Conclusion

Tradable water entitlements exist only when the benefits and costs associated with the entitlements are well defined and there are regimes that facilitate entitlement transfers with appropriate constraints. In general, the greater the heterogeneity among entitlements the greater buyers' searching costs and other transaction costs, since markets operate most efficiently when the commodity being allocated is homogeneous (Howe et al. 1986). The non-uniformity of entitlements arrangements within and across jurisdictional boundaries will lead to market distortions, which may result in undesirable social, economic and ecological outcomes.

Markets increase economic efficiency by allocating resources to the most valuable uses. For market forces to work, property rights to water must be legally defined as enforceable, fully specified, exclusive, and transferable. Trading is only one way to provide incentives to right holders, and not all licensed property rights encourage trading to the same degree (Raymond 2003). "Water problems involve such diverse interests, uses, and values that sorting them out relies on legal and political institutions more than markets" (Bauer 1997, p. 640). Markets cannot substitute for overtly legal and political processes. The key difference/inconsistency between the legal frameworks of water managing jurisdictions has impeded the ability of the government to change the structure of existing water property rights. It seems unlikely that unified forms of property rights and governance arrangements would evolve without first passing through a comprehensive system of water access entitlements in a society that shares the same water resources.

An essential component of sustainable water resource planning and policy is a comprehensive classification framework for water access entitlements that accurately accounts for different water uses/users for consumptive and non-consumptive purposes. It is envisaged that this classification framework has the potential to significantly improve the compatibility of existing water access entitlements arrangements across all water use types at a variety of scales in the MDB. Due to the risk-averting behaviour of individual farmers, future water resource planning must incorporate a comprehensive approach to integrating social, environmental and economic dimensions, and must guarantee greater levels of local involvement and transparency.

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