The role of water markets in climate change adaptation

Abstract Water markets were first introduced in Australia in the 1980s, and water entitlement and allocation trade have been increasingly adopted by both private individuals and government.Irrigators turned to water markets (particularly for allocation water) to manage water scarcity and Governments to acquire water for the environment (particularly water entitlements. It is expected that further adoption of water markets will be essential for coping with future climate change impacts. This report reviews the available literature related to the relationship between southern Murray-Darling Basin (sMDB) water markets and anticipated climate change effects; the economic, social and environmental impacts of water reallocation through markets; and future development requirements to enhance positive outcomes in these areas. The use of water markets by irrigators can involve both transformational (selling all water entitlements and relocating or switching to dryland) and incremental (e.g. buying water allocations/entitlements, using carry-over, changing water management techniques) adaptation to climate change. Barriers to both adaptations include: current and future climate uncertainty; poor (or non-existent) market signals; financial constraints; information barriers; mental processing limits; inherent attitudes toward or beliefs about climate change; institutional barriers and disincentives to adapt. A better understanding of trade behaviour, especially strategic trade issues that can lead to market failures, will improve the economic advantages of water trade. There remains community concerns about the impacts of transfers away from regional areas such as reduced community spending and reinvestment; population losses; loss of jobs; declining taxation base, loss of local services and businesses, regional production changes; and legacy issues for remaining farmers. However, it is hard to disentangle these impacts from those caused by ongoing structural change in agriculture. Rural communities that are most vulnerable to water scarcity under climate change and water trade adjustment include smaller irrigation-dependent towns. Communities less dependent on irrigation are better able to adapt. Further, where environmental managers use water markets to deal with water variability and to ensure ecological benefits, irrigators are concerned about its impact on their traditional use of markets to manage scarcity. Climate change and water scarcity management are intertwined, suggesting that policy, institutional and governance arrangements to deal with such issues should be similarly structured. Water users will adapt, either out of necessity or opportunity. The cost of that adaptation at individual, regional and national levels—particularly to future water supply variability—can be mitigated by the consideration of the existing advantages from future opportunities for water marketing in Australia

Incorporating Uncertainty in the Economic Evaluation of Capital Investments for Water-Use Efficiency Improvements

Long-run investments in water-use efficiency (WUE) are risky, particularly where water is required as a secure input. State-of-nature representations of supply outcomes provide an increased understanding of the vulnerability of capital and water users to adverse events. Using Californian data, we couple cost-benefit analysis to a state-contingent analysis approach to explore the riskiness of WUE investment payoffs and cash-flow outcomes when frequencies of states of nature change over the investment course. Critically, this allows us to represent decision-maker adaptation in the face of risk and uncertainty and the role of subsidy policy in those decisions.David Adamson, Adam Loc

Managing Water Scarcity at a River Basin Scale with Economic Instruments

This paper presents a conceptual framework for both assessing the role of economic instruments, and reshaping them in order to enhance their contribution to the goals of managing water scarcity. Water management problems stem from the mismatch between a multitude of individual decisions, on the one hand, and the current and projected status of water resources on the other. Economics can provide valuable incentives that drive individual decisions, and can design efficient instruments to address water governance problems in a context of conflicting interests and relevant transaction costs. Yet, instruments such as water pricing or trading are mostly based on general principles of welfare economics that are not readily applicable to assets as complex as water. A flaw in welfare economic approaches lies in the presumption that economic instruments may be good or bad on their own (e.g., finding the “right” price). This vision changes radically when we focus on the problem, instead of the instrument. In this paper, we examine how economic instruments to achieve welfare-enhancing water resource outcomes can realize their full potential in basin-scale management contexts. We follow a political economy perspective that views conflicts between public and private interest as the main instrumental challenge of water management. Our analysis allows us to better understand the critical importance of economic instruments for reconciling individual actions towards collective ambitions of water efficiency, equity and sustainability with lessons for later-adopting jurisdictions. Rather than providing panaceas, the successful design and implementation of economic instruments as key river basin management arrangements involves high transaction costs, wide institutional changes and collective action at different levels. </jats:p

