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Hydrology and Economics in Water Management Policy under Increasing uncertainty

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  • Loch, Adam
  • Adamson, David
  • Mallawaarachchi, Thilak

Abstract

Well-designed public policy stimulates social progress. However, when governments translate political vision into programmes to deliver desirable social change, the complexity of issues can overwhelm the policy-making process, creating disappointment for all parties and suboptimal outcomes. In this paper we examine why well-known approaches to evidence-based policy-making often fail to provide policy-makers with credible, consistent and clear outcomes in line with broad social interest. We use the Murray-Darling Basin to highlight key stages to formulating effective natural resource policy, and identify key sources of difficulties that need to be managed to maximize scientific contributions. We argue that the need for public policy primarily arises from a lack of perfect knowledge, which causes individuals and agencies to behave in ways that counter social interest. We hypothesize that effective public policy formulation involves: determining what evidence is available, relevant and useful; as well as identifying critical gaps to making public policy necessary and meaningful. We then examine how effective public policy decisions can still be made and how information asymmetry can be managed via strong evidence, expert analysis to verify that evidence, and an understanding of knowledge gaps such that critical interventions can be agreed upon and objectives achieved in view of how they will be managed and resourced. We draw attention to the opportunities available and challenges that exist for hydrologists, economists and other social scientists to work together in assisting the policy process, and in particular to minimize the burden of information constraints in making effective water resource policy.

Suggested Citation

  • Loch, Adam & Adamson, David & Mallawaarachchi, Thilak, 2013. "Hydrology and Economics in Water Management Policy under Increasing uncertainty," Risk and Sustainable Management Group Working Papers 156479, University of Queensland, School of Economics.
  • Handle: RePEc:ags:uqsers:156479
    DOI: 10.22004/ag.econ.156479
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    References listed on IDEAS

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    1. David Adamson & Thilak Mallawaarachchi & John Quiggin, 2009. "Declining inflows and more frequent droughts in the Murray-Darling Basin: climate change, impacts and adaptation ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(3), pages 345-366, July.
    2. Connor, Jeffery D. & Schwabe, Kurt & King, Darran & Knapp, Keith, 2012. "Irrigated agriculture and climate change: The influence of water supply variability and salinity on adaptation," Ecological Economics, Elsevier, vol. 77(C), pages 149-157.
    3. Puree Sirasoontorn & John Quiggin, 2007. "The Political Economy of Privatization in the Thai Electricity Industry," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 12(3), pages 403-419.
    4. John Quiggin & David Adamson & Sarah Chambers & Peggy Schrobback, 2010. "Climate Change, Uncertainty, and Adaptation: The Case of Irrigated Agriculture in the Murray–Darling Basin in Australia," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 58(4), pages 531-554, December.
    5. Mike Young, 2002. "A preliminary Assessment of the economic and social implications of Environmental Flow Scenarios for the Murray River System," Natural Resource Management Economics 02_009, Policy and Economic Research Unit, CSIRO Land and Water, Adelaide, Australia.
    6. Chambers,Robert G. & Quiggin,John, 2000. "Uncertainty, Production, Choice, and Agency," Cambridge Books, Cambridge University Press, number 9780521622448.
    7. David Adamson & Thilak Mallawaarachchi & John Quiggin, 2007. "Water use and salinity in the Murray-Darling Basin: A state-contingent model ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(3), pages 263-281, September.
    8. Chiesura, Anna & de Groot, Rudolf, 2003. "Critical natural capital: a socio-cultural perspective," Ecological Economics, Elsevier, vol. 44(2-3), pages 219-231, March.
    9. Adamson, David, 2013. "Buying Paper and Giving Gold: The Murray Darling Basin Plan," Risk and Sustainable Management Group Working Papers 156481, University of Queensland, School of Economics.
    10. Kingwell, Ross S., 2006. "Climate change in Australia: agricultural impacts and adaptation," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 14.
    11. Quentin Grafton & Hoang Long Chu & Michael Stewardson & Tom Kompas, 2010. "Optimal Dynamic Water Allocation: Irrigation Extractions and Environmental Tradeoffs in the Murray River, Australia," Centre for Water Economics, Environment and Policy Papers 1008, Centre for Water Economics, Environment and Policy, Crawford School of Public Policy, The Australian National University.
    12. Just, Richard E. & Pope, Rulon D., 1978. "Stochastic specification of production functions and economic implications," Journal of Econometrics, Elsevier, vol. 7(1), pages 67-86, February.
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    Cited by:

    1. Carlos Mario Gómez Gómez & C. D. Pérez-Blanco & David Adamson & Adam Loch, 2018. "Managing Water Scarcity at a River Basin Scale with Economic Instruments," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(01), pages 1-31, January.
    2. Loch, Adam & Wheeler, Sarah Ann & Settre, Claire, 2018. "Private Transaction Costs of Water Trade in the Murray–Darling Basin," Ecological Economics, Elsevier, vol. 146(C), pages 560-573.
    3. Sarah M Rosanowski & Tim E Carpenter & David Adamson & Chris W Rogers & Patricia Pearce & Martin Burns & Naomi Cogger, 2019. "An economic analysis of a contingency model utilising vaccination for the control of equine influenza in a non-endemic country," PLOS ONE, Public Library of Science, vol. 14(1), pages 1-18, January.

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