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Abstract
The regulation of river systems to meet water demands for irrigation in the southern Murray Darling
Basin has changed the timing and the volume of the natural pattern of flows. Australian governments
have committed to restoring, in part, winter and spring flow regimes to preserve and enhance the
riverine environment. These changes will involve trade-offs against the foregone returns to agriculture
and between different environmental objectives.
To better understand these trade-offs, environmental flow objectives are specified as a change in the
inter-arrival time distributions of winter and spring flow events, ranging from brief flooding events to the
inundation of flood plains and wetlands over several weeks. Expected costs, and hence the trade-offs,
depend on the required volume, the threshold inter-arrival time between environmental watering events,
and the acceptable probability of exceeding that threshold time.
The economic costs of meeting environmental flow objectives will depend on prevailing climatic
conditions. The key to minimising costs to other water users is to time the environmental release to
avoid periods of low water availability and take advantage of periods of high availability while still
meeting the flow objectives. In doing so, an environmental manager must weigh current environmental
condition against the likelihood of more or less favourable conditions in the future.
A stochastic optimisation model is used to develop release strategies based on a known set of stream
inflows and evaluated against a randomised sequence of unknown flows. The model is used to elicit the
economic trade-offs associated with environmental flow objectives and the threshold inter-arrival time
between events. The model was also used to examine how different institutional arrangements affect
the economic efficiency of delivering these objectives.