Discounting and policy options for sustainable management of the Murray-Darling River System

In many resource management problems, the starting point is one involving a large number of users with imprecisely defined rights and an aggregate rate of resource use that is environmentally unsustainable. One possible policy response is to make formal or informal contracts with users, under which users receive current benefits in return for a commitment to forgo usage rights in future. If users have high discount rates, this response may permit a substantial reduction in resource use over time at relatively low cost. In this paper, this issue is explored with specific reference to the Murray-Darling River System