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Investigating the delayed on-farm consequences of selling water entitlements in the Murray-Darling Basin

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  • Wheeler, Sarah Ann
  • Zuo, Alec
  • Bjornlund, Henning

Abstract

Up to one-fifth of all irrigators in the Murray-Darling Basin sold water entitlements to the Australian Commonwealth in the period from the beginning of 2008 to the start of 2012. The sale of water entitlements has positive and negative consequences for irrigators and rural communities. This study focuses specifically on these potential on-farm consequences, by providing an overview of the reasons irrigators sell water, examining fluctuations in water use by irrigators over time, and modelling the delayed impact of water sales in the previous five years on net farm income. It suggests that to date, many irrigators who sold water to the Commonwealth and continued farming in the southern Murray-Darling Basin have predominately sold their surplus and buffer water (water not used in production). There is only weak to no significant evidence from the regression modelling to suggest that there is a delayed negative impact on net farm income from selling water entitlements, which supports the notion that the reduction in farm production has been offset by many irrigators using water sales proceeds to reduce debt (and hence interest payments), restructure and reinvest on farm. However, given the advent of climate change and future water scarcity, all irrigators, but particularly for some of those who have sold part of their water entitlements, will need to plan for further incremental adaptation, water management or on-farm changes, or risk facing regular water shortages.

Suggested Citation

  • Wheeler, Sarah Ann & Zuo, Alec & Bjornlund, Henning, 2014. "Investigating the delayed on-farm consequences of selling water entitlements in the Murray-Darling Basin," Agricultural Water Management, Elsevier, vol. 145(C), pages 72-82.
    • Handle: RePEc:eee:agiwat:v:145:y:2014:i:c:p:72-82
    DOI: 10.1016/j.agwat.2013.10.015
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    Cited by:

    1. Zuo, Alec & Qiu, Feng & Wheeler, Sarah Ann, 2019. "Examining volatility dynamics, spillovers and government water recovery in Murray-Darling Basin water markets," Resource and Energy Economics, Elsevier, vol. 58(C).
    2. 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.
    3. Sarah Ann Wheeler & Alec Zuo, 2017. "The impact of drought and water scarcity on irrigator farm exit intentions in the Murray–Darling Basin," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 61(3), pages 404-421, July.
    4. 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.
    5. Tristan D. Pearce & Evelyn H. Rodríguez & David Fawcett & James D. Ford, 2018. "How Is Australia Adapting to Climate Change Based on a Systematic Review?," Sustainability, MDPI, vol. 10(9), pages 1-14, September.
    6. Sarah Ann Wheeler & Ying Xu & Alec Zuo, 2020. "Modelling the climate, water and socio-economic drivers of farmer exit in the Murray-Darling Basin," Climatic Change, Springer, vol. 158(3), pages 551-574, February.
    7. 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.
    8. Bjornlund, H. & Xu, W. & Wheeler, S., 2014. "An overview of water sharing and participation issues for irrigators and their communities in Alberta: Implications for water policy," Agricultural Water Management, Elsevier, vol. 145(C), pages 171-180.
    9. Cooper, Bethany & Crase, Lin & Rose, John M., 2018. "Cost-reflective pricing: empirical insights into irrigators’ preferences for water tariffs," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 62(2), April.
    10. Min Ge & Fengping Wu & Xiaoping Chen, 2018. "Using Multiple Discriminant Analysis for the Assignment of Initial Water Entitlements at River Basin-Level under the Strictest Water Resources Management System Constraints in China," Sustainability, MDPI, vol. 10(12), pages 1-17, November.
    11. Wheeler, Sarah Ann & Marning, Angelika, 2019. "Turning water into wine: Exploring water security perceptions and adaptation behaviour amongst conventional, organic and biodynamic grape growers," Land Use Policy, Elsevier, vol. 82(C), pages 528-537.
    12. Sarah Ann Wheeler & Alec Zuo & John Kandulu, 2021. "What Water are We Really Pumping? The Nature and Extent of Surface and Groundwater Substitutability in Australia and Implications for Water Management Policies," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(4), pages 1550-1570, December.
    13. Abebe, Fentahun & Zuo, Alec & Wheeler, Sarah Ann & Bjornlund, Henning & Chilundo, Mario & Kissoly, Luitfred & Dube, Thabani, 2022. "The influences on farmers' planned and actual farm adaptation decisions: Evidence from small-scale irrigation schemes in South-Eastern Africa," Ecological Economics, Elsevier, vol. 202(C).
    14. Grafton, Rupert Quentin, 2019. "Policy review of water reform in the Murray– Darling Basin, Australia: the “do’s” and “do’nots”," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(1), January.

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