I am at a loss to understand Bruce Haigh's complete opposition to any market based solutions to water management.

Allowing farmers to trade their water allocations simply ensures that the water is used most efficiently. Eg. take this simple example: There are two apple farmers using a total of 2 litres (1L each) of water from a river. Farmer A produces 5 apples from each L, while farmer B only produces 1.

The government decides 2L is unsustainable and caps total use at 1L. If it creates a market for the use of that water, the more efficient farmer can outbid the less efficient farmer for the right to use water until the marginal benefit is equal. Thus water use has been reduced at the least cost in terms of output. Moreover, the higher price gives an incentive for improvements in water efficiency.

If the government tries to allocate water by other means it will face many problems. If each farmer is given the same amount of water then total output will be lower and there will be a reduced incentive to use water efficiently. If the government tries to allocate water entitlements according to efficiency of use, it incurs massive administrative problems; the farmers have more knowledge about how efficient their water use is than the government. Trying to gain this information will be incredibly costly (especially if there are 1000's of farmers growing different products, some of which do not bring a steady return each year) and unlikely to ever be entirely successful.

A market is merely a forum for humans to exchange goods and services. Voluntary trade is by definition mutually beneficial - otherwise it would not occur. We can set it up in any way we want. It is therefore nothing to be afraid of. Evil corporations in black vans will not come in and ruin our lives if we allow farmers to trade water