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Modelling the Australian government's buyback scheme with a dynamic multi-regional CGE model

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  • Peter B. Dixon
  • Maureen T. Rimmer
  • Glyn Wittwer

Abstract

TERM-H2O is a dynamic, multi-regional computable general equilibrium model of the Australian economy with agricultural detail adapted to include regional water accounts. It focuses on the effects of inter-regional water trading. Factors of production are mobile between sectors in farm industries. TERM-H2O includes complementarity conditions that impose constraints on the volume of irrigation water traded between regions. The application detailed here is to the Commonwealth government's water buyback scheme against a background of temporary drought. The buyback scheme provides a windfall gain for holders of water rights by raising the price of irrigation water. The scheme may provide a net benefit to irrigation regions while increasing environmental flows.

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Bibliographic Info

Paper provided by Victoria University, Centre of Policy Studies/IMPACT Centre in its series Centre of Policy Studies/IMPACT Centre Working Papers with number g-186.

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Date of creation: Apr 2009
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Publication status: Published in 'Saving the Southern Murray-Darling Basin: the Economic Effects of a Buyback of Irrigation Water', Economic Record 87(276):153-168, January 2011. DOI: 10.1111/j.1475-4932.2010.00691.x
Handle: RePEc:cop:wpaper:g-186

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Keywords: regional modelling; CGE modelling; water;

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