Expanders, diversifiers or downsizers? Identifying clusters of irrigators’ water trade and farm management strategies in Australia

Abstract

Australia, in particular the southern Murray-Darling Basin, has the most advanced water market in the world. However, there is still much to be understood as to how and why irrigators use the water market, and in what combination with other farm management strategies. This study used principal component analysis to identify five clusters of southern Murray-Darling Basin irrigators from a set of twenty possible farm and water strategies during 2015–16 (n = 977). Multinomial logit regression was then used to identify influences associated with each cluster. The five clusters of irrigators include those: expanding the farm (includes buying temporary water); expanding and diversifying (includes buying permanent water); downsizing (selling both temporary and permanent water); transitioning (switching away from irrigation to dryland); and saving (using carryover – water saved in storages for the following year). Around a third of irrigators can be classified as trying to expand the farm (the Expanders and the Expanders & Diversifiers); another third, of typically older irrigators, have lower levels of debt and excess water (the Savers); while a final third, who also tend to be older but also face financial and/or psychological stress, are placing more emphasis on dryland production (away from irrigation) or decreasing agricultural production altogether (the Transitioners and Downsizers). Higher long-term temperature of a farm area’s location increased the probability of the irrigator being a downsizer, indicating a future trend of irrigation farm exit, given the predicted rise in temperature from climate change in the Murray-Darling Basin.