 𝐽 = 3), where the landowner has an option to allocate a
given parcel of land n to one of 𝐽 possible LULC types, 𝑗 ∈ {agriculture, native forest,
plantation forest}. The probability that a parcel 𝑛 that is currently in land use i will be
allocated to land use j is:
exp( 𝛼𝑖𝑗 + β′𝑗x𝑛 )

𝑝(𝑦𝑛 = 𝑗|𝑖) = ∑𝐽−1 exp(𝛼𝑖𝑘+ β′𝑘x𝑛)
𝑖 = 0, … 𝐽 − 1, 𝑗 = 0, … 𝐽 − 1, β𝑟 = 0, 𝛼𝑖𝑟 = 0 (4.1)
𝑘=0
where 𝛼𝑖𝑗 is the transition-specific constant for each combination of initial and final
LULC (Polyakov and Zhang 2008), β𝑗 is a vector of coefficients of the biophysical land
features, locations, socio-economics, and spatial-temporal factors specific to LULC
alternative 𝑗, and x𝑛 is the vector of explanatory variables for each grid cell 𝑛. In order
113
for coefficients to be estimated in MNL, they need to be normalised by setting β𝑟 = 0 and
𝛼𝑖𝑟 = 0, where r is a reference LULC category. Therefore, in the case with 𝐽 possible
outcomes, 𝐽 − 1 sets of coefficients 𝛽 and 𝐽 × (𝐽 − 1) of coefficients 𝛼 need to be
estimated.
Parameter estimates from the MNL model are not readily interpretable. Therefore
corresponding marginal effects were computed. We evaluated the marginal effects for
each initial land use as the partial derivatives of the predicted probabilities with respect
to the vector of predictors:
𝜕𝑝( 𝑦=𝑗|𝑖) 𝐽−1

