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Abstract

Australia is the world's driest continent and the intensity of conflict over water and water management has been increasing , especially in rural areas. By focussing on the recent federalist compact, National Wa ter Initiative (NWI), we explore the use of market and property rights instruments in water governance in Australia . The question we explore is does the use of such market-based governance instruments imply a reduced role for the state, as new instruments displace previous top down or regulatory modes of governance? It is true that progress has been made in establishing a new property rights and market regime for water and that the operation of such markets has improved the technical efficiency of water usage. However, this paper challenges the view that the new market-based system of governance can be self-managing and thus obviate the need for substantial government involvement. In other words, we argue that the market regime requires substantial 'metagovernance'

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