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Property Rights and Water Buy Back in Australia's Murray-Darling Basin

Author

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  • Adamson, David
  • Oss-Emer, Max
  • Quiggin, John

Abstract

To mitigate environmental damage from the over allocation of water property rights to irrigation in Australia’s Murray-Darling Basin, the Federal Government has introduced a Buy-Back policy. However, the conjunctive nature of water resources in the Murray- Darling Basin is highly variable. Consequently alternative water property rights describing their reliability to supply water have been developed. Thus three critical questions concerning both the policy design and its outcome have been raised. Firstly, how much water will be transferred to the environment on an annual basis? Secondly, how will the environment benefit from this water? Thirdly, what are the economic consequences of restoring environmental flows? This article presents a state-contingent model of risk and uncertainty that allows for the specification of water resources and water property rights by water supply states of nature. This specification then allows for the optimal mix of water entitlements to be determined under a range of policy options and budgetary constraints that encapsulates the ability to supply water to environmental targets under alternative states of nature.

Suggested Citation

  • Adamson, David & Oss-Emer, Max & Quiggin, John, 2011. "Property Rights and Water Buy Back in Australia's Murray-Darling Basin," Risk and Sustainable Management Group Working Papers 149883, University of Queensland, School of Economics.
    • Handle: RePEc:ags:uqsers:149883
    DOI: 10.22004/ag.econ.149883
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    References listed on IDEAS

    as
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    2. Productivity Commission, 2009. "Government Drought Support," Inquiry Reports, Productivity Commission, Government of Australia, number 46, January.
    3. Peter B. Dixon & Maureen T. Rimmer & Glyn Wittwer, 2011. "Saving the Southern Murray‐Darling Basin: The Economic Effects of a Buyback of Irrigation Water," The Economic Record, The Economic Society of Australia, vol. 87(276), pages 153-168, March.
    4. Chambers,Robert G. & Quiggin,John, 2000. "Uncertainty, Production, Choice, and Agency," Cambridge Books, Cambridge University Press, number 9780521622448, January.
    5. Alan Randall, 1981. "Property Entitlements And Pricing Policies For A Maturing Water Economy," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 25(3), pages 195-220, December.
    6. Rasmussen, Svend, 2004. "Optimizing Production under Uncertainty: Generalisation of the State-Contingent Approach and Comparison of Methods for Empirical Application," Unit of Economics Working Papers 24184, Royal Veterinary and Agricultural University, Food and Resource Economic Institute.
    7. R. Quentin Grafton, 2010. "Economics of Water Reform in the Murray-Darling Basin," Centre for Water Economics, Environment and Policy Papers 1004, Centre for Water Economics, Environment and Policy, Crawford School of Public Policy, The Australian National University.
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    Cited by:

    1. Adamson, David, 2012. "The 2011 Basin Plan, Climate Change and the Buy-Back," Risk and Sustainable Management Group Working Papers 149884, University of Queensland, School of Economics.

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