IDEAS home Printed from https://ideas.repec.org/a/bla/ajarec/v65y2021i2p318-348.html
   My bibliography  Save this article

Explaining permanent and temporary water market trade patterns within local areas in the southern Murray–Darling Basin

Author

Listed:
  • Juliane Haensch
  • Sarah Ann Wheeler
  • Alec Zuo

Abstract

The southern Murray–Darling Basin of Australia has the world’s largest and most sophisticated water markets. However, there has been little study on the drivers of permanent and temporary water market movements within local areas, or the substitution effects between groundwater and surface‐water extraction over time. This topic is important as it is often claimed that water market trade patterns (especially selling large amounts of permanent water) are associated with rural decline. This study uses random‐effects tobit panel models to investigate the association of regional and spatial socio‐economic characteristics with temporary and permanent southern Murray–Darling Basin water market trade, using a broker panel database at postcode level from 2010/11 to 2013/14. Overall, results suggest there is no statistical significant evidence that more disadvantaged communities sold larger amounts of permanent water. Permanent water selling was statistically more likely to be associated with other spatial and land productivity characteristics, while temporary water market trade volumes were more related to water scarcity factors. In addition, there was evidence to suggest a substitution effect between rural areas selling higher volumes of permanent water and using higher volumes of groundwater.

