000162023 001__ 162023
000162023 005__ 20250221175526.0
000162023 0247_ $$2doi$$a10.22004/ag.econ.162023
000162023 037__ $$a428-2016-27978
000162023 037__ $$a428-2016-28564
000162023 041__ $$aeng
000162023 245__ $$aExit fees and termination fees revisited: funding irrigation infrastructure in a manner compatible with water trade
000162023 260__ $$c2010
000162023 269__ $$a2010
000162023 270__ $$mdarryl.biggar@stanfordalumni.org$$pBiggar,   Darryl
000162023 300__ $$a15
000162023 336__ $$aJournal Article
000162023 520__ $$aIt has long been recognised that the mechanism for funding irrigation infrastructure
in Australia may be incompatible with efficient trade in the rural water market. If
the revenue received by an irrigation operator is dependent on the volume of water
entitlements held in the operator’s region, out-of-region permanent water sales
threaten the operator’s revenue stream, potentially leading to higher charges on
remaining irrigators, encouraging an inefficient ‘rush for the exit’. In response,
irrigation operators have imposed restrictions on permanent water trade, such as exit
fees and termination fees, to protect their revenue stream. Previous economic analysis
has suggested that exit fees, in particular, are a barrier to efficient trade in the water
market and should be abolished. In contrast, this paper argues that allowing irrigators
to cancel their water delivery rights without fees or charges leads to inefficient trade in
the water market, hinders efficient on-farm investment in sunk complementary assets
and leads to inefficient network rationalisation decisions. Instead, the revenue stream
of irrigation operators should be insulated from water trade decisions, through high
termination fees, tying irrigation charges to the land, or tagging the obligation to pay
delivery charges to the new owner of the traded water.
000162023 546__ $$aEnglish
000162023 650__ $$aAgricultural Finance
000162023 650__ $$aResource/Energy Economics and Policy
000162023 6531_ $$aexit fees
000162023 6531_ $$airrigation infrastructure charges
000162023 6531_ $$asunk complementary investments
000162023 6531_ $$atermination fees
000162023 700__ $$aBiggar, Darryl
000162023 773__ $$q421$$o435$$tAustralian Journal of Agricultural and Resource Economics$$j54$$k4$$dDecember 2010
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000162023 887__ $$ahttp://purl.umn.edu/162023
000162023 909CO $$ooai:ageconsearch.umn.edu:162023$$pGLOBAL_SET
000162023 912__ $$nSubmitted by Adrienne Keiser (keise023@umn.edu) on 2013-12-26T21:39:25Z
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  Previous issue date: 2010
000162023 913__ $$aLicense granted by Adrienne Keiser (keise023@umn.edu) on 2013-12-26T21:35:05Z (GMT):

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000162023 980__ $$a428
000162023 982__ $$gAustralian Journal of Agricultural and Resource Economics>Volume 54, Issue 4, December 2010