IDEAS home Printed from https://ideas.repec.org/a/ags/aareaj/117737.html
   My bibliography  Save this article

Price elasticity of water allocations demand in the Goulburn–Murray Irrigation District

Author

Listed:
  • Wheeler, Sarah Ann
  • Bjornlund, Henning
  • Shanahan, Martin
  • Zuo, Alec

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 analysed 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 & Bjornlund, Henning & Shanahan, Martin & Zuo, Alec, 2008. "Price elasticity of water allocations demand in the Goulburn–Murray Irrigation District," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(1), pages 1-19.
    • Handle: RePEc:ags:aareaj:117737
    DOI: 10.22004/ag.econ.117737
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/117737/files/j.1467-8489.2008.00416.x.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.117737?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. R. Quentin Grafton & Tom Kompas, 2007. "Pricing Sydney water ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(3), pages 227-241, September.
    2. Cheng Hsiao, 1997. "Statistical Properties of the Two-Stage Least Squares Estimator Under Cointegration," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(3), pages 385-398.
    3. Donna Brennan, 2006. "Water policy reform in Australia: lessons from the Victorian seasonal water market ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(3), pages 403-423, September.
    4. Bell, Rosalyn & Gali, Jyothi & Gretton, Paul & Redmond, Ineke, 2007. "The responsiveness of Australian farm performance to changes in irrigation water use and trade," 2007 Conference (51st), February 13-16, 2007, Queenstown, New Zealand 9454, Australian Agricultural and Resource Economics Society.
    5. Varela-Ortega, Consuelo & M. Sumpsi, Jose & Garrido, Alberto & Blanco, Maria & Iglesias, Eva, 1998. "Water pricing policies, public decision making and farmers' response: implications for water policy," Agricultural Economics, Blackwell, vol. 19(1-2), pages 193-202, September.
    6. Brennan, Donna C., 2006. "Water policy reform in Australia: lessons from the Victorian seasonal water market," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(3), pages 1-21, September.
    7. Robert Brooks & Edwyna Harris, 2005. "An Analysis of Watermove Water Markets," Monash Econometrics and Business Statistics Working Papers 10/05, Monash University, Department of Econometrics and Business Statistics.
    8. Pagan, Phil & Fagan, Margot & Crean, Jason & Jones, Randall E., 1997. "Short and Long Run Approaches to Water Demand Estimation," 1997 Conference (41st), January 22-24, 1997, Gold Coast, Australia 136499, Australian Agricultural and Resource Economics Society.
    9. Margriet Caswell & Erik Lichtenberg & David Zilberman, 1990. "The Effects of Pricing Policies on Water Conservation and Drainage," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(4), pages 883-890.
    10. Appels, David & Douglas, Robert A. & Dwyer, Gavan, 2004. "Responsiveness of Demand for Irrigation Water: A Focus on the Southern Murray-Darling Basin," Staff Working Papers 31924, Productivity Commission.
    11. Perry, C.J, 2001. "Charging for irrigation water: The issues and options, with a case study from Iran," IWMI Research Reports H 27766, International Water Management Institute.
    12. Margriet Caswell & David Zilberman, 1985. "The Choices of Irrigation Technologies in California," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(2), pages 224-234.
    13. Perry, Christopher J., 2001. "Charging for irrigation water: The issues and options, with a case study from Iran," IWMI Research Reports 44567, International Water Management Institute.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bjornlund, Henning & Nicol, Lorraine & Klein, K.K., 2007. "Challenges in implementing economic instruments to manage irrigation water on farms in southern Alberta," Agricultural Water Management, Elsevier, vol. 92(3), pages 131-141, September.
    2. de Fraiture, Charlotte & Perry, C. J., 2007. "Why is agricultural water demand unresponsive at low price ranges?," IWMI Books, Reports H040602, International Water Management Institute.
    3. de Fraiture, Charlotte & Perry, C. J., 2007. "Why is agricultural water demand unresponsive at low price ranges?," Book Chapters,, International Water Management Institute.
