Study finds sell trend

By Country News

A neighbour’s decision to sell their water entitlements makes it more likely that an individual irrigator will also decide to sell their water, new research has found.

Exploring the buybacks that occurred under the Murray-Darling Basin Plan, the report found that buybacks were subject to a significant neighbourhood effect, contributing to larger volumes of water leaving specific areas.

The report’s findings could add further weight to the much discussed ‘swiss cheese effect’ that resulted from the buybacks.

‘‘Social pressure on selling started to disappear for selling temporary water, but the social pressure on selling permanent water entitlements continues and the uptake of water entitlement trading in general was slow because of the long-term nature of this water right and the historical attachment to irrigators’ land,’’ the report found.

‘‘This local pressure increased with the advent of the government into the MDB water market to purchase water for the environment from 2008 onwards.

‘‘There are fears that permanent water entitlement sales (which may lead to farm exits) may threaten the viability of the local farming community and lead to increased infrastructure costs for remaining irrigators.’’

The report noted that irrigators were likely to sell their water out of ‘last resort’ circumstances — including debt, death and divorce — with water entitlement trading more likely to be based on long-term considerations.

Although conceding it was not supported by a majority of irrigators, the report said those that did participate in the buybacks scheme saw reduced farm debt levels, with many irrigators using the proceeds to stay in business and improve on farm efficiencies, or retire.

‘‘Irrigators located further away from major and smaller cities were more likely to sell their water, but at a decreasing rate,’’ the report said.

‘‘Regional socio-economic classifications were not found to be associated with water entitlement selling decisions. Thus, results suggest no evidence that rural community decline is associated with high water entitlement sales.’’

A total of 1462 farmers were surveyed as part of the research, with small clusters appearing in northern NSW Murray, with those who owned larger volumes of water entitlements who had previously lowered season water allocation levels in their area the most likely to sell.