IDEAS home Printed from https://ideas.repec.org/a/wsi/wepxxx/v04y2018i01ns2382624x15500204.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S2382624X15500204
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S2382624X15500204?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. George, Biju & Malano, Hector & Davidson, Brian & Hellegers, Petra & Bharati, Luna & Massuel, Sylvain, 2011. "An integrated hydro-economic modelling framework to evaluate water allocation strategies II: Scenario assessment," Agricultural Water Management, Elsevier, vol. 98(5), pages 747-758, March.
    2. Qureshi, Muhammad Ejaz & Connor, Jeffery D. & Kirby, Mac & Mainuddin, Mohammed, 2007. "Economic assessment of acquiring water for environmental flows in the Murray Basin," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(3), pages 1-21.
    3. Kirby, Mac & Connor, Jeffery D. & Bark, Rosalind H. & Qureshi, Muhammad Ejaz & Keyworth, Scott W., 2012. "The economic impact of water reductions during the Millennium Drought in the Murray-Darling Basin," 2012 Conference (56th), February 7-10, 2012, Fremantle, Australia 124490, Australian Agricultural and Resource Economics Society.
    4. Gomez-Limon, Jose Antonio & Berbel, Julio & Arriaza Balmón, Manuel, 2005. "MCDM Farm System Analysis for Public Management of Irrigated Agriculture," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24676, European Association of Agricultural Economists.
    5. 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.
    6. Ronald C. Griffin, 2006. "Water Resource Economics: The Analysis of Scarcity, Policies, and Projects," MIT Press Books, The MIT Press, edition 1, volume 1, number 026207267x, April.
    7. Julio Berbel & M. Mesa-Jurado & Juan Pistón, 2011. "Value of Irrigation Water in Guadalquivir Basin (Spain) by Residual Value Method," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 25(6), pages 1565-1579, April.
    8. Michael R. Moore & Noel R. Gollehon & Marc B. Carey, 1994. "Multicrop Production Decisions in Western Irrigated Agriculture: The Role of Water Price," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(4), pages 859-874.
    9. Jiang, Qiang & Grafton, R. Quentin, 2012. "Economic effects of climate change in the Murray–Darling Basin, Australia," Agricultural Systems, Elsevier, vol. 110(C), pages 10-16.
    10. George, Biju & Malano, Hector & Davidson, Brian & Hellegers, Petra & Bharati, Luna & Massuel, Sylvain, 2011. "An integrated hydro-economic modelling framework to evaluate water allocation strategies I: Model development," Agricultural Water Management, Elsevier, vol. 98(5), pages 733-746, March.
    11. Ari M. Michelsen & Robert A. Young, 1993. "Optioning Agricultural Water Rights for Urban Water Supplies During Drought," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(4), pages 1010-1020.
    12. Ejaz Qureshi, Muhammad & Ranjan, Ram & Ejaz Qureshi, Sumaira, 2010. "An empirical assessment of the value of irrigation water: the case study of Murrumbidgee catchment," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(1), pages 1-20.
    13. Mukherjee, Monobina & Schwabe, Kurt A., 2014. "Where's the salt? A spatial hedonic analysis of the value of groundwater to irrigated agriculture," Agricultural Water Management, Elsevier, vol. 145(C), pages 110-122.
    14. M. Ejaz Qureshi & Sumaira E. Qureshi & Tim Goesch & Ahmed Hafi, 2006. "Preliminary Economic Assessment Of Groundwater Extraction Rules," Economic Papers, The Economic Society of Australia, vol. 25(1), pages 41-67, March.
    15. Appels, David & Douglas, Robert A. & Dwyer, Gavan, 2004. "Responsiveness of Demand for Irrigation Water: A Focus on the Southern Murray-Darling Basin," Staff Working Papers 31924, Productivity Commission.
    16. Johansson, Robert C., 2005. "Micro and macro-level approaches for assessing the value of irrigation water," Policy Research Working Paper Series 3778, The World Bank.
    17. Medellín-Azuara, J. & Howitt, R.E. & Harou, J.J., 2012. "Predicting farmer responses to water pricing, rationing and subsidies assuming profit maximizing investment in irrigation technology," Agricultural Water Management, Elsevier, vol. 108(C), pages 73-82.
    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. 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.
    2. Siderius, C. & Biemans, H. & Kashaigili, J. & Conway, D., 2022. "Water conservation can reduce future water-energy-food-environment trade-offs in a medium-sized African river basin," Agricultural Water Management, Elsevier, vol. 266(C).
    3. K. Shuvo Bakar, 2020. "Interpolation of daily rainfall data using censored Bayesian spatially varying model," Computational Statistics, Springer, vol. 35(1), pages 135-152, March.
