Climate change, mitigation and adaptation: the case of the Murray–Darling Basin in Australia



taking account of impacts on product and factor prices. In most problems of this
kind, general equilibrium effects are of relatively minor importance, since
changes in supply from one region have only a modest impact on the prices of
goods traded in national and world markets.

In the case of climate change, however, the effects modelled here will be part of a
global change. In the ‘adaptation only’ projection, global reductions in
agricultural productivity are likely to drive an increase in the prices of
agricultural commodities (IPCC 2007b; Quiggin 2008). This will attract more
resources to agriculture. The implication is that reductions in agricultural
output will be smaller than modelled here, but, given the greater economic value
of agricultural products, the welfare loss will be greater than in the case of a
local climate change, specific to the Murray-Darling Basin.

References

Adamson, D., Mallawaarachchi, T. and Quiggin, J. (2007), ‘Modelling basin level
allocation of water in the Murray-Darling Basin in a world of
uncertainty’,
Australian Journal of Agricultural and Resource
Economics
, 51(3), 263-81.

Adamson, D., Mallawaarachchi, T. and Quiggin, J. (2009), ‘Declining inflows and
more frequent droughts in the Murray-Darling Basin: climate change,
impact and adaptation’,
Australian Journal of Agricultural and
Resource Economics
, 53(3), 345-66.

Arnell, N.W. (2004), ‘Climate change and global water resources: SRES
emissions and socio-economic scenarios’,
Global Environmental Change,
14(1), 31-52.

Australian Bureau of Statistics (2006), ‘Water Account Australia 2004-05, Cat
No 4610.0’, Canberra.

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