The spatial distribution and determinants of irrigators’ price choices for water entitlement trading

Abstract

Although many studies have examined irrigators’ water trading behaviour, little is known about how irrigators value their water, especially for their water entitlements (permanent water rights). This article’s aim is to assess the determinants of irrigators’ values for their water (i.e. price choices for selling and buying of water entitlements). Specifically, we focus on spatial determinants and how irrigators’ price choices vary spatially. We used stated preferences data from an irrigator survey in the southern Murray-Darling Basin (MDB) in Australia at the end of the Millennium drought (2011). It was found that (spatial) influences affect the price choices of the selling and buying decision differently depending e.g. on irrigators’ location in the southern MDB, i.e. with regards to rural areas, lower resource areas and the regional socio-economic index. Furthermore, irrigators’ valued their water differently if they owned it compared to if they were going to own it, which may relate to the ‘endowment effect’.