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Saving the Southern Murray‐Darling Basin: The Economic Effects of a Buyback of Irrigation Water *
Author(s) -
DIXON PETER B.,
RIMMER MAUREEN T.,
WITTWER GLYN
Publication year - 2011
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.2010.00691.x
Subject(s) - computable general equilibrium , irrigation , structural basin , term (time) , economics , water resource management , natural resource economics , agricultural economics , water trading , environmental science , water conservation , geology , ecology , macroeconomics , paleontology , biology , physics , quantum mechanics
We use TERM‐H 2 O in analysing the effects of the Government buying back water from irrigators in the Southern Murray‐Darling Basin (SMDB) and thereby increasing river flows. TERM‐H 2 O is a dynamic multiregional computable general equilibrium model containing water accounts. Controversially, our results suggest that buyback would increase economic activity in SMDB. Although a scheme of environmentally useful size would sharply increase the price of irrigation water, there would be little effect on aggregate SMDB farm output. Instead, farm resources would be reallocated between activities. Because farmers are owners of water rights, they would benefit from the price increase induced by buyback.