Impacts of water trading in the southern Murray Darling Basin

Today the National Water Commission (NWC) launched a report into the impacts of water trading in the southern Murray Darling Basin. The NWC find that water trading has made a vital contribution to optimising the economic, social and environmental values of the Basin’s scarce water resources. The ability to trade water entitlements and allocations provided water users with increased flexibility to manage risk, cash flow and debt. This flexibility has been extremely beneficial during the severe and prolonged drought in the Basin over the last decade, with large volumes of water moving to higher valued water uses. Economic modeling demonstrated the benefits of allowing water trading, with national GDP increasing by $220 million in 2008-09 as a result of the ability to trade.

The report also found that water users showed a growing acceptance of water trading, a greater understanding of how the market operates and had better access to market information. The impacts of water trading on third party water users and the environment were generally small over the study period, and in many cases positive.

Frontier (Australia) was the lead advisor to the National Water Commission for this study.

For more information, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com or call on +61 (0)3 9620 4488.

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