The Economic and Social Impacts of Water Trading: Case studies in the Victorian Murray Valley

Abstract

The trading of water, which developed in response to competing pressures on the resource from users and for the environment, emerged during the early 1980s. The intention was to facilitate more efficient use of an increasingly scarce resource by enabling water to move to more productive uses. An open, robust water market is expected to provide numerous benefits to individuals, communities, the environment, and the economy more broadly. A number of concerns have, however, also been expressed about the economic and social impacts of the water trade. The objective of this study was to report on the impacts of water trading on individual water entitlement holders, industries and communities in the Victorian Murray Valley and, in doing so, to differentiate between changes that are the result of allowing water to move via trade and those that reflect changes in the economy that have affected the industries and communities in the study regions. The report provides valuable information for policy makers who are examining the social and economic impacts of water trading on rural communities and industries and whether there might be alternative mechanisms that could be used without imposing major constraints on the propensity for water to trade to its most productive use. It seeks to contribute to understanding the impacts of water trading on all stakeholders across regional economies and communities.