Experimentally Testing Institutions And Policy Instruments To Coordinate Groundwater Recharge in the Coleambally Irrigation Area

John Ward, John Tisdell and Stuart Whitten ()

No 139923, 2006 Conference (50th), February 8-10, 2006, Sydney, Australia from Australian Agricultural and Resource Economics Society

Abstract: A rising saline aquifer in the Coleambally Irrigation Area constitutes a common pool resource, characterised by costly exclusion and rival utilisation for regional irrigators. The approach outlined in general terms in this paper is the application of formal, empirical techniques to guide the design and a priori testing of a proposed tradeable recharge entitlements scheme to resolve the common pool dilemma. The focus of the research is the design and quantitative evaluation of potential market impediment solutions and alternative coordinating mechanisms applying the findings of experimental economics techniques. The initial policy design process involved identifying potential impediments to the functioning of a credit trade policy which could prevent cost-effective and environmentally effective outcomes. The SWAGMAN recharge model was employed as a recharge accounting tool to determine farm specific recharge rates as a function of irrigation application, crop mix and the spatial location of the farm in the Coleambally landscape. The experimental setting relies on a context rich catchment analogue, which represents the economic decision-making and trading environment facing farmers, populated with the salient biophysical, economic and hydrological characteristics estimated for proposed land use changes. Observed behavioural responses to policy initiatives were compared according to three metrics: aggregate groundwater recharge, farm income (expressed as player payments) net of non-compliance penalties and market outcomes. The rationale and experimental design of three treatments to test the efficacy of institutional arrangements to overcome identified impediments is outlined; the provision of recharge information, the introduction of a recharge cap and market exchange of tradeable recharge credits and the face to face communication. The conclusions focus on the application of the experimental results in the specification of a potential groundwater recharge management contract and the challenges for a successful implementation with local constituency.

Keywords: Environmental Economics and Policy; Financial Economics; Political Economy; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 30
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aare06:139923

DOI: 10.22004/ag.econ.139923

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