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Targeting Environmental Water from Irrigators in the Murray Darling Basin

  • Sarah Chambers

    ()

    (Risk & Sustainable Management Group, School of Economics, University of Queensland)

  • David Adamson

    ()

    (Risk and Sustainable Management Group, University of Queensland)

The extended dry conditions in the Murray Darling Basin have resulted in unprecedented levels of reduced water availability for both irrigators and the environment. Concerns over environmental degradation and the health of the river Murray have prompted the Federal and State Governments to cooperate in a range of environmental water restoration programs, including environmental water purchases. These programs have been subjected to varying levels of criticism as to the environmental effectiveness and the economic merit in addressing the central problem of over allocation of a spatially distributed multiple use resource. This paper investigates the economic-environmental tradeoffs under the assumption of unrestricted trade in the Basin. Using a bio-economic model of the Murray Darling Basin we will investigate the opportunity costs of not allowing unrestricted trade, and then consider alternative Environmental Water Allocations (EWAs) to environmental Icon Sites. The model suggests that if unrestricted trade was implemented across the Basin, there would be potential for massive water savings compared to the current long term average cap, and benefits to trade in the order of $96 million. The model also suggests that, under unrestricted trade, the provision of large EWA’s will lead to large reductions in water use (40 percent), however the relative reduction in agricultural value will be much less (12 percent). This brings to question the current objective of the government buybacks as a transition to the Water Act 2009 Sustainable Diversions while allowing State enforced barriers to trade.

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File URL: http://www.uq.edu.au/rsmg/WP/WPM09_01.pdf
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Paper provided by Risk and Sustainable Management Group, University of Queensland in its series Murray-Darling Program Working Papers with number WP1M09.

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Date of creation: Jan 2009
Date of revision: Jul 2010
Handle: RePEc:rsm:murray:m09_1
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  1. Schrobback, Peggy & Adamson, David & Quiggin, John, 2008. "Options for salinity mitigation in the Murray-Darling Basin," Risk and Sustainable Management Group Working Papers 149872, University of Queensland, School of Economics.
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