Climate change, water scarcity and water markets - implications for farmer's wealth and farm succession
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Date
2010
Authors
Bjornlund, H.
Rossini, P.A.
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Conference paper
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Proceedings from the 16th Pacific Rim Real Estate Conference, 2010, pp.1-17
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16th Pacific Rim Real Estate Conference (24 Jan 2010 - 27 Jan 2010 : Wellington, New Zealand)
Abstract
Large areas of Australia are in the midst of the worst drought period in white man's history; it is potentially the worst drought in a thousand years. The socioeconomic impacts within irrigation communities are detrimental. The Federal and State Governments are offering drought assistance to affected irrigators and businesses that are dependent on them. This paper provides a discussion of how water markets have been used by irrigators over the last 16 years to manage scarcity and structural adjustment. It then uses analysis of prices paid over the last 16 years within the Goulburn Murray Irrigation District in Victoria, Australia (GMID) to discuss how water markets could continue to be used to serve this purpose as scarcity worsens due to climate change and policy reforms. The analyses show strong and consistent increases in prices, with a strong relationship between the fluctuations in the two market prices. The price of allocations leads the price of entitlements. These findings have important implications for how markets can be used to assist irrigators to adapt to the impact of water scarcity and to protect the value of their total assets, either as part of an exit strategy or a succession strategy. Providing opportunities to deal with these processes in the best possible way will not only be most beneficial for the irrigators themselves but also for the communities servicing, and dependent on, the irrigation industry.
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Copyright 2010 The Authors