Hostname: page-component-586b7cd67f-vdxz6 Total loading time: 0 Render date: 2024-11-28T15:12:34.307Z Has data issue: false hasContentIssue false
  • English
  • Français

Ownership structure and incentives to invest: dual-structured irrigation cooperatives in Australia

Published online by Cambridge University Press:  06 May 2010

BRADLEY PLUNKETT ,
FABIO R. CHADDAD  and
MICHAEL L. COOK
BRADLEY PLUNKETT*
Affiliation:
Trade and Market Development, Department of Agriculture and Food, Western Australia
FABIO R. CHADDAD
Affiliation:
University of Missouri and Ibmec, São Paulo, Brazil
MICHAEL L. COOK
Affiliation:
University of Missouri, Columbia, MO
*
*Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract:

In the past decade, Australia has begun to privatize its irrigation system. Two general models have emerged: a single and a dual ownership structure. This paper examines the trade-offs, costs and benefits, and the attendant efficiencies regarding costs of ownership. In particular, we examine member capital investment incentives and resultant risk-bearing costs related to capital formation. The paper concludes that the dual ownership structure system has significant economic advantages relative to its single-structured counterpart.

Type
Research Article
Information
Journal of Institutional Economics , Volume 6 , Issue 2 , June 2010 , pp. 261 - 280
Copyright
Copyright © The JOIE Foundation 2010

