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Upgrading irrigation infrastructure in the Murray Darling Basin: is it worth it?

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  • Glyn Wittwer
  • Janine Dixon

Abstract

Infrastructure upgrades appear superficially to be a politically acceptable way of increasing environmental flows in the Murray-Darling Basin. From an economic perspective, their costs and benefits should be compared with other policy instruments. We do so using TERM-H2O, a dynamic regional CGE model with considerable basin detail. Voluntary and fully compensated buybacks are much less costly than upgrades as a means of obtaining a target volume of environmental water. Even during drought, when highly secure water created by infrastructure upgrades is more valuable, the upgrades remain too costly. As an instrument of regional economic management, infrastructure upgrades are inferior to public spending on health, education and other services in the basin. For each job created from upgrades, the money spent on services could create between three and four jobs in the basin.

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File URL: http://www.copsmodels.com/ftp/workpapr/g-228.pdf
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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-228.

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Date of creation: Jun 2012
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Publication status: Published in 'Effective use of public funding in the Murray-Darling Basin: a comparison of buybacks and infrastructure upgrades', Australian Journal of Agricultural and Resource Economics 57(2):399-421, July 2013. DOI: 10.1111/1467-8489.12001
Handle: RePEc:cop:wpaper:g-228

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Keywords: CGE modelling; water buybacks; regional economies;

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  1. Glyn Wittwer & Mark Horridge, 2010. "Bringing Regional Detail to a CGE Model using Census Data," Spatial Economic Analysis, Taylor & Francis Journals, vol. 5(2), pages 229-255.
  2. Young, Michael D. & McColl, Jim C., 2009. "Double trouble: the importance of accounting for and defining water entitlements consistent with hydrological realities," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(1), March.
  3. Glyn Wittwer & Marnie Griffith, 2011. "Modelling drought and recovery in the southern Murray‚ÄźDarling basin," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(3), pages 342-359, 07.
  4. Michael D. Young & Jim C. McColl, 2009. "Double trouble: the importance of accounting for and defining water entitlements consistent with hydrological realities ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(1), pages 19-35, 01.
  5. Peter B. Dixon & Maureen T. Rimmer & Glyn Wittwer, 2011. "Saving the Southern Murray‚ÄźDarling Basin: The Economic Effects of a Buyback of Irrigation Water," The Economic Record, The Economic Society of Australia, vol. 87(276), pages 153-168, March.
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