A model of water trade and irrigation activity in the southern Murray-Darling Basin
by
 
GUPTA Mihir

Title
A model of water trade and irrigation activity in the southern Murray-Darling Basin

Series
Conference papers

Series Issue
18.1

Publication Date
07/02/2018

Description
Overview This paper presents a new econometric partial equilibrium model of water trade and irrigation activity within the southern Murray-Darling Basin (sMDB). The model exploits a unique data set detailing water availability, water market outcomes, irrigation activity, climate conditions and commodity prices for the sMDB annually over the period 2002-03 to 2016-17. This data is used to econometrically estimate a set of demand functions for water by region and irrigation activity. These demand functions are placed within a spatial equilibrium framework taking into account constraints on inter-regional water trade across the basin. The model is able to simulate the market prices of water allocations and entitlements by region and inter-regional water trade flows along with water and land use by irrigation activity and region. The performance of the model is demonstrated with in and out-of-sample validation tests. The model provides a basis for separating the effects of historical climate, market and policy shocks on the region and for simulating the effects of potential future shocks. Key Issues * This is a technical report describing a new ABARES water trade mode, focusing on the robustness and validity of the model. * The model builds on previous work to provide robust analysis of water market use and market outcomes in the sMDB. It is suitable for both historical analysis and generating future scenarios. * The structure of the model allows assessment of the effects of climate, water market and policy changes, including separating out the effect of each on: * water prices for each region * inter-regional water trade flows * water and land use by irrigation activity and region. * Future uses of the model are under development but could include, for example, examining the: * changes in water demand as a result of investment in perennial plantings * implications of changes in water availability associated with climate variability and change * effects of historical water policy changes on water markets * water market implications of changes to inter-regional water trade constraints * projections of future allocation prices and water trade flows. * The model uses a unique data set detailing water availability, water market outcomes, irrigation activity, climate conditions and commodity prices for the sMDB annually over the period 2002-03 to 2016-17.

Resource URL Description
0 : A model of water trade and irrigation activity in the southern Murray-Darling Basin - PDF [3.1 MB]
 
1 : A model of water trade and irrigation activity in the southern Murray-Darling Basin - MS Word [3.5 MB]
 
2 : A Model of water trade and irrigation activity dashboard - Complex Type [0.1 MB]

Resource URL
1027111

Publisher
ABARES : Australian Bureau of Agricultural and Resource Economics and Sciences : Department of Agriculture

Author
GUPTA Mihir
 
HUGHES Neal
 
WAKERMAN-POWELL Kai

Right Management
Use constraints: copyright
 
Other constraints: Licence type: Copyright
 
Other constraints: All material in this publication is licensed under a Creative Commons Attribution 4.0 Licence, save for content supplied by third parties, logos and the Commonwealth Coat of Arms. http://creativecommons.org/licenses/by/4.0
 
Other constraints: This publication (and any material sourced from it) should be attributed as: Gupta, M, Hughes, N & Wakerman Powell, Kai 2018, A model for water trade and irrigation activity in the southern Murray-Darling Basin, ABARES conference paper, Canberra, January. CC BY 4.0

Identifier
ISBN 978-1-74323-374-0
 
ISSN 1447-8358

Asset Name
pb_amowtd9aaw20180207