Predicting water allocations and trading prices to assist water markets

Khan, Shahbaz; Dassanayake, Dharmasiri; Mushtaq, Shahbaz; Hanjra, Munir A.

doi:10.1002/ird.535

Cited by 16 publications

(5 citation statements)

References 58 publications

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“…If this scenario eventuates, 'Low Security' entitlements may yield significantly less water than models anticipate. This outcome could also affect the ability of irrigators who rely on 'Low Security' entitlements to plan for the coming agricultural season (Khan et al 2010). In his recent report to the Governor of South Australia, Commissioner Bret Walker (2019) recounted two opposing impressions from his experience of conducting the Royal Commission:…”

Section: Resultsmentioning

confidence: 99%

‘Sub-Prime’ Water, Low-Security Entitlements and Policy Challenges in Over-Allocated River Basins: the Case of the Murray–Darling Basin

Moore

Rutherfurd

Peel

et al. 2020

Environmental Management

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Environmental policy is often implemented using market instruments. In some cases, including carbon taxing, the links between financial products and the environmental objectives, are transparent. In other cases, including water markets, the links are less transparent. In Australia's Murray-Darling Basin (MDB), financial water products are known as 'entitlements', and are similar to traditional financial products, such as shares. The Australian water market includes 'Low Security' entitlements, which are similar to 'sub-prime' mortgage bonds because they are unlikely to yield an amount equal to their financial worth. Nearly half the water purchased under the Murray-Darling Basin Plan for environmental purposes is 'Low Security'. We suggest that the current portfolio of water held by the Australian Government for environmental purposes reflects the mortgage market in the lead-up to the global financial crisis. Banks assumed that the future value of the mortgage market would reflect past trends. Similarly, it is assumed that the future value of water products will reflect past trends, without considering climate change. Historic records of allocations to 'Low Security' entitlements in the MDB suggest that, in the context of climate change, the Basin Plan water portfolio may fall short of the target annual average yield of 2075 GL by 511 GL. We recommend adopting finance sector methods including 'hedging' 'Low Security' entitlements by purchasing an additional 322-2755 GL of 'Low Security', or 160-511 GL of 'High Security' entitlements. Securing reliable environmental water is a global problem. Finance economics present opportunities for increasing the reliability of environmental flows.

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Section: Resultsmentioning

confidence: 99%

‘Sub-Prime’ Water, Low-Security Entitlements and Policy Challenges in Over-Allocated River Basins: the Case of the Murray–Darling Basin

Moore

Rutherfurd

Peel

et al. 2020

Environmental Management

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“…Moreover, what has to be taken into consideration is that: ‘economic risk is pervasive in agriculture due to climatic variability and irrigated agriculture is no exception’ (Shahbaz Khan et al ., ); investing in irrigation infrastructures requires such a huge amount of money that they should be maintained as long as possible, so as to prevent the owner—government, public authority, water user association—from having to reinvest for rehabilitation. It is therefore necessary to include long‐term renewal in the initial financial equation; head structures are most of time not delivering an individual service.…”

Section: Some Guidelines For Addressing the Issuementioning

confidence: 99%

“…Water markets are strictly regulated as regards trading zones and price mechanisms. Ideally they should enhance water resource allocation efficiency without impacting on the environment or social equity (Shahbaz Khan et al, 2009). Transactions are facilitated by traders, who are paid by sellers, while buyers pay duties and taxes on the said transaction.…”

