IDEAS home Printed from https://ideas.repec.org/a/wsi/wepxxx/v03y2017i03ns2382624x16500399.html
   My bibliography  Save this article

An Economic Framework for Sharing Water Within a River Catchment

Author

Listed:
  • R. J. Farquharson

    (The University of Melbourne, Australia)

  • J. W. Freebairn

    (The University of Melbourne, Australia)

  • J. A. Webb

    (The University of Melbourne, Australia)

  • M. J. Stewardson

    (The University of Melbourne, Australia)

  • T. Ramilan

    (The University of Melbourne, Australia†Massey University, New Zealand)

Abstract

A framework for sharing a limited quantity, but also a variable quantity, of water between irrigation and the environment to maximize social wellbeing is developed and illustrated. The optimal water allocation equates the marginal social value of water across different uses. A simplified illustration allocates water from the Goulburn River in northern Victoria, Australia, between environmental water to increase numbers of Golden Perch (GP) fish stocks and irrigation demand for water for dairy farmers. The value of water for GP is developed using a combination of fish numbers as an ecological response function of water and Choice Model estimates of willingness to pay by Victorian households for improved fish stocks. Irrigation demand for water by dairy farmers is developed using a Linear Programming study. The complex ecological response functions require a numerical search model to evaluate the socially efficient allocation of water between the different uses. The shadow price of water as optimally allocated between the environmental and agricultural uses is developed as seasonal water availability varies. Further development of the framework could include identifying dependencies within the ecological responses and incorporating multiple ecological and agricultural responses in an expanded model. The policy implications include information on the socially efficient allocation of limited water between irrigation and the environment and the value of water when shared optimally between uses.