Developing a water market readiness assessment framework

Water markets are increasingly proposed as a demand-management strategy to deal with water scarcity. Water trading arrangements, on their own, are not about setting bio-physical limits to water-use. Nevertheless, water trading that mitigates scarcity constraints can assist regulators of water resources to keep water-use within limits at the lowest possible cost, and may reduce the cost of restoring water system health. While theoretically attractive, many practitioners have, at best, only a limited understanding of the practical usefulness of markets and how they might be most appropriately deployed. Using lessons learned from jurisdictions around the world where water markets have been implemented, this study attempts to fill the existing water market development gap and provide an initial framework (the water market readiness assessment (WMRA)) to describe the policy and administrative conditions/reforms necessary to enable governments/jurisdictions to develop water trading arrangements that are efficient, equitable and within sustainable limits. Our proposed framework consists of three key steps: 1) an assessment of hydrological and institutional needs; 2) a market evaluation, including assessment of development and implementation issues; and 3) the monitoring, continuous/review and assessment of future needs; with a variety of questions needing assessment at each stage. We apply the framework to three examples: regions in Australia, the United States and Spain. These applications indicate that WMRA can provide key information for water planners to consider on the usefulness of water trading processes to better manage water scarcity; but further practical applications and tests of the framework are required to fully evaluate its effectiveness.This work was supported by the Australian Research Council [FF140100733, DE150100328 and DP140103946], and the Australian National Commission for UNESCO

Real-time 6-DoF Pose Estimation by an Event-based Camera using Active LED Markers

Real-time applications for autonomous operations depend largely on fast and robust vision-based localization systems. Since image processing tasks require processing large amounts of data, the computational resources often limit the performance of other processes. To overcome this limitation, traditional marker-based localization systems are widely used since they are easy to integrate and achieve reliable accuracy. However, classical marker-based localization systems significantly depend on standard cameras with low frame rates, which often lack accuracy due to motion blur. In contrast, event-based cameras provide high temporal resolution and a high dynamic range, which can be utilized for fast localization tasks, even under challenging visual conditions. This paper proposes a simple but effective event-based pose estimation system using active LED markers (ALM) for fast and accurate pose estimation. The proposed algorithm is able to operate in real time with a latency below \SI{0.5}{\milli\second} while maintaining output rates of \SI{3}{\kilo \hertz}. Experimental results in static and dynamic scenarios are presented to demonstrate the performance of the proposed approach in terms of computational speed and absolute accuracy, using the OptiTrack system as the basis for measurement.Comment: 14 pages, 12 figures, this paper has been accepted to WACV 202

Predicting water allocation trade prices using a hybrid Artificial Neural Network-Bayesian modelling approach

This paper proposes an integrated (hybrid) Artificial Neural Network-Bayesian (ANN-B) modelling approach to improve the accuracy of predicting seasonal water allocation prices in Australia’s Murry Irrigation Area, which is part of one of the world’s largest interconnected water markets. Three models (basic, intermediate and full), accommodating different levels of data availability, were considered. Data were analyzed using both ANN and hybrid ANN-B approaches. Using the ANN-B modelling approach, which can simulate complex and non-linear processes, water allocation prices were predicted with a high degree of accuracy (RBASIC = 0.93, RINTER. = 0.96 and RFULL = 0.99); this was a higher level of accuracy than realized using ANN. This approach can potentially be integrated with online data systems to predict water allocation prices, enable better water allocation trade decisions, and improve the productivity and profitability of irrigated agriculture

Putting virtual worlds to work to support improved climate risk decision-making on real world farms

