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The NSW, Victorian and Commonwealth Governments are in the process of corporatising the Snowy Mountains Hydro-electric Scheme. As part of this process a water inquiry was established to assist in the determination of the environmental operating conditions of the new business, Snowy Hydro Ltd. The Inquiry’s principal task was to examine the range of environmental issues arising from the current pattern of water flows caused by the Scheme and to develop a comprehensive range of costed options to address these issues. Central to the Inquiry’s deliberations is the re-allocation of water from irrigated agriculture and electricity generation to the Snowy River catchment. This paper focuses on trade-off issues associated with such a re-allocation and the difficulties involved in achieving a balance that improves net social welfare. The findings of the paper suggest that further work is required by Government and highlights a need for an ongoing process to manage resource use trade-offs over time.


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