= 𝑝 (𝑦 = 𝑗|𝑖)(β𝑗 − ∑𝑘=0 𝑝(𝑦 = 𝑗|𝑖)β𝑘 ) 𝑖 = 0, … 𝐽; 𝑗 = 0, … 𝐽 (4.2)
𝜕𝐱
The standard error of marginal effects were estimated using the Delta Method (Greene
2003).
There are econometric issues caused by the spatial nature of the data. One issue arises
from spatially correlated unobservable variables. If they are spatially correlated with the
dependent variable, the estimates of the coefficients can be biased. A second common
challenge facing MNL is spatial-autocorrelation, which may emerge when the LULC of
nearby grid cells directly affects the LULC at each location (Irwin and Bockstael 1998).
For example, conversions to plantation forest may be more likely near existing forest
plantations, due to the adoption of similar land use practices by neighbouring landowners
with similar land characteristics. The random sampling strategy for acquiring data should,
in principle, downplay the effect of spatial autocorrelation (see section 4.4.3. Sample
Size). However, to account for this bias, we include variables representing spatially-
temporally LULC type in previous period. This allows us to capture the potential impact
of the proximity of neighbouring land use change (Plant 2012; Irwin and Bockstael 1998;
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Polyakov and Zhang 2008). The equation to calculate spatiotemporal lag 𝑙𝑛𝑡𝑗 of land use
j for parcel n at time t is given by:
∑𝑚(𝑦𝑚,𝑡−1=𝑗)/𝑑𝑛,𝑚
𝑙 𝑛𝑡𝑗 = ∑𝑚 1/𝑑𝑛,𝑚
∀ 𝑚: 𝑑𝑛,𝑚 ≤ 3 𝑘𝑚 (4.3)
where 𝑦𝑚,𝑡−1 is land use of parcel 𝑚 in period 𝑡 − 1 ; 𝑑𝑛,𝑚 is distance between parcels
𝑛 and 𝑚; 𝑚: 𝑑𝑛,𝑚 ≤ 3 𝑘𝑚 indicates that we use all parcels 𝑚 within distance 3 km of
parcel n. In this study, we use the ‘vglm’ function in the VGAM package to estimate
MNLs in the R software (Yee 2010; R Core Team 2016).
4.4.2. Data sources
4.4.2.1. Land‐Use and Land-Cover dataset
The LULC database was developed in Chapter 2 using multi-temporal remote sensing
imagery from Landsat Multispectral Scanner (MSS), Thematic Mapper (TM), Enhanced
Thematic Mapper (ETM+), and Operational Land Imager (OLI), for four years (1979,
1992, 2003, and 2014) with a spatial resolution of 30 meters. In addition to these four
existing LULC maps, this study included a LULC classification based on Landsat ETM+
acquired on 01 February 2010 (Path 111/Row 84) and on 24 February 2010 (Path
112/Row 84). This 2010 classification enabled observation of LULC changes
immediately following the amendment in 2007 of tax arrangements for forestry MIS. A
supervised object-based classification approach was conducted using a Support Vector
Machine (SVM) classifier, and was implemented using the same methodology given in
Chapter 2. The LULC maps discriminate between the following classes: agriculture,
water, native forest, sand dunes, harvested native forest and plantation forest.
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4.4.2.2. Other data used for modelling
Table 4.1 shows a list of potential explanatory variables for the MNL. The variables that
might drive LULC change trajectories in the WRC were chosen in part based on the land-
rent theories postulated by Ricardo (1817) and von Thünen (1966). For instance, we
hypothesised that biophysical measures of land productivity (i.e., Ricardo) and location
(i.e., von Thünen) affect returns to land uses and, therefore, decisions of LULC allocatio n.
Moreover, we believe that policies play an important role in shaping farmers’ land use
choices; therefore, two key changes in tax incentives applied to commercial plantatio n
forest were included in the model as explanatory variables.
In this study, the explanatory variables are classified into four groups, namely:
biophysical land features, location, socio-economic and spatial-temporal controls
variables. A digital elevation model (DEM) from the Shuttle Radar Topography Mission
(SRTM 2017); 1 Arc-Second Global available by United States Geological Survey
USGS) was acquired and, six terrain characteristics (e.g. slope, aspect) were calculated
using the ‘Raster’ package (Hijmans 2016). Distances from each pixel to all major towns
were calculated. Furthermore, fourteen soil attributes from the Soil and Landscape Grid
National Soil Attribute Maps (3" resolution; CSIRO 2016), and climatic variables
available from BOM (2016) were included as potential predictors of LULC changes. Each
soil attribute was estimated at each of six depth intervals (0-5cm, 5-15cm, 15-30cm, 30-
60cm, 60-100cm and 100-200cm), as specified in the GlobalSoilMap specificatio ns
(Science Committee 2015).
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Table 4.1. List of prospective explanatory variables for the multinomial logit model.
Explanatory Variables Units Attribute Description
Biophysical land Terrain model (30m) Terrain Ruggedness Index (TRI) m TRI represents the amount of elevation difference between adjacent cells of a DEM.
attributes Extracted from SRTM Topographic Position Index (TPI) m TPI is the difference between the value of a cell and the mean value of its 8 neighbouring pixels.
(2017) Roughness m Roughness is the difference between the maximum and the minimum value of a cell and a specified surrounding cell.
Slope Degree Slope is the degree of incline of a surface.
Aspect Degree Aspect is the orientation of slope, measured clockwise in degrees from 0 to 360.
Flow direction of Water The direction of the greatest drop in elevation. They are encoded as powers of 2 (0 to 7).
Soil attribute Total Phosphorus (PTO) % Mass fraction of total phosphorus in the soil by weight.
(CSIRO 2016) Total Nitrogen (NTO) % Mass fraction of total nitrogen in the soil by weight.
Available Water Capacity (AWC) % AWC is computed for each of the specified depth increments.
Organic Carbon (SOC) % Mass fraction of carbon by weight in the < 2 mm soil material as determined by dry combustion at 900° C.
Bulk Density - Whole Earth (BDw) g/cm3 BDw is calculated for the whole soil (fine and coarse texture fractions) in mass per unit volume.
Bulk Density - Fine Earth (BDf) g/cm3 BDf is calculated for the soil fine earth fraction (< 2mm).
Clay (CLY) % CLY is calculated as % of the <2mm fraction with a grain size of less than 2 μm.
Electrical Conductivity (ECD) dS/m ECD samples are analysed in a 1:5 saturated paste.
pH Water (pHw) NONE pHw is calculated of a 1:5 soil water solution.
Plant Exploitable Depth (DPE) cm Reflects the common depth of agricultural crops in Western Australia.
Depth to Rock (DPR) cm The estimated depth to hard rock down to 200cm
Sand (SND) % SND is based on the <2mm fraction with a grain size of 20 μm to 2mm.
Silt (SLT) % SLT is based on the <2mm fraction with a grain size between 2 - 20 μm.
Coarse Fragments (CFG) % CFG is based on the <2mm fraction with a grain size of less than 2 μm.
Climate conditions Rainfall wet season mm The average seasonal rainfall over the period 1961 to 1990 - Wet season between November and March.
(BOM 2016) Rainfall dry season mm The average seasonal rainfall over the period 1961 to 1990 - Dry season between April and October.
Temperature minimum °C The average annual distributions of temperature over the period 1961 to 1990.
Temperature maximum °C The average annual distributions of temperature over the period 1961 to 1990.
Temperature average °C The average annual distributions of temperature over the period 1961 to 1990.
Average annual sunshine hours Annual sunshine duration over the period 1900 to 2003.
Humidity annual average % The 9am and 3pm average annual relative humidity over the period 1976 to 2005.
Average annual evaporation mm Average amount of water which evaporates from an open pan annually over the period 1975 to 2005.
Evapotranspiration annual average mm Based on the transfer and balance of energy in the environment over the period 1961 to 1990.
Location Accessibility Distance to Manjimup m Log of the distance from each individual LULC pixel to the nearest town.
Distance to Pemberton m
Distance to Kojonup m
Socio-economic Policy Policies 1998 ITAA (1997), PRS (1998), the 2020 Vision (1997) and MIA (1998) responded to the timber supply shortage.
Policies 2007 The revised deductibility of MIS investments between 2006 and 2007 leading to the development of the TR2007.
Tenure (Conservation State Forest Forest administered or protected by Western Australian government.
