Abstract

The objective of this paper is to examine the trade-offs between economic, social, and environmental objectives of increased environmental flows of water in the Murray-Darling system (Australia’s largest river system). The Murray-Darling Basin Authority has proposed a transfer of between 3,000 ML and 6,700 ML from irrigation to environmental flows. Many farmers consider the costs of even the smallest transfer to be prohibitive, while many conservationists regard even the largest transfer as insufficient to capture any significant environmental benefits. The paper examines published work to shed light on the nature of the trade-offs involved in this proposed transfer of water to the environment. Preliminary work indicates a number of hypotheses that are worthy of further examination. First, several estimates suggest that the costs to farming will be small as long as irrigation water is purchased at its full market value. Second, there appeared to be significant thresholds of environmental water flows which would be required to capture any worthwhile environmental benefits. Third, under various proposed compensation schemes, communities overall in the Murray-Darling Basin may benefit (rather than lose) from transfers of water within the above range. Fourth, there would be some losers from the transfer, especially those dependent on irrigated agriculture who have no irrigation entitlements. This would include local businesses supplying services to irrigated agriculture. These are the key issues examined in the paper.