Effective use of public funding in the Murray-Darling Basin: a comparison of buybacks and infrastructure upgrades

Wittwer, Glyn; Dixon, Janine

doi:10.1111/1467-8489.12001

Cited by 50 publications

(19 citation statements)

References 12 publications

(17 reference statements)

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“…The irrigation renewal has exacerbated this situation, as unprofitable farms become even less valuable since these are also the least likely to have access to the backbone. As mentioned earlier, Wittwer and Dixon (2013) calculated that the money spent on irrigation renewal throughout the MDB would be better spent on services, as this would create three to four times more jobs. Irrigators are reportedly unsure of what the future land use of areas removed from irrigation will be, what new industries may potentially replace irrigated agriculture, and the role of government, both state and federal, in this new situation (R4).…”

Section: _14-41indd 10mentioning

confidence: 99%

“…Crase, Pawsey, and O'Keefe (2013) concluded that policies for subsidising irrigation renewal are in direct conflict with water markets, and undermine the effectiveness of market-based policies for efficient water use. Wittwer and Dixon (2013) argued that public investment in this irrigation renewal case is likely to be less effective for fostering regional development than spending on education, health or other services. In this paper, we report the findings of empirical research with water management professionals involved in this Australian case, and draw out systemic insights from the governance of the irrigation renewal that can be used in future water reform projects nationally and internationally.…”

Section: Introductionmentioning

confidence: 99%

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Governing irrigation renewal in rural Australia

Wallis

Iaquinto

Ison

et al. 2015

IJWG

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Irrigation renewal schemes are taking place globally for water conservation and gains in agricultural productivity, as competition for water resources increases. The publically-funded renewal of irrigation infrastructure is a key platform of water reform in Australia's Murray-Darling Basin; it is considered by some to be a policy that contradicts market-based approaches. In this Australian study, we examine an irrigation renewal scheme in northern Victoria resulting from a large investment by the State and Federal Governments. The long historical development of infrastructure and institutions for irrigation in the region led to technological lock-in and exposure to international terms of trade and climate change. From interviews with water professionals involved in the region, three key themes were identified through an adapted grounded theory approach: (1) a lack of an appropriate platform for fostering community involvement in what was a large-scale investment of public money; (2) issues in the way that water losses and savings were calculated; and (3) contradictions in policies for water buyback and irrigation renewal that lead to some irrigators being disadvantaged. To better understand the situation, we also applied a theoretical lens based on social learning. We conclude that the framing of a water 'crisis' was used to the benefit of some irrigators in attracting large-scale investment of public funds for irrigation renewal. The proposed solution, a technologically-driven irrigation renewal scheme, was implemented at a pace that didn't match the planning horizons for many, leading many to exit from irrigated agriculture. Systemic insights for the design and implementation of irrigation renewal schemes internationally are highlighted.

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Section: _14-41indd 10mentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Governing irrigation renewal in rural Australia

Wallis

Iaquinto

Ison

et al. 2015

IJWG

View full text Add to dashboard Cite

show abstract

“…G omez and P erez-Blanco 2014) due to rebound effects resulting in greater consumptive extractions (Gomez and Gutierrez-Martin 2011), and this combination increases all water users' exposure to risk (Adamson et al 2017). Sixth, irrigation efficiency investments are inferior to public spending on health, education and other services to stimulate economic growth in the Basin (Wittwer and Dixon 2013). Political constraints on buyback, despite economic advice to the contrary, motivate our interest in evaluating the effectiveness of these two water recovery instruments.…”

Section: Introductionmentioning

confidence: 99%

Achieving environmental flows where buyback is constrained

Adamson

Loch

2017

Aus J Agri & Res Econ

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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 onfarm 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.

