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Modelling drought and recovery in the southern Murray‐Darling basin

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  • Glyn Wittwer
  • Marnie Griffith

Abstract

The prolonged drought from 2006–07 to 2008–09 in south-eastern Australia presented severe difficulties for dry-land and irrigation farmers in the southern Murray-Darling basin. A dynamic multi-regional computable general equilibrium model (TERMH2O) is used to estimate the economy-wide small region impacts during and after drought. Drought reduces real GDP in some small regions by up to 20 per cent. Irrigation water trading and farm factor movements alleviate losses. The drought results in an estimated 6000 jobs being lost across the southern basin. Depressed farm investment during drought results in farm capital not returning to baseline levels after drought. Consequently, job numbers in 2017–18 remain 1500 below forecast in the southern basin.
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Suggested Citation

  • Glyn Wittwer & Marnie Griffith, 2011. "Modelling drought and recovery in the southern Murray‐Darling basin," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(3), pages 342-359, July.
  • Handle: RePEc:bla:ajarec:v:55:y:2011:i:3:p:342-359
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    References listed on IDEAS

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    1. Glyn Wittwer & Simon McKirdy & Ryan Wilson, 2005. "Regional economic impacts of a plant disease incursion using a general equilibrium approach ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(1), pages 75-89, March.
    2. Dixon, Peter B. & Rimmer, Maureen T., 2011. "You can't have a CGE recession without excess capacity," Economic Modelling, Elsevier, vol. 28(1-2), pages 602-613, January.
    3. Peter B. Dixon & Maureen T. Rimmer & Glyn Wittwer, 2009. "Modelling the Australian government's buyback scheme with a dynamic multi-regional CGE model," Centre of Policy Studies/IMPACT Centre Working Papers g-186, Victoria University, Centre of Policy Studies/IMPACT Centre.
    4. Freebairn, John W., 1983. "Drought Assistance Policy," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 27(03), December.
    5. Peter B. Dixon & Maureen T. Rimmer & Glyn Wittwer, 2011. "Saving the Southern Murray‐Darling 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.
    6. Sherony, Keith R. & Knowles, Glenn J. & Boyd, Roy, 1991. "The Economic Impact Of Crop Losses: A Computable General Equilibrium Approach," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(01), July.
    7. Kaludura Abayasiri-Silva & Mark Horridge, 1996. "Economies of Scale and Imperfect Competition in an Applied General Equilibrium Model of the Australian Economy," Centre of Policy Studies/IMPACT Centre Working Papers op-84, Victoria University, Centre of Policy Studies/IMPACT Centre.
    8. W. Jill Harrison & Mark Horridge & K.R. Pearson & Glyn Wittwer, 2002. "A Practical Method for Explicitly Modeling Quotas and Other Complementarities," Centre of Policy Studies/IMPACT Centre Working Papers ip-78, Victoria University, Centre of Policy Studies/IMPACT Centre.
    9. Kym Anderson & Signe Nelgen & Ernesto Valenzuela & Glyn Wittwer, 2009. "Economic contributions and characteristics of grapes and wine in AustraliaÂ’s wine regions," Centre for International Economic Studies Working Papers 2009-01, University of Adelaide, Centre for International Economic Studies.
    10. Thomas W. Hertel & Padma Swaminathan, 1996. "Introducing Monopolistic Competition into the GTAP Model," GTAP Technical Papers 309, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    11. Pauw, Karl & Thurlow, James & Bachu, Murthy & Van Seventer, Dirk Ernst, 2011. "The economic costs of extreme weather events: a hydrometeorological CGE analysis for Malawi," Environment and Development Economics, Cambridge University Press, vol. 16(02), pages 177-198, April.
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    Cited by:

    1. Glyn Wittwer, 2015. "From Almond Shaming to Water Trading: CGE Insights into Managing California's Drought," Centre of Policy Studies/IMPACT Centre Working Papers g-258, Victoria University, Centre of Policy Studies/IMPACT Centre.
    2. Li Jiang & Feng Wu & Yu Liu & Xiangzheng Deng, 2014. "Modeling the Impacts of Urbanization and Industrial Transformation on Water Resources in China: An Integrated Hydro-Economic CGE Analysis," Sustainability, MDPI, Open Access Journal, vol. 6(11), pages 1-15, October.
    3. Connor, Jeffery D. & Kandulu, John M. & Bark, Rosalind H., 2014. "Irrigation revenue loss in Murray–Darling Basin drought: An econometric assessment," Agricultural Water Management, Elsevier, vol. 145(C), pages 163-170.
    4. Glyn Wittwer & Peter Dixon, 2011. "Water trading, buybacks and drought in the Murray-Darling basin: lessons from economic modelling," Centre of Policy Studies/IMPACT Centre Working Papers g-222, Victoria University, Centre of Policy Studies/IMPACT Centre.
    5. repec:wsi:wepxxx:v:03:y:2017:i:04:n:s2382624x17500072 is not listed on IDEAS
    6. Glyn Wittwer & Janine Dixon, 2012. "Upgrading irrigation infrastructure in the Murray Darling Basin: is it worth it?," Centre of Policy Studies/IMPACT Centre Working Papers g-228, Victoria University, Centre of Policy Studies/IMPACT Centre.
    7. Banerjee, Onil & Bark, Rosalind & Connor, Jeff & Crossman, Neville D., 2013. "An ecosystem services approach to estimating economic losses associated with drought," Ecological Economics, Elsevier, vol. 91(C), pages 19-27.
    8. repec:eee:ecolec:v:146:y:2018:i:c:p:560-573 is not listed on IDEAS
    9. Chokri Thabet, 2014. "Water Policy and Poverty Reduction in Rural Area: A Comparative Economy Wide Analysis for Morocco and Tunisia," Working Papers 860, Economic Research Forum, revised Nov 2014.
    10. 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.
    11. repec:wsi:wepxxx:v:03:y:2017:i:03:n:s2382624x16500429 is not listed on IDEAS
    12. 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.
    13. Adam Loch & David Adamson, 2015. "Drought and the rebound effect: a Murray–Darling Basin example," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 79(3), pages 1429-1449, December.

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