Environmental Effectiveness and Economic Efficiency of Water Use in Agriculture: The Experience of and Lessons from the Australian Water Reform Programme

by Michael D. Young

Jan 1, 2010
Australia has embraced the idea of competion and markets as a paradigm for water management. Delivered through an emerging array of State and National initiatives. The result has been the generation of significant opportunities and wealth but, for a number of reasons, these gains have come at a cost to the environment. As a Nation, Australia is now moving to rectify the environmental problems caused by these reforms without losing access to the significant gains already achieved. With the resolution of these problems, it is expected that the development of water markets will be seen as the best way to have resolved the need to change the way water is allocated and used in Australia. In this paper, Australian experiences and Australian approaches to water reform are summarised with a view to assisting countries to put in place water trading and other institutional arrangements without replicating the mistakes that Australia has made and is now having to rectify. When Australia embarked on its water reform journey and the development of water markets, it focused on the development of fully specified entitlement and allocation announcement systems and the reduction of barriers to trade. Considerable effort has been put into the development of arrangements that reduce transaction costs and enable speedy adjustment and also promote efficient investment. Less effort was put into the resolution of an associated set of accounting and allocation issues that are critical for the maintainence of river health, wetland health and water quality. One of the key recommendations made in the report is that water access licences or concessions as they are called in many countries should be unbundled so that access entitlements, seasonal allocations and use approvals can be managed using separate instruments and independent processes.
Environmental Effectiveness and Economic Efficiency of Water Use in Agriculture: The Experience of and Lessons from the Australian Water Reform Programme


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