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Modelling the Impact of Environmental Policy Reforms on Water Markets and Irrigation Use in Australia

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  • Wittwer, Glyn
  • Stringer, Randy

Abstract

This paper explores the key factors motivating change in national, regional and local water institutions and examines how the resulting policy reforms affect water markets and water use. FEDSA-WATER, a national level CGE model of Australia is used to examine the removal of implicit subsidies on water usage in irrigation industries in New South Wales and Victoria, and the removal of small implicit taxes on usage in South Australia, for the various irrigation industries. A second scenario taxes producers for salinity. In the water pricing reform scenario, there is a redistribution of irrigation activity to South Australia with pricing reforms. There is an overall decline in agricultural output but this is outweighed by the benefit in terms of reduced salinity damage. Similarly, in the case of taxing producers for the full cost of salinity damage, the benefit of reduced salinity outweighs the reduction in national income.

Suggested Citation

  • Wittwer, Glyn & Stringer, Randy, 2002. "Modelling the Impact of Environmental Policy Reforms on Water Markets and Irrigation Use in Australia," Conference papers 330982, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:330982
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    1. Patrick J. Kehoe & Timothy J. Kehoe, 1994. "A primer on static applied general equilibrium models," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 18(Spr), pages 2-16.
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