Section: Payment For Water Resource Conservation; Water Market Mechanismmentioning

confidence: 99%

Financing Irrigation

Brelle

Dressayre

2014

Irrigation and Drainage

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For the last 10 years, food security has been coming back to centre stage as a major challenge for future decades. Financing irrigation and drainage is really a broad issue, each main component of which requires specific analysis: investment, operation, maintenance, renewal, rehabilitation and modernization. Questions, and thus answers, differ for funding infrastructures and for paying for water service. Financing setting up, rehabilitation or modernization, operation and maintenance of systems for collective irrigation are considered.The present paper aims to highlight the main lessons learnt from the past, analyse present constraints and trends, and propose in which directions to steer so as to take up the challenge of a sustainable increase in production of more and better food while better preserving ecosystems and natural resources.It RÉSUMÉCes dix dernières années ont vu la question de la sécurité alimentaire revenir au-devant de la scène comme un défi majeur pour les prochaines décades. Financer l'irrigation et le drainage est assurément un sujet très vaste, dont chaque composante requiert une analyse spécifique: investissement, exploitation et maintenance, renouvellement ou rénovation, modernisation. Les questions, et donc les réponses, varient selon qu'il s'agit du financement des investissements ou du paiement pour le service de l'eau. Ces questions sont abordées pour les systèmes collectifs d'irrigation et de drainage. Le présent document a pour but de mettre en évidence les principales leçons à retenir du passé, d'analyser les contraintes et tendances actuelles, et de proposer les directions à suivre pour relever le défi d'une amélioration durable de la production alimentaire, tant en qualité qu'en quantité, tout en préservant mieux les ressources naturelles et les écosystèmes.Il pose la question de savoir quelles doivent être les contributions financières relatives des états-ou de leurs agences ou établissements publics-en d'autres termes des citoyens par l'impôt. Quel peut être le rôle du secteur privé, que ce soit pour financer, construire ou exploiter, dans quels cas et sous quelles conditions? Quelle doit-être la contribution des usagers de l'eau, payeurs in fine? Et quelles autres conditions doivent être remplies pour que les divers dispositifs de financement réussissent, comme par exemple la solidarité entre les usages en fonction de leurs capacités financières respectives?

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“…An adaptive learning model for predicting availability of water for allocation has been developed in this study for Murrumbidgee irrigation area (MIA), New South Wales, Australia that learns from results of detailed hydrological models and ocean‐based climate forecasts using artificial neural network (ANN) technique. Extensions of this model to predict water prices have been made by Khan et al [2009] while earlier versions of this work can be found at Khan et al [2004, 2005].…”

Section: Introductionmentioning

confidence: 99%

An Adaptive Learning Framework for Forecasting Seasonal Water Allocations in Irrigated Catchments

Khan

Dassanayake

Gabriel

2010

Natural Resource Modeling

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This paper describes an adaptive learning framework for forecasting end-season water allocations using climate forecasts, historic allocation data, and results of other detailed hydrological models. The adaptive learning framework is based on artificial neural network (ANN) method, which can be trained using past data to predict future water allocations. Using this technique, it was possible to develop forecast models for end-irrigation-season water allocations from allocation data available from 1891 to 2005 based on the allocation level at the start of the irrigation season. The model forecasting skill was further improved by the incorporation of a set of correlating clusters of sea surface temperature (SST) and the Southern oscillation index (SOI) data.A key feature of the model is to include a risk factor for the end-season water allocations based on the start of the season water allocation. The interactive ANN model works in a riskmanagement context by providing probability of availability of water for allocation for the prediction month using historic data and/or with the incorporation of SST/SOI information from the previous months.All four developed ANN models (historic data only, SST incorporated, SOI incorporated, SST-SOI incorporated) C opyright c 2010 W iley Perio d icals, In c. 324SEASONAL WATER ALLOCATIONS 325 demonstrated ANN capability of forecasting end-of-season water allocation provided sufficient data on historic allocation are available. SOI incorporated ANN model was the most promising forecasting tool that showed good performance during the field testing of the model.

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Predicting water allocations and trading prices to assist water markets

Cited by 16 publications

References 58 publications

‘Sub-Prime’ Water, Low-Security Entitlements and Policy Challenges in Over-Allocated River Basins: the Case of the Murray–Darling Basin

‘Sub-Prime’ Water, Low-Security Entitlements and Policy Challenges in Over-Allocated River Basins: the Case of the Murray–Darling Basin

Financing Irrigation

An Adaptive Learning Framework for Forecasting Seasonal Water Allocations in Irrigated Catchments

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