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Impact of Climate Variability Including Drought on the Residual Value of Irrigation Water Across the Murray–Darling Basin, Australia

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  • M. E. Qureshi

    (CSIRO Land and Water Flagship, Canberra, ACT, Australia†Fenner School of Environment & Society, ANU, ACT, Australia)

  • M. D. Ahmad

    (CSIRO Land and Water Flagship, Canberra, ACT, Australia)

  • S. M. Whitten

    (CSIRO Land and Water Flagship, Canberra, ACT, Australia)

  • A. Reeson

    (CSIRO Land and Water Flagship, Canberra, ACT, Australia)

  • M. Kirby

    (CSIRO Land and Water Flagship, Canberra, ACT, Australia)

Abstract

Understanding the economic value of irrigation water is essential for supporting policies relating to the irrigation sector, irrigation water allocation decisions, water pricing and to compare the variable impacts of water reform within and across sectors of the economy. In this paper, we apply the residual method as a complement to other methods for determining the value of the water used over a wide range of irrigated crops in different seasons and regions of Australia’s Murray–Darling Basin. Using Monte Carlo simulation and probability theory, we estimated the combined impacts of biophysical and economic factors on the economic productivity of irrigation water use by individual activities. The estimated residual values vary across regions and in response to water availability as we would expect and warrant consideration of these factors in making any future water policy and investment decisions in different regions. As anticipated perennial (fruits and nuts, grapes) and high capital annual activities (cotton) represent the highest value water uses. Water trading from low to high value activities results in economic losses that are much lower than the proportional decline in water availability during periods of drought.

Suggested Citation

  • M. E. Qureshi & M. D. Ahmad & S. M. Whitten & A. Reeson & M. Kirby, 2018. "Impact of Climate Variability Including Drought on the Residual Value of Irrigation Water Across the Murray–Darling Basin, Australia," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(01), pages 1-25, January.
    • Handle: RePEc:wsi:wepxxx:v:04:y:2018:i:01:n:s2382624x15500204
    DOI: 10.1142/S2382624X15500204
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    4. Isabella Aitkenhead & Yuriy Kuleshov & Andrew B. Watkins & Jessica Bhardwaj & Atifa Asghari, 2021. "Assessing agricultural drought management strategies in the Northern Murray–Darling Basin," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 109(2), pages 1425-1455, November.

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