PhD Thesis

This study undertakes analysis of the water market in the NSW Murray Darling Basin between 2004 and 2010. It combines state-wide water trading, land trading and land-use data to map the transfer of water rights and the characteristics of market participants. This data is analysed using a combination of GIS, spatial statistics, econometrics and interviews of key stakeholders. The results show the changing property-level ownership of water entitlements and allocations then compares it to the premise of the National Water Initiative that water flows to its “higher valued uses”.

Water reform in the MDB is highly contested, evidenced by the furore surrounding the Guide to the Basin Plan and the federal government’s Water for the Future policy. The reforms extend from the National Water Initiative framework, which seeks to maximise the efficiency and productive use of water, and optimise the “pattern of water use and related investment that maximises the economic, social and environmental benefits of Australia’s water resources” (NWC Biennial). The separation of land and water property rights and the of creation markets for trading water entitlements are the principle instruments for achieving the NWI outcomes. The introduction and subsequent expansions of water markets were “based on the premise that trading provides economic benefits to buyers and sellers, and to society as a whole, by reallocating scarce water resources to higher valued uses” (NWC 2010).

The impacts of the water market are well explored in the literature from an economic perspective. Less attention has been paid to the spatiality of water ownership and how this changes over time, despite water’s undeniable biophysical constraints as a commodity. This study is a quantitative attempt to examine the spatio-temporal geographies of water traders. Using the theoretical vocabulary of economic geography, it is argued that the spatio-temporal characteristic of traders provides a more complete understanding for the value of water than simply economic productivity. The spatial context of water traders determines how they value water, their investment decisions and the “pattern of water use and related investment” across various geographies.

Now in non-academic language…

Governments have embraced market-based management of natural resources from Carbon to Water. The National Water Initiative 2004 created the institutional framework for Australia’s Water Trading Market, intending it to optimise social, economic and environmental aspects in the Basin. We assume that markets are successful vehicles for efficiently allocating water resources, but we don’t even know where the water has gone! After a decade of water trading, there is still scarce knowledge about the trends in the water market. Are foreigners buying Australia’s water? Do large agri-businesses own more water than family farmers? Is water ownership flowing from Dairy farms to the Cotton farms? What communities gained or lost water during the recent drought and with what impacts? How does the price of water relate to other agricultural commodities?

Understanding these questions is critical to government policy-makers, farm businesses, water brokers and water investment funds.