ABSTRACT:During recent years many countries have moved to rationalize the management of state owned or state controlled resources. In Victoria, Australia, water, in particular, has received a great deal of attention. Subsidies to construct, operate, and rehabilitate irrigation facilities have been reduced, and there have been numerous consolidations of small water supply authorities to achieve economies of scale. In addition, Victoria has taken the unusual step of using auctions to allocate new irrigation water entitlements.The six water auctions that took place during 1988 and early 1989 were perceived as an efficient and equitable mechanism to allocate limited water supplies to their highest value use. While the agricultural areas where the different auctions occurred were similar, there was substantial variation in the prices paid, which reflects varying demands for additional irrigation water.This paper will discuss the following topics: the auction process used and the results of the auctions, the efficiency of the auction procedures, and the factors influencing the demand for additional irrigation water in the different auctions. In addition, the implications of using auctions to allocate water supplies for future water management in Victoria will be discussed.
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