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Managing Saline Groundwater Impacts from Irrigation - Designing and Testing Emissions Trading in Coleambally Irrigation Area

Stuart Whitten (), Shahbaz Khan, Drew Collins, John Ward and David Robinson

No 9975, 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: Irrigated agriculture often leads to recharge to local and regional groundwater systems greater than what the systems can absorb, resulting in the development of shallow watertables causing salinity and waterlogging. Policy based on emissions trading offers one option for effective management of existing recharge externalities if effective property rights to diffuse emissions can be defined. In this paper we combine the conclusions drawn from biophysical research with economic principles underpinning emissions trading to present such a system. Allocation of net recharge contracts to irrigation farms will internalize the costs associated with saline aquifer impacts. Irrigators may reduce their compliance costs by creating or purchasing credits that reduce recharge through perennial vegetation, engineering solutions or crop rotation options. We discuss the economic impacts of adopting such a policy in the Coleambally Irrigation Area in southwestern New South Wales, Australia. Conclusions drawn from our research are demonstrated using experimental economics.

Keywords: salinity; irrigation; recharge; tradable emissions; cap and trade; hydrologic-economic modelling; experimental economics; Resource /Energy Economics and Policy (search for similar items in EconPapers)
Date: 2007
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