    4. Wittwer, Glyn & Waschik, Robert, 2021. "Estimating the economic impacts of the 2017–2019 drought and 2019–2020 bushfires on regional NSW and the rest of Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(04), January.

    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. Muhammad Ejaz Qureshi & Ram Ranjan & Sumaira Ejaz Qureshi, 2010. "An empirical assessment of the value of irrigation water: the case study of Murrumbidgee catchment ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(1), pages 99-118, January.
    2. Rouhi Rad, Mani & Haacker, Erin M.K. & Sharda, Vaishali & Nozari, Soheil & Xiang, Zaichen & Araya, A. & Uddameri, Venkatesh & Suter, Jordan F. & Gowda, Prasanna, 2020. "MOD$$AT: A hydro-economic modeling framework for aquifer management in irrigated agricultural regions," Agricultural Water Management, Elsevier, vol. 238(C).
    3. repec:bla:canjag:v:58:y:2010:i:s1:p:403-409 is not listed on IDEAS
    4. Yang, Y.C. Ethan & Wi, Sungwook, 2018. "Informing regional water-energy-food nexus with system analysis and interactive visualization – A case study in the Great Ruaha River of Tanzania," Agricultural Water Management, Elsevier, vol. 196(C), pages 75-86.
    5. Davidson, Brian & Hellegers, Petra & George, Biju & Malano, Hector, 2019. "The opportunity costs of increasing reliability in irrigation systems," Agricultural Water Management, Elsevier, vol. 222(C), pages 173-181.
    6. Wheeler, Sarah Ann, 2022. "Debunking Murray-Darling Basin water trade myths," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(04), January.
    7. Amjath-Babu, T.S. & Sharma, Bikash & Brouwer, Roy & Rasul, Golam & Wahid, Shahriar M. & Neupane, Nilhari & Bhattarai, Utsav & Sieber, Stefan, 2019. "Integrated modelling of the impacts of hydropower projects on the water-food-energy nexus in a transboundary Himalayan river basin," Applied Energy, Elsevier, vol. 239(C), pages 494-503.
    8. 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.
    9. Gohar, Abdelaziz A. & Cashman, Adrian, 2016. "A methodology to assess the impact of climate variability and change on water resources, food security and economic welfare," Agricultural Systems, Elsevier, vol. 147(C), pages 51-64.
    10. Qureshi, M. Ejaz & Ahmad, Mobin-ud-Din & Whitten, Stuart M. & Kirby, Mac, 2014. "A multi-period positive mathematical programming approach for assessing economic impact of drought in the Murray–Darling Basin, Australia," Economic Modelling, Elsevier, vol. 39(C), pages 293-304.
    11. Ghosh, Sanchari & Willett, Keith D., 2021. "Water Permit Trading for reservoir water under competing demands and downstream flows," 2021 Annual Meeting, August 1-3, Austin, Texas 313858, Agricultural and Applied Economics Association.
    12. Laura Mirra & Bernardo Corrado de Gennaro & Giacomo Giannoccaro, 2021. "Farmer Evaluation of Irrigation Services. Collective or Self-Supplied?," Land, MDPI, vol. 10(4), pages 1-15, April.
    13. March, Hug & Therond, Olivier & Leenhardt, Delphine, 2012. "Water futures: Reviewing water-scenario analyses through an original interpretative framework," Ecological Economics, Elsevier, vol. 82(C), pages 126-137.
    14. Freire-González, Jaume & Decker, Christopher & Hall, Jim W., 2017. "The Economic Impacts of Droughts: A Framework for Analysis," Ecological Economics, Elsevier, vol. 132(C), pages 196-204.
    15. R. Quentin Grafton & James Horne & Sarah Ann Wheeler, 2016. "On the Marketisation of Water: Evidence from the Murray-Darling Basin, Australia," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 30(3), pages 913-926, February.
    16. Asad Falsafi Zadeh, Neda & Sabouhi Sabouni, Mahmood, 2009. "Determination of Optimal Environmental Flow Acquisition in Kor Basin, Doroudzan Dam," 2009 Conference, August 16-22, 2009, Beijing, China 50258, International Association of Agricultural Economists.
    17. 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.
    18. Yu, Yang & Yu, Ruide & Chen, Xi & Yu, Guoan & Gan, Miao & Disse, Markus, 2017. "Agricultural water allocation strategies along the oasis of Tarim River in Northwest China," Agricultural Water Management, Elsevier, vol. 187(C), pages 24-36.
    19. 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.
    20. 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.
    21. 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.

    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:04:y:2018:i:01:n:s2382624x15500204. 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.