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Integrating rural and urban water markets in south east Australia: Preliminary analysis

Author

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  • Dwyer, Gavan
  • Loke, Paul
  • Appels, David
  • Stone, Susan F.
  • Peterson, Deborah C.

Abstract

The conference paper, 'Integrating rural and urban water markets in south east Australia: Preliminary analysis' by Gavan Dwyer, Paul Loke, David Appels, Susan Stone and Deborah Peterson, was presented to the OECD Workshop on Agriculture and Water: Sustainability, Markets and Policies Adelaide, 14-18 November 2005. The trade of water in Australia is constrained and generally limited to irrigators, with other industries and households excluded. A regional general equilibrium model of the Australian economy (TERM-Water) is used to undertake a preliminary analysis of the effects of expanding the trade of water in south east Australia to include both irrigators and urban users. The focus is on the urban centres of Adelaide, Canberra and Melbourne, and the major irrigation districts in the southern Murray-Darling Basin and Gippsland. Losses from a hypothetical reduction in water availability to gross regional product and household demand are reduced when water trade is allowed. The extent to which these losses are reduced depends on the extent to which trade is allowed and the differing water uses in each trading region. The results of this preliminary modelling show that net gains are greatest, and the costs to industries and regions are generally more dissipated, when trade is unconstrained. When regions with relatively low levels of water consumption (such as Adelaide and Canberra) face shortfalls in water availability and trade with regions that use large volumes of water (such as irrigators in the southern Murray-Darling Basin), they have little effect on traded prices and quantities. The opposite is true, however, when large water users experience shortages. These broad patterns hold when all regions experience the same hypothetical reduction in water availability. *The views expressed in this paper do not necessarily reflect those of the Productivity Commission.

Suggested Citation

  • Dwyer, Gavan & Loke, Paul & Appels, David & Stone, Susan F. & Peterson, Deborah C., 2005. "Integrating rural and urban water markets in south east Australia: Preliminary analysis," Conference Workshop Proceedings 31909, Productivity Commission.
    • Handle: RePEc:ags:prodwp:31909
    DOI: 10.22004/ag.econ.31909
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    References listed on IDEAS

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    1. Peterson, Deborah C. & Dwyer, Gavan & Appels, David & Fry, Jane, 2004. "Modelling Water Trade in the Southern Murray-Darling Basin," Staff Working Papers 31925, Productivity Commission.
    2. Geoff Edwards, 2003. "Water Policy: Setting the Scene," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 36(2), pages 193-202, June.
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    Cited by:

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    2. Dinar, Ariel, 2012. "Economy-wide implications of direct and indirect policy interventions in the water sector: lessons from recent work and future research needs," Policy Research Working Paper Series 6068, The World Bank.
    3. Rowan Roberts & Nicole Mitchell & Justin Douglas, 2006. "Water and Australia’s future economic growth," Economic Roundup, The Treasury, Australian Government, issue 1, pages 53-69, March.
    4. Cakmak, Erol H. & Dudu, Hasan & Saracoglu, Sirin & Diao, Xinshen & Roe, Terry & Tsur, Yacov, 2008. "Macro-Micro Feedback Links Of Irrigation Water Management In Turkey," Policy Research Working Paper Series 4781, The World Bank.
    5. D.-A. An-Vo & S. Mushtaq & T. Nguyen-Ky & J. Bundschuh & T. Tran-Cong & T. Maraseni & K. Reardon-Smith, 2015. "Nonlinear Optimisation Using Production Functions to Estimate Economic Benefit of Conjunctive Water Use for Multicrop Production," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 29(7), pages 2153-2170, May.
    6. Productivity Commission, 2008. "Towards Urban Water Reform: A Discussion Paper," Research Papers 0801, Productivity Commission, Government of Australia.

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