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WATER MARKETS AS RISK MANAGEMENT AND ADJUSTMENT TOOLS WITHIN IRRIGATION COMMUNITIES – SOME AUSTRALIAN EXPERIENCES

IWRA World Water Congress 2003 Madrid Spain
IWRA WWC2003 - default topic
Author(s): BJORNLUND Henning

BJORNLUND Henning

School of International Business, University of South Australia, City West Campus, North Terrace, Adelaide SA 5001, Australia


Article:

Abstract

The development of water resources and associated water management and policies has undergone significant changes over the last century and a half. Until the 1970s and 1980s the water industry was in an expansionary phase. Development was encouraged in pursuit of social and policy objectives: closer settlement, resettlement of soldiers, alleviation of unemployment and social hardship, increased food production to meet domestic needs and for exports. Policy makers were persistent in this effort often against sound advice from economists and in the face of economic failure of many of these projects, besides early evidence of significant environmental problems (Davidson, 1969; Powell, 1989). In this phase increased demand was met by increased supply.

Modern environmental policies, which emerged during the late 1960s, evolved into comprehensive environmental management strategies during the following three decades, and started to affect policies and laws (Bosselmann & Richardson, 1999). This process was driven by a strong change in public opinion with respect to environmental values, together with a better understanding of interrelated issues. The same three decades also saw a sharp increase in the marginal cost of supplying new water as the water industry entered the mature phase (Randall, 1981), as well as a decrease in the public willingness to fund such work due to the shift in public opinion.

The above economic, environmental and community concerns caused a shift in policy paradigm. Under the expansionary phase water management and policy was based on a centralised ‘control and command approach’ with little community involvement in the decision-making processes and associated with subsidised water prices and generous allocations, which encouraged excessive, inefficient and low-value water use. The ‘command and control’ approach has therefore often been associated with low level of community commitment to the long-term viability of irrigation systems, with the result that many systems suffered from lack of maintenance, low rate of fee collection, organised water theft and little regard for environmental issues (Easter, 1999).

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