Agriculture Reference
In-Depth Information
Chapter 1.
National Water Initiative -
The Economics of Water Management in Australia -
An Overview
Malcolm Thompson
1
The major economic issues facing agriculture and water in Australia involve the
continued transition to using and managing water under the influence of more mature
market conditions. This includes clearer specification of water property rights, assigning
risk of changes in water allocation to improve investment certainty, proper accounting
for water, extending the scope for efficient water markets, and pricing which seeks to
better reflect the true economic cost of the resource. Each of these elements is pursued
by Australia's blueprint for water reform, the National Water Initiative. Amongst other
things, the transition will involve making careful judgements in order to optimise the mix
of markets, planning and regulation for water management in Australia.
Background
There are a number of ways of describing water management in Australia, for
example historically, legislatively, institutionally, or in hydrological or ecological terms.
By way of background, this paper begins by illustrating some of the challenges for
water management in Australia through some prominent tensions which currently
characterise water use and management in this country. The notion of 'tensions' is not
used here as a negative term - it simply reflects the competing interests, incentives,
methods and understandings which lie at the heart of managing a natural resource such as
water.
Some of the more notable tensions for water in Australia include the following:
Water is vested in the state and territory governments, but there are national imperatives
for water management - including the sharing of physical water resources between
states, nationally significant environmental assets, the emergence of interstate water
markets, the cross-border flow of capital to water-based investments. All this is
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