Suggested Citation

  • R. J. Farquharson & J. W. Freebairn & J. A. Webb & M. J. Stewardson & T. Ramilan, 2017. "An Economic Framework for Sharing Water Within a River Catchment," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(03), pages 1-19, July.
    • Handle: RePEc:wsi:wepxxx:v:03:y:2017:i:03:n:s2382624x16500399
    DOI: 10.1142/S2382624X16500399
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S2382624X16500399
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S2382624X16500399?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Farquharson, Robert J. & Ramilan, Thiagarajah & Stewardson, Michael & Beverly, Craig & Vietz, Geoff & George, Brendan & Dassanyake, K. & Sammonds, M., 2011. "Water sharing for the environment and agriculture in the Broken catchment," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 100547, Australian Agricultural and Resource Economics Society.
    2. John Freebairn, 2011. "Allocating Limited Water," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 44(2), pages 225-232, June.
    3. Mac Kirby & Jeff Connor & Mobin-ud Din Ahmad & Lei Gao & Mohammed Mainuddin, 2015. "Irrigator and Environmental Water Management Adaptation to Climate Change and Water Reallocation in the Murray–Darling Basin," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 1(03), pages 1-31.
    4. Alec Zuo & Sarah Ann Wheeler & W.L. (Vic) Adamowicz & Peter C. Boxall & Darla Hatton-MacDonald, 2016. "Measuring Price Elasticities of Demand and Supply of Water Entitlements Based on Stated and Revealed Preference Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(1), pages 314-332.
    5. Sarah Wheeler & Henning Bjornlund & Martin Shanahan & Alec Zuo, 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 37-55, March.
    6. Kolstad, Charles, 2011. "Intermediate Environmental Economics: International Edition," OUP Catalogue, Oxford University Press, edition 2, number 9780199732654.
    7. Akter, Sonia & Grafton, R. Quentin & Merritt, Wendy S., 2014. "Integrated hydro-ecological and economic modeling of environmental flows: Macquarie Marshes, Australia," Agricultural Water Management, Elsevier, vol. 145(C), pages 98-109.
    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. 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. Seidl, Constantin & Wheeler, Sarah Ann & Zuo, Alec, 2020. "High turbidity: Water valuation and accounting in the Murray-Darling Basin," Agricultural Water Management, Elsevier, vol. 230(C).
    3. 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.
    4. Claire Settre & Jeff Connor & Sarah Ann Wheeler, 2017. "Reviewing the Treatment of Uncertainty in Hydro-economic Modeling of the Murray–Darling Basin, Australia," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(03), pages 1-35, July.
    5. 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).
    6. Fatima Khalid & Asma Jamil & Huda Kamal & Tahira Afzal & Tahseenullah Khan & Muhammad Babar Taj & Ahmad Raheel & Syed Ahmad Tirmizi & Muhammad Babar Taj & Muhammad Jamshed Iqbal & Muhammad Ashiq & Muh, 2019. "Multiple Impacts of Illegal Logging- A key to Deforestation Over the Globe," Biomedical Journal of Scientific & Technical Research, Biomedical Research Network+, LLC, vol. 20(5), pages 15430-15435, August.
    7. 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-04670841, HAL.
    8. Siyu Yue & Huaien Li & Fengmin Song, 2023. "Temporal–Spatial Variations in the Economic Value Produced by Environmental Flows in a Water Shortage Area in Northwest China," Sustainability, MDPI, vol. 15(4), pages 1-17, February.
    9. Botor, Benjamin & Böcker, Benjamin & Kallabis, Thomas & Weber, Christoph, 2021. "Information shocks and profitability risks for power plant investments – impacts of policy instruments," Energy Economics, Elsevier, vol. 102(C).
    10. Philip Kofi Adom & Joonho Yeo & Lin Zhang, 2021. "Is water use sustainable and efficient in China? Evidence from a macro level analysis," Applied Economics, Taylor & Francis Journals, vol. 53(53), pages 6166-6183, November.
    11. Colombo, Luca & Labrecciosa, Paola & Van Long, Ngo, 2022. "A dynamic analysis of international environmental agreements under partial cooperation," European Economic Review, Elsevier, vol. 143(C).
    12. Filippo Maria D’Arcangelo & Ilai Levin & Alessia Pagani & Mauro Pisu & Åsa Johansson, 2022. "A framework to decarbonise the economy," OECD Economic Policy Papers 31, OECD Publishing.
    13. Hughes, Neal, 2009. "Management of irrigation water storages: carryover rights and capacity sharing," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 47642, Australian Agricultural and Resource Economics Society.
    14. Kualwik, Jacek, 2016. "Selected problems of farmland valuation and setting rents for its lease," Problems of Agricultural Economics / Zagadnienia Ekonomiki Rolnej 252639, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).
    15. Adam Loch & Henning Bjornlund & Sarah Wheeler & Jeff Connor, 2012. "Allocation trade in Australia: a qualitative understanding of irrigator motives and behaviour," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(1), pages 42-60, January.
    16. Pérez-Blanco, C.D. & Gutiérrez-Martín, C., 2017. "Buy me a river: Use of multi-attribute non-linear utility functions to address overcompensation in agricultural water buyback," Agricultural Water Management, Elsevier, vol. 190(C), pages 6-20.
    17. Raffensperger, John F., 2011. "Matching users' rights to available groundwater," Ecological Economics, Elsevier, vol. 70(6), pages 1041-1050, April.
    18. Dahal, Ram P. & Grala, Robert K. & Gordon, Jason S. & Petrolia, Daniel R. & Munn, Ian A., 2018. "Estimating the willingness to pay to preserve waterfront open spaces using contingent valuation," Land Use Policy, Elsevier, vol. 78(C), pages 614-626.
    19. Li, Xing & Hu, Zhigao & Cao, Jianhua & Xu, Xing, 2022. "The impact of environmental accountability on air pollution: A public attention perspective," Energy Policy, Elsevier, vol. 161(C).
    20. 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.

    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:wsi:wepxxx:v:03:y:2017:i:03:n:s2382624x16500399. 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: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/wep/wep.shtml .

    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.