Socio-economic assessment of water efficiency investments in the Murrumbidgee Valley
Centre for International Economics
November 2004
ISBN 0 642 55273 8
PDF file
About this report
The purpose of this evaluation is to estimate the net benefits of the Pratt Water investment opportunities and proposals at a whole-of-region level.
The economic value of the Pratt Water initiatives to save water and improve supply reliability/distribution depends largely on the extent to which water is a scarce input to production. Maximising water use efficiency, per se, is not necessarily in the best interests of growers or the regional economy. Many other inputs (land, labour and capital) are involved in irrigated production and it is the returns to all these factors that must be optimised, not just water. Indeed, in some situations water may not be the limiting constraint to production - land or labour may be more limiting.
However, water scarcity is expected to increase in future as more water is allocated for environmental purposes and the possibility of a drier climate over the coming years. Increased scarcity would increase the value of water to users as an economic resource and thus elevate the importance of savings.
To undertake this evaluation we have constructed a regional economywide model of the Murrumbidgee Valley to map out the water inputs of all the main activities in the Valley and their corresponding outputs. Such a framework is capable of explicitly modelling the linkages and interactions between economic activities in the region, which ensures that all inputs and outputs add up and there is no double counting.
The interactions are complex, therefore it is necessary to use a regional economic framework for consistency and valid comparison of costs and benefits. For example, a change to one sector of the economy invariably affects other sectors - possibly leading to changed input costs or product prices. Keeping track of these changes is too complicated for a simple spreadsheet model. The Murrumbidgee Valley Economywide (MVE) model developed in this study includes a comprehensive water sector built into the model design. The model produces estimates of:
- the value of water savings and the opportunity cost (foregone benefits) of reducing irrigation diversions;
- the impact of water use efficiency improvements and various other potential Pratt Water outcomes on irrigation value added as well as value added from other economic activities;
- the flow-on effects of the changes in terms of increased value added to other industries - for example, service industries, input suppliers and processors; and
- direct and indirect impacts on regional employment.
Before you download
Most publications are downloadable as PDF files. Adobe Acrobat Reader is required to view PDF files.
If you are unable to access a publication, please contact us to organise a suitable alternative format.
Key
Links to another web site
Opens a pop-up window