Next Article in Journal
Using a Statistical Model to Examine the Effect of COD: SO42 Ratio, HRT and LA Concentration on Sulfate Reduction in an Anaerobic Sequencing Batch Reactor
Next Article in Special Issue
Assessment of Short Term Rainfall and Stream Flows in South Australia
Previous Article in Journal
Comparison of Performance between Genetic Algorithm and SCE-UA for Calibration of SCS-CN Surface Runoff Simulation
Previous Article in Special Issue
Impact of Climate Change on the Irrigation Water Requirement in Northern Taiwan
Article Menu

Export Article

Open AccessArticle
Water 2014, 6(11), 3457-3477;

Understanding Irrigator Bidding Behavior in Australian Water Markets in Response to Uncertainty

School of Commerce, University of South Australia, Adelaide 5000, Australia
Faculty of Business and Economics, Monash University, Caulfield East 3145, Australia
Department of Economics, Monash University, Clayton 3168, Australia
Author to whom correspondence should be addressed.
Received: 10 September 2014 / Revised: 30 October 2014 / Accepted: 31 October 2014 / Published: 14 November 2014
(This article belongs to the Special Issue Water Resources in a Variable and Changing Climate)
View Full-Text   |   Download PDF [312 KB, uploaded 9 June 2015]   |  


Water markets have been used by Australian irrigators as a way to reduce risk and uncertainty in times of low water allocations and rainfall. However, little is known about how irrigators’ bidding trading behavior in water markets compares to other markets, nor is it known what role uncertainty and a lack of water in a variable and changing climate plays in influencing behavior. This paper studies irrigator behavior in Victorian water markets over a decade (a time period that included a severe drought). In particular, it studies the evidence for price clustering (when water bids/offers end mostly around particular numbers), a common phenomenon present in other established markets. We found that clustering in bid/offer prices in Victorian water allocation markets was influenced by uncertainty and strategic behavior. Water traders evaluate the costs and benefits of clustering and act according to their risk aversion levels. Water market buyer clustering behavior was mostly explained by increased market uncertainty (in particular, hotter and drier conditions), while seller-clustering behavior is mostly explained by strategic behavioral factors which evaluate the costs and benefits of clustering. View Full-Text
Keywords: water allocation market; price clustering; uncertainty; strategic behavior water allocation market; price clustering; uncertainty; strategic behavior

Figure 1

This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

Share & Cite This Article

MDPI and ACS Style

Zuo, A.; Brooks, R.; Wheeler, S.A.; Harris, E.; Bjornlund, H. Understanding Irrigator Bidding Behavior in Australian Water Markets in Response to Uncertainty. Water 2014, 6, 3457-3477.

Show more citation formats Show less citations formats

Related Articles

Article Metrics

Article Access Statistics



[Return to top]
Water EISSN 2073-4441 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
Back to Top