Suggested Citation

  • Juliane Haensch & Sarah Ann Wheeler & Alec Zuo, 2021. "Explaining permanent and temporary water market trade patterns within local areas in the southern Murray–Darling Basin," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(2), pages 318-348, April.
    • Handle: RePEc:bla:ajarec:v:65:y:2021:i:2:p:318-348
    DOI: 10.1111/1467-8489.12420
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1467-8489.12420
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1467-8489.12420?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. Maksym Polyakov & David J. Pannell & Ram Pandit & Sorada Tapsuwan & Geoff Park, 2015. "Capitalized Amenity Value of Native Vegetation in a Multifunctional Rural Landscape," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 299-314.
    2. Sheng, Yu & Davidson, Alistair & Fuglie, Keith & Zhang, Dandan, 2016. "Input Substitution, Productivity Performance and Farm Size," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 60(3), July.
    3. Jeff Connor & Kurt Schwabe & Darran King & David Kaczan & Mac Kirby, 2009. "Impacts of climate change on lower Murray irrigation ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(3), pages 437-456, July.
    4. Ancev, Tiho, 2015. "The role of the commonwealth environmental water holder in annual water allocation markets," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 59(01), January.
    5. Konyar, Kazim & Howitt, Richard E., 2000. "The Cost Of The Kyoto Protocol To U.S. Crop Production: Measuring Crop Price, Regional Acreage, Welfare, And Input Substitution Effects," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(2), pages 1-21, December.
    6. Lisa Yu-Ting Lee & Tihomir Ancev, 2009. "Two Decades of Murray-Darling Water Management: A River of Funding, a Trickle of Achievement," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 16(1), pages 5-24.
    7. R. Quentin Grafton & Gary Libecap & Samuel McGlennon & Clay Landry & Bob O'Brien, 2011. "An Integrated Assessment of Water Markets: A Cross-Country Comparison," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(2), pages 219-239, Summer.
    8. Giancarlo Moschini, 1988. "The Cost Structure of Ontario Dairy Farms: A Microeconometric Analysis," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 36(2), pages 187-206, July.
    9. Glyn Wittwer, 2011. "Confusing Policy and Catastrophe: Buybacks and Drought in the Murray–Darling Basin," Economic Papers, The Economic Society of Australia, vol. 30(3), pages 289-295, September.
    10. Kirby, Mac & Bark, Rosalind & Connor, Jeff & Qureshi, M. Ejaz & Keyworth, Scott, 2014. "Sustainable irrigation: How did irrigated agriculture in Australia's Murray–Darling Basin adapt in the Millennium Drought?," Agricultural Water Management, Elsevier, vol. 145(C), pages 154-162.
    11. Sarah Ann Wheeler & Ying Xu & Alec Zuo, 2020. "Modelling the climate, water and socio-economic drivers of farmer exit in the Murray-Darling Basin," Climatic Change, Springer, vol. 158(3), pages 551-574, February.
    12. Gerald C. Nelson & Daniel Hellerstein, 1997. "Do Roads Cause Deforestation? Using Satellite Images in Econometric Analysis of Land Use," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 80-88.
    13. Sabrina Isé & David L. Sunding, 1998. "Reallocating Water from Agriculture to the Environment under a Voluntary Purchase Program," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 20(1), pages 214-226.
    14. Lin Crase & Eve Merton, 2013. "Correcting Misconceptions about Links between Water Planning and Food Security in the Murray–Darling Basin," Economic Papers, The Economic Society of Australia, vol. 32(3), pages 298-307, September.
    15. Cho, Seong-Hoon & Newman, David H., 2005. "Spatial analysis of rural land development," Forest Policy and Economics, Elsevier, vol. 7(5), pages 732-744, August.
    16. Nieswiadomy, Michael L., 1988. "Input Substitution In Irrigated Agriculture In The High Plains Of Texas, 1970-80," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 13(01), pages 1-8, July.
    17. Monobina Mukherjee & Kurt Schwabe, 2015. "Irrigated Agricultural Adaptation to Water and Climate Variability: The Economic Value of a Water Portfolio," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(3), pages 809-832.
    18. Stephan J. Goetz & David L. Debertin, 2001. "Why Farmers Quit: A County-Level Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(4), pages 1010-1023.
    19. Michael J. Roberts & Nigel Key, 2008. "Agricultural Payments and Land Concentration: A Semiparametric Spatial Regression Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(3), pages 627-643.
    20. Loch, Adam & Bjornlund, Henning & Wheeler, Sarah & Connor, Jeff, 2012. "Allocation trade in Australia: a qualitative understanding or irrigator motives and behaviour," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(01), pages 1-19, March.
    21. David P. Vincent, 1977. "Factor Substitution In Australian Agriculture," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 21(2), pages 119-129, August.
    22. Juliane Haensch & Sarah Ann Wheeler & Alec Zuo & Henning Bjornlund, 2016. "The Impact of Water and Soil Salinity on Water Market Trading in the Southern Murray–Darling Basin," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(01), pages 1-26, March.
