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The formulation of Australian water policy continues to be one of the most politically vexing areas of public policy. The pressing need for a national policy response stems from a variety of sources, including increasing scarcity, evidence of climate change, jurisdictional ranging amongst states and a history of generous allocations to agriculture that are now proving unsustainable. Collectively, these forces have promoted a policy stance that embodies serious contradictions. On the one hand substantial public investments are being made to upgrade irrigation infrastructure on the grounds that this will ‘save’ water that can then be allocated to satisfy environmental demands. On the other hand, governments have been actively repurchasing water rights, in the hope of striking a better balance in severely stressed systems, such as the Murray-Darling Basin. This paper traces the contradictions in this policy approach and argues that greater emphasis on the market purchase of water rights would give rise to a more efficacious outcome.

The contradiction between modernising irrigation and water buyback