Commission of Western Conservation Areas Western Australian protected areas.
Australia 2013). Private Land Property owned by non-governmental legal entities.
Spatial-temporal Spatial lag Previous LULC %% LULC Proportion of each of LULC in previous period within 3km weighted by inverse distance.
controls Previous LULC Previous LULC Dummy Type of preceding LULC.
Time Time since last classification’ Years The total years between classifications.
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The first policy factor included was based on the introduction of PRS, ITAA 1997, The
2020 Vision and MIA 1998. Since they were all introduced in the late 1990s and were
covered by the same Taxation Rules (TR2000/8) from 2000 to 2007, we decided to
combine them into one explanatory variable called ‘Policies 1998’. The second policy
factor was the major review of MIS investments between 2006 and 2007 (Policies 2007),
where the TR 2000/8 was replaced by the TR 2007/8. Additionally, to test the impact of
policies on private land and state forests we included three tenure types, termed state
forest, conservation area, and private land (Conservation Commission of Western
Australia 2013). We also added a time variable namely ‘time since last classification’ to
account for different re-measurement periods (Polyakov, Wear and Huggett 2010).
Hence, the prospective explanatory variables included: (i) biophysical land features
divided into 84 potential soil variables (14 soil attributes x 6 depth intervals), 9 climate
conditions, and 6 terrain characteristics; (ii) 3 location attributes (in terms of distance to
town); (iii) 5 socio-economic factors, including the 2 policy sets targeting plantatio n
forest; and (iv) 3 spatial temporal controls (Table 4.1). The most appropriate combinatio n
of explanatory variables was selected based on a preliminary data analysis (e.g. selection
of variables and multicollinearity analysis, see Section 4.4.4.).
4.4.3. Sample size
Five LULC maps (1979, 1992, 2003, 2010, and 2014) allow LULC transitions to be
identified for four periods (1979-1992, 1992-2003, 2003-2010, and 2010-2014) for each
pixel within study area. We then randomly drew a sample of 54,000 (30x30 m) pixels
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representing 0.5% of total pixels of the study area. The selected pixels comprise 13,500
observations for each transition period with only one observation per location.
Further, we excluded observations that had LULC classes “water”, “sand dunes” and
“harvested native forest” (clearcut) from our samples as they are not directly impacted by
the policies targeting plantation forest, and occupy only a very small portion of the
landscape (< 3%). The remaining observations had one of three LULC classes
(agriculture, native forest, plantation forest) at the beginning and end of the transitio n
period. Further attributes were assigned to each observation from the explanatory
variables presented in Table 4.1.
To select an appropriate sample size for which there is minimal improvement in
prediction accuracy when sample size is increased, we randomly divided our samples into
six training subsets of sizes {1000, 5000, 10000, 20000, 30000, 40000}. Test subsets were
drawn independently of the training set, numbering 30% of the size of the training subset
(i.e., {300, 1500, 3000, 6000, 9000, 12000}, respectively). The ideal sample size for the
MNL model was calculated with a margin of error no more than 5%, and was achieved
with 30,000 data observations. Once the ideal sample size value was selected, it was used
in the variables selection for the MNL model.
4.4.4. Selection of variables and multicollinearity analysis
LULC choices can be influenced by numerous factors, of which many may be highly
correlated. Multicollinearity in this instance would result in biased coefficients estimates
and unreliable and unstable model predictions (Alin 2010). To overcome
multicollinearity, we applied both all-subset regression and multicollinearity analysis.
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Firstly, all-subset regression was applied to the groups of soils parameters to generate 14
MNLs – one for each pairwise combination (i.e., six depth intervals for each soil attribute)
of soil parameters. Of these the best three models were selected post-hoc by minimis ing
the Akaike's Information Criterion (AIC) scores (Goodenough, Hart and Stafford 2012;
Munroe and Muller 2007).
Variance inflation factors (VIF) were then computed independently for each subset of
variables (e.g., the three selected soil parameters, climate conditions, and accessibility –
Table 4.1) (Zuur et al. 2009), and the backward elimination process was applied to remove
the explanatory variables that were causing collinearity in each subset. Next, the VIF
values were calculated again for the reduced set of variables until each subset of variables
have all explanatory variable with the 𝑉𝐼𝐹𝑖 ≤ 2. The VIF quantifies how much of the
variance (the square of the standard error) associated with a given coefficient is ‘infla ted’
because of a linear dependence on the other predictors in the model. VIF values of ≥5
(moderate multicollinearity) or ≥10 (high multicollinearity) implies that the associated
regression coefficients are poorly estimated because of multicollinearity (Montgomer y,
Peck and Vining 2001). Thus, in this paper, it was desirable to state a cut-off value of
𝑉𝐼𝐹𝑖 ≤ 2, suggesting that no more than 50% of the estimated variance of a parameter
coefficient may be attributable to the remaining explanatory variables.
Finally, all predictors retained within each of the seven regression models, following
removal of multicollinear variables, were included in one single MNL model. Hence, only
16 variables remained in the pool of potential explanatory variables: Phosphorus and
organic carbon at 0-5cm and 100-200cm each, nitrogen (5-15cm and 100-200cm); slope;
distance to Manjimup and Kojonup; past state; spatial lag; time since last classificatio n;
private land; and the two set of policy variables (Policies 1998 and Policies 2007).
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4.5. RESULTS
4.5.1. LULC trajectories
To provide context to our multinomial logit model results, figure 4.3 illustrate the
observed changes in the extent of the three LULC classes over the five data captures:
1979, 1992, 2003, 2010 and 2014. The area of native forest amounted to approximate ly
68% (3,023 km2 ) of the study area in 2014, and has remained relatively stable since 1979.
Hence, the control on clearing embedded by the 1947 Act appears to have been effective
in the WRC in minimising the clearing of native vegetation.
Broad-acre agriculture is the second largest land use in the catchment, occupying
approximately 25% of the landscape. However, this extent has decreased by 5% since
1979. Conversely, the plantation forest industry was almost non-existent in 1992, growing
to about 192 km2 in 2003, and reaching its largest area in 2010 (238 km2 ). From late 1990s
onwards, Eucalyptus plantations have been mainly established on the north-east of the
catchment and formerly occupied primarily by broad-acre cropping and pastures.
However, a slight decrease in plantation forest was observed in 2014 compared to 2010.
This is potentially a consequence of investors’ concerns regarding the proposed changes
of tax treatment for MIS investments in 2007.
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Figure 4.3. Trends in surface areas and percentage for the three major LULC classes in
the study area.
4.5.2. Multinomial Logit Model (MNL) of land use change
The MNL model of LULC change explained 62.2% of the observed variation in the data
(McFadden’s pseudo-R2 ; Domencich and McFadden 1975). This model may be explained
in terms of its marginal effects (Table 4.2). For continuously-valued independent
variables the marginal effect measures the instantaneous rate of change in the probability
of moving towards a new land use; whereas discrete change was measured through
indicator variables.
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Table 4.2. Marginal Effects of explanatory variables on the transition probabilities of

