Experiments with regulations & markets linking upstream tree plantations with downstream water users

Land-use change in upper catchments impact downstream water flows. As trees use large amounts of water the expansion of upstream plantations can substantially reduce water availability to downstream users. There can also be impacts on downstream salinity due to reduced dilution flows. In some jurisdictions afforestation requires the purchase of water rights from downstream holders, while in others it does not, effectively handing the water rights to the upstream landholders. We consider the economic efficiency and equity (profitability and distributional) consequences of upstream land use change in the presence of a water market under alternate property rights regimes and different salinity scenarios.