Irrigation, Water Quality and Water Rights in the Murray Darling Basin, Australia

Abstract

While irrigation has facilitated the development of high value agricultural production in Australia’s Murray Darling Basin, it has also generated significant externalities in terms of water quality. Irrigation has substantially increased the amount of water entering ground water systems, leading to rising water tables. As water tables rise, there is an increase in mobilised salt that is discharged into the Murray River. To evaluate the costs and benefits of changes in irrigation practices and technology in the Murray Darling Basin, a simulation model has been developed at ABARE in cooperation with the Commonwealth Scientific and Industrial Research Organisation (CSIRO). The model incorporates the relationships between land use, vegetation cover, surface and ground water hydrology and agricultural returns. The model consists of a network of land use units linked through overland and ground water flows. Land use units are defined according the characteristics of the ground water system and each unit is managed independently to maximise returns given the level and salinity of available land and water resources, subject to any land use constraints. The results indicate that water trade and improvements in irrigation efficiency can generate significant external benefits and costs to downstream water users. Internalising these benefits and costs in water property rights can improve economic returns through more efficient water allocation.