Experiments with regulations & markets linking upstream tree plantations with downstream water users
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Land-use change in upper catchments impact downstream water flows. As trees use
large amounts of water the expansion of upstream plantations can substantially reduce
water availability to downstream users. There can also be impacts on downstream
salinity due to reduced dilution flows. In some jurisdictions afforestation requires the
purchase of water rights from downstream holders, while in others it does not,
effectively handing the water rights to the upstream landholders. We consider the
economic efficiency and equity (profitability and distributional) consequences of
upstream land use change in the presence of a water market under alternate property
rights regimes and different salinity scenarios.