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New South Wales Government's 1995 water reform proposals included several environmental flow policies aimed at improving water quality and the river ecosystems. In evaluating these policies a number of different river flow objectives were considered some of which resulted in a reduction in the water availability for irrigated agriculture. This paper discusses the methodology and modelling framework adopted to analyze the economic impacts of environmental flow policies on the Macquarie regional economy of NSW. An economic model (Catchment Economic Impact Model) was developed to estimate these impacts. This model combines hydrology, simulation, spreadsheet and linear programming applications. The objective function of the linear programming model is to maximize the total gross margins for the region. Constraints include prices, costs, land, labour, and water availability. The model provides economic impacts in the format of descriptive statistics of total gross margin, total irrigated regional gross margin, present value of total regional gross margin over a 30 year period and changes in crop areas under different environmental flow objectives. Four different river flow objectives represented by six hydrology scenarios were considered in this analysis. The results of the preliminary analysis of these objectives are also discussed in this paper.


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