The Evolution of Markets for Water

The Evolution of Markets for Water

Theory and Practice in Australia

New Horizons in Environmental Economics series

Edited by Jeff Bennett

This book presents a detailed picture of the evolutionary processes at work in water markets with a particular focus on theory and practice in Australia. Policymakers are striving to strike a balance between the pros and cons of a property rights/market based approach to the allocation of water resources, as opposed to an approach that centres on government regulation. The current movement in Australia is toward the use of markets, and numerous reforms are either underway or under consideration in that direction. This provides an ideal opportunity to observe the factors at play in determining the balance and hence the mix of policy instruments at work. The distinguished contributors offer a range of perspectives – economic, legal, environmental – and combine conceptual analysis with evidence from real policy decisions.

Chapter 1: Markets and Government - An Evolving Balance

Jeff Bennett

Subjects: business and management, management and sustainability, development studies, agricultural economics, economics and finance, agricultural economics, environmental economics, environment, agricultural economics, ecological economics, environmental economics, environmental management, water


1. Markets and Government – An Evolving Balance Jeff Bennett How frequently has Australia been described (erroneously) as the driest continent? Yet not only is Australia, in the words of poet Dorothea Meckellar, ‘a land of droughts’ but it is also one of ‘flooding rains’.1 The wet season in the north of the nation dumps metres of water on Darwin, Cairns and Broome. Floods that leave millions of hectares of cropping and grazing land inundated and country towns isolated for days are periodic but well known through the river systems of the Murray-Darling Basin. The salient point is that Australians suffer from a scarcity of water at varying times and in varying places. This temporal and geographic scarcity of water has acted as a constraint to human behaviour ever since the continent was first inhabited. The aboriginal people evolved complex patterns of locational behaviour as well as water detection and storage skills to cope with water scarcity (Flannery 1994). Early European settlers were also forced to adapt often in dramatic circumstances as sequences of lush seasons were followed, ruinously, by periods of prolonged drought. For instance, the belief that rain follows the plough was dispelled in the northward march of farmers from Adelaide in South Australia when a run of bad seasons led to the drawing of the Goyder Line to demark the area of ‘safe’ farming.2 However, not all have been satisfied to be so constrained. Pioneers of irrigated agriculture in Australia sought to free themselves from the limits of...

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