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Institutional Impediments to Groundwater Trading: the case of the Gnangara groundwater system of Western Australia

James H. Skurray, Ram Pandit () and David Pannell ()

No 117825, Working Papers from University of Western Australia, School of Agricultural and Resource Economics

Abstract: The development of a market in groundwater usage rights can be inhibited by constraints arising from the institutional context. Such impediments may reduce the potential gains from trade and may generate high transaction costs for prospective traders. We analyse the regulations and policies influencing groundwater transfers in a case-study area -- the Gnangara groundwater system around Perth, Western Australia -- and identify significant impediments to a groundwater market. Property rights are found to be conditional, temporary, and vulnerable to amendment. Regulatory approval is required for all transfers. Facilitating infrastructure is lacking, and price information is unavailable. Management area boundaries reflect land ownership and use rather than hydrogeological realities; the limitation of transfers to within these boundaries eliminates much of the potential for gains from trade. Over-allocation and weak monitoring also impede the development of a market. The current management system is likely to obscure unmet demand for water-rights transfers between users and usage-types.

Keywords: Agricultural and Food Policy; Environmental Economics and Policy; Institutional and Behavioral Economics; Land Economics/Use; Political Economy; Public Economics; Resource /Energy Economics and Policy (search for similar items in EconPapers)
Pages: 36
Date: 2011-11-14
New Economics Papers: this item is included in nep-agr, nep-env and nep-reg
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Journal Article: Institutional impediments to groundwater trading: the case of the Gnangara groundwater system of Western Australia (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwauwp:117825

DOI: 10.22004/ag.econ.117825

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