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Removing Barriers to Facilitate Efficient Water Markets in the Murray Darling Basin – A Case Study from Australia

Author

Listed:
  • M Ejaz Qureshi
  • Tian Shi
  • Sumaira Qureshi
  • Wendy Proctor
  • Mac Kirby

    () (CSIRO Sustainable Ecosystems, Australia)

Abstract

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.

Suggested Citation

  • M Ejaz Qureshi & Tian Shi & Sumaira Qureshi & Wendy Proctor & Mac Kirby, 2009. "Removing Barriers to Facilitate Efficient Water Markets in the Murray Darling Basin – A Case Study from Australia," Socio-Economics and the Environment in Discussion (SEED) Working Paper Series 2009-02, CSIRO Sustainable Ecosystems.
  • Handle: RePEc:cse:wpaper:2009-02
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    File URL: http://www.csiro.au/files/files/pnth.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Muhammad Ejaz Qureshi & Ram Ranjan & Sumaira Ejaz Qureshi, 2010. "An empirical assessment of the value of irrigation water: the case study of Murrumbidgee catchment ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(1), pages 99-118, January.
    2. Agbola, Frank W. & Evans, Nigel, 2012. "Modelling rice and cotton acreage response in the Murray Darling Basin in Australia," Agricultural Systems, Elsevier, vol. 107(C), pages 74-82.
    3. Wheeler, Sarah Ann & Zuo, Alec & Bjornlund, Henning, 2014. "Investigating the delayed on-farm consequences of selling water entitlements in the Murray-Darling Basin," Agricultural Water Management, Elsevier, vol. 145(C), pages 72-82.
    4. Kirby, Mac & Bark, Rosalind & Connor, Jeff & Qureshi, M. Ejaz & Keyworth, Scott, 2014. "Sustainable irrigation: How did irrigated agriculture in Australia's Murray–Darling Basin adapt in the Millennium Drought?," Agricultural Water Management, Elsevier, vol. 145(C), pages 154-162.
    5. repec:wsi:wepxxx:v:03:y:2017:i:03:n:s2382624x16500429 is not listed on IDEAS
    6. Ejaz Qureshi, M. & Hanjra, Munir A. & Ward, John, 2013. "Impact of water scarcity in Australia on global food security in an era of climate change," Food Policy, Elsevier, vol. 38(C), pages 136-145.
    7. Hang Zheng & Zhongjing Wang & Siyi Hu & Yongping Wei, 2012. "A Comparative Study of the Performance of Public Water Rights Allocation in China," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 26(5), pages 1107-1123, March.
    8. Ejaz Qureshi, Muhammad & Ranjan, Ram & Ejaz Qureshi, Sumaira, 2010. "An empirical assessment of the value of irrigation water: the case study of Murrumbidgee catchment," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(1), March.
    9. repec:eee:agiwat:v:190:y:2017:i:c:p:6-20 is not listed on IDEAS
    10. Raffensperger, John F., 2011. "Matching users' rights to available groundwater," Ecological Economics, Elsevier, vol. 70(6), pages 1041-1050, April.
    11. repec:eee:agiwat:v:200:y:2018:i:c:p:47-59 is not listed on IDEAS

    More about this item

    Keywords

    market barrier; opportunity cost; temporary water market; efficient water market; Australia;

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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