Please use this identifier to cite or link to this item: https://hdl.handle.net/2440/111155
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Type: Journal article
Title: Achieving environmental flows where buyback is constrained
Author: Adamson, D.
Loch, A.
Citation: The Australian Journal of Agricultural and Resource Economics, 2018; 62(1):83-102
Publisher: Australian Agricultural Economics Society
Issue Date: 2018
ISSN: 1364-985X
1467-8489
Statement of
Responsibility: 
David Adamson and Adam Loch
Abstract: Theory suggests that the development of common property increases national welfare, and consistent with this thinking Australia's Murray–Darling Basin (MDB) Plan uses a common property approach to recover environmental water rights in the national interest. Two water recovery instruments are used: purchasing water rights (buyback) from farmers, and saving water by subsidising irrigator adoption of technically efficient technology. A moratorium on buyback has focused environmental recovery on subsidised technically efficient technology adoption. Economists argue that national welfare is maximised via buyback and highlight the limitations of efficiency savings to recover sufficient environmental water. A risk is that water recovery targets may be reduced in future, limiting welfare gains from water reform. This article evaluates possible welfare trade-offs surrounding environmental water recovery outcomes where arbitrary limits on buyback are imposed. Results suggest that, on average, strategies which attempt to obtain >1500 gigalitres (GL) of water from on-farm efficiency investments will only provide sufficient resources to meet environmental objectives in very wet states of nature. We conclude that reliance on technically efficient irrigation infrastructure is less economically efficient relative to water buyback. Importantly, the transformation of MDB irrigation will significantly constrain irrigators' future capacity to adapt to climate change
Keywords: Environmental water; optimisation; water buyback
Rights: © 2017 Australian Agricultural and Resource Economics Society Inc.
DOI: 10.1111/1467-8489.12231
Grant ID: http://purl.org/au-research/grants/arc/DE160100213
http://purl.org/au-research/grants/arc/DE150100328
http://purl.org/au-research/grants/arc/DP140103946
Published version: http://onlinelibrary.wiley.com/doi/10.1111/1467-8489.12231/full
Appears in Collections:Aurora harvest 8
Global Food Studies publications

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