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Economics of Water Recovery in the Murray-Darling Basin, Australia

Author

Listed:
  • R. Quentin Grafton

    (Crawford School of Public Policy, Australian National University, Australian Capital Territory 2601, Australia)

  • Sarah Ann Wheeler

    (Centre for Global Food and Resources, Faculty of Professions, University of Adelaide, Adelaide, South Australia 5001)

Abstract

We review recent water reforms and the consequences of water recovery intended to increase stream flows in the Murray-Darling Basin (MDB), Australia. The MDB provides a natural experiment of water recovery for the environment that includes (a) the voluntary buy-back of water rights from willing sellers and (b) the subsidization of irrigation infrastructure. We find that (a) the actual increase in the volumes of water in terms of stream flows is much less than claimed by the Australian government; (b) subsidies to increase irrigation efficiency have reduced stream and groundwater return flows; (c) buy-backs are much more cost effective than subsidies; (d) many of the gains from water recovery have accrued as private benefits to irrigators; and (e) more than a decade after water recovery began, there is no observable basin-wide relationship between volumes of water recovered and flows at the mouth of the River Murray.

Suggested Citation

  • R. Quentin Grafton & Sarah Ann Wheeler, 2018. "Economics of Water Recovery in the Murray-Darling Basin, Australia," Annual Review of Resource Economics, Annual Reviews, vol. 10(1), pages 487-510, October.
    • Handle: RePEc:anr:reseco:v:10:y:2018:p:487-510
    DOI: 10.1146/annurev-resource-100517-023039
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    Citations

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    Cited by:

    1. Bretreger, David & Yeo, In-Young & Quijano, Juan & Awad, John & Hancock, Greg & Willgoose, Garry, 2019. "Monitoring irrigation water use over paddock scales using climate data and landsat observations," Agricultural Water Management, Elsevier, vol. 221(C), pages 175-191.
    2. Sarah Ann Wheeler, 2022. "Debunking Murray‐Darling Basin water trade myths," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(4), pages 797-821, October.
    3. Neal Hughes & Manannan Donoghoe & Linden Whittle, 2020. "Farm Level Effects of On‐Farm Irrigation Infrastructure Programs in the Southern Murray–Darling Basin," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 53(4), pages 494-516, December.
    4. Ghosh, Sanchari & Willett, Keith D., 2021. "Water Permit Trading for reservoir water under competing demands and downstream flows," 2021 Annual Meeting, August 1-3, Austin, Texas 313858, Agricultural and Applied Economics Association.
    5. Wheeler, Sarah Ann & Marning, Angelika, 2019. "Turning water into wine: Exploring water security perceptions and adaptation behaviour amongst conventional, organic and biodynamic grape growers," Land Use Policy, Elsevier, vol. 82(C), pages 528-537.
    6. Hellegers, Petra & Davidson, Brian & Russ, Jason & Waalewijn, Pieter, 2022. "Irrigation subsidies and their externalities," Agricultural Water Management, Elsevier, vol. 260(C).
    7. Grafton, Rupert Quentin, 2019. "Policy review of water reform in the Murray– Darling Basin, Australia: the “do’s” and “do’nots”," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(1), January.
    8. Jordán, Cristian & Speelman, Stijn, 2020. "On-farm adoption of irrigation technologies in two irrigated valleys in Central Chile: The effect of relative abundance of water resources," Agricultural Water Management, Elsevier, vol. 236(C).
    9. Zuo, Alec & Qiu, Feng & Wheeler, Sarah Ann, 2019. "Examining volatility dynamics, spillovers and government water recovery in Murray-Darling Basin water markets," Resource and Energy Economics, Elsevier, vol. 58(C).
    10. Simon de Bonviller & Alec Zuo & Sarah Ann Wheeler, 2019. "Is there evidence of insider trading in Australian water markets?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(2), pages 307-327, April.
    11. Seidl, Constantin & Wheeler, Sarah Ann & Zuo, Alec, 2020. "High turbidity: Water valuation and accounting in the Murray-Darling Basin," Agricultural Water Management, Elsevier, vol. 230(C).
    12. Graham R. Marshall, 2020. "Evaluating Adaptive Efficiency in Environmental Water Recovery: Application of a Framework for Institutional Cost-Effectiveness Analysis," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 6(02), pages 1-28, April.
    13. Colby, Bonnie, 2020. "Acquiring environmental flows: ecological economics of policy development in western U.S," Ecological Economics, Elsevier, vol. 173(C).
    14. Aghaie, Vahid & Alizadeh, Hosein & Afshar, Abbas, 2020. "Agent-Based hydro-economic modelling for analysis of groundwater-based irrigation Water Market mechanisms," Agricultural Water Management, Elsevier, vol. 234(C).
    15. Steve Easton & Sean Pinder, 2022. "Measuring the price of Australian water," Australian Journal of Management, Australian School of Business, vol. 47(1), pages 24-33, February.
    16. Juliane Haensch & Sarah Ann Wheeler & Alec Zuo, 2021. "Explaining permanent and temporary water market trade patterns within local areas in the southern Murray–Darling Basin," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(2), pages 318-348, April.
    17. Gutiérrez-Martín, Carlos & Gómez-Limón, José A. & Montilla-López, Nazaret M., 2020. "Self-financed water bank for resource reallocation to the environment and within the agricultural sector," Ecological Economics, Elsevier, vol. 169(C).
    18. Guy M. Robinson & Bingjie Song, 2023. "Managing Water for Environmental Provision and Horticultural Production in South Australia’s Riverland," Sustainability, MDPI, vol. 15(15), pages 1-20, July.
    19. Nouri, Milad & Homaee, Mehdi & Pereira, Luis S. & Bybordi, Mohammad, 2023. "Water management dilemma in the agricultural sector of Iran: A review focusing on water governance," Agricultural Water Management, Elsevier, vol. 288(C).
    20. Hartwig, Lana D. & Jackson, Sue & Osborne, Natalie, 2020. "Trends in Aboriginal water ownership in New South Wales, Australia: The continuities between colonial and neoliberal forms of dispossession," Land Use Policy, Elsevier, vol. 99(C).
    21. Zuo, Alec & Wheeler, Sarah Ann & Xu, Ying, 2022. "Expanders, diversifiers or downsizers? Identifying clusters of irrigators’ water trade and farm management strategies in Australia," Agricultural Water Management, Elsevier, vol. 264(C).

    More about this item

    Keywords

    irrigation; water buy-back; water markets; water-use efficiency; return flows; Australia;
    All these keywords.

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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