Policy review of water reform in the Murray–Darling Basin, Australia: the “do's” and “do'nots”

R. Quentin Grafton

Australian Journal of Agricultural and Resource Economics, 2019, vol. 63, issue 1, 116-141

Abstract: The water reforms undertaken in the Murray–Darling Basin, Australia since 2007 have been viewed as a model for other countries seeking to respond to water insecurity. Here, a policy review is provided of this water reform and whether it delivers on key environmental objectives in the 2007 Water Act (the Act). The evaluation includes a review of the 2012 Basin Plan, a key instrument of the Act, and complementary policies associated with the acquisition of water entitlements for the environment via direct (reverse tenders) and indirect (infrastructure subsidies) means. Using the objects of the Act as a benchmark, an evaluation is provided of the following: (i) planned reductions in irrigation water extractions in the 2012 Basin Plan; (ii) risks associated with the 2018 amendments to the Basin Plan that, collectively, allow for an increase in irrigation water extractions of some 22 per cent, relative to the sustainable diversion limits specified in the 2012 Basin Plan; (iii) Basin‐scale environmental outcomes achieved, as of the end of 2018; and (iv) economic effects of direct and indirect methods of acquiring water for the environment. Findings from the review generate the “Do's” and “Do Nots” of water reform for Australia, and possibly other countries, when managing the trade‐offs between water for irrigation and the environment.

Date: 2019
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