Lin Crase

Water markets as a vehicle for water reform: the case of New South Wales

Water reform in NSW is being undertaken using an adaptive approach in recognition of the uncertainty and imperfect knowledge embodied in the riverine environment. However, the reform process also relies, in part, on the ability of markets for tradable water entitlements to develop and thereby assist in allocating scarce water resources to their highest value use. This article explores impediments to the formation of efficient markets in permanent tradable water entitlements in NSW. The article concludes that more attention should be paid to market failures and related problems which manifest themselves in thin markets for permanent water entitlements.

Is bigger local government better? An evaluation of the case for Australian municipal amalgamation programs

Municipal amalgamations have historically accounted for a substantial reduction in the number of councils in Australia. Proponents of municipal consolidation typically argue that substantial economic benefits will inevitably flow from fewer, larger municipal councils. This article seeks to evaluate the validity of the generic case for council amalgamation in Australia.

Local government failure: Why does Australian local government experience permanent financial austerity?

Funding of local government systems in Australia has been falling relative to other tiers of government for the past 30 years with various adverse consequences, especially the decline of local government infrastructure. This paper seeks to explain this phenomenon by drawing on two relatively new theoretical strands in the political economy literature; the Australian theory of local government failure and the Wittman model of democratic efficiency. Three explanations are assessed: a traditional public finance perspective, Australian local government failure, and the institutional efficiency of democratic preference revelation. A secondary aim of the paper is to evaluate the implications of the Wittman model for the local government failure paradigm.

Water Policy in Australia : The Impact of Change and Uncertainty

1. An Introduction to Australian Water Policy 2. The Hydrological Setting 3. Historical Development of Water Resources in Australia: Irrigation in the Murray-Darling Basin 4. Legal Frameworks of Australian Water: Progression from Common Law Rights to Sustainable Shares 5. Uncertainty, Risk and Water Management in Australia 6. The Institutional Setting 7. Coping with the Reforms to Irrigated Agriculture: The Case of Murray Irrigation 8. Hydroelectricity 9. Ecological Requirements: Creating a Working River in the Murray-Darling Basin 10. Urban Water Management 11. Acknowledging Scarcity and Achieving Reform 12. Urban Reuse and Desalination 13. Water Trading and Market Design 14. Adaptive Management 15. The Social and Cultural Aspects of Sustainable Water Use 16. Lessons from Australian Water Reform Index

Community consultation in public policy : the case of the Murray-Darling basin of Australia.

Community consultation is widely employed in contemporary Australia as a means of improving the formulation and implementation of public policy. However, little is known about the optimal expenditure of effort required for any given consultation. This article develops a rational choice model of community consultation that seeks to encapsulate the major elements involved in optimising consultation effort. The framework is particularly useful for understanding and explaining why actual community consultation processes may be sub-optimal. The rational choice model is then applied to the Living Murray debate over water resources in the Murray-Darling Basin of Australia.

Is bigger better? Local government amalgamation and the South Australian rising to the challenge inquiry.

Although municipal amalgamation has enjoyed prominence as the primary engine of structural reform in Australian local government for at least the past century, mounting evidence concerning its adverse consequences has led to a growing scepticism over its efficacy as a suitable method of enhancing the operational efficiency of local councils. The results of an exhaustive enquiry into the financial sustainability of South Australian by the Financial Sustainability Review Board (2005) provides further damning evidence on the inability of amalgamation to improve the financial standing of fiscally distressed local authorities in that state. This paper examines those aspects of the deliberations of the Review Board that shed empirical light on the impact of amalgamation on the financial viability of South Australian local government and considers its wider implications for amalgamation as an efficacious instrument of municipal reform in Australia.

Does Anybody Like Water Restrictions? Some Observations in Australian Urban Communities

Mandatory water restrictions continue to be the immediate response to urban water shortages in most major cities in southern Australia. Whilst generally rejected by economists on efficiency grounds, restrictions and the enforcement regimes used to invoke them are, nonetheless, viewed by some in the community as a positive way of dealing with water scarcity. Given the likelihood that urban water restrictions will persist for some time, there is value in understanding householders’ attitudes in this context. The impact and acceptability of differing approaches to enforcement is of particular interest, because this has wider ramifications for the administration of policy generally. This paper uses the results from a choice experiment to investigate the interplay between different components of a water restriction regime. In stark contrast to prevailing views that focus on the community benefits from ‘sharing the pain of water shortages’, results point to the significance of being able to inform on ones neighbours as a component of the enforcement regimes.

Urban water restrictions: Attitudes and avoidance

In most urban cities across Australia, water restrictions remain the dominant policy mechanism to restrict urban water consumption. The extensive adoption of water restrictions over several years means that Australian urban water prices have consistently not reflected the opportunity cost of water (Edwards 2008). Given the generally strong political support for water restrictions and the likelihood that they will persist for some time, there is value in understanding householders’ attitudes in this context. More specifically, identifying the welfare gains associated with avoiding urban water restrictions entirely would be a non-trivial contribution to our knowledge. This paper is used to describe the results from a contingent valuation study that investigates consumers’ willingness to pay to avoid urban water restrictions. Importantly, the research also investigates the influence of cognitive and exogenous dimensions on the utility gain associated with avoiding water restrictions. The results provides some salutary insights into the impact of this policy mechanism on economic welfare.

Regulation versus Pricing in Urban Water Policy: The Case of the Australian National Water Initiative

The Australian National Water Initiative (NWI) builds on the foundations of earlier water reforms, attempts to correct earlier errors in both policy and its implementation, and seeks to better define some of the policy aims with the benefit of hindsight. However, despite the deliberate effort to improve on earlier reforms, the NWI still embodies a significant economic paradox. Although policymakers have shown their faith in the market insofar as allocating water between competing agricultural interests is concerned, they have not shown the same degree of faith in the ability of urban users to respond to price signals. This paper attempts to shed at least some light on this question by examining the responses of a number of State governments across Australia to the NWI. The paper specifically explores the rationale for non-price regulation in the urban context but challenges the long-term viability of this approach.

Water Rights: A Comparison of the Impacts of Urban and Irrigation Reforms in Australia

Although there has been a policy thrust towards making all Australians more cognisant of the relative scarcity of water resources, the approach adopted for urban dwellers differs markedly from that applied to irrigators. These differences are examined from a property-rights perspective focussing primarily on the institutional hierarchies in the Victorian water sector. The analysis reveals significant attenuation of urban dwellers’ rights, presumably on the basis of the information deficiencies that circumscribe urban water use. Alternative policy options are then proposed, which might alleviate some of these information deficiencies and simultaneously address the efficiency losses that attend the present arrangements.