Economics of Water Recovery in the Murray-Darling Basin, Australia

We review recent water reforms and the consequences of water recovery intended to increase stream flows in the Murray-Darling Basin (MDB), Australia. The MDB provides a natural experiment of water recovery for the environment that includes ( a ) the voluntary buy-back of water rights from willing se...

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Bibliographic Details
Published in:Annual review of resource economics 2018-01, Vol.10 (1), p.487-510
Main Authors: Grafton, R. Quentin, Wheeler, Sarah Ann
Format: Article
Language:English
Subjects:
Australia
Basins
Irrigation
Reforms
return flows
Studies
Subsidies
water buy-back
Water conservation
water markets
Water rights
water-use efficiency
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Summary:We review recent water reforms and the consequences of water recovery intended to increase stream flows in the Murray-Darling Basin (MDB), Australia. The MDB provides a natural experiment of water recovery for the environment that includes ( a ) the voluntary buy-back of water rights from willing sellers and ( b ) the subsidization of irrigation infrastructure. We find that ( a ) the actual increase in the volumes of water in terms of stream flows is much less than claimed by the Australian government; ( b ) subsidies to increase irrigation efficiency have reduced stream and groundwater return flows; ( c ) buy-backs are much more cost effective than subsidies; ( d ) many of the gains from water recovery have accrued as private benefits to irrigators; and ( e ) more than a decade after water recovery began, there is no observable basin-wide relationship between volumes of water recovered and flows at the mouth of the River Murray.
ISSN:1941-1340
1941-1359
DOI:10.1146/annurev-resource-100517-023039