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Economic assessment of acquiring water for environmental flows in the Murray Basin

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Author Info

  • M. Ejaz Qureshi
  • Jeff Connor
  • Mac Kirby
  • Mohammed Mainuddin

Abstract

This article is an economic analysis of reallocating River Murray Basin water from agriculture to the environment with and without the possibility of interregional water trade. Acquiring environmental flows as an equal percentage of water allocations from all irrigation regions in the Basin is estimated to reduce returns to irrigation. When the same volume of water is taken from selected low-value regions only, the net revenue reduction is less. In all scenarios considered, net revenue gains from freeing trade are estimated to outweigh the negative revenue effects of reallocating water for environmental flows. The model accounts for how stochastic weather affects market water demand, supply and requirements for environmental flows. Net irrigation revenue is estimated to be 75 million less than the baseline level for a scenario involving reallocating a constant volume of water for the environment in both wet and dry years. For a more realistic scenario involving more water for the environment in wet and less in dry years, estimated net revenue loss is reduced by 48 per cent to 39 million. Finally, the external salinity-related costs of water trading are estimated at around 1 million per annum, a quite modest amount compared to the direct irrigation benefits of trade. Copyright 2007 The Authors Journal compilation 2007 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Ltd .

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File URL: http://hdl.handle.net/10.1111/j.1467-8489.2007.00383.x
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Bibliographic Info

Article provided by Australian Agricultural and Resource Economics Society in its journal Australian Journal of Agricultural and Resource Economics.

Volume (Year): 51 (2007)
Issue (Month): 3 (09)
Pages: 283-303

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Handle: RePEc:bla:ajarec:v:51:y:2007:i:3:p:283-303

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Postal: AARES Central Office Manager, Crawford School of Public Policy, ANU, Canberra ACT 0200
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Cited by:
  1. Asad Falsafi Zadeh, Neda & Sabouhi Sabouni, Mahmood, 2009. "Determination of Optimal Environmental Flow Acquisition in Kor Basin, Doroudzan Dam," 2009 Conference, August 16-22, 2009, Beijing, China 50258, International Association of Agricultural Economists.
  2. Sarah Wheeler & Dustin Garrick & Adam Loch & Henning Bjornlund, 2011. "Incorporating Temporary Trade with the Buy-Back of Water Entitlements inAustralia," Centre for Water Economics, Environment and Policy Papers 1101, Centre for Water Economics, Environment and Policy, Crawford School of Public Policy, The Australian National University.
  3. Chi Truong, 2012. "An Analysis of Storage Capacity Reallocation Impacts on the Irrigation Sector," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 51(1), pages 141-159, January.
  4. Rupert Quentin Grafton & Qiang Jiang, 2011. "Economic effects of water recovery on irrigated agriculture in the Murray‐Darling Basin," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(4), pages 487-499, October.
  5. Jiang, Qiang, 2009. "An agro-economic model to analyse climate change impacts on farmers' income," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 48172, Australian Agricultural and Resource Economics Society.

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