Historical regulation of Victoria's water sector: A case of government failure? *

E. Harris

Australian Journal of Agricultural and Resource Economics, 2007, vol. 51, issue 3, pages 343-352

Abstract: This paper analyses the role of government failure in Victoria's water sector between 1905 and 1984 as evidenced in the rise of in-stream salinity. It will be shown that high levels of salinity can, in part, be attributed to regulatory failure for two reasons. First, the method of water allocation, a compulsory minimum charge with the marginal cost of water being zero, encouraged over watering, resulting in increased water tables via groundwater recharge. Second, the government did not provide adequate finance for construction of appropriate removal of saline drainage water, and thereby allowed increasing in-stream salinity. Copyright 2007 The Author Journal compilation 2007 Australian Agricultural and Resource Economics Society inc. and Blackwell Publishers Ltd .

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