Final report released: The role of water markets in climate change adaptation

This final report details research funded by the National Climate Change Adaptation Research Facility that reviews the relationship between southern Murray-Darling Basin water markets and anticipated climate change effects; and the economic, social and environmental impacts of water reallocation through markets. 

Water markets were first introduced in Australia in the 1980s, and water entitlement and allocation trade have been increasingly adopted by both private individuals and government. Irrigators turned to water markets (particularly for allocation water) to manage water scarcity and governments to acquire water for the environment (particularly water entitlements). It is expected that further adoption of water markets will be essential for coping with future climate change impacts. This report reviews the available literature related to the relationship between southern Murray-Darling Basin (sMDB) water markets and anticipated climate change effects; the economic, social and environmental impacts of water reallocation through markets; and future development requirements to enhance positive outcomes in these areas.

Researchers found that climate change and water scarcity management are intertwined, suggesting that policy, institutional and governance arrangements to deal with such issues should be similarly structured. Water users will adapt, either out of necessity or opportunity. The cost of that adaptation at individual, regional and national levels—particularly to future water supply variability—can be mitigated by the consideration of the existing advantages from future opportunities for water marketing in Australia.

View the final report

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