LULC change.
Final LULC type (Alternative J)
Explanatory variables Marginal Effect S td. Marginal Effect S td. Marginal Effect S td.
Agriculture Err. Native Forest Err. Plantation Forest Err.
Initial Land Use Agriculture
Private land 0.2128 *** 0.0271 -0.3058 *** 0.0132 0.0930 *** 0.0232
Policies 1998*Private land -0.1332 *** 0.0164 0.0071 0.0124 0.1261 *** 0.0108
Policies 2007*Private land 0.1417 *** 0.0344 -0.0161 0.0206 -0.1256 *** 0.0261
log(distance from M anjimup) 0.0357 *** 0.0090 -0.0332 *** 0.0068 -0.0025 0.0058
log(distance from Kojonup) -0.0473 * 0.0199 -0.0349 * 0.0153 0.0822 *** 0.0129
Phosphorus 0-5 cm -6.9018 *** 1.4223 4.3034 *** 1.0803 2.5984 ** 0.8274
Organic carbon 0-5 cm 0.0036 0.0054 -0.0136 ** 0.0043 0.0100 *** 0.0030
Nitrogen 5-15cm 2.9188 *** 0.2207 -1.3715 *** 0.1673 -1.5473 *** 0.1335
Phosphorus 100-200cm 24.1830 *** 3.5321 -16.9471 *** 2.6655 -7.2360 *** 2.0763
Organic carbon 100-200cm -1.1413 *** 0.1558 1.1888 *** 0.1145 -0.0475 0.0939
Nitrogen 100-200cm -1.3384 2.1212 0.1493 1.5718 1.1890 1.2939
Slope 0.0030 ** 0.0010 -0.0025 ** 0.0008 -0.0006 0.0006
log(time last classification) 0.1058 *** 0.0300 0.0085 0.0170 -0.1143 *** 0.0237
Spatial lag Agriculture 0.1759 *** 0.0265 -0.1597 *** 0.0200 -0.0162 0.0159
Spatial lag Plantation -0.1920 *** 0.0529 -0.0535 0.0414 0.2455 *** 0.0232
Initial Land Use Native Forest
Private land 0.1119 *** 0.0052 -0.1518 *** 0.0080 0.0399 *** 0.0044
Policies 1998*Private land -0.0101 * 0.0048 -0.0120 0.0075 0.0221 *** 0.0021
Policies 2007*Private land 0.0135 0.0082 0.0079 0.0092 -0.0214 *** 0.0048
log(distance from M anjimup) 0.0129 *** 0.0026 -0.0149 *** 0.0032 0.0021 0.0011
log(distance from Kojonup) 0.0086 0.0059 -0.0260 *** 0.0079 0.0174 *** 0.0026
Phosphorus 0-5 cm -1.8025 *** 0.4215 1.6617 *** 0.5044 0.1408 0.1630
Organic carbon 0-5 cm 0.0046 ** 0.0017 -0.0075 *** 0.0021 0.0028 *** 0.0006
Nitrogen 5-15cm 0.6163 *** 0.0649 -0.4423 *** 0.0897 -0.1741 *** 0.0264
Phosphorus 100-200cm 6.9239 *** 1.0404 -6.9078 *** 1.2636 -0.0160 0.4072
Organic carbon 100-200cm -0.4534 *** 0.0448 0.5520 *** 0.0592 -0.0986 *** 0.0182
Nitrogen 100-200cm -0.1265 0.6142 -0.0758 0.7266 0.2023 0.2518
Slope 0.0010 ** 0.0003 -0.0011 ** 0.0004 0.0001 0.0001
log(time last classification) 0.0034 0.0068 0.0178 * 0.0075 -0.0212 *** 0.0043
Spatial lag Agriculture 0.0622 *** 0.0078 -0.0714 *** 0.0098 0.0092 ** 0.0031
Spatial lag Plantation 0.0062 0.0162 -0.0544 ** 0.0209 0.0482 *** 0.0046
Initial Land Use Plantation Forest
Private land -0.0186 0.0467 -0.7388 *** 0.0660 0.7574 *** 0.1136
Policies 1998*Private land -0.2516 *** 0.0235 -0.3204 *** 0.0354 0.5720 *** 0.0526
Policies 2007*Private land 0.2556 *** 0.0535 0.3049 *** 0.0742 -0.5605 *** 0.1215
log(distance from M anjimup) 0.0227 0.0120 -0.0471 * 0.0184 0.0244 0.0273
log(distance from Kojonup) -0.1428 *** 0.0272 -0.2728 *** 0.0421 0.4155 *** 0.0622
Phosphorus 0-5 cm -7.4190 *** 1.7761 0.1066 2.6728 7.3124 3.8862
Organic carbon 0-5 cm -0.0124 0.0066 -0.0484 *** 0.0102 0.0608 *** 0.0143
Nitrogen 5-15cm 3.7780 *** 0.2875 1.8599 *** 0.4464 -5.6379 *** 0.6495
Phosphorus 100-200cm 23.3265 *** 4.4507 -8.3111 6.6693 -15.0154 9.7546
Organic carbon 100-200cm -0.5453 ** 0.2029 2.0448 *** 0.2945 -1.4994 *** 0.4433
Nitrogen 100-200cm -2.4172 2.7497 -2.8899 4.0704 5.3071 6.0431
Slope 0.0024 0.0013 -0.0025 0.0020 0.0001 0.0029
log(time last classification) 0.2201 *** 0.0484 0.3147 *** 0.0664 -0.5348 *** 0.1105
Spatial lag Agriculture 0.1176 *** 0.0339 -0.2151 *** 0.0512 0.0974 0.0754
Spatial lag Plantation -0.4537 *** 0.0571 -0.7328 *** 0.0814 1.1866 *** 0.1078
* Significant at 5%, ** Significant at 1%, and *** Significant at 0.1%
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The estimated marginal effects revealed that the probability of conversion from
agriculture (P < 0.001) or native forest (P < 0.001) to plantation forest, or the retention in
plantation forest (P < 0.001), is greatest for those parcels located near Kojonup. These
probabilities decrease with proximity to Manjimup. Conversely, the probability of
transition from native forest to agriculture (P < 0.001), or retention in agriculture (P <
0.001) increases with proximity to Manjimup. Any conversion to native forest is
negatively related to the proximity to urban centres. These statistically significant effects
support the von Thünen model of rural development concentrated around urban centres.
Ricardian land rent theory is also supported by the data, with soil characteristics found to
significantly influence the probability of transitioning from one land use to another.
Parcels with high levels of nitrogen in the topsoil layer (5-15cm) were correlated with a
high probability of remaining in or transitioning to agriculture (P < 0.001); and negative ly
correlated with transitions to plantation forest (P < 0.001). By contrast, phosphorus (P <
0.01) and organic carbon (P < 0.001) in the topsoil (0-5cm) was positively and
significantly correlated with the transition from agriculture to plantation forest, and
negatively correlated to transitions from plantation forest to agriculture (Phosphorus P <
0.001). More specifically topsoils with high organic carbon (0-5cm) were more likely to
be managed for agriculture instead of native forest. Organic carbon at greater depth (100-
200cm) is associated with the presence of native forest (P < 0.001) due to deeper root
profile. Phosphorus at greater depth is positively related only to the conversion from any
LULC to agriculture (P <0.001). Slope is another parcel attribute with an influence on
LULC transitions; transitions to agriculture occur more frequently on higher sloped land
than compared to native forest (P <0.01).
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Spatial dependence is also captured in the model, with the probability of transitio ning
from agriculture to plantation forest (P <0.001) greater when more Eucalyptus plantatio ns
are present within a 3 km radius. Similarly, a return to agriculture from plantation forest
(P <0.001) is more likely when agriculture predominates in the local landscape.
Land tenure has significant implications for LULC change in the WRC, with transition to
agriculture (P <0.001) or to plantation forest (P <0.001) more likely on private land, while
transition to native forest or staying in native forest is more likely on public land. As MIS
policies only apply to private land, the interaction between policy and land tenure was
explicitly modelled. Policies 1998 and private land was correlated with an increased
probability of transition to plantation forest from agriculture (P <0.001). This result
indicates that federal initiatives including the associated changes in tax rules (PRS and
TR 2000/8) has encouraged the expansion of plantation forest on private land within
WRC (Figure 4.4). In contrast, the transition rate from agriculture to plantation forest (P
<0.001) slowed following the major review of the taxation benefits associated with the
MIS (represented by the Policies 2007 variable). Moreover, the return of plantation forest
to broad-acre agriculture has also increased (P <0.001).
The time since last classification date was included to control for the unevenly spaced
time periods between different image captures. This variable was negatively correlated
with transitions towards plantation forest (P <0.001), accounting in part for the low
transition rate of the first period between image captures (13 years, 1979-1992). Despite
that, some land uses such as native forest remained stable over time; while others such as
plantation forest presented a higher rate of transition in a specific timeframe (i.e., 1992-
2003), with increased plantations depend somewhat on the previously cleared agricultura l
areas.
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Figure 4.4. Map of LULC showing the expansion of plantation forest from 1992 to 2014.
4.6. DISCUSSION
The development of agricultural land use began around 1925 as part of postwar
rehabilitation GSS with the clearing of the Wilgarup, Dombakup and Lefroy sub-
catchments (Munro 2006). Since then, dairy farms, fruit and vegetable horticulture was
widespread developed near Manjimup, thus explaining the positive relationship between
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this town and agriculture. In the 1950s following WSLSS a further increase in conversion
to agriculture was observed in the catchment on already cleared areas that were
considered to be suitable for those activities. Although the WSLSS aimed to settle new
farms on existing cleared land (Field 1963), an extensive removal of native vegetation
occurred in the upper catchment at that time, resulting in an increasing in river salinity
(Munro 2006).
Therefore, the areas in the north-east of the catchment, near Kojonup, represent a portion
of the landscape which has experienced the most landscape change since 1979,
specifically the conversion from agriculture to plantation forest. However, timber is
Manjimup’s major industry, as the rainfall near Manjimup better supports karri and jarrah
forests. The determinants of conversion model such as distance to the next town reinforce
evidence of von Thunen’s model, showing especially that new development such as
agriculture or plantation forest is more likely to locate close to urban places rather than
far away.
Plantation forest development was largely driven by government policies in the
catchment, with a rapid expansion following the MIS introduction in the late 1990s, and
subsequent stagnation with the policy changes in the late 2000s. The intentions of the tax
incentives have not achieved its purpose over the long term. Investors have been avoiding
investments in MIS since the late 2000s, in response to the considerable changes to the
structuring of the tax incentives over time (Brown, Trusler and Davis 2010; Summers et
al. 2015). Following the legislative changes of 2007 investments in MIS industry
decreased from approximately AU $1.2 billion in 2006 (The Treasury 2008) to AU $300
million in 2009, and in 2010 fell further to below AU $100 million (NewForests 2015).
Significantly, the uncertainty about the economic viability of tree plantations in Australia
127
contributed in part to the financial collapse in the last decade of at least five high-profile
agribusiness companies operating in Australia: Environinvest Ltd., FEA Plantations Ltd.,
Great Southern Group Ltd., Rewards Projects Ltd., and Timbercorp Ltd. (Thompson
2010). Since then, there has been only a small number of forestry MIS offered to
investors.
Consequently, the area of plantation forest in the catchment decreased in 2014 for the first
time since the introduction of the tax inducements for MIS investments, leading to an
increase in broad-acre agricultural areas formerly under plantation forest. This result is
consistent with the simulation of future LULC changes in the WRC proposed earlier (see
3.4.3. Future Prediction Using Multilayer Perceptron CA-Markov Model), with the
findings highlighting that Eucalyptus plantation areas will tend to decrease by 2025; while
