The problem of salinity and proposals to control or ameliorate it have received increasing attention in Australia in recent years. It is generally agreed that inappropriate land and water management practices, such as the excessive use of irrigation water in hydrologically unsuitable areas, are the main cause of the increasing levels of salinity which have been observed over the period of European settlement. If mitigation works are undertaken without regard to the incentive structures which generate these practices, they may encourage an extension of inappropriate land uses and ultimately be ineffectual or even counterproductive. Analysis of these problems requires consideration of some issues which have so far received limited attention in discussions of salinity. These include the incentives which lead farmers to adopt different land management practices and the way in which institutional structures operate to generate these incentives. This change in focus has important implications for areas of analysis such as modelling. In the present paper, a model of the Murray River system, developed by Quiggin (1988a) is applied to the problem of farm responses to mitigation works and the availability of new technologies.
