Economic, social and environmental sustainability of the Murray-Darling Basin

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-Darlingsystem (Australia's largest river system). The Murray-Darling Basin Authority has proposed atransfer of between 3,000 ML and 6,700 ML from irrigation to environmental flows. Manyfarmers consider the costs of even the smallest transfer to be prohibitive, while many conservationistsregard even the largest transfer as insufficient to capture any significant environmentalbenefits. The paper examines published work to shed light on the nature of the trade-offs involvedin this proposed transfer of water to the environment. Preliminary work indicates anumber of hypotheses that are worthy of further examination. First, several estimates suggestthat the costs to farming will be small as long as irrigation water is purchased at its full marketvalue. Second, there appeared to be significant thresholds of environmental water flows whichwould be required to capture any worthwhile environmental benefits. Third, under variousproposed 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 somelosers from the transfer, especially those dependent on irrigated agriculture who have no irrigationentitlements. This would include local businesses supplying services to irrigated agriculture.These are the key issues examined in the paper.