Ability of water trade to limit the impact of...
URL: https://www.mdba.gov.au/sites/default/files/publications/Ability%20of%20water%20trade%20to%20limit%20the%20impact%20of%20climate%20change%20on%20water%20pricing%20and%20industry%20viability.pdf
Authors: Georgia Dwyer, David Downie and Rebecca Lester
Date of publication: September 2025
This research examined how climate change might affect irrigated farming in the southern Basin. This includes almonds, cotton, dairy, hay, rice and other crops, horticulture and livestock.
One way to adapt to climate change might be through water trading. However, up until now there has been very little evidence for how effective water trading might be. A water market (or water trading) is a system of formal rules and regulations that govern the buying, selling and leasing of water use rights (or water entitlements), often independent of land titles.
This research examined current water trading levels to a scenario where no inter-regional trade was allowed. The researchers also looked at one where unrestricted trade was allowed. For each, they modelled historical climate conditions as well as wet, moderate and dry future climate scenarios.
The researchers then considered how climate change and water trading might affect the ability of different industries to afford water.
Key findings / recommendations:
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Water trading can help reduce the frequency and duration that water is unaffordable for irrigated farming under climate change.
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When water trading is allowed, water prices are more likely to stay affordable for longer compared to not allowing trade. These changes have the potential to increase industry viability.
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However, while there may be benefits for irrigated agricultural overall, there will likely be unequal impacts across industries and communities.
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