agricultural areas may increase slightly with the reconversion of plantation forests to
agriculture. This concern extends to the whole Western Australia as regrettably some
plantations were not ideally located which lead to lower financial returns, and the likely
conversion of these unviable plantations to other land uses (Forest Industries Federation
2015).
This potential decrease in plantation area may impact not only timber production, but may
also threats the long-term efforts to decrease river salinity by 2030 to the State Salinity
Strategy’s desired potable standard (i.e., 500mg/L TDS). As already emphasised by
Bryan & Crossman (2013), failure to understand the interactions between tax incentives
and their impact across ecosystem services can result in inefficient policy outcomes, such
as are presented in this study. Our results highlighted the power of financial incentive
interventions for changing the landscape and confirmed our hypothesis that in the absence
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or reduction of government inducements, forestry MIS would no longer be a profitable
‘business’ for investors, resulting in a decreasing of plantation areas.
Plantation forest as a mitigation strategy, when spatially targeted, can have a positive
impact on water resources (Bustamante et al. 2014). This co-benefit was also identified
by Townsend et al. (2012) who showed that reforestation could result in the restoration
of water quality in the WRC. Despite the economic benefits, there are at least three
justifications for incorporating plantations in the Australian landscape (climate change
mitigation, salinity abatement, and biodiversity conservation), however, currently these
issues are all considered separately (George et al. 2012). In the Warren River Catchment
the co-benefits generated by plantation investment incentives was neglected, and not
explicitly defined in the legislation. According to Plantinga & Wu (2003) multi-tar get
policies are more efficient than ones that target single benefits.
The consequences of basing policy on temporary incentives can clearly be seen in the
short-term increase in plantation forest within the WRC, followed by the collapse of two
of the largest MIS companies operating in Western Australia (Timbercorp Limited and
Great Southern Group Limited) when those tax incentives were partly removed through
an unanticipated change in the tax legislation. Notwithstanding, Lacey et al., (2006)
reported that most MIS sector continues to perform poorly with respect to realistic rates
of returns versus projected rates. This situation raises a crucial question why policies to
increase sustainable timber production and environmental co-benefits remain largely
unfulfilled despite large-scale government intervention. In fact, the financial collapse of
those MIS companies reflects the well-known issues of using temporary tax benefits to
fund an industry (NewForests 2015; Ajani 2008).
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This study demonstrates how policy incentives impacting on LULC change can be
assessed with freely available remotely sensed data (e.g., United States Geological Survey
– USGS), and a range of open-source software (e.g., Quantum GIS). Moreover,
throughout the implementation of the MIS tax incentives, limited periodic assessment of
policy outcomes (e.g., timber production or co-benefits at catchment level) was
undertaken to assess program success, or whether tax changes were appropriate in
achieving long-term benefits.
One of the policy requirement underlined in our findings is that the outcomes of a policy
need to be assessed so that the policy or strategy measures can be adjusted to achieve the
policy objectives (i.e., sustainable timber production). Appropriate knowledge of the
historical drivers of LULC changes is essential because there are public policies that do
influence LULC decisions. A direction for future research is to evaluate policies that
target multiple benefits such as carbon sequestration and water quality. The governme nt
should take action towards more generous taxation breaks to encourage a multi-tar get
strategy and so avoid the decrease of plantation forest areas. To date, those environme nta l
co-benefits generated by plantations are not valued by most landowners as they do not
contribute to their revenue. Despite that, investors in plantation take the risk of investing
in a product that generates profits at mid to long term after the initial investment. In this
sense, agriculture can generally be seen as a more profitable farming system, with
potential annual production cycles and cash-flow.
However, agriculture is the main cause of the environmental degradation and saliniza tio n
of water resources. Therefore, the costs related to environmental degradation should be
borne by the agricultural sector, rather than transferred on to others including taxpayers.
In order to effectively design reliable land use policy that embraces more environmenta lly
130
friendly practices (i.e., multi-purpose plantation programs), causes of past land use
decision in response to policy initiative needs to be understood.
4.7. CONCLUSION
The introduction of The Managed Investments Act 1998 and The 2020 Vision, combined
with the associated benefits in taxation rules, has encouraged the expansion of Eucalyptus
plantations in private properties between the late 1990s and mid-2000s. Consequently,
those concessions promoted the expansion of Western Australia’s plantation forest and
reduced reliance on both native forests and imported timber. However, the change in tax
deduction caused uncertainty over the future tax treatment for MIS, discouraging the
investments in forestry schemes by the late 2000s.
The collapse of the two largest operators of agribusiness schemes in Western Australia
(Timbercorp Limited and Great Southern Limited) suggested that the MIS were never
entirely safe, long-term investments. In hindsight, these MIS were doomed to failure as
the investors were not driven by returns, but by up-front tax deductions in year one of the
investment. Profitable harvesting of the plantations a few years later would, in essence,
simply provide a windfall to the investor. Our results show the extent to which those
policies and associated tax inducements can impact LULC patterns, and also suggest that
tax-effective schemes should not merely be framed to attract people into an industry, but
be grounded in sound market principles to avoid failure. Pannell (2008) recommended
that incentives will be more effective if, once adopted, the practice will be able to mainta in
itself, otherwise it will inevitably be disadopted. Further, land use policies driven by
mitigation concerns should target multiple benefits (e.g. environmental, commercial and
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community values), to support efficient use of land resources. A thorough understanding
of how different factors influence LULC patterns across space and time should be
considered as a crucial component in the assessment of successful policy outcomes for
both environmental and land use policy design.
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Chapter 5. Conclusions
5. CONCLUSIONS
5.1. OVERVIEW
Land Use and Land Cover changes are influenced by a variety of natural and
anthropogenic processes and can generate significant economic, social and environme nta l
impacts that may become the foci of a wide range of policy issues. There has been much
debate in Australia recently over the merits of tax incentive policies to support the
plantation forest industry. While this land use has been recognised as an important
component of Australia’s economy by supplying forest products, as well as by potentially
helping to solve critical issues in natural resource management for example dryland
salinity, there has been some controversy surrounding the efficiency of the taxation
system for forestry Managed Investment Schemes (MIS).
Within an evidence-based framework to land-use policy development the design of
efficient management policies requires knowledge of the drivers of land use changes. In
turn, the impact of policy reforms on land use change can only be unpacked if the
consequent land use change is monitored. Such up-to-date and accurate information about
the expansion of plantation forest in the south-west of Western Australia is limited,
despite a strong emphasis on conservation and sustainable land use planning in the region.
The analysis of remote sensing imagery presents a viable approach to developing a better
understanding of the history and dynamics of a changing landscape in response to
policies. Developing methods to analyse these data and extract relevant information is,
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therefore, a fundamental step in supporting policy-makers and researchers to design more
targeted land use policies.
From this perspective, the overall objective of this thesis was to increase our
understanding of the historical landscape changes in the Warren River Catchment (WRC)
in Western Australia, and so identify the physical and political forces that drive those
changes. This thesis addressed questions about the nature of these land use changes by
integrating remote sensing, geographical information system, machine learning
algorithms and econometrics. As such, the key research findings and policy implicatio ns
specific to each research questions are presented concisely below, followed by an
overview of the research contribution and overall significance of the thesis. We close this
dissertation with an evaluation of the limitations of our study and suggestions for future
research.
5.2. RESEARCH F INDINGS
5.2.1. Research Question 1
Which classifier exhibits better learning rates for discriminating spectrally similar
classes of a time-series of Landsat imagery? (That is, between plantation forest and native
forest).
Key Research Findings
This first research question is addressed in Chapter 2. Six LULC classes were classified :
agriculture, water, native forest, sand dunes, plantation forest, and harvested native forest.
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Distinct forest types including plantations and native forest are often classified as one
broad class, leading to an underestimate of commercial plantation trees. The comparison
among three MLAs namely, SVM, RF and CART, suggested that SVMs were more able
to distinguish between spectrally similar but ecologically distinct classes, such as native
forest and plantation forest, when using Landsat time-series imagery.
An important innovation in this study was the development of a consistent and accurate
method for distinguishing plantation forest from the native forest in Western Australia.
The combination of SVM classifier, four bands held in common between the four Landsat
Sensors (MSS 1979; TM 1992; ETM+ 2003; OLI 2014), and PCA of texture features
allowed a consistent procedure to be applied in the historical reconstruction of the extent
