Social, Economic and Community Impacts of Water Markets in Australia’s Murray Darling Basin Region

Abstract

In the last quarter of the 20th century, it became obvious that water resources within Australia's Murray–Darling Basin were significantly overcommitted. Existing patterns of water use were unsustainable and would have serious environmental, economic, and social repercussions throughout the region and beyond. Consequently, in 1994 a new National Water Reform Framework was introduced aimed at balancing the opposing demands of certainty for consumptive users with the need to allocate more water to the environment. This framework presented sweeping reforms of the water industry, including the introduction of water markets. Water markets operate through trading water entitlements on the assumption that water would be redirected towards the most efficient and productive users. Earlier research indicated that water markets can lead to (1) a few producers accumulating water entitlements at the expense of smaller producers in a particular locality, and (2) significant export of water out of a locality. Both processes can have serious economic, social, and community repercussions for individuals, families, and entire communities. These include, for example, increased unemployment and out-migration, and reduced incomes, infrastructure investment resources, social capital, and community capacity in affected communities. Aims of this study were to investigate the social and economic community impacts of (1) major new corporate irrigation entities created by water markets and (2) exporting a large proportion of water entitlement out of a locality. Methodology involved interviews, focus groups, and secondary data analysis in communities in Australia's Murray-Darling Basin region. Results confirm that water entitlement accumulation and export are having significant economic and social impacts for individuals, families, business, and entire communities.