The farm level impacts of water sharing plans in the Namoi Valley: A stochastic dynamic programming analysis

In NSW the Water Management Act (2000) requires water to be specifically allocated for environmental purposes so as to improve river health. Water sharing plans have been developed that establish extractive and environmental shares to river flows. In unregulated river systems this has resulted in changed access rules to river flows for irrigation purposes, raising the prospect of opportunity costs being imposed on irrigators. An important consideration in the development of these plans is an assessment of socio-economic impacts of different water sharing options. This paper presents a bioeconomic modelling framework, based on stochastic dynamic programming linked to hydrological and biophysical models, to assess the farm level impacts of different water sharing plans in a sub-catchment of the Namoi Valley. The framework incorporates temporal farm adjustment decisions in response to changes in water rights and the impact of river flow and climatic variability in assessing the impact of different water sharing plans.