Water reform and co-operation

This paper examines the potential impact of water reforms on agricultural water users and the consequences of the privatisation of government water irrigation assets. Within this context, the role of co-operation and the use of the co-operative organisational structure is documented and explored. From a public policy perspective, the importance of co-operation and cooperative structures can be viewed as a response to market failure. The established and proposed water markets and associated property rights, have elements of common property resources, externalities and high transaction costs. The recognition of market failure and its consequences questions the standard economic efficiency arguments for an unregulated water market, and heightens the role of co-operation.