Economics of Water Recovery in the Murray-Darling Basin, Australia

Posted: 29 Oct 2018

See all articles by Quentin Grafton

Quentin Grafton

The Australian National University

Sarah Ann Wheeler

University of South Australia

Date Written: October 2018

Abstract

We review recent water reforms and the consequences of water recovery intended to increase stream flows in the Murray-Darling Basin (MDB), Australia. The MDB provides a natural experiment of water recovery for the environment that includes ( a) the voluntary buy-back of water rights from willing sellers and ( b) the subsidization of irrigation infrastructure. We find that ( a) the actual increase in the volumes of water in terms of stream flows is much less than claimed by the Australian government; ( b) subsidies to increase irrigation efficiency have reduced stream and groundwater return flows; ( c) buy-backs are much more cost effective than subsidies; ( d) many of the gains from water recovery have accrued as private benefits to irrigators; and ( e) more than a decade after water recovery began, there is no observable basin-wide relationship between volumes of water recovered and flows at the mouth of the River Murray.

Suggested Citation

Grafton, Quentin and Wheeler, Sarah Ann, Economics of Water Recovery in the Murray-Darling Basin, Australia (October 2018). Annual Review of Resource Economics, Vol. 10, Issue 1, pp. 487-510, 2018, Available at SSRN: https://ssrn.com/abstract=3274147 or http://dx.doi.org/10.1146/annurev-resource-100517-023039

Quentin Grafton (Contact Author)

The Australian National University ( email )

Crawford School (Bldg 132)
The ANU
Acton, Canberra, Australian Capital Territory 2601
Australia

HOME PAGE: http://https://crawford.anu.edu.au/people/academic/quentin-grafton

Sarah Ann Wheeler

University of South Australia ( email )

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

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