Disposition of precipitation: Supply and Demand for Water Use by New Tree Plantations
2011
Nordblom, Thomas L. | Finlayson, John D. | Hume, Iain H.
As the greatest rainwater users among all vegetative land covers, tree plantations have beenemployed strategically to mitigate salinity and water-logging problems. However, large-scalecommercial tree plantations in high rainfall areas reduce fresh water inflows to riversystems supporting downstream communities, agricultural industries and wetlandenvironmental assets. A bio-economic model was used to estimate economic demand forwater by future upstream plantations in a sub-catchment (the 2.8 million ha Macquarievalley in NSW) of the Murray-Darling Basin, Australia. Given four tree-product values,impacts were simulated under two settings: without and with the requirement thatpermanent water entitlements be purchased from downstream entitlement holders beforeestablishing a tree plantation. Without this requirement, gains in economic surplus fromexpanding tree plantations exceeded economic losses by downstream irrigators, and stockand domestic water users, but resulted in reductions of up to 154 GL (gigalitres) in annualflows to wetland environments. With this requirement, smaller gains in upstream economicsurplus, added to downstream gains, could total $330 million while preservingenvironmental flows. Extending downstream water markets to new upstream treeplantations, to equilibrate marginal values across water uses, helps ensure waterentitlements are not diminished without compensation. Outcomes include better economic-efficiency,social-equity and environmental-sustainability.
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