of plantations and native forest. Further, the method applied here is sufficiently general
to have potential application to similar LULC classification scenarios elsewhere. This
approach is suitable not only for identification of new forest plantation areas, but also for
calculating their life span through ongoing monitoring. Besides that, previous estimates
of landscape change in the catchment came from different sources and were usually
applied to a single moment in time. These estimates might, therefore, be inconsistent as
they were derived from different classification schemes and image processing methods
through time. The results presented here consistently show that regardless of the spectral
similarity between both Eucalypt forests (i.e., plantation and native), they can be
successfully classified using SVMs, and should therefore not be oversimplified into one
broad forest class during classification.
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Policy Implications
The major policy benefit of this study is the development of an acceptably robust method
to separate Eucalypt dominated plantation forests from adjacent Eucalypt native forest
across the landscape and through time. This allows the distribution of plantation forests
throughout the landscape to be tracked through time in response to policy innovations, as
a key component in delivering evidence-based policy concerning sustainable timber and
conservation management. For example, correctly classyfing plantation forest as one of
the major land uses associated with the tax subsidy schemes in Western Australia (e.g.,
tThe 2020 Vision) provides an understanding of the role of plantation forest development
in combatting a variety of environmental issues such as salinity mitigation, soil erosion,
and carbon sequestration. Both plantation and native forest types deliver distinct
economic and ecological benefits, and thus should be considered separately during
classification for the effective design of more targeted policy.
What are the main changes in LULC that have occurred since 1979? (That is, since the
start of the Landsat record).
Chapter 3 describes the trajectory of landscape changes in the catchment from 1979 to
2014. Empirical evidence shows that no major clearing of native forest was identified in
the WRC since 1979. By contrast, an in-depth analysis of the transition matrix revealed
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that the most dominant LULC change was the conversion of agriculture to plantatio n
forest, especially after the late 1990s. Plantation forest areas had grown from 0.44% in
1992 to 4.36% in 2014. These plantation forests were mostly centred on the upper north-
east of the catchment associated with greater rates of dryland salinity.
Broad-acre agriculture had consequently declined from 30% in 1979 to 25% in 2014. The
extent of harvested native forest has been maintained, increasing marginally from 0.7%
in 1979 to 0.9% in 2014. So far as we are aware, this analysis provides the most up-to-
date and detailed historical information of LULC change in the Warren River Catchment
Policy Implications
The key result is that the total area of cleared land for agriculture has decreased over time.
The Country Areas Water Supply Act 1947 has been in place in the WRC since 1978, and
so far has been effective in preventing further wide-spread clearing of native vegetation.
Improving our knowledge of this Act is of interest to researchers and policy-makers
concerned with the effectiveness of public policies, including any unanticipated indirect
benefits.
One of the main constraints faced by policy-makers is a lack of reliable information on
plantation forest development. The historical LULC changes estimated in this thesis
sought to fill this information gap. The historical reconstruction of LULC change can be
referenced when designing new policy instruments. Further, the spatial pattern of
plantation development have largely been consistent with the State Salinity Strategy,
which recommends commercial plantation forest in already cleared areas as a key
management option in reducing the salinity level of the region’s water resources. Our
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analysis of landscape change in the WRC is a step towards addressing a place-based
insight into economic and environmental changes.
Given the current policy scenario, what is the likely future of plantation forest?
One of the main findings outlined in the Chapter 3 is the substantial reduction of
plantation forest areas forecasted for 2025 if the current trend of land use change is
maintained. Despite all government efforts to increase the areas of Eucalyptus
plantations, the model predicted growth of agricultural areas due to the ongoing
harvesting rates of existing plantation forest and a reduction in establishment rate of new
plantation forest. By 2025, plantation forest is predicted to have its smallest extent since
the introduction of government tax incentives for forestry in the 1990s. This reduction is
most likely related to the reformulations of the tax incentives supporting MIS in the late
2000s. The method presented here to predict future land use change trends shows that an
integrated approach combining Markov transition probabilities, Multilayer Perceptron
and Cellular Automata produced satisfactory results, based on Kappa statistics (Kappa
coefficient of 72% and Kappa location of 74%) for predicting LULC changes in the
catchment.
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Policy Implications
The findings of this chapter contribute to policy in two ways. Firstly, the estimates of
plantation forest areas allow researchers and policy-makers to better anticipate the likely
landscape change given the current policy scenario. In particular, this analysis provides
the first estimate of the future extent of plantation forest within the catchment. The
simulated results reveal that there will be a decline of plantations which will likely affect
Western Australia’s timber production. This decline will in turn threaten efforts to reduce
annual average water salinity over the long-term. So far, the government forecast of an
ongoing increase in plantation forest looks to be overly optimistic, and out of date.
Secondly, the lack of reliable information on tax incentives and their associated risks is
likely to constrain investments in MIS forestry within the catchment. Current forestry
MIS policy may be failing due to a focus on an allowance for tax minimisation, rather
than on realistic or actual rates of return. Regrettably, some plantations were poorly sited
in terms of climate and soil and/or poorly maintained, leading to an overestimate of the
rate of return. Further, high upfront costs combined with high opportunity costs due to
long time to reach investment maturity following harvest makes investment in long
rotation plantations economically challenging for many investors. Thus, our findings also
imply that forestry MIS will likely be doomed to fail if changes to the current policy
scenario do not take place. For instance, to prevent large areas of Eucalyptus plantatio ns
being reconverted to agriculture, the government could apply credits to the carbon
captured by these plantation forests. There is thus an urgent need to create economic
incentives to secure the benefits of plantations. Furthermore, the results highlight the
necessity of governmental and non-governmental organisation to be highly cautious when
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relying on tax inducements to design sustainable management strategies, if in part due to
the ease with which those inducements can be withdrawn from the market.
What were the main drivers of LULC change over the past 35 years (i.e., 1979-2014)?
The MNL model presented in Chapter 4 reveals the main spatial determinants of LULC
changes in the catchment with the five major findings being: (1) biophysical land
attributes such as phosphorus and soil organic carbon in the topsoil layer (0-5cm)
influenced the transition to plantation forest, thus supporting the Ricardo land rent theory;
(2) the probability of conversion to agriculture or plantation forest is strongest for those
parcels located close to urban places, thereby reinforcing evidence for von Thunen’s
model; (3) a parcel of private land is more likely to be used for either plantatio n forest or
agriculture rather than for native forest; (4) the interaction between private land and the
introduction of the tax benefits for forestry MIS contributed significantly to the
development of Eucalyptus plantations in the catchment; (5) however, the revision of tax
deductibility for MIS investments was negatively associated to the conversion to and
retention of plantation forest areas.
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Policy Implications
The MNL model suggests that the rapid expansion, and subsequent stagnation of
plantation forest development was largely driven by land use policies in the catchment.
This finding underlines the important consequence of basing policy on temporary
incentives, namely when the rapid increase in plantation forest reversed to a decline
following the reduction in the associated tax incentive through sudden governme nt
reforms. This implication stems from: the results of the MNL model; the historica l
analysis of LULC changes which show that plantations are currently at a standstill in the
WRC; the predicted decline in plantation forest with modelling of the current rates of
LULC transition out to 2025; and, with no establishment of significant area of new
plantations having been documented since 2010.
Significantly, it does not appear that without tax incentives the current set of policies that
are in place will adequately meet policy targets for water quality, timber production and
indeed carbon sequestration. Presently, land use policies directed at plantation forest
development rely on the commercial benefit of plantations to sustain investment, and do
not have a provision for plantation owners to capture environmental and social co-benefits
to sustain this land use.
There is then a need to consider new strategies, such as focusing on potential co-benefits
associated with plantations (e.g., and mitigation of global climate change, dryland salinity
reduction, and biodiversity conservation), to attract investors into multi-purpose
plantation programs. These new strategies should strongly consider taxation reform,
given the rapid increase in plantation extent as a response to the tax incentive schemes of
the late 1990s.
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Industry also needs to be involved to ensure the design of a consistent policy, that reduces
the risk of unintended societal and environmental impacts, while supporting the continued
investment in long rotation plantations, given forestry MISs have been a contentious area
of investment, In all, the results presented in this chapter may assist policy makers in
