Saturday, October 16, 2010

Comment on water allocations (in The Australian)

We need to get back to first principles. The amount of water available varies and is often zero for extended periods. So: (A) We need to have agricultural capability out there to take advantage of the water when it comes; and (B) We can't have plants, like fruit trees, that will die if they don't get a minimum allocation every year. So actually rice is a great crop to plant when there's lots of water, as long as it isn't allowed to take water when it is scarce. If you want a market mechanism to do this, I'm happy to give my "Hedging the Weather" talk to anyone who's interested, from the abstract: "Modern radar systems deployed by the Bureau of Meteorology may be able to give an unbiased and reasonably accurate report of how much rain has fallen and where, in areas covered by such radar. This can form the basis of an insurance system to allow farmers and others in those areas to hedge against the weather." This system would give farmers the averaged income they need to keep the regional towns going during droughts.

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