Increased Participation In
Australian Water Markets
Author(s)
H. Bjornlund
Abstract
This paper examines evidence of the factors affecting the adoption of water
markets within Australia’s largest irrigation district, the Goulburn-Murray
Irrigation District in Northern Victoria. The district is unique for the purpose of
this analysis for a number of reasons: 1) irrigators are supplied by two main
systems with very different supply reliability; 2) parts of the district have a high
proportion of land suffering from soil degradation and salinity with low value
production while other areas have better soils and higher value production; 3)
market restrictions have been eased over time and vary across the district; 4) the
district has experienced severe drought over the last six years; and 5) there are
two different types of irrigators within the district, those supplied by the district
infrastructure and those pumping their own water directly from the rivers with
slightly different entitlements. The paper uses the trading and entitlement
registers to analyze the trading behavior of all farm businesses during the first
13 years of trading both in the market for water entitlements and water
allocations. Originally markets were adopted most extensively in the area with
the largest potential financial tradeoffs between high and low value water users
and irrigators with poor and good soils, while in the other parts of the district the
main drivers of market participation have been scarcity and policy changes.
Keywords: water markets, market adoption, market participation, Australia.
1 Introduction
Water markets have been promoted by economists as a preferred instrument to
reallocate scarce water resources within a mature water economy since the 1960s
and 1970s. It was not until the early 1990s, however, that policy makers began in
Keywords
water markets, market adoption, market participation, Australia.
Related Book
Other papers in this volume
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