Tax as a solution for irrigation water scarcity, quality and sustainability: case studies in Australia and New Zealand

This article utilises three case studies to examine the issues of water scarcity, quality and sustainability arising from agricultural irrigation schemes and suggests a role for tax policy to address these issues. Selected to raise different water for irrigation issues, the case studies are the Murray Darling Basin in mainland Australia, the Australian island state of Tasmania, and the Canterbury region in the South Island of New Zealand. We refer to the literature on water taxes for each case study and apply to each the water tax economic objective, which is to encourage efficient allocation of water to its highest value use. We choose to focus on the water tax environmental objective of encouraging behavioural change to lead to reductions in consumption and pollution. For each case study region, we propose a water tax to resolve issues surrounding scarcity, quality and sustainability and outline a broad design of such a tax. The suggestions differ, but draw from the same body of literature and the water tax principles and concepts contained therein.