Stranded Irrigation Assets
The staff working paper ‘Stranded Irrigation Assets’ (Roper, H., Sayers, C. and Smith, A) was released on 28 June 2006. Prior to the National Water Initiative (NWI), irrigation authorities imposed restrictions on outward trade of water entitlements partly to protect remaining irrigators against the risks and consequences of having to recover the costs of ‘stranded’ or under-utilised assets. This could be one of a number of reasons behind low levels of permanent water trade. This paper examines ways of minimising the financial impact of stranded assets on remaining irrigators with the relaxation of trading restrictions. The aim of the project was to research the options to address the perceived adverse financial consequences of stranded irrigation assets. The authors concluded that it is not certain that proposals under the NWI to relax restrictions on permanent water trading will necessarily result in widespread stranded irrigation assets. Furthermore, stranded assets do not represent an impediment to the efficient use of infrastructure, the allocation of entitlements, or the use of water. The key findings are that instead of using the ongoing payment of access fees, ‘retail tagging’ and ‘exit’ fees to manage financial impacts, a more efficient approach would involve abandoning charges for renewals annuities predicated on the full replacement of existing assets; revaluing under-utilised assets ‘appropriately’ to reflect their current economic value in use; charging to recover costs fully; and the introduction of cost differentiated charges for individual irrigators within irrigation areas. The project is part of a larger suite of Commission research on water policy, which includes modelling regional economic impacts of changes in water trade and research into irrigation externalities. It also complements the commissioned research study on rural water use and the environment. The views expressed in this paper are those of the staff involved and do not necessarily reflect those of the Productivity Commission.
|Date of creation:||Jun 2006|
|Date of revision:|
|Publication status:||Published by the Productivity Commission, Australia.|
|Contact details of provider:|| Postal: Level 28, 35 Collins St, Melbourne Victoria 3000|
Phone: 61 3 9653 2100
Fax: 61 3 9653 2199
Web page: http://www.pc.gov.au/
More information through EDIRC
References listed on IDEAS
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.:
- 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.
- D. Peterson & G. Dwyer & D. Appels & J. Fry, 2005. "Modelling Water Trade in the Southern Murray-Darling Basin," Urban/Regional 0506007, EconWPA.
- Anonymous, 1999. "Impact of Competition Policy Reforms on Rural and Regional Australia," Inquiry Reports 31892, Productivity Commission.
- Anonymous, 2006. "Rural Water Use and the Environment: The Role of Market Mechanisms," Commissioned Studies 8020, Productivity Commission.
- Randall G. Holcombe & Russell S. Sobel, 2001. "Public Policy Toward Pecuniary Externalities," Public Finance Review, , vol. 29(4), pages 304-325, July.
- 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.
- 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.
- R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837 - 877.
- Bjornlund, Henning, 2003. "Farmer participation in markets for temporary and permanent water in southeastern Australia," Agricultural Water Management, Elsevier, vol. 63(1), pages 57-76, November.
When requesting a correction, please mention this item's handle: RePEc:ris:prodsw:0605. 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: (MAPS)
If references are entirely missing, you can add them using this form.