Water tariffs and farmer adaptation: The case of Goulburn-Murray water Victoria, Australia

Many economists argue that the most effective way to facilitate human adaptation to a range of phenomena is to allow prices to signal the relative scarcity of resources/goods/services such that individuals and firms modify expectations and use. This response would align costs and prices so that (theoretically at least) less would be used of more costly (scarce) items and more of those less costly (scarce). In the case of water, for example, progressive increases in cost and setting prices to match would signal that users needed to exercise more caution in use and, where possible, substitute other resources.