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Seminar Series 2008

Experiments with markets linking upstream land use with downstream water entitlement holders

Time:
Date:
Venue:
Presenter: 		3.00pm - 4.00pm
Thursday, 29 May 2008
Conference Rm, Wagga Wagga Agricultural Institute
Dr Tom Nordblom, Senior Research Scientist (Economics),
Industry & Investment NSW

Severe water shortages in recent years highlight the need for policy development on water use/sharing in Australia. Zhang et al. (2007) describe the biological and geophysical nexus of afforestation, water-yields and salt loads at catchment level, given that forest land-cover uses more water than any other. This provides a framework for considering the economic (efficiency), social (equity) and environmental service aspects linking upstream land uses, including new forestry plantations, and downstream uses of water. The ‘services’ of concern here are the volumes and salt concentrations of water-yield from upper parts of a catchment to the urban, agricultural and wetland uses down-stream. What are the prospects for extending the water market to upstream areas?

We explore the impacts of different combinations of physical and policy conditions, defined as the presence or absence of contrasting (high or very high) salinity concentrations (C) in an unregulated tributary to the water supply of urban and other high-security users; markets and/or policy giving strong incentives for upstream tree plantations (P) in the higher-rainfall parts of the catchment; and a policy that water entitlements (E) must be purchased from downstream entitlement holders before new upstream tree plantations are allowed, as in SE South Australia. An experiment is designed to show the effects of all combinations for conditions C, P and E in an example catchment. A bio-economic optimising model was used to find the least-cost changes in upstream land use to alter long-term water-yields (and salt-loads).

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