The Treasurer announced today that the Productivity Commission will undertake a research study into water markets and externalities.
The outcomes of this study will assist jurisdictions in implementing their water trading commitments under the National Water Initiative (NWI). The NWI, which was agreed through the Council of Australian Governments on 25 June 2004, has been signed by all States and Territories excluding Western Australia. One of the key objectives of the NWI is to establish an efficient water market structure and expand markets to their widest practical geographical scope, enabling increased returns from water use.
The Commission will report on the feasibility of establishing workable market mechanisms that provide incentives for investment in rural water use efficiency. The Commission will also report on ways to deal with rural water-related environmental externalities. In doing so, the Commission will draw lessons from existing examples of market mechanisms.
The terms of reference for the study are attached. Interested parties are encouraged to make submissions to the Commission.
Further information on the study can be obtained from the Productivity Commission’s website at www.pc.gov.au or by contacting the Commission directly on (02) 6240 3239.