Economic analysis of water banking and managed aquifer recharge as innovations for enhancing water supply and drought resilience

The future of water security in Australia, particularly in the Murray-Darling Basin, faces challenges due to limited water supply options, increasing demand, and climate change impacts. These imbalances and fluctuations in water availability necessitate innovative water management strategies. Technologies such as managed aquifer recharge (MAR) and water banking show potential for enhancing water availability but lack extensive evidence on economic viability concerning social and environmental factors.

About this project

Managed aquifer recharge (MAR) and water banking are promising innovations to enhance water supply and drought resilience. Water banking and MAR involve storing and managing “surplus” surface water and alternative sources in aquifers and extracting back water when water is scarce and additional supplies are needed.

MAR and water banking adoption depend on economic viability, yet existing research focuses mainly on financial aspects. Broader economic feasibility assessments, which incorporate social and environmental impacts, remain underdeveloped. Therefore, it is important to establish further evidence of the viability of MAR and water banking for effective decision-making and uptake. This research will examine the economic, social, and environmental viability of MAR and water banking and implications for water management strategies in the Murray–Darling Basin.

Through qualitative and quantitative analyses, the research proposes ways to include social and environmental factors in economic feasibility assessments of MAR and water banking. The study will identify and extract indicators for measuring social and environmental benefits, costs, and externalities from the literature across and outside Australia. These indicators will be used to evaluate whether water banking is worthwhile in the Murray–Darling Basin using extended cost-benefit analysis and a social welfare function. This research will also develop a conceptual framework linking economic theory to empirical analysis to enhance economic feasibility evaluations for MAR and water banking.

Outcomes

The project aims to provide evidence for improving the assessment of the economic viability of MAR and water banking by incorporating social and environmental factors. It will gather and organise indicators on the benefits and costs related to these factors. The project will evidence how well these indicators work in evaluating economic viability and equity of water banking in the Murray-Darling Basin. Additionally, it will create a framework that combines economic principles with practice to enhance the economic evaluation for these water storage and management systems. Overall, the outcomes will lead to a more comprehensive understanding towards the true value of water banking and aquifer recharge, considering economic, social, and environmental implications.