Projects in this program will apply new developments in the theory of risk and uncertainty to analyse and improve policies for the reform of property rights, institution and land and water management in the Murray-Darling system. The project will assist in the formulation of sustainable resources to problems of drought and irrigation related salinity in the Murray-Darling system
Key Projects
- Murray-Darling Basin Model
- The Precautionary Principle
- Institutions and Property Rights
1) Murray-Darling Basin Model
Objective
Develop a model of the Murray-Darling Basin incorporating flexible responses to uncertainty regarding climate and water allocation policy
Progress so far
The main objective for 2004 was to develop a simulation model of land and water use for the Murray–Darling Basin. This development extends previous work in this area through the modelling of alternative water use technologies and the inclusion of the Darling Basin. The modelling component of the project has proceeded on schedule. The major tasks have been: implementing the theoretical design for the model using Excel Solver and GAMS ; Using gross margin data to represent a wide range of agricultural land uses; Obtaining and reconciling data on existing water flows, and modelling changes in flows under alternative land uses.
Although the main focus of attention has been sustainable management of irrigation water, other issues such as groundwater and tree planting and clearance are crucial, and arise in contexts extending beyond the Murray–Darling Basin. Any complete analysis of water resources in the Murray–Darling Basin must take account of both surface flows of water and groundwater, and of the interactions between the two. Groundwater is also a crucial resource in other sensitive systems such as the Great Artesian Basin. Research in 2004 focused on the problems of Great Artesian Basin and on modelling reflow of salt and irrigation water in the Murray–Darling system. In addition, research in this project has dealt with issues of forestry and tree clearing, with a particular focus on the possible development of a timber industry by the Wik people on Cape York Peninsula.
2) The Precautionary Principle
Objective
Analyse the precautionary principle in relation to models of choice under uncertainty
Progress so far
The precautionary principle, presented as a guide to environmental policy decisions in the presence of uncertainty, has been the subject of vigorous debate. However, the principle has generally not been discussed in relation to formal theories of choice under uncertainty developed as generalisations of the expected utility model. The aim of this project, is to derive a formal basis for the precautionary principle, based on an incompleteness hypothesis regarding formal models of choice under uncertainty. The incompleteness hypothesis states that estimates derived from formal models of choice under uncertainty will generally be over-optimistic and that the errors will be greater, the less well-understood is the problem in question.
3) Institutions and Property Rights
Objective
Examine the role of property rights and institutions in environmental management
Progress so far
In the policy component of the project, the main focus has been on the design of water rights in the presence of uncertainty. The aim has been to use concepts of state-contingent production to model alternative systems of property rights. Research in 2004 has dealt with alternative designs for water rights systems in the Murray–Darling Basin and on possible ways of dealing with uncertainty.