    23. -, 2009. "The economics of climate change," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 38679, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    24. Elena G. Irwin & Andrew M. Isserman & Maureen Kilkenny & Mark D. Partridge, 2010. "A Century of Research on Rural Development and Regional Issues," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(2), pages 522-553.
    25. S. Wheeler & A. Zuo & H. Bjornlund & C. Lane Miller, 2012. "Selling the Farm Silver? Understanding Water Sales to the Australian Government," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 52(1), pages 133-154, May.
    26. Glyn Wittwer & Michael D Young, 2020. "Distinguishing Between Policy, Drought and International Events in the Context of the Murray Darling Basin Plan," Centre of Policy Studies/IMPACT Centre Working Papers g-295, Victoria University, Centre of Policy Studies/IMPACT Centre.
    27. Zuo, Alec & Qiu, Feng & Wheeler, Sarah Ann, 2019. "Examining volatility dynamics, spillovers and government water recovery in Murray-Darling Basin water markets," Resource and Energy Economics, Elsevier, vol. 58(C).
    28. Simon de Bonviller & Alec Zuo & Sarah Ann Wheeler, 2019. "Is there evidence of insider trading in Australian water markets?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(2), pages 307-327, April.
    29. Quiggin, John C., 2001. "Environmental economics and the Murray-Darling river system," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 45(01), pages 1-28.
    30. Charles Regnacq & Ariel Dinar & Ellen Hanak, 2016. "The Gravity of Water: Water Trade Frictions in California," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(5), pages 1273-1294.
    31. Rigoberto A. Lopez & Adesoji O. Adelaja & Margaret S. Andrews, 1988. "The Effects of Suburbanization on Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(2), pages 346-358.
    32. R. Quentin Grafton & Sarah Ann Wheeler, 2018. "Economics of Water Recovery in the Murray-Darling Basin, Australia," Annual Review of Resource Economics, Annual Reviews, vol. 10(1), pages 487-510, October.
    33. Brian Roe & Elena G. Irwin & Jeff S. Sharp, 2002. "Pigs in Space: Modeling the Spatial Structure of Hog Production in Traditional and Nontraditional Production Regions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 259-278.
    34. Alec Zuo & Céline Nauges & Sarah Ann Wheeler, 2015. "Farmers' exposure to risk and their temporary water trading," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 42(1), pages 1-24.
    35. Sarah Ann Wheeler & Dustin E Garrick, 2020. "A tale of two water markets in Australia: lessons for understanding participation in formal water markets," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 36(1), pages 132-153.
    36. JunJie Wu & Monica Fisher & Unai Pascual, 2011. "Urbanization and the Viability of Local Agricultural Economies," Land Economics, University of Wisconsin Press, vol. 87(1), pages 109-125.
    37. Edwards, Brian K. & Howitt, Richard E. & Flaim, Silvio J., 1996. "Fuel, crop, and water substitution in irrigated agriculture," Resource and Energy Economics, Elsevier, vol. 18(3), pages 311-331, October.
    38. JunJie Wu & Bruce A. Weber & Mark D. Partridge, 2017. "Rural-Urban Interdependence: A Framework Integrating Regional, Urban, and Environmental Economic Insights," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(2), pages 464-480.
    39. Bill Pritchard & Neil Argent & Scott Baum & Lisa Bourke & John Martin & Phil Mcmanus & Anthony Sorensen & Jim Walmsley, 2012. "Local -- If Possible: How the Spatial Networking of Economic Relations amongst Farm Enterprises Aids Small Town Survival in Rural Australia," Regional Studies, Taylor & Francis Journals, vol. 46(4), pages 539-557, June.
    40. Crossman, Neville D. & Connor, Jeffrey D. & Bryan, Brett A. & Summers, David M. & Ginnivan, John, 2010. "Reconfiguring an irrigation landscape to improve provision of ecosystem services," Ecological Economics, Elsevier, vol. 69(5), pages 1031-1042, March.
    41. Vincent, David P., 1977. "Factor Substitution In Australian Agriculture," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 21(2), pages 1-11, August.
    42. Cai, Ximing & Ringler, Claudia & You, Jiing-Yun, 2008. "Substitution between water and other agricultural inputs: Implications for water conservation in a River Basin context," Ecological Economics, Elsevier, vol. 66(1), pages 38-50, May.
    43. Javier Calatrava & Alberto Garrido, 2005. "Spot water markets and risk in water supply," Agricultural Economics, International Association of Agricultural Economists, vol. 33(2), pages 131-143, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sarah Ann Wheeler, 2022. "Debunking Murray‐Darling Basin water trade myths," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(4), pages 797-821, October.
    2. Guy M. Robinson & Bingjie Song, 2023. "Managing Water for Environmental Provision and Horticultural Production in South Australia’s Riverland," Sustainability, MDPI, vol. 15(15), pages 1-20, July.
    3. Zuo, Alec & Wheeler, Sarah Ann & Xu, Ying, 2022. "Expanders, diversifiers or downsizers? Identifying clusters of irrigators’ water trade and farm management strategies in Australia," Agricultural Water Management, Elsevier, vol. 264(C).
    4. Haensch, Juliane & Bergmann, Holger & Quaranta, Gianni & Salvia, Rosanna & Sun, Dingqiang & Zhong, Funing & Plaas, Elke, 2022. "Water management in agriculture under growing water scarcity: Comparing policy options and listening to stakeholders across Europe, Israel and China," 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium 321231, Agricultural Economics Society - AES.

