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Removing barriers to facilitate efficient water markets in the Murray-Darling Basin of Australia

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  • Qureshi, M. Ejaz
  • Shi, Tian
  • Qureshi, Sumaira E.
  • Proctor, Wendy

Abstract

We discuss the role and characteristics of water markets in Australia in facilitating efficient water allocation. Administrative, regulatory and/or political barriers to effective functioning of water markets are reviewed with a focus on the southern Murray-Darling Basin (MDB) region of Australia. A mathematical model is developed to estimate the costs of existing restrictions and the benefits from potential changes in water markets (e.g., removing barriers in temporary water markets). The modelling results reveal that expanding trade leads to an increase in mean annual net returns from AU $2502 million to AU $2590 million (i.e., an increase of AU $88 million). When the current volume restrictions, exchange rates, and trading charges are accounted for, mean annual net returns reduced from AU $2590 million to AU $2573 million (i.e., a reduction of AU $17 million). The exclusion of any of the three southern MDB states from the interstate water trading imposes significant costs. If South Australia, New South Wales or Victoria withdraws from the water market, net returns are reduced by AU $27 million, AU $31 million and $63 million, respectively. The paper outlines the policy implications of strategies to remove market barriers and to facilitate efficient and effective water trading.

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  • Qureshi, M. Ejaz & Shi, Tian & Qureshi, Sumaira E. & Proctor, Wendy, 2009. "Removing barriers to facilitate efficient water markets in the Murray-Darling Basin of Australia," Agricultural Water Management, Elsevier, vol. 96(11), pages 1641-1651, November.
    • Handle: RePEc:eee:agiwat:v:96:y:2009:i:11:p:1641-1651
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    Cited by:

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    2. Pérez-Blanco, C. D & Standardi, G., 2019. "Farm waters run deep: a coupled positive multi-attribute utility programming and computable general equilibrium model to assess the economy-wide impacts of water buyback," Agricultural Water Management, Elsevier, vol. 213(C), pages 336-351.
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    4. Speelman, Stijn & Veettil, Prakashan Chellattan, 2013. "Heterogeneous preferences for water rights reforms among smallholder irrigators in South Africa," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 2(2), pages 1-19, August.
    5. Iftekhar, M.S. & Tisdell, J.G. & Connor, J.D., 2013. "Effects of competition on environmental water buyback auctions," Agricultural Water Management, Elsevier, vol. 127(C), pages 59-73.
    6. Kirby, Mac & Bark, Rosalind & Connor, Jeff & Qureshi, M. Ejaz & Keyworth, Scott, 2014. "Sustainable irrigation: How did irrigated agriculture in Australia's Murray–Darling Basin adapt in the Millennium Drought?," Agricultural Water Management, Elsevier, vol. 145(C), pages 154-162.
    7. 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.
    8. Pérez-Blanco, C.D. & Gutiérrez-Martín, C., 2017. "Buy me a river: Use of multi-attribute non-linear utility functions to address overcompensation in agricultural water buyback," Agricultural Water Management, Elsevier, vol. 190(C), pages 6-20.
    9. Raffensperger, John F., 2011. "Matching users' rights to available groundwater," Ecological Economics, Elsevier, vol. 70(6), pages 1041-1050, April.
    10. Wheeler, Sarah Ann & Zuo, Alec & Bjornlund, Henning, 2014. "Investigating the delayed on-farm consequences of selling water entitlements in the Murray-Darling Basin," Agricultural Water Management, Elsevier, vol. 145(C), pages 72-82.
    11. Claire Settre & Jeff Connor & Sarah Ann Wheeler, 2017. "Reviewing the Treatment of Uncertainty in Hydro-economic Modeling of the Murray–Darling Basin, Australia," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(03), pages 1-35, July.
    12. Muhammad Ejaz Qureshi & Ram Ranjan & Sumaira Ejaz Qureshi, 2010. "An empirical assessment of the value of irrigation water: the case study of Murrumbidgee catchment ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(1), pages 99-118, January.
    13. Agbola, Frank W. & Evans, Nigel, 2012. "Modelling rice and cotton acreage response in the Murray Darling Basin in Australia," Agricultural Systems, Elsevier, vol. 107(C), pages 74-82.
    14. Min Ge & Fengping Wu & Xiaoping Chen, 2018. "Using Multiple Discriminant Analysis for the Assignment of Initial Water Entitlements at River Basin-Level under the Strictest Water Resources Management System Constraints in China," Sustainability, MDPI, vol. 10(12), pages 1-17, November.
    15. Perez Blanco, C.D., 2018. "Waters run deep: A coupled Revealed Preference and CGE model to assess the economy-wide impacts of agricultural water buyback," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277028, International Association of Agricultural Economists.
    16. Speelman, Stijn & Veettil, Prakashan Chellatan, 2012. "Comparing the scope for irrigation water rights reforms in India and South Africa," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126731, International Association of Agricultural Economists.
    17. Skurray, James H. & Roberts, E.J. & Pannell, David J., 2013. "Hydrological challenges to groundwater trading: lessons from south-west Western Australia," Working Papers 161073, University of Western Australia, School of Agricultural and Resource Economics.
    18. Ejaz Qureshi, M. & Hanjra, Munir A. & Ward, John, 2013. "Impact of water scarcity in Australia on global food security in an era of climate change," Food Policy, Elsevier, vol. 38(C), pages 136-145.
    19. Hang Zheng & Zhongjing Wang & Siyi Hu & Yongping Wei, 2012. "A Comparative Study of the Performance of Public Water Rights Allocation in China," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 26(5), pages 1107-1123, March.
    20. Montilla-López, Nazaret M. & Gómez-Limón, José A. & Gutiérrez-Martín, Carlos, 2018. "Sharing a river: Potential performance of a water bank for reallocating irrigation water," Agricultural Water Management, Elsevier, vol. 200(C), pages 47-59.

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