Using proportional modeling to evaluate irrigator preferences for market-based water reallocation

Abstract

Irrigators’ policy preferences for water reallocation programs usually take the form of proportional data, where one option will be relatively more or less favored than another in the composition of a government’s total budget apportionment to address water reform. This study applies a zero-one inflated beta regression to model Murray–Darling Basin irrigators’ preferences for market-based water policy programs. Market-based arrangements are more likely to provide efficient solutions to water reallocation problems, particularly where future uncertainty and appropriate pricing induce irrigator preferences for such programs. Our modeling of drivers of irrigator preferences for government expenditure on market-based programs identified different determinants of zero (a corner solution) and proportional outcomes for the reallocation of Murray–Darling Basin water. In addition, the proportional modeling identifies some variables (namely, state regional influences, the type of farm production and recent debt, low income, or water allocation stressors) that increase engagement with market-based programs. Interestingly, while price variables are important and statistically significant, they appear to be less relevant to program engagement than other influences.