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Expanders, diversifiers or downsizers? Identifying clusters of irrigators’ water trade and farm management strategies in Australia

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  • Zuo, Alec
  • Wheeler, Sarah Ann
  • Xu, Ying

Abstract

Australia, in particular the southern Murray-Darling Basin, has the most advanced water market in the world. However, there is still much to be understood as to how and why irrigators use the water market, and in what combination with other farm management strategies. This study used principal component analysis to identify five clusters of southern Murray-Darling Basin irrigators from a set of twenty possible farm and water strategies during 2015–16 (n = 977). Multinomial logit regression was then used to identify influences associated with each cluster. The five clusters of irrigators include those: expanding the farm (includes buying temporary water); expanding and diversifying (includes buying permanent water); downsizing (selling both temporary and permanent water); transitioning (switching away from irrigation to dryland); and saving (using carryover – water saved in storages for the following year). Around a third of irrigators can be classified as trying to expand the farm (the Expanders and the Expanders & Diversifiers); another third, of typically older irrigators, have lower levels of debt and excess water (the Savers); while a final third, who also tend to be older but also face financial and/or psychological stress, are placing more emphasis on dryland production (away from irrigation) or decreasing agricultural production altogether (the Transitioners and Downsizers). Higher long-term temperature of a farm area’s location increased the probability of the irrigator being a downsizer, indicating a future trend of irrigation farm exit, given the predicted rise in temperature from climate change in the Murray-Darling Basin.

Suggested Citation

  • 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).
    • Handle: RePEc:eee:agiwat:v:264:y:2022:i:c:s0378377422000427
    DOI: 10.1016/j.agwat.2022.107495
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    References listed on IDEAS

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    1. Sarah Ann Wheeler & Céline Nauges & Alec Zuo, 2021. "How stable are Australian farmers’ climate change risk perceptions? New evidence of the feedback loop between risk perceptions and behaviour," Post-Print hal-03198062, HAL.
    2. 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).
    3. Céline Nauges & Sarah Ann Wheeler & Alec Zuo, 2016. "Elicitation of irrigators' risk preferences from observed behaviour," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 60(3), pages 442-458, July.
    4. Wheeler, Sarah Ann & Zuo, Alec, 2017. "The impact of drought and water scarcity on irrigator farm exit intentions in the Murray– Darling Basin," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 61(3), July.
    5. Randall, Alan, 1981. "Property Entitlements And Pricing Policies For A Maturing Water Economy," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 25(3), pages 1-26, December.
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    7. 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.
    8. 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.
    9. Rupert Quentin Grafton, 2019. "Policy review of water reform in the Murray–Darling Basin, Australia: the “do's” and “do'nots”," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(1), pages 116-141, January.
    10. Henry Kaiser, 1974. "An index of factorial simplicity," Psychometrika, Springer;The Psychometric Society, vol. 39(1), pages 31-36, March.
    11. 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.
    12. 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.
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    14. 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.
    15. Wheeler, Sarah & Bjornlund, Henning & Zuo, Alec & Shanahan, Martin, 2010. "The changing profile of water traders in the Goulburn-Murray Irrigation District, Australia," Agricultural Water Management, Elsevier, vol. 97(9), pages 1333-1343, September.
    16. Wheeler, Sarah & Bjornlund, Henning & Zuo, Alec & Shanahan, Martin, 2010. "Erratum to "The changing profile of water traders in the Goulburn-Murray Irrigation District, Australia" by Wheeler et al. [Agric. Water Manage. 97 (2010) 1333-1343]," Agricultural Water Management, Elsevier, vol. 98(1), pages 222-225, December.
    17. Alan Randall, 1981. "Property Entitlements And Pricing Policies For A Maturing Water Economy," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 25(3), pages 195-220, December.
    18. Sarah Wheeler & Henning Bjornlund & Martin Shanahan & Alec Zuo, 2009. "Who trades water allocations? Evidence of the characteristics of early adopters in the Goulburn–Murray Irrigation District, Australia 1998–1999*," Agricultural Economics, International Association of Agricultural Economists, vol. 40(6), pages 631-643, November.
    19. Sahar Daghagh Yazd & Sarah Ann Wheeler & Alec Zuo, 2019. "Exploring the Drivers of Irrigator Mental Health in the Murray–Darling Basin, Australia," Sustainability, MDPI, vol. 11(21), pages 1-15, November.
    20. Sarah Ann Wheeler & Jeremy Cheesman, 2013. "Key Findings from a Survey of Sellers to the Restoring the Balance Programme," Economic Papers, The Economic Society of Australia, vol. 32(3), pages 340-352, September.
    21. Sarah Ann Wheeler & Alec Zuo & Henning Bjornlund & Makarius Victor Mdemu & Andre van Rooyen & Paiva Munguambe, 2017. "An overview of extension use in irrigated agriculture and case studies in south-eastern Africa," International Journal of Water Resources Development, Taylor & Francis Journals, vol. 33(5), pages 755-769, September.
    22. 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.
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    Cited by:

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