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Lin CraseLin Crase
Markets, Property Rights and Managing the Environmental Water Reserve
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Living with Reality
• Basin Plan will set SDLs • PC estimates more than 2500Gl may be held by
Commonwealth• > 20% of all extractive entitlements according to
Australian Farm Institute• Guide points to 27-37% as volumetric ambition• Buyback to bridge any gap
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Some Starters
• Commonwealth Environmental Water Reserve will represent a significant portion of MDB water resources
• Major management challenges
• Are the rights right?
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How does the Commonwealth presently manage environmental water?
• An example, TLM
• Complex hierarchical and inter-jurisdictional requirements
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At the Site Level
• Barmah-Millewa Forest:
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Looks simple, but it’s not
• Coordination committee
• Technical Advisory Committee
• Consultation Reference Group
• Project Officer
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So if environmental water managers are given scope to work in market what does it look like?
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Water rights and markets
• Present focus is on volume with limited attention to delivery characteristics– Access (permanent) markets– Allocation (temporary) markets
• Others– Use– Works and network– Quality
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How it works in reality
• Dam managers
–Allocation announcements
–Use of temporary trade to redress imbalance between announcements and
• Opportunity costs
• Risk preferences
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Carryover
• An inter-seasonal right
• Attenuated relative to other rights
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What does the environmental water manager want?• More water in stream
• More variability
• More early season flow
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What does the environmental water manager want?• More water in stream
– Volume will do this, up to a point
• More variability– Carryover is weaker right
• More early season flow– Allocations don’t favour this– Temporary trade?– Important empirical question
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Concluding remarks
• Environmental water holder will control significant volumes
• Volumes have limitations when considered against environmental preferences
• Temporary market versus modifying rights• Potential for other products to ease pain of
adjustment– Need science to estimate trade-offs between
volumetric and other dimensions
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Thank You