'buybacks' and their use to secure environmental flows - National ...
alance the objectives of environmental managers and irrigators. This analysis has demonstrated that the most cost effective options trigger may vary between buyback regions and environmental sites. And importantly, options offer significant advantages where the water demands of environmental managers and irrigators are counter-cyclical, but can become blunt and ineffectual where this is not the case. Finally, irrigators surveyed were generally supportive of an Environmental Manager entering the market, provided there were transparency in operations and accountability mechanisms in place. They indicated a strong preference for such a Manager to trade in seasonal allocations rather than entitlement, due to perceived flow on effects to regional communities. Irrigators surveyed indicated a preference for multi-year leaseback arrangements to manage their price risks, however if options contracts were to be used, they indicated a preference for crafting triggers around the seasonal allocations market. The fieldwork has demonstrated the benefits of involving irrigators in the design of market instruments, with useful insights into the operation of the water markets, irrigator’s risk preferences and useful suggestions on how contracts may be designed being elicited from those surveyed. Natural resource ‘buybacks’ and their use to secure environmental flows BDA Group 60
BIBLIOGRAPHY ACIL Tasman 2002, Scope for water use efficiency savings as a source of water to meet increased environmental flows –independent review, a Report to the Murray Darling Basin Commission, December. ACIL Tasman 2003, Water Trading in Australia, Current and Prospective Products, current trends and prospective instruments to improve water market function, prepared for the water reform working group, June. Allan, J. and Lovett, S. 1997, Impediments to managing environmental water provisions, Bureau of Resource Sciences, Canberra. BDA Group 2003, A market approach to The Living Murray Initiative: a discussion paper, Final Report, 11 August 2003. BDA Group 2006, Issues and Options in applying market based measures in the Living Murray First Step, a report to the Murray-Darling Basin Commission, Canberra. Brennan, D. 2004, Price formation on the Northern Victorian water exchange, paper presented to the Australian Agricultural and Resource Economics Society Conference, 11-13 February 2004, Melbourne. Campbell, I. 2004, Government to buy 114 commercial fishing licences under the Great Barrier Reef Marine Park Adjustment Scheme, Press Release, 10 December 2004. Commonwealth of Australia 2004a, Intergovernmental Agreement on addressing water overallocation and achieving environmental objectives in the Murray Darling Basin, An agreement between the Commonwealth of Australia and the Governments of New South Wales, Victoria, South Australia and the Australian Capital Territory, Canberra, 25 June. Commonwealth of Australia 2004b, Intergovernmental agreement on a National Water Initiative, An agreement between the Commonwealth of Australia and the Governments of New South Wales, Victoria, South Australia, the Australian Capital Territory and the Northern Territory, Canberra, 25 June. Council of Australian Governments 1994, Communique, Hobart, 25 February. Crouter, J. 2003, A Water Bank Game with Fishy Externalities, Review of Agricultural Economics, vol. 25, no. 1, pp. 246-258. Department of Environment and Heritage 2002, Australia’s National Report – 8th Conference of Contracting Parties to the Convention on Wetlands, 18-26 November, Spain Department of Infrastructure, Planning and Natural Resources (DIPNR) undated, Just add water. Department of Infrastructure, Planning and Natural Resources (DIPNR)b undated, Water Allocation Plan for the Murray and Lower Darling River Valleys, 2004-2005. Department of Primary Industries and University of Melbourne 2003, Creating Markets for the Environment, prepared for the Murray Darling Basin Commission, Canberra, November. English, B., Brearley, T. and Coggan, A. 2004, Environmental flow allocations and counter-cyclical trading in the River Murray System, paper presented to the Australian Agricultural and Resource Economics Society Conference, 11-13 February 2004, Melbourne. Gippel, C. 2003, Review of Achievements and Outcomes of Environmental Flow Initiatives Undertaken on the extended River Murray System to August 2002, Report to Murray-Darling Basin Commission, Canberra, March. Natural resource ‘buybacks’ and their use to secure environmental flows BDA Group 61
knowledge for managing Australian l
Acknowledgements This study has bee
Executive Summary Governments have
The analysis demonstrates that no s
1. INTRODUCTION Over the last two d