    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. Sarah Ann Wheeler, 2022. "Debunking Murray‐Darling Basin water trade myths," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(4), pages 797-821, October.
    2. Zuo, Alec & Wheeler, Sarah Ann & Xu, Ying, 2022. "Expanders, diversifiers or downsizers? Identifying clusters of irrigators’ water trade and farm management strategies in Australia," Agricultural Water Management, Elsevier, vol. 264(C).
    3. 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).
    4. Zuo, Alec & Nauges, Celine & Wheeler, Sarah, 2012. "Water trading as a risk-management tool for farmers: new empirical evidence from the Australian water market," Risk and Sustainable Management Group Working Papers 149885, University of Queensland, School of Economics.
    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. Morrison, Mark & Wheeler, Sarah Ann & Hatton MacDonald, Darla, 2012. "Towards a more nuanced discussion of the net-benefits of sharing water in the Murray-Darling Basin," AFBM Journal, Australasian Farm Business Management Network, vol. 8(2), pages 1-12, April.
    7. de Bonviller, Simon & Zuo, Alec & Wheeler, Sarah Ann, 2019. "Is there evidence of insider trading in Australian water markets?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 60(2), April.
    8. Alec Zuo & Sarah Ann Wheeler & Peter Boxall & W. L. (Vic) Adamowicz & Darla Hatton MacDonald, 2015. "Identifying Water Prices at which Australian Farmers Will Exit Irrigation: Results of a Stated Preference Survey," The Economic Record, The Economic Society of Australia, vol. 91(S1), pages 109-123, June.
    9. Wight, Charles & Garmany, Kyle & Arima, Eugenio & Garrick, Dustin, 2024. "Texas water markets: Understanding their trends, drivers, and future potential," Ecological Economics, Elsevier, vol. 224(C).
    10. Sarah Ann Wheeler & Alec Zuo & John Kandulu, 2021. "What Water are We Really Pumping? The Nature and Extent of Surface and Groundwater Substitutability in Australia and Implications for Water Management Policies," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(4), pages 1550-1570, December.
    11. Adam Loch & Christopher Auricht & David Adamson & Luis Mateo, 2021. "Markets, mis‐direction and motives: A factual analysis of hoarding and speculation in southern Murray–Darling Basin water markets," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(2), pages 291-317, April.
    12. Zuo, Alec & Qiu, Feng & Wheeler, Sarah Ann, 2019. "Examining volatility dynamics, spillovers and government water recovery in Murray-Darling Basin water markets," Resource and Energy Economics, Elsevier, vol. 58(C).
    13. Hartwig, Lana D. & Jackson, Sue & Osborne, Natalie, 2020. "Trends in Aboriginal water ownership in New South Wales, Australia: The continuities between colonial and neoliberal forms of dispossession," Land Use Policy, Elsevier, vol. 99(C).
    14. Guy M. Robinson & Bingjie Song, 2023. "Managing Water for Environmental Provision and Horticultural Production in South Australia’s Riverland," Sustainability, MDPI, vol. 15(15), pages 1-20, July.
    15. Gutiérrez-Martín, Carlos & Gómez-Limón, José A. & Montilla-López, Nazaret M., 2020. "Self-financed water bank for resource reallocation to the environment and within the agricultural sector," Ecological Economics, Elsevier, vol. 169(C).
    16. Juliane Haensch & Sarah Ann Wheeler & Alec Zuo & Henning Bjornlund, 2016. "The Impact of Water and Soil Salinity on Water Market Trading in the Southern Murray–Darling Basin," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(01), pages 1-26, March.
    17. Grafton, R. Quentin & Horne, James, 2014. "Water markets in the Murray-Darling Basin," Agricultural Water Management, Elsevier, vol. 145(C), pages 61-71.
    18. Carlos Mario Gómez Gómez & C. D. Pérez-Blanco & David Adamson & Adam Loch, 2018. "Managing Water Scarcity at a River Basin Scale with Economic Instruments," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(01), pages 1-31, January.
    19. 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.
    20. Sarah Ann Wheeler & Ying Xu & Alec Zuo, 2020. "Modelling the climate, water and socio-economic drivers of farmer exit in the Murray-Darling Basin," Climatic Change, Springer, vol. 158(3), pages 551-574, February.

    More about this item

    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:bla:ajarec:v:65:y:2021:i:2:p:318-348. 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: Wiley Content Delivery (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.