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Costing Water Quality Improvements with auction mechanisms: case studies for the Great Barrier Reef in Australia


  • John Rolfe

    () (Faculty of Business and Informatics, Central Queensland University.)

  • Jill Windle

    () (Centre for Environmental Management at Central Queensland University)


Australian governments continue to commit significant resources to the protection of the Great Barrier Reef, with funding for Reef Rescue aimed at reducing the impacts of agricultural production on water quality. A key challenge for policy makers is to identify where funding can be efficiently allocated, as information about both the costs and benefits of different proposals is limited. While there is adequate information about the costs of different inputs for reducing water quality, there is much more limited information about the costs of achieving different outputs.The use of water quality tenders to reveal the opportunity costs of changing agricultural practices can help policy makers to understand the potential costs of misallocating public resources and to design better ways of achieving water quality improvements. This role of water quality tenders to reveal opportunity costs is demonstrated by reporting four pilot applications to improve water quality into the Great Barrier Reef in Australia. The results demonstrate the potential for opportunity costs to vary substantially between agricultural producers, and across industries, catchments and pollutants.

Suggested Citation

  • John Rolfe & Jill Windle, 2009. "Costing Water Quality Improvements with auction mechanisms: case studies for the Great Barrier Reef in Australia," Environmental Economics Research Hub Research Reports 0935, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:eenhrr:0935

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    1. Uwe Latacz-Lohmann & Carel Van der Hamsvoort, 1997. "Auctioning Conservation Contracts: A Theoretical Analysis and an Application," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 407-418.
    2. Uwe Latacz‚ÄźLohmann & Carel P. C. M. Van der Hamsvoort, 1998. "Auctions as a Means of Creating a Market for Public Goods from Agriculture," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(3), pages 334-345, September.
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    auctions; conservation tenders; market based instruments; water quality;

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