Do Markets Promote More Efficient And Higher
Value Water Use? Tracing Evidence Over Time In
An Australian Water Market
Author(s)
H. Bjornlund
Abstract
This paper analyses buyers and sellers of water entitlements in Australia based
on surveys conducted during three time periods from 1992 to 2006 to identify
whether water markets have facilitated a reallocation of water from inefficient,
unproductive and low-value users to efficient, productive and high-value users.
There is evidence that the entitlement market has an increasing impact on the
way water is used and facilitates reallocation. While the early markets mainly
activated previously unused water, there is evidence that as the market matures,
more actively used water is being sold reducing the productive capacity of the
selling property. The evidence suggests that many sellers reduced their irrigated
area during the last five years, in response to prices in the seasonal market for
water allocations, before eventually selling their entitlement.
Keywords: water trading, water reallocation, community impact, Australia.
1 Introduction
As water scarcity intensifies around the world water markets are increasingly
being proposed to facilitate a reallocation of water from inefficient low-value
users to efficient high-value users to minimize the overall economic impact of
scarcity. The expectation is that the buyers will be able and willing to pay the
sellers a price that compensates them for their losses. However markets in water
entitlements (the market in which the long term entitlement to receive annual
water allocations is traded) have been slow to evolve. Australia is one of a few
countries where entitlement markets have been operating for some time.
Australia therefore provides an opportunity to investigate whether the market has
Keywords
water trading, water reallocation, community impact, Australia.
Related Book
Other papers in this volume
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