Climate variability represents a significant risk to farming enterprises. Effective communication and extension of climate information may improve climate risk decision making and adaptive management responses to climate variability on farms. However, extension services are under strain worldwide due to cost and time constraints. Innovative applications of emerging digital technologies are likely to play an increasingly important role in this space. Evaluation of stakeholder responses to new web-based virtual world ‘discussion-support’ tools (short scripted video clips or machinima filmed in Second Life) indicate that they may provide a potentially revolutionary way to present and cost-effectively disseminate consistent and highly targeted information about climate, climate risk and climate risk adaptation to large numbers of farmers. Leveraging the social and observational learning aspects of farming, these tools also incorporate and apply recent advances in the use of digital technologies in education. With contextualised settings and relevant and engaging storylines, the tools model discussions between farmers about climate information, risk and on-farm practices. Follow up discussion among real life farming groups and farming families, stimulated by the tools, will potentially assist farmers to make better on-farm decisions to manage climate risk which, in turn, will support sustainable food and fibre production systems and reduce environmental harm. Prototype machinimas were developed for and trialled in the Australian sugar cane farming industry (Fig. 1). This industry is located in coastal regions of north-eastern Australia (Queensland and northern New South Wales) which experience high levels of climatic variability ranging from drought to intense rainfall events associated with tropical lows and cyclones. Improved access to targeted climate information, better understanding of climate risk and adaptation through adoption of recommended farm management best practice have been a key focus of sugar industry extension programs, In the sugar industry, as in other agricultural sectors, farmer participation in conventional face-to-face workshops, though effective in influencing adoption rates, is limited and likely to become more so as resources supporting extension services diminish. At the same time, online dissemination of technical information, though far-reaching, is often ineffective. Even the development of high-level decision support tools has seen only limited uptake among farmers. It is generally recognised within extension circles that the key to farmer engagement is through participatory processes and relevant discussion. The discussion support machinimas developed in this project deal with specific scenarios within the sugar cane farming calendar: specifically, irrigation; fertiliser application; harvesting; and planning. Evaluation of the machinimas was conducted, firstly, through a series of climate workshops where the tools were used to generate discussion of climate risk associated with each of these situations. These workshops were followed up with a phenomenographic study in which selected participants were interviewed about their response to the machinimas and transcripts were then analysed thematically. This study was designed to investigate the value of these tools in stimulating discussion about climate risk and adaptation within a farmer group and, subsequently, farming families. Secondly, the machinimas and an on-line survey questionnaire were posted to the website of the sugar cane farming peak body, CANEGROWERS Australia, whose membership numbers approximately 4,000 cane farmers. This survey was designed to investigate both farmer responses to the tools and the effectiveness of the tools, when disseminated electronically, in stimulating discussion and potentially influencing on farm decision making. Results suggest that these virtual world tools positively engage farmers and, while not replacing face-to-face extension, provide cost-effective support for climate risk decision making on Australian sugar cane farms. Future development of the machinimas will enable rapid updates of relevant seasonal climate information to farmer groups to ensure access to the best available information as a basis for discussion and decision making. Increasing capacity to deliver such tools online, given expanding access to the internet and uptake of mobile technologies, also suggests potential to digitally engage large numbers of farmers globally. The virtual world platform in which the machinimas are made allows ready contextualisation of climate risk information for a target audience through customised representations of landscapes, farming systems, characters (avatars) and scripted dialogues that reflect the real life experiences of farmers, wherever they are. Discussion is a key element of social learning. By modelling conversations and stimulating further discussion, these tools may assist in providing cost-effective targeted support for learning and on-farm decision making, thereby enhancing the adaptive capacity of farmers and the development of more sustainable food production systems

Virtual Discussions to Support Climate Risk Decision Making on Farms

Climate variability represents a significant risk to farming enterprises. Effective extension of climate information may improve climate risk decision making and adaptive management responses to climate variability on farms. This paper briefly reviews current agricultural extension approaches and reports stakeholder responses to new web-based virtual world ‘discussion-support’ tools developed for the Australian sugar cane farming industry. These tools incorporate current climate science and sugar industry better management practices, while leveraging the social-learning aspects of farming, to provide a stimulus for discussion and climate risk decision making. Responses suggest that such virtual world tools may provide effective support for climate risk decision making on Australian sugar cane farms. Increasing capacity to deliver such tools online also suggests potential to engage large numbers of farmers globally

Virtual world technologies to enhance climate risk management on Australian sugar cane farms

Improved climate risk decision-making and management in agriculture is critical to the well-being and long-term sustainability of farming communities and future global food security. Decision-making on farms often makes assumptions about seasonal conditions and weather events over the cropping season. Projected climate change and increasing climate variability are likely to pose increasing challenges to the productivity and profitability of farming systems. Hence, better understanding of climate information may improve farmers' ability to plan for climate risk. Digital technologies offer an important alternative in the delivery and communication of agricultural information, complementing and expanding the reach of conventional face-to-face agricultural extension services, particularly where these are subject to declining levels of investment. Sophisticated digital platforms and their applications in learning environments also offer new opportunities which may influence and significantly enhance agricultural knowledge exchange. This paper reports on a project undertaken by the University of Southern Queensland's Australian Digital Futures Institute and International Centre for Applied Climate Sciences to develop and evaluate a web-based virtual 'discussion-support' system that integrates climate information with practical farming operations in Australian sugar farming systems. Customized video clips (machinima), created in the Second Life virtual world environment, use lifelike avatar actors to model conversations about climate risk and key farm operational decisions relevant to sugarcane farmers. Designed to be readily available online, this innovative approach is designed to provide more equitable and cost-effective access to targeted climate information as well as improved learning and decision-making opportunities at local, regional, national and even global scales

Sweet success: virtual world tools enhance real world decision making in the Australian sugar industry

Investigating the impact of a web-based, ‘discussion-support’, agricultural-climate information system on Australian farmers’ operational decision making