Price Elasticity of Water Allocations Demand in the Goulburn-Murray Irrigation District

19 Pages Posted: 30 Jan 2008

See all articles by Sarah Ann Wheeler

Sarah Ann Wheeler

University of South Australia

Henning Bjornlund

University of South Australia - International Graduate School of Management

Martin Shanahan

University of South Australia - School of Commerce

Alec Zuo

University of South Australia

Abstract

Bid prices for the demand and supply of water allocations between 2001 and 2007, and average monthly prices paid for water allocations from 1997 to 2007 in the Goulburn-Murray Irrigation District are analyzed to estimate price elasticities. Based on bid prices, the price elasticity of demand for water allocations appears highly elastic, with elasticities strongly influenced by the season and drought. The price elasticity of supply for water allocations is also elastic, albeit less elastic than demand. Using actual prices paid, water demand is negatively related to price and is inelastic, and appears to be most influenced by demand the previous month, drought and seasonality factors.

Suggested Citation

Wheeler, Sarah Ann and Bjornlund, Henning and Shanahan, Martin and Zuo, Alec, Price Elasticity of Water Allocations Demand in the Goulburn-Murray Irrigation District. Australian Journal of Agricultural and Resource Economics, Vol. 52, No. 1, pp. 37-55, March 2008, Available at SSRN: https://ssrn.com/abstract=1088507 or http://dx.doi.org/10.1111/j.1467-8489.2008.00416.x

Sarah Ann Wheeler (Contact Author)

University of South Australia ( email )

37-44 North Terrace, City West Campus
Adelaide, South Australia 5001
Australia

Henning Bjornlund

University of South Australia - International Graduate School of Management ( email )

GPO Box 2471
Adelaide South Australia 5001
Australia

Martin Shanahan

University of South Australia - School of Commerce ( email )

37-44 North Terrace
Adelaide SA 5000, South Australia 5001
Australia

Alec Zuo

University of South Australia ( email )

37-44 North Terrace, City West Campus
Adelaide, South Australia 5001
Australia

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