Price elasticity of water allocations demand in the Goulburn-Murray Irrigation District

Bid prices for the demand and supply of water allocations between 2001 and 2007, and average monthly prices paid for water allocations from 1997 to 2007 in the Goulburn-Murray Irrigation District are analysed to estimate price elasticities. Based on bid prices, the price elasticity of demand for wat...

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Bibliographic Details
Published inThe Australian journal of agricultural and resource economics Vol. 52; no. 1; pp. 37 - 55
Main Authors Wheeler, Sarah, Bjornlund, Henning, Shanahan, Martin, Zuo, Alec
Format Journal Article
LanguageEnglish
Published Melbourne, Australia Melbourne, Australia : Blackwell Publishing Asia 01.03.2008
Blackwell Publishing Asia
Blackwell Publishing Ltd
Subjects
1997-2007
demand elasticities
Econometrics
Economic theory
Economics
Elasticity of demand
Environmental economics
Irrigation
Price elasticity
Prices
Resource management
Statistics
Studies
Supply and demand
Victoria
water allocations demand
water allocations supply
water markets
Water resources
Australia
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Summary:Bid prices for the demand and supply of water allocations between 2001 and 2007, and average monthly prices paid for water allocations from 1997 to 2007 in the Goulburn-Murray Irrigation District are analysed to estimate price elasticities. Based on bid prices, the price elasticity of demand for water allocations appears highly elastic, with elasticities strongly influenced by the season and drought. The price elasticity of supply for water allocations is also elastic, albeit less elastic than demand. Using actual prices paid, water demand is negatively related to price and is inelastic, and appears to be most influenced by demand the previous month, drought and seasonality factors.
Bibliography:http://dx.doi.org/10.1111/j.1467-8489.2008.00416.x
Australian Journal of Agricultural and Resource Economics, v.52, no.1, Mar 2008: 37-55
Sarah Wheeler (email
Henning Bjornlund, Martin Shanahan and Alec Zuo are from the Centre for Regulation and Market Analysis, School of Commerce, University of South Australia, Adelaide. Henning Bjornlund also holds a Canadian Research Chair at the University of Lethbridge, Canada.
The helpful comments of two referees are gratefully acknowledged. Thanks also to Arnab Gupta for his initial analysis of this topic. This research is part of a larger project funded by the Australian Research council and six industry partners: Murray‐Darling Basin Commission, Department of Natural Resources, Department of Sustainability and Environment, Goulburn‐Murray Water, Department of Water, Land and Biodiversity Conservation and UpMarket Software Services.
sarah.wheeler@unisa.edu.au
ISSN:1364-985X
1467-8489
DOI:10.1111/j.1467-8489.2008.00416.x