Water Options Contracts To Facilitate
Intersectoral Trade
Author(s)
J. Byrnes, L. Crase & B. Dollery
Abstract
While much faith has been placed in the ability of market based solutions to
allocate water entitlements efficiently, relatively little effort has been made in
fostering trade between urban and rural sectors. One barrier has been concerns
regarding the decline of rural communities following the trade of water out of
rural areas. In this paper we demonstrate how the use of options contracts to
facilitate temporary trade between the sectors may benefit both urban water
utilities and water entitlement holders in irrigation districts.
Keywords: water options, intersectoral trade, water reform.
1 Introduction
Creating the conditions for deep and liquid markets for the trade in water
entitlements has been an enduring motif in the development of Australian water
resource policy for at least the last ten years (Crase et al. [4]). Yet in terms of
implementation, the focus has almost solely been on trade in rural water
allocations. Trade from rural to other sectors has received relatively little
attention due to at least two factors. First, in some locations considerable
geographic barriers necessitate elaborate engineering solutions and considerable
investment. Second, politicians and some rural communities have raised
objections on the grounds that access to water is the lifeblood of rural Australia
(Crase et al. [4]).
www.witpress.com, ISSN 1743-3541 (on-line)
© 2008 WIT Press WIT Transactions on Ecology and the Environment, Vol 112,
Sustainable Irrigation Management, Technologies and Policies II 83
doi:
Keywords
water options, intersectoral trade, water reform.
Related Book
Other papers in this volume
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