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Possible negative feedbacks from ‘gold-plating’ irrigation infrastructure

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  • Adamson, David
  • Loch, Adam

Abstract

For an irrigator, investments in on-farm water infrastructure that increase the marginal productivity of water may improve use efficiency. However, increasing on-farm water use efficiency invariably diminishes return flows, compromising the ability to maintain sufficient water flows in streams to support natural environmental values, particularly in dry states of nature. As climate change can increase the probability of dry states, modelling that does not incorporate state-contingent treatments of uncertainty may misrepresent the benefits of public investment on irrigation infrastructure improvements to recover environmental water flows. This paper uses a state-contingent modelling approach to review an extended farm capital investment policy in Australia's Murray–Darling Basin. We examine technical efficiency gain implications for irrigation and environmental water managers under alternative states of inflow variability and the role that increasing climatic uncertainty has on policy objectives. Results suggest that the incentives provided to recover environment water via on-farm capital investments could have two principal negative feedbacks given future uncertainties. First, farm capital investments may encourage inflexible production systems that fail to respond to future water scarcity, exposing that investment to increased risk. Second, technical efficiency gains may reduce return flows, creating perverse policy outcomes aligned with meeting environmental objectives. Highlighting these ulterior policy outcomes provides irrigators and policy makers the capacity to adapt and develop flexible arrangements, robust policy, and management solutions that help negate future uncertainty.

Suggested Citation

  • Adamson, David & Loch, Adam, 2014. "Possible negative feedbacks from ‘gold-plating’ irrigation infrastructure," Agricultural Water Management, Elsevier, vol. 145(C), pages 134-144.
  • Handle: RePEc:eee:agiwat:v:145:y:2014:i:c:p:134-144
    DOI: 10.1016/j.agwat.2013.09.022
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    References listed on IDEAS

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    1. R. Quentin Grafton, 2017. "Editorial — Water Reform and Planning in the Murray–Darling Basin, Australia," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(03), pages 1-18, July.
    2. Wheeler, Sarah Ann & Zuo, Alec & Loch, Adam, 2015. "Watering the farm: Comparing organic and conventional irrigation water use in the Murray–Darling Basin, Australia," Ecological Economics, Elsevier, vol. 112(C), pages 78-85.
    3. Claire Settre & Jeff Connor & Sarah Ann Wheeler, 2017. "Reviewing the Treatment of Uncertainty in Hydro-economic Modeling of the Murray–Darling Basin, Australia," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(03), pages 1-35, July.
    4. Wu, Bingfang & Jiang, Liping & Yan, Nana & Perry, Chris & Zeng, Hongwei, 2014. "Basin-wide evapotranspiration management: Concept and practical application in Hai Basin, China," Agricultural Water Management, Elsevier, vol. 145(C), pages 145-153.
    5. Perez Blanco, C.D., 2018. "Waters run deep: A coupled Revealed Preference and CGE model to assess the economy-wide impacts of agricultural water buyback," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277028, International Association of Agricultural Economists.
    6. David Adamson & Adam Loch & Kurt Schwabe, 2017. "Adaptation responses to increasing drought frequency," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 61(3), pages 385-403, July.
    7. David Adamson & Adam Loch, 2021. "Dead in the Water: A Very Angry Book About our Greatest Environmental Catastrophe. The Death of the Murray‐Darling Basin," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(3), pages 760-762, July.
    8. C. D. Pérez-Blanco & E. E. Koks & E. Calliari & J. Mysiak, 2018. "Economic Impacts of Irrigation-Constrained Agriculture in the Lower Po Basin," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(01), pages 1-38, January.
    9. Palazzo,Amanda & Valin,Hugo Jean Pierre & Batka,Miroslav & Havlík,Petr, 2019. "Investment Needs for Irrigation Infrastructure along Different Socioeconomic Pathways," Policy Research Working Paper Series 8744, The World Bank.
    10. Mukherjee, Monobina & Schwabe, Kurt A., 2014. "Where's the salt? A spatial hedonic analysis of the value of groundwater to irrigated agriculture," Agricultural Water Management, Elsevier, vol. 145(C), pages 110-122.
    11. Carlos Mario Gómez Gómez & C. D. Pérez-Blanco & David Adamson & Adam Loch, 2018. "Managing Water Scarcity at a River Basin Scale with Economic Instruments," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(01), pages 1-31, January.
    12. Palazzo, Amanda & Brozović, Nicholas, 2014. "The role of groundwater trading in spatial water management," Agricultural Water Management, Elsevier, vol. 145(C), pages 50-60.
    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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