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“…Consequently while the analysis work by Dixon, Rimmer andWittwer (2011) andDixon (2013) (Dixon, Rimmer & Wittwer 2011;Hone et al 2010;Wittwer & Dixon 2013), evaluated the farmer's perceptions of the strategies (Cheesman & Wheeler 2012;Wheeler & Cheesman 2013); examined the impact that a general reduction in water availability would have on irrigated production rather than a specific implementation strategy (Grafton, Chu, et al 2011;Grafton & Jiang 2011); discussed the limitations of the models used to evaluate the Basin Plan (Connor 2011); provided the analysis for an individual catchment (Qureshi et al 2010) examined the RtB using a single water property right (Qureshi et al 2010) or derived a solution for the Southern Murray-Darling Basin (SMDB) only (Qureshi et al 2007). The partial-equilibrium analyses utilised the tradational stochastic function approach to modeling risk and uncertainty (see Section 5).…”

Section: Rsmg Model Of the Mdb (Statementioning

confidence: 99%

“…However, Wittwer and Dixon (2013) analyzed the second round impacts of both the RtB and the SRWUIP using the TERM-H 2 O CGE model (see Section 1.3) and determined that the SRWUIP (upgrades) provide... "…a windfall gain to the MDB regions at the expense of the rest of Australia.…”

Section: 2mentioning

confidence: 99%

Restoring the balance: Water reform & the Murray-Darling Basin plan

Adamson¹

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The Murray-Darling Basin Plan (Basin Plan) is tasked with improving welfare by internalizing the negative externalities derived from the past 130 years of policy development which has over allocated water resources to irrigators in Australia's MurrayDarling Basin (MDB). As water scarcity increases these welfare losses are compounded.For example, during the Millennium Drought water could not be delivered to urban communities, critical environmental flow was not provided, and the typically elastic private demand for water transformed into an inelastic demand function exposing capital investment to climatic risk.The Basin Plan utilizes the common property concept to internalize externalities by reducing the quantity of the privately held (irrigators) surface rights by 3,200 gigalitres (GL) and transferring these rights to an environmental steward. By restoring environmental flows, externalities are internalized as the environment gets a share, and the 'quality' of the water resources improves thus increasing economic welfare. To facilitate this transfer, an adjustment package has been designed that provides a net increase in groundwater and allocates over $10 billion in funding, split between two programs to purchase surface water. Some $3.1 billion has been allocated to purchase 1,500GL of property rights from irrigators while $5.8 billion has been allocated to gain 1,700GL by subsidizing investments in water use efficiency programs.Water resources in the MDB are highly variable and are characterized by floods and droughts events. This variability is expected to increase as climate change is forecast to reduce supply and increase the variability of rainfall. Consequently the long run success of the Basin Plan will be dependent on the efficiency of these alternative strategies to source surface water for the environment subject to this inherent variability and increasing uncertainty.By representing uncertainty about water supply within alternative states of nature (drought, wet and normal), the state-contingent approach (SCA) provides the capacity to examine how irrigators adapt to both the state of nature and alternative policy settings by changing inputs, production systems and transition towards opportunistically irrigating in favorable states of nature. By being able to model output and decision maker uncertainty separately, ii the SCA approach then overcomes the limitations of other decision making approaches.By setting up the Basin Plan as an optimization question, the net change in national welfare from irrigation can be examined against the assurance that the Basin Plan objectives are achieved (i.e. policy constraints of minimum flow targets and quality improvements). This provides the capacity to illustrate how alternative climate scenarios could alter the possibility of meeting the water reform objectives listed in the Basin Plan.The analysis reveals that: the increased groundwater access creates inequitable wealth for irrigators and shifts climate risk towards the environment; that the optimal...

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Effective use of public funding in the Murray-Darling Basin: a comparison of buybacks and infrastructure upgrades

Cited by 50 publications

References 12 publications

Governing irrigation renewal in rural Australia

Governing irrigation renewal in rural Australia

Achieving environmental flows where buyback is constrained

Restoring the balance: Water reform & the Murray-Darling Basin plan

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