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Abstract

In this paper, the design of water markets for the management of irrigation-induced salinity in Australia is addressed. Indeed, this setting exhibits complex interactions between the different features of the resource water. Quality, quantity of surface and ground-water interact in ways that produce coupled environmental externalities. It is then difficult to design efficient policy instruments to tackle all the issues at stake. This paper provides a preliminary analysis of three types of water market mechanisms, involving diversion rights and recharge rights.

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