Jeff Connor

Economic Assessment of Acquiring Water for Environmental Flows in the Murray Basin

This article is an economic analysis of reallocating River Murray Basin water from agriculture to the environment with and without the possibility of interregional water trade. Acquiring environmental flows as an equal percentage of water allocations from all irrigation regions in the Basin is estimated to reduce returns to irrigation. When the same volume of water is taken from selected low-value regions only, the net revenue reduction is less. In all scenarios considered, net revenue gains from freeing trade are estimated to outweigh the negative revenue effects of reallocating water for environmental flows. The model accounts for how stochastic weather affects market water demand, supply and requirements for environmental flows. Net irrigation revenue is estimated to be

Impacts of climate change on lower Murray irrigation

75 million less than the baseline level for a scenario involving reallocating a constant volume of water for the environment in both wet and dry years. For a more realistic scenario involving more water for the environment in wet and less in dry years, estimated net revenue loss is reduced by 48 per cent to

Allocation Trade in Australia: A Qualitative Understanding of Irrigator Motives and Behaviour

39 million. Finally, the external salinity-related costs of water trading are estimated at around

What Actually Confers Adaptive Capacity? Insights from Agro-Climatic Vulnerability of Australian Wheat

1 million per annum, a quite modest amount compared to the direct irrigation benefits of trade.

Irrigator and Environmental Water Management Adaptation to Climate Change and Water Reallocation in the Murray–Darling Basin

This article evaluates irrigated agriculture sector response and resultant economic impacts of climate change for a part of the Murray Darling Basin in Australia. A water balance model is used to predict reduced basin inflows for mild, moderate and severe climate change scenarios involving 1, 2 and 4°C warming, and predict 13, 38 and 63% reduced inflows. Impact on irrigated agricultural production and profitability are estimated with a mathematical programming model using a two-stage approach that simultaneously estimates short and long-run adjustments. The model accounts for a range of adaptive responses including: deficit irrigation, temporarily following of some areas, permanently reducing the irrigated area and changing the mix of crops. The results suggest that relatively low cost adaptation strategies are available for a moderate reduction in water availability and thus costs of such a reduction are likely to be relatively small. In more severe climate change scenarios greater costs are estimated. Adaptations predicted include a reduction in total area irrigated and investments in efficient irrigation. A shift away from perennial to annual crops is also predicted as the latter can be managed more profitably when water allocations in some years are very low.

Reviewing the Treatment of Uncertainty in Hydro-economic Modeling of the Murray–Darling Basin, Australia

Governments in Australia are purchasing water entitlements to secure water for environmental benefit, but entitlements generate an allocation profile that does not correspond fully to environmental flow requirements. Therefore, how environmental managers will operate to deliver small and medium-sized inundation environmental flows remains uncertain. To assist environmental managers with the supply of inundation flows at variable times, it has been suggested that allocation trade be incorporated into efforts aimed at securing water. This paper provides some qualitative and quantitative perspective on what influences southern Murray–Darling Basin irrigators to trade allocation water at specific times across and within seasons using a market transaction framework. The results suggest that while irrigators now have access to greater risk-management options, environmental managers should consider the possible impact of institutional change before intervening in traditional market activity. The findings may help improve the design of intervention strategies to minimise possible market intervention impacts and strategic behaviour.

Sustainable irrigation: How did irrigated agriculture in Australia's Murray-Darling Basin adapt in the Millennium Drought?

Vulnerability assessments have often invoked sustainable livelihoods theory to support the quantification of adaptive capacity based on the availability of capital—social, human, physical, natural, and financial. However, the assumption that increased availability of these capitals confers greater adaptive capacity remains largely untested. We quantified the relationship between commonly used capital indicators and an empirical index of adaptive capacity (ACI) in the context of vulnerability of Australian wheat production to climate variability and change. We calculated ACI by comparing actual yields from farm survey data to climate-driven expected yields estimated by a crop model for 12 regions in Australia’s wheat-sheep zone from 1991–2010. We then compiled data for 24 typical indicators used in vulnerability analyses, spanning the five capitals. We analyzed the ACI and used regression techniques to identify related capital indicators. Between regions, mean ACI was not significantly different but variance over time was. ACI was higher in dry years and lower in wet years suggesting that farm adaptive strategies are geared towards mitigating losses rather than capitalizing on opportunity. Only six of the 24 capital indicators were significantly related to adaptive capacity in a way predicted by theory. Another four indicators were significantly related to adaptive capacity but of the opposite sign, countering our theory-driven expectation. We conclude that the deductive, theory-based use of capitals to define adaptive capacity and vulnerability should be more circumspect. Assessments need to be more evidence-based, first testing the relevance and influence of capital metrics on adaptive capacity for the specific system of interest. This will more effectively direct policy and targeting of investment to mitigate agro-climatic vulnerability.

An ecosystem services approach to estimating economic losses associated with drought

In an earlier paper (Kirby et al. 2014a), we showed that climate change and a new policy which reallocates water to the environment will impact both the flow of water and the income derived from irrigation in the Murray–Darling Basin. Here, we extend the analysis to consider irrigator and environmental water management strategies to adapt to these new circumstances. Using an integrated hydrology-economics model, we examine a range of strategies and their impact on flows and the gross income of irrigation.We show that the adaptation strategies provide a range of flow and economic outcomes in the Basin. Several strategies offer significant scope to enhance flows without large adverse impacts on the gross income of irrigation overall. Some environmental water management strategies enhance flows in the Murray part of the basin even under the drying influence of a projected median climate change. Irrigator strategies that include carryover of water in storage from one year to the next provide for lesser year to year variability in gross income and may be regarded as more advantageous in providing security against droughts. Flows and the gross income of low value irrigation industries strategies are sensitive to climate change, irrespective of adaptation strategy. Should a projected dry extreme climate change be realized, no strategy can prevent a large reduction in flows and also in gross income, particularly of low value irrigation industries. Nevertheless, environmental water management strategies mitigate the impact on flows, and in some cases may also help mitigate the impacts on gross income. High value irrigation industries are less affected (in terms of gross income, though net income will reduce because of rising water prices) by projected climate change, consistent with observation in the recent long term drought.

Environmental water governance in federal rivers: opportunities and limits for subsidiarity in Australia's Murray–Darling River

Hydro-economic modeling is the combination of economic principles and hydrological modeling to achieve a more integrated representation of water resource management. In the Murray–Darling Basin (MDB), hydro-economic modeling has been widely used to analyze and inform basin-wide water policy. A growing but uneven literature base has prompted this review of MDB hydro-economic studies published over the past three decades to identify innovations and avenues for advancement. We focus particularly on the treatment of uncertainty, which is inherent in all modeling. While consideration of uncertainty is increasing in prominence, our review indicates the robust treatment of epistemic and stochastic uncertainty have not been fully integrated in the hydro-economic modeling literature. When hydro-economic modeling results are used to inform policy, treatment of uncertainty has both technical and political implications. We conclude that the methodological rigor of MDB hydro-economic modeling can be vastly improved with greater attention to quantifying, reducing and communicating uncertainties inherent in the modeling of water resources.