Removing Barriers to Facilitate Efficient Water Markets in the Murray Darling Basin – A Case Study from Australia
Water markets have been seen as an effective way of addressing water scarcity and allocation issues. In this paper we discuss the role and characteristics of water markets in facilitating efficient water allocation. Administrative, regulatory and/or political barriers to effective functioning of water markets are reviewed with a focus on southern Murray-Darling Basin in Australia. A mathematical model is developed to estimate the costs of existing restrictions and the benefits from potential changes in the water markets (eg. removing barriers in temporary water market). The modelling results reveal that when expanding trade from intraregional only to interregional trade, mean annual net returns increased from $2,502 million to $2,590 million (i.e. an increase of $88 million). When the current volume restrictions, exchange rates, and trading charges are in place, mean annual net returns reduced from $2,590 million to $2,573 million (i.e. a reduction of $17 million). The exclusion of any state from the interstate water trading market imposes significant costs. If South Australia, New South Wales or Victoria withdraws from the market, it reduces net returns by $27 million, $31 million and $63 million, respectively, from water trading. In conclusion, the policy implications on strategies to removing market barriers are outlined to facilitate efficient and effective water trading.
|Date of creation:||Jan 2009|
|Date of revision:|
|Contact details of provider:|| Postal: Gungahlin Homestead, GPO Box 284, Canberra City, ACT 2601|
Phone: (02) 6242 1600
Fax: (02) 6242 1555
Web page: http://www.csiro.au/org/cse
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mike Young & Darla Hatton MacDonald, 2000. "Interstate Water Trading: a 2-year Review," Natural Resource Management Economics 00_001, Policy and Economic Research Unit, CSIRO Land and Water, Adelaide, Australia.
- Qureshi, Muhammad Ejaz & Connor, Jeffery D. & Kirby, Mac & Mainuddin, Mohammed, 2002.
"Economic assessment of acquiring water for environmental flows in the Murray Basin,"
Australian Journal of Agricultural and Resource Economics,
Australian Agricultural and Resource Economics Society, vol. 51(3), September.
- M. Ejaz Qureshi & Jeff Connor & Mac Kirby & Mohammed Mainuddin, 2007. "Economic assessment of acquiring water for environmental flows in the Murray Basin ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(3), pages 283-303, 09.
- Mainuddin, Mohammed & Das Gupta, Ashim & Raj Onta, Pushpa, 1997. "Optimal crop planning model for an existing groundwater irrigation project in Thailand," Agricultural Water Management, Elsevier, vol. 33(1), pages 43-62, May.
- John Freebairn, 2003. "Principles for the Allocation of Scarce Water," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 36(2), pages 203-212.
- Lee, Terence R. & Jouravlev, Andrei, 1998. "Prices, property and markets in water allocation," Medio Ambiente y Desarrollo 6, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
- Easter, K William & Rosegrant, Mark W & Dinar, Ariel, 1999. "Formal and Informal Markets for Water: Institutions, Performance, and Constraints," World Bank Research Observer, World Bank Group, vol. 14(1), pages 99-116, February.
- David Zilberman, 1997. "Allocation and Pricing at the Water District Level," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 952-963.
- Bell, Rosalyn & Blias, Athena, 2002. "Capturing benefits from the removal of impediments to water trade: a modelling framework," 2002 Conference (46th), February 13-15, 2002, Canberra 125059, Australian Agricultural and Resource Economics Society.
- D. Peterson & G. Dwyer & D. Appels & J. Fry, 2005.
"Modelling Water Trade in the Southern Murray-Darling Basin,"
- 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.
- Rosegrant, Mark W. & Binswanger, Hans P., 1994. "Markets in tradable water rights: Potential for efficiency gains in developing country water resource allocation," World Development, Elsevier, vol. 22(11), pages 1613-1625, November.
- Heaney, Anna & Dwyer, Gavan & Beare, Stephen & Peterson, Deborah C. & Pechey, Lili, 2005. "Third-party effects of water trading and potential policy responses," Conference/Workshop Proceedings 31907, Productivity Commission.
- Javier Calatrava & Alberto Garrido, 2005. "Spot water markets and risk in water supply," Agricultural Economics, International Association of Agricultural Economists, vol. 33(2), pages 131-143, 09.
When requesting a correction, please mention this item's handle: RePEc:cse:wpaper:2009-02. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CSE-Webrequest)
If references are entirely missing, you can add them using this form.