Investing in recovering water for the environment in Australia's Murray-Darling Basin

Abstract

Irrigated agriculture makes an important contribution to the economy of Australia's Murray-Darling Basin. Competing water demand, recurring drought and climate change have ushered in an era of water policy reform. To recover water for the environment, surface water extraction is capped and investment in irrigation infrastructure is prioritized. This article applies a computable general equilibrium model to evaluate the economic impacts of investment in irrigation in a case study of the Murrumbidgee subcatchment. Results indicate an increase in regional output, income and employment, while at the national level there is a small negative impact resulting from the transfer of resources to the basin and the crowding out of private investment.

A Conceptual Framework for Integrated Economic–Environmental Modeling

“…The authors build on the World Bank's global ENVISAGE model, introducing a high degree of disaggregation for Latin American and Caribbean countries and linking this model to household survey data for examining within-country climate change impacts on households. Banerjee et al (2015) modeled climate change impacts on household caloric intake by developing a linked CGE and food security model for Bangladesh. Bo¨hringer and Rutherford (2013) examined how transitioning from coal to cleaner energies could be facilitiated through flexibility of emissions abatement, revenue recyclying, and technology in Poland.…”

“…Recent analysis by Wittwer and Banerjee (2015) explored the viability of investment in irrigated agricultural development in Australia's North West Queensland. Banerjee (2015) investigated the returns to investing in irrigation efficiency to return water to the environment for enhanced ecosystem services supply.…”

“…Banerjee et al. (2015) modeled climate change impacts on household caloric intake by developing a linked CGE and food security model for Bangladesh.…”