Natural resource 'buy-backs' and their use to secure environmental flows

This project investigated market-based approaches that could be used to temporarily access water for environmental flow requirements that are more cost-effective than the purchase of permanent entitlements.

Buy-backs in other resource industries were reviewed and their applicability in the Australian water market investigated. Feedback from irrigators was sought to determine both interest and feasibility of the approaches.

This project is now complete.

Related resources

1. Rural Water Use and the Environment: The Role of Market Mechanisms

This research report by the Productivity Commission examines the feasibility of establishing market mechanisms to encourage economic efficiency of rural water use, including managing environmental externalities. Further information is also available at the Productivity Commission website.

2. Issues and options in applying market based measures in The Living Murray First Step

Prepared by the BDA Group for the Murray Darling Basin Commission, this report explores the use of market based measures to complement existing infrastructure projects in achieving water recovery targets.

Outcomes

To investigate:

1. How buy-back instruments can be tailored to account for temporal differences in when water is of greatest value to the environment compared to irrigation
2. How instruments can be designed to be consistent with prevailing institutional arrangements for water but adaptive to future reforms
3. How instruments can be designed to share uncertainty and risk between environmental mangers and irrigators
4. How third-party issues, such as salinity, can be factored into purchasing strategies
5. How purchase costs can be reduced through competitive purchasing approaches
6. Preliminary estimates of the likely cost to Government of alternative buy-back designs compared to sourcing permanent entitlements
7. Implications of alternative approaches for production and water use in participating industries and regions
8. The likely acceptability of buy-back instruments to irrigators

Publications and Resources

None listed

Citation

Land & Water Australia. 2009. Natural resource 'buy-backs' and their use to secure environmental flows. [Online] (Updated June 16th, 2009)
Available at: http://lwa.gov.au/node/3222 [Accessed Saturday 20th of March 2010 06:19:21 PM ].