@article{Biggar:162023,
      recid = {162023},
      author = {Biggar, Darryl},
      title = {Exit fees and termination fees revisited: funding  irrigation infrastructure in a manner compatible with water  trade},
      journal = {Australian Journal of Agricultural and Resource Economics},
      address = {2010},
      number = {428-2016-27978},
      pages = {15},
      year = {2010},
      abstract = {It has long been recognised that the mechanism for funding  irrigation infrastructure
in Australia may be incompatible  with efficient trade in the rural water market. If
the  revenue received by an irrigation operator is dependent on  the volume of water
entitlements held in the operator’s  region, out-of-region permanent water sales
threaten the  operator’s revenue stream, potentially leading to higher  charges on
remaining irrigators, encouraging an inefficient  ‘rush for the exit’. In response,
irrigation operators have  imposed restrictions on permanent water trade, such as  exit
fees and termination fees, to protect their revenue  stream. Previous economic analysis
has suggested that exit  fees, in particular, are a barrier to efficient trade in  the water
market and should be abolished. In contrast, this  paper argues that allowing irrigators
to cancel their water  delivery rights without fees or charges leads to  inefficient trade in
the water market, hinders efficient  on-farm investment in sunk complementary assets
and leads  to inefficient network rationalisation decisions. Instead,  the revenue stream
of irrigation operators should be  insulated from water trade decisions, through  high
termination fees, tying irrigation charges to the  land, or tagging the obligation to pay
delivery charges to  the new owner of the traded water.},
      url = {http://ageconsearch.umn.edu/record/162023},
      doi = {https://doi.org/10.22004/ag.econ.162023},
}