Limits to Adaptation: Limits and barriers to climate change adaptation for small inland communities affected by drought

Anthony S. Kiem and Emma K. Austin

This study found that on the whole, water trading has potential as a climate change adaptation strategy, with many benefits experienced in previous and current versions of water trading. However, there are also some significant limitations and uncertainties surrounding the social and environmental impacts of water trading. Robust water policy (including a robust water trading scheme) should account for and be able to cope with changes in hydroclimatic conditions, but to date there has been minimal effort focussed on assessing whether the existing and proposed water trading schemes are robust under the range of historical and projected Australian climate conditions, or in fact whether such a "climatically resilient" water trading scheme is even possible. It is difficult to separate the impacts and issues attributable to water trading or policy from those that are caused by drought or other climate impacts; a task that is further complicated by the country's highly variable climate. The study found that significant uncertainty exists around the impacts of water trading on the environment (eg: changed hydrological regimes, underestimation of sustainable environmental flows, etc.). Proper quantification of these impacts is needed, however, it is a very complex task given the current lack of understanding as to what is and is not sustainable, and how best to balance and optimise the water needs of the environment, agriculture, other non-agricultural industry, and human settlements. These issue of balancing water distribution can be seen in the 'cap and trade' quantity based market based instruments (MBIs) that are intended to reallocate resources to 'high value' users. When used in a water trading context, such MBIs would eventually reallocate resources from the 'low value' users of agriculture and drinking water supply to the "high value" user of mining, manufacturing and electricity production. As such, the question that must be asked is: do we really want water trading to achieve its objective? A companion factsheet to this report can be found here. This is one of the six case studies conducted for NCCARF’s ‘Limits to Adaptation’ project to explore the underlying causes and potential to transcend limits in particular regions. A factsheet synthesising the key findings from the 'Limits to Adaptation project' is available here.

Resource Type: 
Case studies
Research report
Australia Wide
Biodiversity, natural resources
Finance, business
Legal issues

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