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Rural Water Use and the Environment: The Role of Market Mechanisms

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  • Productivity Commission
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    Abstract

    The Productivity Commission released its final research report into ‘Rural Water Use and the Environment: The Role of Market Mechanisms’ in August 2006. The report indicates that there is scope for markets to play a greater role in improving the efficient use of water, including for environmental purposes. The Commission suggests that governments should give greater recognition to the integrated nature of water resources and use markets to more efficiently allocate water among competing users. Water for environmental purposes can be obtained cost effectively through purchasing a range of water products from willing sellers on the open market, including, but not limited to, water entitlements. This can often be more cost effective than investing in new infrastructure works: Markets can also be used to achieve other environmental goals, such as managing salinity, but need to be targeted to location and scale — no ’one size’ fits all. Unless accounted for, climate change, farm dams, vegetation and land-use change, groundwater extractions or changes in irrigation management have the potential to undermine efforts to achieve environmental goals and affect the reliability of existing entitlements. Governments should press ahead with the National Water Initiative, especially refining and clarifying property rights, undertaking further research on water systems and improving water accounting.

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    File URL: http://www.pc.gov.au/__data/assets/pdf_file/0004/14818/waterstudy.pdf
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    File URL: http://www.pc.gov.au/projects/study/waterstudy/docs/finalreport
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    Bibliographic Info

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    This book is provided by Productivity Commission, Government of Australia in its series Research Reports with number 21 and published in 2006.

    ISBN: 1 74037 207 7
    Handle: RePEc:ris:prodcs:21

    Note: 369 pages
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    Phone: 61 3 9653 2100
    Fax: 61 3 9653 2199
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    Web page: http://www.pc.gov.au/
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    Related research

    Keywords: Agriculture; Drinking water; Environment; Environmental impact; Environmental management; Environmental policy; Environmental protection; Farming; Irrigation; Natural resources; Regulations; Rivers; Renewable resources; Sustainable development; Water; Water conservation; Water management; Water supply;

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    1. Mike Young & Jim McColl, 2003. "Robust Reform: Implementing robust institutional arrangements to achieve efficient water use in Australia," Natural Resource Management Economics 03_003, Policy and Economic Research Unit, CSIRO Land and Water, Adelaide, Australia.
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