Skip to main content Skip to main navigation Skip to search

Help for those affected by flood

Visit nema.gov.au.

Close
ABARES

Top navigation abares

  • Department
  • Ministers
  • Media Centre
Main menu

Main navigation ABARES

  • ABARES Home
    ABARES Home
  • About
    About
  • Research topics
    Research topics
  • Products
    Products
  • Data
    Data
  • News
    News
  • Conferences and events
    Conferences and events
  • Careers
    Careers
Department of Agriculture

Breadcrumb

  1. DAFF Home
  2. ABARES
  3. Research topics
  4. Water
  5. A model of water trade and irrigation activity in the southern Murray-Darling Basin

Secondary ABARES

  • Water
    • A model of water trade and irrigation activity in the southern Murray-Darling Basin
    • Future scenarios for the southern Murray-Darling Basin: Report to the Independent Assessment of Social and Economic Conditions in the Basin
    • Measuring water market prices
    • Murray-Darling Basin water markets: trends and drivers 2002-03 to 2018-19
    • Murray-Darling-Basin water market dataset
    • Trends in water entitlement holdings and trade: Analysis of ABARES survey data
    • Water Market Outlook

A model of water trade and irrigation activity in the southern Murray-Darling Basin

​​​​​​Authors: Mihir Gupta, Neal Hughes and Kai Wakerman-Powell

Publication date: 7 February 2018

Overview

This paper presents a new econometric partial equilibrium model of water trade and irrigation activity within the southern Murray-Darling Basin (sMDB). The model exploits a unique data set detailing water availability, water market outcomes, irrigation activity, climate conditions and commodity prices for the sMDB annually over the period 2002-03 to 2016-17. This data is used to econometrically estimate a set of demand functions for water by region and irrigation activity.

These demand functions are placed within a spatial equilibrium framework taking into account constraints on inter-regional water trade across the basin. The model is able to simulate the market prices of water allocations and entitlements by region and inter-regional water trade flows along with water and land use by irrigation activity and region.

The performance of the model is demonstrated with in and out-of-sample validation tests. The model provides a basis for separating the effects of historical climate, market and policy shocks on the region and for simulating the effects of potential future shocks.

Key Issues

  • This is a technical report describing a new ABARES water trade mode, focusing on the robustness and validity of the model.
  • The model builds on previous work to provide robust analysis of water market use and market outcomes in the sMDB. It is suitable for both historical analysis and generating future scenarios.
  • The structure of the model allows assessment of the effects of climate, water market and policy changes, including separating out the effect of each on:
    • water prices for each region
    • inter-regional water trade flows
    • water and land use by irrigation activity and region.
  • Future uses of the model are under development but could include, for example, examining the:
    • changes in water demand as a result of investment in perennial plantings
    • implications of changes in water availability associated with climate variability and change
    • effects of historical water policy changes on water markets
    • water market implications of changes to inter-regional water trade constraints
    • projections of future allocation prices and water trade flows.
  • The model uses a unique data set detailing water availability, water market outcomes, irrigation activity, climate conditions and commodity prices for the sMDB annually over the period 2002-03 to 2016-17.
​​

Downloads

Key documents

A model of water trade and irrigation activity in the southern Murray-Darling Basin PDF [3.1 MB]
A model of water trade and irrigation activity in the southern Murray-Darling Basin DOCX [3.5 MB]

Data visualisation

A Model of water trade and irrigation activity dashboard – data visualisation

​
Thanks for your feedback.
Thanks! Your feedback has been submitted.

We aren't able to respond to your individual comments or questions.
To contact us directly phone us or submit an online inquiry

CAPTCHA
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.

Please verify that you are not a robot.

Skip

Footer

  • Contact us
  • Accessibility
  • Disclaimer
  • Privacy
  • FOI
Last updated: 04 November 2019

© Department of Agriculture, Fisheries and Forestry

We acknowledge the Traditional Owners of country throughout Australia and recognise their continuing connection to land, waters and culture. We pay our respects to their Elders past, present and emerging.