Investigating a farm exit policy in Australia: Results of a stated preference survey

In response to one of the worst droughts on record in the Murray-Darling Basin and widespread environmental degradation, there was significant intervention by the Australian government in water policy and irrigation over the past decade. Government responses have included irrigation infrastructure investment, buying back water, exit packages for smallscale irrigators (only a very small initial program) and implementing a new Basin plan across the Murray-Darling Basin. This study investigates the willingness of irrigators to participate in an expanded exit package policy with the use a stated preference survey. The exit package program involves irrigators selling all their water entitlements and removing any permanent plantings and associated irrigation infrastructure. We designed a survey to elucidate the range of water prices that irrigators would require for them to sell all their water and leave the irrigation industry. Irrigator participation responses and the amount of water volume offered for sale are generally price elastic and the price elasticity of volume sold is heterogeneous across sub-groups of irrigators, as compared to probability of irrigator participation. Our findings would assist policy makers in devising further exit programs.