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Water Buy-Back in Australia: Political, Technical and Allocative Challenges

Authors
Disciplines
  • Political Science

Abstract

State and Federal governments are increasingly reliant on the re-purchase of water access rights as a vehicle for bringing ‘over-allocation’ in the Murray- Darling Basin into check. Not surprisingly, this has attracted criticism from several quarters, usually on the basis that such mechanisms produce unnecessary hardship for rural communities. Set against this are the views of many economists who have bemoaned the modest endeavours of governments to actively use water markets and the ongoing proclivity of agencies to instead embark on public projects under the guise of water use efficiency (see, for example Watson 2008). This paper focuses specifically on water buyback and traces recent policy episodes in this context. The paper also offers details of alternative market instruments which have the potential to improve on the current, relatively fragmented arrangements. We use contemporary examples to test the efficacy of alternative buyback instruments in the hope of informing policy formulation.

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