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Economic assessment of acquiring water for environmental flows in the Murray Basin *
Author(s) -
Qureshi M. Ejaz,
Connor Jeff,
Kirby Mac,
Mainuddin Mohammed
Publication year - 2007
Publication title -
australian journal of agricultural and resource economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 1364-985X
DOI - 10.1111/j.1467-8489.2007.00383.x
Subject(s) - revenue , irrigation , non revenue water , environmental science , agriculture , net present value , agricultural economics , net income , water resource management , irrigated agriculture , business , natural resource economics , economics , production (economics) , water conservation , geography , ecology , accounting , archaeology , macroeconomics , finance , biology
This article is an economic analysis of reallocating River Murray Basin water from agriculture to the environment with and without the possibility of interregional water trade. Acquiring environmental flows as an equal percentage of water allocations from all irrigation regions in the Basin is estimated to reduce returns to irrigation. When the same volume of water is taken from selected low‐value regions only, the net revenue reduction is less. In all scenarios considered, net revenue gains from freeing trade are estimated to outweigh the negative revenue effects of reallocating water for environmental flows. The model accounts for how stochastic weather affects market water demand, supply and requirements for environmental flows. Net irrigation revenue is estimated to be 75 million less than the baseline level for a scenario involving reallocating a constant volume of water for the environment in both wet and dry years. For a more realistic scenario involving more water for the environment in wet and less in dry years, estimated net revenue loss is reduced by 48 per cent to 39 million. Finally, the external salinity‐related costs of water trading are estimated at around 1 million per annum, a quite modest amount compared to the direct irrigation benefits of trade.