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Economic cost of environmental flows in an unregulated river system

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  • Jones, Randall E.
  • Crean, Jason
  • Aluwihare, Parakrama B.
  • Letcher, Rebecca A.

Abstract

This paper applies a stochastic dynamic programming framework, incorporating links to hydrological and biophysical models, to assess the economic costs of environmental flows in an unregulated river system in the Namoi Valley of northern New South Wales, Australia. Structural adjustment decisions are included in the model to account for farmer responses to changes in environmental flows through the introduction of a water sharing plan. The results of the analysis indicate that the proposed level of environmental flows reduces water extractions by around 6 per cent, and imposes an opportunity cost of less than 1 per cent in terms of reduced net income over a 20-year period.

Suggested Citation

  • Jones, Randall E. & Crean, Jason & Aluwihare, Parakrama B. & Letcher, Rebecca A., 2007. "Economic cost of environmental flows in an unregulated river system," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(3), pages 1-17.
    • Handle: RePEc:ags:aareaj:118334
    DOI: 10.22004/ag.econ.118334
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    References listed on IDEAS

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    1. Dan Yaron & Ariel Dinar, 1982. "Optimal Allocation of Farm Irrigation Water during Peak Seasons," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(4), pages 681-689.
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