developing policies that are more effectively targeted at sustaining development of long-
term, while embracing more environmentally friendly land use practices.
What is the role of government policy incentives in the establishment of plantation forest?
A sequence of events led to the expansion of eucalyptus plantations in the catchment.
There is no doubt that plantations underwent a boom because of an agribusiness scheme
market (Managed Investment Schemes - MIS), which turned plantations into tax-effective
investments (following the findings in Chapters 3 and 4). By the late 1990s the spread of
plantation forest, especially of Tasmanian Bluegums, across previously cleared
agricultural lands was spurred by the MIA 1998 and The 2020 Vision. Furthermore, the
income tax subsidies afforded by the Income Tax Assessment Act of 1997 and Product
Ruling System of 1998 also supported the MIS sector by being aligned with the intent of
The 2020 Vision and MIA 1998. Overall, the tax incentives resulted in the rapid
establishment of plantation forests across a remarkably wide region of Australia.
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However, over the past decade, the taxation laws governing MIS operations have been
subjected to successive changes by the government. These changes have affected the tax
deductibility of plantation establishment costs (e.g., Taxation Ruling TR2007). Thus, a
notable decrease of investments in forestry was observed due to an increase of uncertainty
among MIS investors. This reduced level of investment constitutes a significant risk to
the fulfilment of The 2020 Vision, and for the future domestic supply of high value, long
rotation timber products. It is clear from the evidence presented that many of the current
plantations have, or will, revert to broad-acre agriculture. Overall, it seems that the rate
of development of forest MIS would have been considerably slower without the
substantial role of the Australian government in promoting and incentivising the growth
of the plantation industry.
Policy Implications
From an efficiency point of view, sustainable land use policies at the catchment and local
levels should involve a systematic analysis of investment options to encourage the
adoption and persistence of preferred land use. Indeed, the Warren River Catchment
exemplifies how unrealistic national policies and legislation, such as The 2020 Vision
and associated tax changes, have been in achieving the proposed local land-use and water
quality objectives. For instance, the State Salinity Strategy for the Warren relies heavily
on commercial plantation forest to reduce water salinity. However, plantations have
generated little worthwhile improvement in salinity mitigation within the catchment and
will have little lasting benefit insofar as the intention of the tax incentives to promote
plantations will not be achieved over the long term.
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If the government is intent on avoiding the decline in the area of long rotation plantatio n
then it needs to take action towards improving the MIS taxation arrangement. Moreover,
land-use policies should be revised urgently for the desired external benefits from
growing plantations to be realised. To date, the full range of co-benefits generated by
reforestation (e.g., carbon sequestration) is not explicitly defined in the relevant polic ies
(i.e., The 2020 Vision, and MIA 1998). It is then no surprise that these co-benefits remain
largely unvalued by the landholder as the co-benefits usually does not contribute to direct
cash-flow. For instance, landowners should be compensated for not clear-felling
plantation forestry especially where hydrological modelling indicates a potential adverse
effect on water salinity. The Commonwealth’s approach to plantation and water has
discussed multiple benefits of plantation. However, the National Water Initiative for
carbon plantation cut programs that intend to use reforestation for catchment water quality
improvement because of the negative impact in eastern Australia.
The potential effects in the landscape of land use policy innovations should always be
assessed as part of an evidence-based framework. This approach enables policy or
strategy measures to be adjusted to achieve a given policy goal (e.g., mitigation of dryland
salinity), by observing the landscape scale response to the policy measure as it evolves
over time. Furthermore, the forestry MIS needs to have a sound reputation as a feasible
investment to incentivise plantation adoption and persistence. A range of factors
contribute to the high risk associated with investing in MIS supported forestry when
compared to other non-forestry agribusiness. These factors include: the long wait before
returns are realised following plantation establishment; high upfront establishment costs;
a relatively low return compared to other industries; the volatility of commodity markets;
and, uncertainty about tax deductibility. While it is critical to address the economics of
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plantation forestry in future land use policies, so that plantation investments become more
viable, government institutions need to also target the multiple co-benefits that are
potentially available (e.g., water quality), and to align that policy with the aspirations of
the local community within which those future investments are to take place.
5.3. STUDY LIMITATIONS AND FUTURE RESEARCH DIRECTIONS
The methodological limitations of this study may feasibly be improved upon in future.
Firstly, the classification accuracy of the remote sensing component of this study may
readily be improved by sourcing high-resolution and/or hyperspectral multi-tempo ra l
images. Such imagery are critical to providing better discrimination of the spectrally
similar classes namely plantation forest and native forest. These data are not
retrospectively available for the study period starting in 1979, and so we applied the
Landsat family of moderate resolution sensors as the most consistent archive of historica l
imagery available. Despite this limitation in image resolution, we were able to generate
satisfactory results from the Landsat data, as described in Chapter 2. However, the future
monitoring of land-use change in response to policy innovations will benefit from the
application of the higher spatial and spectral resolution of the remotely sensed data now
available. This high-resolution imagery will also help in targeting policy to the local
context considering high discrimination will likely result. For example, different species
of forest trees within the native forest estate can potentially be identified, and related to a
set of ecological functions such as estimating the amount of carbon sequestered in the
catchment based on different native forest types.
150
Precise and up-to-date information concerning the forest estate is really the only gateway
to improving our understanding of the causes underpinning the historical response of the
forest estate to economic, climatic and policy factors. Equipping government and non-
government organisations with this understanding enables a clearer identification of
potential land-use and ecological problems, and of the solutions required to address those
problems. The insight from this study identifies few limitations, and suggests a number
of future research priorities to further improve the effectiveness of land use policies.
In Chapter 3 we simulated the likely future extent of plantations under the current policy
settings. Further, in Chapter 4 we identified the main drivers of landscape change. More
may be done to support this evidence chain, such as the inclusion of a survey to explore
the specific socio-economic causes driving the land use change. These survey results may
be integrated into predicting the likely outcomes of alternative policy scenarios and
enable a better picture to be built of local community aspirations. The key reason for not
developing a survey instrument was the budgetary constraint of this study. This limita tio n
was partially addressed by utilising Government provided data, such as policies and land
tenure. Importantly, how the development of large-scale plantation forest impacts rural
communities should be addressed in future research. Such research would assist in
preserving pre-existing social, environmental and economic values by which rural
communities have historically operated within the catchment.
The third limitation of this research lies with the choice of policies that may be driving
plantation development, and the lack of a comprehensive policy brief. Over the past 20
years the forestry sector has been subjected to various government interventions, as
summarised in the Chapter 4. We concluded that the two main policies driving plantatio n
industry were the tax-effective Management Investment Schemes in support of The 2020
151
Vision (Plantations for Australia). It would have been more useful if we could have
developed a more detailed historical analysis of policy decisions, and so simulate several
land use patterns according to different policies to reveal the implication of possible
policies. We acknowledge that a well-designed historical policy brief would contribute to
improving policy and decision-making process, while also distil lessons learned from this
research. Future research should therefore address this issue to ensure that the past
mistakes are taken into account and used in the development of a new policy.
One further research priority would be to develop a hedonic pricing model to explain
farmland characteristics and landholders’ preferences in the adoption and relinquishme nt
of plantations. The inclusion of historical land prices would help explain the preferences
of landholders among competing land uses, by detailing the commercial and nonmarket
benefits of plantation forestry and other land uses that influence the local community.
Understanding the dynamics of land prices in response to land use decisions, and vice
versa the land use decisions made in response to land prices would further socio-economic
questions, such as whether small and medium businesses family landholders are being
replaced by big companies and corporations, to be addressed. Again, this approach to
understanding historical prices as a driver of land use change due to the cost of the land
price data over and above the study’s budgetary constraint.
Finally, we felt that the policy challenges surrounding plantation forestry are related to
more deeply rooted issues than the profitability of sustaining commercial timber resource.
The expectations that have been placed on plantation forestry have been significant, and
include contributions to biodiversity conservation, carbon emissions and climate
warming, water quality and local community aspirations. Designing better land use
152
policies will require further research to fill this gap by exploring the interactions that exist
between those issues.
153

