Who wants to sell water to the government and how much water do they want to sell?

To achieve a more sustainable balance of water in the Murray Darling Basin, the Federal Australian Government has committed billions of dollars over ten years to buy back existing water rights from willing irrigators. The literature on participation on water buybacks has been scarce and this study provide insights into factors influence willingness to participate in such programs using irrigator surveys from 2008-09 in South Australia’s Riverland and Victoria’s Goulburn Murray Irrigation District. We used ordered probit analysis to investigate willingness to participate in selling water to the government and how much of their water entitlement irrigators are willing to sell. The results were different for each irrigation area, indicating the importance of considering the heterogeneity of each irrigation area. The factors influencing participation and the volume regressions are relatively similar, and suggest that commercial farmers, or farmers with larger farms (but lower water entitlements); those who are close to retirement or are looking to leave farming and those with greater flexibility in irrigation are those that are planning to sell water, and to sell more of their water. In Victoria, the higher the farm debt and the higher the off-farm income then the more likely irrigators’ plan to sell water to the government, and sell a higher percentage of their water entitlements. Our results also suggest that many farmers in both SA and GMID had no interest in selling environmental water back to the Government, even in a time of severe drought, which suggests the program may need to pursue different approaches or restructure the buyback in order to encourage future participation.