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Experiments with regulations & markets linking upstream tree plantations with downstream water users


  • Nordblom, Thomas L.
  • Reeson, Andrew
  • Finlayson, John D.
  • Hume, Iain H.
  • Whitten, Stuart M.
  • Kelly, Jason A.


Land-use change in upper catchments impact downstream water flows. As trees use large amounts of water the expansion of upstream plantations can substantially reduce water availability to downstream users. There can also be impacts on downstream salinity due to reduced dilution flows. In some jurisdictions afforestation requires the purchase of water rights from downstream holders, while in others it does not, effectively handing the water rights to the upstream landholders. We consider the economic efficiency and equity (profitability and distributional) consequences of upstream land use change in the presence of a water market under alternate property rights regimes and different salinity scenarios.

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  • Nordblom, Thomas L. & Reeson, Andrew & Finlayson, John D. & Hume, Iain H. & Whitten, Stuart M. & Kelly, Jason A., 2009. "Experiments with regulations & markets linking upstream tree plantations with downstream water users," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 47945, Australian Agricultural and Resource Economics Society.
  • Handle: RePEc:ags:aare09:47945

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    1. Thaler, Richard, 1980. "Toward a positive theory of consumer choice," Journal of Economic Behavior & Organization, Elsevier, vol. 1(1), pages 39-60, March.
    2. Jack L. Knetsch & J. A. Sinden, 1984. "Willingness to Pay and Compensation Demanded: Experimental Evidence of an Unexpected Disparity in Measures of Value," The Quarterly Journal of Economics, Oxford University Press, vol. 99(3), pages 507-521.
    3. Gintis, Herbert, 2000. "Beyond Homo economicus: evidence from experimental economics," Ecological Economics, Elsevier, vol. 35(3), pages 311-322, December.
    4. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
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    Cited by:

    1. Nordblom, Tom & Finlayson, John D. & Hume, Iain H. & Kelly, Jason A., 2009. "Supply and Demand for Water use by New Forest Plantations: a market to balance increasing upstream water use with downstream community, industry and environmental use?," Research Reports 280785, New South Wales Department of Primary Industries Research Economists.
    2. Nordblom, T.L. & Christy, B.P. & Finlayson, J.D. & Roberts, A.M. & Kelly, J.A., 2010. "Least cost land-use changes for targeted catchment salt load and water yield impacts in south eastern Australia," Agricultural Water Management, Elsevier, vol. 97(6), pages 811-823, June.

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