Economic effects of water recovery on irrigated agriculture in the Murray-Darling Basin

In October 2010, the Murray‐Darling Basin Authority (MDBA) proposed that a range of 3000–4000 GL per year, on average, of additional water be made available for the environment in the Murray‐Darling Basin (MDB) to mitigate the effects of what it considers to be inadequate environmental flows. To hel...

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Published inThe Australian journal of agricultural and resource economics Vol. 55; no. 4; pp. 487 - 499
Main Authors Quentin Grafton, Rupert, Jiang, Qiang
Format Journal Article
LanguageEnglish
Published Oxford, UK Blackwell Publishing Ltd 01.10.2011
Subjects
Agricultural economics
Agriculture
Australia
Australia: Economic policy
Competitiveness
Cost minimization
Economic impact analysis
Economic theory
Environmental management
Irrigation
Murray-Darling River system
Murray‐Darling Basin
Profitability
Resource allocation
Studies
Water conservation
Water management
Water markets
water modelling
Water reallocation
water reform
Water resources
Australia
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Summary:In October 2010, the Murray‐Darling Basin Authority (MDBA) proposed that a range of 3000–4000 GL per year, on average, of additional water be made available for the environment in the Murray‐Darling Basin (MDB) to mitigate the effects of what it considers to be inadequate environmental flows. To help quantify the costs of this water reallocation, a hydro‐economic model was constructed based on the 19 regions of the MDB. The model results indicate the following: (i) substantial reductions in surface water extractions of up to 4400 GL per year impose only a moderate reduction on net profits in irrigated agriculture, Basin wide, given competitive water markets, but the effects are much more pronounced in particular regions/catchments and (ii) the costs of the water reallocation are comparable with the amount budgeted by the Australian government to acquire water from willing sellers and increase environmental flows if inter‐regional water trade is unrestricted.
Bibliography:Australian Journal of Agricultural and Resource Economics, v.55, no.4, Oct 2011: (487)-499
Rupert Quentin Grafton (email
quentin.grafton@anu.edu.au
Authorship is alphabetical.
is a Professor of Economics at the Crawford School of Economics and Government, Centre for Water Economics, Environment and Policy (CWEEP) and Chairholder, UNESCO Chair in Water Economics and Transboundary Water Governance, The Australian National University, Acton, Australia. Qiang Jiang is a Doctoral candidate in environmental and resource management at the Australian National University, Acton, Australia.
The authors are grateful to the comments and suggestions of the two reviewers, an Associate Editor, and the assistance provided by Miles Grafton and Matthew Irwin.
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ISSN:1364-985X
1467-8489
DOI:10.1111/j.1467-8489.2011.00545.x