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THESIS DOCTOR OF PHILOSOPHY NERY DE FIGUEIREDO Thayse 2018

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Understanding the determinants of Land-Use and Land-Cover

change as a basis for conservation management in the Warren

Achieve International Excellence

Thayse Nery de Figueiredo

University of Basel, Switzerland

This thesis is presented for the degree of

The University of Western Australia

School of Agriculture and Environment

design. Under review: International Journal of Remote Sensing 11-Aug-2017. Student

Catchment in Western Australia. Under review: Journal of Environmental Science &

Policy 10-Apr-2018. Student contribution: 80%.

plantation development in the Warren River Catchment of Western Australia. Under

review: Journal of Environmental Management 06-Apr-2018. Student contribution: 80%.

I have the permission of all co-authors to include this work in my thesis.

Coordinating supervisor’s signature:

Thayse Nery de Figueiredo

Perth, August 2018

support to undertake this study.

support also helped a great deal.

program and interaction opportunities. I feel proud to be part of this School.

action plans within the catchment.

I also, and wholeheartedly, acknowledge family support from my beloved mother, my

My mother, Claudia Batista Nery,

My beloved daughter, Amanda Nery Gomig, who has made me stronger,

better and more fulfilled than I could have ever imagined.

south-west of Western Australia which has undergone extensive LULC conversions in

come at a high environmental cost, resulting in biodiversity loss, development of dryland

salinity, and consequent degradation of water quality.

By integrating remote sensing data, geographical information systems, and machine

learning algorithms, we reconstructed the trajectories of landscape changes in the

where they share similar dominant genera.

Mapping and forecasting the expansion or contraction of plantations is critical if we are

harvesting of plantations). Thus, we also predicted the spatial distribution of LULC

In addition to the simulation of landscape changes, we estimate an econometric model of

forestry is vulnerable to policy changes. While the unprecedented expansion of plantatio n

timber benefits such as salinity mitigation.

Statement of Candidate Contribution ................................................................................iii

2. DISCRIMINATING NATIVE AND PLANTATION FORESTS IN A

3. PREDICTING FUTURE PLANTATION FOREST DEVELOPMENT IN

4. POLICY INFLUENCE ON FOREST PLANTATION DEVELOPMENT IN

Table 2.1. Satellite data for the study area. ..................................................................... 35

Table 2.3. Land use classification system....................................................................... 38

Figure 2.2. Flow diagram of pre-processing, processing, classification and evaluatio n

Figure 3.2. Overview of the methodology applied in this study. .................................... 78

AIC Akaike Information Criterion

is anthropogenically driven and includes deforestation through the expansion of

Teeter 2008; Meyer and Turner 1992).

policy implications, including mitigation of dryland salinity, protection of wildlife

Plantations for Australian (The 2020 Vision; Commonwealth of Australia 2002)

exemplifies it well due to its role in promoting an increase in Australia’s plantatio n

and land use policies (Hobbs et al. 2016).

The conversion of the south-western Australian landscape from deep-rooted native

widespread degradation of water quality, but have also contributed to significa nt

understood. Burvill (1979) provides a broad summary of land clearing in south-west of

environmental changes, with the conventional method involving a cross-tabulation matrix

subset of ground-truthed data. A number of recently developed MLAs provide accurate

Importantly, the selection of a suitable classifier is essential to improve upon

However, in spite of the development of MLAs, the classification of spectrally similar

imagery) remains a challenging task (Marcos-Martinez and Baerenklau 2015; Wardlow

(Shang and Chisholm 2014), and therefore should be considered as an essential

component of land use and conservation monitoring and management.

implies a multi-disciplinary approach that integrates the knowledge of biophysical, socio-

gained considerable attention in a number of fields (Paiboonvorachat and Oyana 2011),