Author(s)

A. Loch & H. Bjornlund

Abstract

Over the last 25 years water markets in Australia have been used to transfer water entitlements and allocations between irrigators, helping them to manage the risks associated with water supply and the demand for structural change. More recently governments have entered entitlement markets to purchase water for the environment. This paper hypothesises that a focus on purchasing entitlements will not motivate a sufficient number of irrigators to engage in the provision of environmental water. It is hypothesised that governments may need to enter the allocation market to secure long-term arrangements for counter-cyclical provision of environmental water. Avoiding any negative impacts of interference on the traditional users of this market requires a greater understanding of how irrigators currently use allocations, and what drives their decisions to buy and sell. This paper provides the findings of qualitative research involving 39 irrigators in three states within the Murray-Darling Basin in Australia. The findings provide a preliminary assessment of the factors influencing irrigators’ decisions to trade allocations and how these factors change across and within seasons. Irrigator attitudes toward government use of the allocation market to support counter-cyclic environmental water provision are also examined. Overall, irrigators appear comfortable with the notion of trading in allocations with the government, rather than in entitlements alone. Keywords: allocation trading, environmental water provision, trade influences, Murray-Darling Basin.

Keywords

allocation trading, environmental water provision, trade influences,Murray-Darling Basin