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Economics of Water Recovery in the Murray-Darling Basin, Australia

Author

Listed:
  • R. Quentin Grafton

    (Crawford School of Public Policy, Australian National University, Australian Capital Territory 2601, Australia)

  • Sarah Ann Wheeler

    (Centre for Global Food and Resources, Faculty of Professions, University of Adelaide, Adelaide, South Australia 5001)

Abstract

We review recent water reforms and the consequences of water recovery intended to increase stream flows in the Murray-Darling Basin (MDB), Australia. The MDB provides a natural experiment of water recovery for the environment that includes (a) the voluntary buy-back of water rights from willing sellers and (b) the subsidization of irrigation infrastructure. We find that (a) the actual increase in the volumes of water in terms of stream flows is much less than claimed by the Australian government; (b) subsidies to increase irrigation efficiency have reduced stream and groundwater return flows; (c) buy-backs are much more cost effective than subsidies; (d) many of the gains from water recovery have accrued as private benefits to irrigators; and (e) more than a decade after water recovery began, there is no observable basin-wide relationship between volumes of water recovered and flows at the mouth of the River Murray.

Suggested Citation

  • R. Quentin Grafton & Sarah Ann Wheeler, 2018. "Economics of Water Recovery in the Murray-Darling Basin, Australia," Annual Review of Resource Economics, Annual Reviews, vol. 10(1), pages 487-510, October.
    • Handle: RePEc:anr:reseco:v:10:y:2018:p:487-510
    DOI: 10.1146/annurev-resource-100517-023039
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    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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