    4. Qureshi, Muhammad Ejaz & Connor, Jeffery D. & Kirby, Mac & Mainuddin, Mohammed, 2007. "Economic assessment of acquiring water for environmental flows in the Murray Basin," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(3), pages 1-21.
    5. Wheeler, Sarah Ann & Zuo, Alec & Bjornlund, Henning, 2014. "Investigating the delayed on-farm consequences of selling water entitlements in the Murray-Darling Basin," Agricultural Water Management, Elsevier, vol. 145(C), pages 72-82.
    6. Alfonso Expósito & Julio Berbel, 2017. "Why Is Water Pricing Ineffective for Deficit Irrigation Schemes? A Case Study in Southern Spain," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 31(3), pages 1047-1059, February.
    7. Raffensperger, John F., 2011. "Matching users' rights to available groundwater," Ecological Economics, Elsevier, vol. 70(6), pages 1041-1050, April.
    8. Griffith, Marnie & Codner, Gary & Weinmann, Erwin & Schreider, Sergei, 2009. "Modelling hydroclimatic uncertainty and short-run irrigator decision making: the Goulburn system," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(4), pages 1-20.
    9. Mullen, Jeffrey D. & Yu, Yingzhuo & Hoogenboom, Gerrit, 2009. "Estimating the demand for irrigation water in a humid climate: A case study from the southeastern United States," Agricultural Water Management, Elsevier, vol. 96(10), pages 1421-1428, October.
    10. Wei, Yongping & Chen, Deli & Hu, Kelin & Willett, Ian R. & Langford, John, 2009. "Policy incentives for reducing nitrate leaching from intensive agriculture in desert oases of Alxa, Inner Mongolia, China," Agricultural Water Management, Elsevier, vol. 96(7), pages 1114-1119, July.
    11. de Bonviller, Simon & Wheeler, Sarah Ann & Zuo, Alec, 2020. "The dynamics of groundwater markets: Price leadership and groundwater demand elasticity in the Murrumbidgee, Australia," Agricultural Water Management, Elsevier, vol. 239(C).
    12. Neal Hughes & Manannan Donoghoe & Linden Whittle, 2020. "Farm Level Effects of On‐Farm Irrigation Infrastructure Programs in the Southern Murray–Darling Basin," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 53(4), pages 494-516, December.
    13. Robert Brooks & Edwyna Harris & Yovina Joymungul, 2013. "Price clustering in Australian water markets," Applied Economics, Taylor & Francis Journals, vol. 45(6), pages 677-685, February.
    14. Shah, Tushaar & Scott, Christopher & Berkoff, J. & Kishore, A. & Sharma, A., 2007. "The energy-irrigation nexus in South Asia: groundwater conservation and power sector viability," IWMI Books, Reports H040608, International Water Management Institute.
    15. Rui Manuel de Sousa Fragoso & Carlos Alberto Falcão Marques, 2013. "The Economic Impact of Alternative Water Pricing Policies in Alentejo Region," CEFAGE-UE Working Papers 2013_02, University of Evora, CEFAGE-UE (Portugal).
    16. Changhai Qin & Shan Jiang & Yong Zhao & Yongnan Zhu & Qingming Wang & Lizhen Wang & Junlin Qu & Ming Wang, 2022. "Research on Water Rights Trading and Pricing Model between Agriculture and Energy Development in Ningxia, China," Sustainability, MDPI, vol. 14(23), pages 1-15, November.
    17. Wei, Yongping & White, Robert & Hu, Kelin & Willett, Ian, 2010. "Valuing the environmental externalities of oasis farming in Left Banner, Alxa, China," Ecological Economics, Elsevier, vol. 69(11), pages 2151-2157, September.
    18. Ansink, Erik & Houba, Harold, 2012. "Market power in water markets," Journal of Environmental Economics and Management, Elsevier, vol. 64(2), pages 237-252.
    19. Llop Llop, Maria & Ponce Alifonso, Xavier,, 2012. "Agriculture, technological change and environmental sustainability: Looking for a win-win water policy strategy," Working Papers 2072/203158, Universitat Rovira i Virgili, Department of Economics.
    20. G. R. Soltani & M. Bakhshoodeh & M. Zibaei, 2009. "Optimization of Agricultural Water Use and Trade Patterns: The Case of Iran," Working Papers 508, Economic Research Forum, revised Dec 2009.

    More about this item

    Keywords

    Resource /Energy Economics and Policy;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aareaj:117737. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaresea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.