Rosalyn Bell

Evaluating improvements in irrigation efficiency as a salinity mitigation option in the South Australian Riverland

A modelling framework incorporating relationships between agricultural production and groundwater hydrology was developed to estimate the benefits of improved irrigation efficiency in the Riverland of South Australia. Increased irrigation efficiency can generate external benefits to downstream users through reduced discharge of saline groundwater. In the Riverland these benefits are large in comparison to the direct value of the irrigation water. However, the non‐exclusive and site‐specific nature of these benefits makes it difficult to fully internalise them through market instruments such as salinity credits. Achieving optimal irrigation efficiency is likely to require institutional arrangements that promote collective investment and public expenditure.

Emulating Trade in Emissions Permits: An Application of Genetic Algorithms

Emissions permits are generally a second best option for dealing with site specific pollution. The outcome of trade in emissions permits when the economic welfare of market participants is linked spatially through production externalities is unclear. Trade will reflect the interaction of bargaining agents whose incentives vary with the relative physical location of both the buyer and seller. For the permit system to internalise the costs of pollution, information on who are the current buyers and sellers is necessary. This information corresponds to an understanding of the economic impacts of the physical externality, which in turn allows an improvement in the level and distribution of resource access or use. However, provision of such information is not characteristic of a competitive market in which rents associated with reducing the net cost of an externality are competed away. To achieve a more efficient distribution of entitlements, through the internalisation of pollution costs, the market structure must allow agents to capture these rents.