"Water resource development in the Murray-Darling Basin (MDB) is the culmination of 130 years of ‘romantic and reckless’ policy, which has created a legacy of obstacles that will inhibit swift reform (Cummins & Watson 2012). Policy romanticism and recklessness is neither the sole domain of water, nor is it unique to Australia (Chan 1982; Jairath 2003) but rather water policy is the outcome of a political game between rent seekers (Epstein & Nitzan 2002). This political game is an amalgamation of how well the game, correctly interprets current and future social preferences (Escobar 2013; Rostow 1959) and the design and implementation of the policy. Thus water reform is not only dependent on: the efficiency and effectiveness of policy makers to interpret the problem and its solution (Colebatch 2006); but how the policy is supported by the available institutions, frameworks and regulations required to implement policy (Brennan 2006; Garrick et al. 2009); and how the policy interacts with other social settings (Adamson, Zalucki & Furlong 2014)." Chapter 2 from my PhD The MDB is entering the fourth stage of natural resource development. he first phase is 'exploring' and learning about the natural water resources, then we enter an 'expansionary' phase where an attempt is made to bend the resource to our will via engineering solutions to increase supply and incentives to utilise these new resources, the third phase 'maturity' is when externalises are realised and the ability of using non-market based solutions to these problems is found wanting, but the combination of missing markets and market failure prevent sustainable solutions. The fourth stage of resource development is 'contraction'. Where the combination of public institutions and regulations allow markets to function and are used to reduce the quantity of water utilised for consumptive purposes.
While water reallocation can occur without markets, its the ability of water markets to deal with risk and uncertainty derived from water supply that has allowed instigators in the MDB to survive. Markets create wealth and they reduce risk. With the adoption of the concepts of 'common property', the environment is gaining a portfolio of property rights that have both spatial and state-contingent reliability attributes.
By developing a model that explores how both irrigators and the environment utilises water during 'extreme droughts', 'droughts', 'normal seasons', 'wet seasons' and 'very wet years' we can explore alternative strategies for maximising welfare subject to a series of policy and environmental goals. This constrained welfare optimisation solution then provide insights into how and why trade will occur between the government and irrigators, exploring if there is sufficient environmental supply to meet needs of is triaeing of environmental assets inevitable, Underneath this complexity is the fundamental uncertainty, what will future states of water supply look like as the climate changes, and do these changes lead to a greater consumption of water, just how black is the swan!
Create your own unique website with customizable templates.