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A multi-period positive mathematical programming approach for assessing economic impact of drought in the Murray-Darling Basin, Australia

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  • Qureshi, Muhammad Ejaz
  • Ahmad, Mobin-ud-Din
  • Whitten, Stuart M.
  • Kirby, Mac

Abstract

In the last decade, the Murray-Darling Basin (MDB), Australia faced a severe drought which affected its agriculture production. Sustainable diversion limits as proposed in the Australian Government’s basin plan together with climate change is expected to impact on future agriculture production and development in the MDB. We developed a biophysical-economic mathematical model calibrated against the observed multi-period land use data utilising the positive mathematical programming (PMP) approach to evaluate the impacts on agricultural production activities of a range of climate events and policy options. This is an extension of our previous work where the model was calibrated against a single year and focus was on the southern MDB only. The multi-period calibrated model has strong predictive capacity as it matches simulated irrigated area, water use and gross value of irrigated agricultural product (GVIAP) well with the observed irrigated land, water use and GVIAP for all the crops in all the regions of the MDB across the highly variable climatic conditions from 2005 to 2009. The approach will be useful in assessing economic impacts of climate change on irrigation, farmers’ adaptation options and/or water policies including water markets and irrigation efficiency improvement.

Suggested Citation

  • Qureshi, Muhammad Ejaz & Ahmad, Mobin-ud-Din & Whitten, Stuart M. & Kirby, Mac, 2012. "A multi-period positive mathematical programming approach for assessing economic impact of drought in the Murray-Darling Basin, Australia," 2012 Conference (56th), February 7-10, 2012, Freemantle, Australia 124418, Australian Agricultural and Resource Economics Society.
  • Handle: RePEc:ags:aare12:124418
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    References listed on IDEAS

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    1. Pierre Mérel & Santiago Bucaram, 2010. "Exact calibration of programming models of agricultural supply against exogenous supply elasticities," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 37(3), pages 395-418, September.
    2. Ronald C. Griffin, 2006. "Water Resource Economics: The Analysis of Scarcity, Policies, and Projects," MIT Press Books, The MIT Press, edition 1, volume 1, number 026207267x, January.
    3. Thomas Heckelei & Wolfgang Britz, 2000. "Positive Mathematical Programming with Multiple Data Points: A Cross-Sectional Estimation Procedure," Cahiers d'Economie et Sociologie Rurales, INRA Department of Economics, vol. 57, pages 27-50.
    4. Thomas W. Hertel & Stephanie D. Rosch, 2010. "Climate Change, Agriculture, and Poverty," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 32(3), pages 355-385.
    5. Kirby, Mac & Connor, Jeffery D. & Bark, Rosalind H. & Qureshi, Muhammad Ejaz & Keyworth, Scott W., 2012. "The economic impact of water reductions during the Millennium Drought in the Murray-Darling Basin," 2012 Conference (56th), February 7-10, 2012, Freemantle, Australia 124490, Australian Agricultural and Resource Economics Society.
    6. Heckelei, Thomas & Britz, Wolfgang, 2005. "Models Based on Positive Mathematical Programming: State of the Art and Further Extensions," 89th Seminar, February 2-5, 2005, Parma, Italy 234607, European Association of Agricultural Economists.
    7. Cortignani, Raffaele & Severini, Simone, 2009. "Modeling farm-level adoption of deficit irrigation using Positive Mathematical Programming," Agricultural Water Management, Elsevier, vol. 96(12), pages 1785-1791, December.
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    Keywords

    Integrated hydrology and economic model; multi-period calibration; climate change; drought; agriculture; positive mathematical programming; Resource /Energy Economics and Policy;

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