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Australian Competition and Consumer Commission(ACCC, 2006), ‘A Regime for the Calculation and Implementation of Exit, Access and Termination Fees Charged by Irrigation Water Delivery Businesses in the Southern Murray–Darling Basin’, available at: http://www.accc.gov.au/content/index.phtml/itemId/771300 [accessed 17 March 2007].Google Scholar
Australian Senate (2007), ‘Water Policy in Australia’, available at: http://www.aph.gov.au/SENATE/committee/rrat_ctte/completed_inquiries/2002-04/water/report/c02.htm [accessed 17 March 2007].Google Scholar
Chaddad, F. R. and Cook, M. L. (2004), ‘Understanding New Cooperative Models: An Ownership-Control Rights Typology’, Review of Agricultural Economics, 26 (3): 348–360.CrossRefGoogle Scholar
Chaddad, F. R., Cook, M. L., and Heckelei, T. (2005), ‘Testing for the Presence of Financial Constraints in US Agricultural Cooperatives: An Investment Behaviour Approach’, Journal of Agricultural Economics, 56 (3): 385–397.CrossRefGoogle Scholar
Coleambally Irrigation Cooperative Limited (CICL) (2006), ‘Annual Report’.Google Scholar
Coleambally Irrigation Mutual Cooperative Limited (CIMCL) (2004), 2005 and 2006), ‘Annual Reports’.Google Scholar
Coleambally Irrigation Mutual Cooperative Limited (CIMCL) (2006), ‘Due Diligence Report’.Google Scholar
Cook, M. L. (1995), ‘The Future of US Agricultural Cooperatives: A Neo-Institutional Approach’, American Journal of Agricultural Economics, 77 (5): 1153–1159.CrossRefGoogle Scholar
Cook, M. L. and Iliopoulos, C. (2000), ‘Ill-Defined Property Rights in Collective Action: The Case of Agricultural Cooperatives’, in Menard, C. (ed.), Institutions, Contracts, and Organizations: Perspectives from New Institutional Economics, London: Edward Elgar.Google Scholar
Cook, M. L. and Plunkett, B. (2006), ‘Collective Entrepreneurship: An Emerging Phenomenon in Producer-Owned Organizations’, Journal of Agricultural and Applied Economics, 38 (2): 421–428.CrossRefGoogle Scholar
Commonwealth Scientific and Industrial Research Organisation (CSIRO, (2005), ‘Irrigation in Perspective: Irrigation in the Murray and Murrumbidgee Basins: A Bird's Eye View’, Cooperative Research Centre for Irrigation Futures, Commonwealth Scientific and Research Organisation, Canberra, Australia.Google Scholar
Department of Natural Resources and Environment (2001), ‘Financial Review of Shepparton and Central Goulburn Irrigation Areas: Goulburn-Murray Water’, Melbourne, Australia.Google Scholar
Economic Consulting Service (2006), ‘Harvey Water Irrigation Area – Logue Brook Dam Water Value for Irrigation’, Perth, WA, available at: http://portal.water.wa.gov.au/portal/page/portal/WaterManagement/Projects/LogueBrook/Content/Value%20of%20LBD%20Irrigation%20Water%202.pdf [accessed 30 March 2006].Google Scholar
Fama, E. F. and Jensen, M. C. (1983), ‘Agency Problems and Residual Claims’, Journal of Law and Economics, 26: 327–349.CrossRefGoogle Scholar
Fama, E. F. and Jensen, M. C. (1985), ‘Organizational Forms and Investment Decisions’, Journal of Financial Economics, 14: 101–119.CrossRefGoogle Scholar
Grafton, R., Bennett, J., and Hussey, K. (2007), ‘An Economic Evaluation of the National Plan for Water Security’, Dry Water: Policy Brief, Crawford School of Economics and Government, Australian National University.Google Scholar
Grossman, S. J. and Hart, O. D. (1986), ‘The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration’, Journal of Political Economy, 94: 691–719.CrossRefGoogle Scholar
Hansmann, H. (1996), The Ownership of Enterprise, Cambridge: The Belknap Press of Harvard University Press.Google Scholar
Hart, O.D. (1995), Firms, Contracts and Financial Structure, Oxford: Clarendon.CrossRefGoogle Scholar
Irrigation Review Steering Committee (2005), ‘State Water Strategy: Irrigation Review Final Report’, Perth, WA, available at: http://www.statewaterstrategy.wa.gov.au/index.cfm?event=irrigationReview [accessed 17 March 2007].Google Scholar
Jensen, M. C. and Meckling, W. H. (1979), ‘Rights and Production Functions: An Application to Labor-Managed Firms and Codetermination’, Journal of Business, 52 (4): 460–506.Google Scholar
Knoeber, C. R. and Baumer, D. L. (1983), ‘Understanding Retained Patronage Refunds in Agricultural Cooperatives’, American Journal of Agricultural Economics, 65 (1): 30–37.CrossRefGoogle Scholar
LeVay, C. (1983), ‘Agricultural Cooperative Theory: A Review’, Agricultural Economics, 34: 1–44.CrossRefGoogle Scholar
Libecap, G., (2007) ‘Chinatown Revisited: Owens Valley and Los Angles – Bargaining Costs and Fairness Perceptions of the First Major Water Rights Exchange’, Workshop Paper, University of Arizona, available at: http://ele.arizona.edu/papers/ELElibecap3-30-07.pdf [accessed 18 March 2008].Google Scholar
Marsden Jacob Associates (2004), ‘Future Governance of the NSW Abalone Fishery: Alternative Arrangements’, NSW Fisheries and the Abalone Development Company, available at: http://www.fisheries.nsw.gov.au/data/assets/pdf_file/4827/Abalone-Report.pdf [accessed 30 March 2006].Google Scholar
McKay, J. (2005), ‘Water Institutional Reforms in Australia’, Water Policy, 7: 35–52.CrossRefGoogle Scholar
Milgrom, P. and Roberts, J. (1992), Economics, Organization and Management, Englewood Cliffs, NJ: Prentice-Hall.Google Scholar
Myer, W. (2005), ‘The Irrigation Industry in the Murray and Murrumbidgee Basins’, Technical Report No. 03/05, Cooperative Research Centre for Irrigation Futures, Commonwealth Scientific and Research Organisation, available at: http://www.clw.csiro.au/publications/consultancy/2005/irrigation-industry-murray-CRCIF.pdf [accessed 18 March 2008].Google Scholar
Ostrom, E. (1993), ‘Design Principles of Long Enduring Irrigation Institutions’, Water Resources Research, 29 (7): 1907–1912.CrossRefGoogle Scholar
Saleth, R. M. and Dinar, A. (1999), ‘Water Challenge and Institutional Response: A Cross-Country Perspective’, Policy Research Paper 2045, The World Bank, Washington, DC.Google Scholar
Saleth, R. M. and Dinar, A. (2004), The Institutional Economics of Water: A Cross-Country Analysis of Institutions and Performance, Cheltenham, UK: Edward Elgar.Google Scholar
Staatz, J. M. (1987), ‘The Structural Characteristics of Farmer Cooperatives and Their Behavioural Consequences’, in Royer, J.S. (ed.), Cooperative Theory: New Approaches, ACS Service Report 18, Washington, DC: USDA, pp. 33–60.Google Scholar
South West Irrigation Asset Cooperative (SWIAC) (2005) and 2006), ‘Annual Reports’, available at: http://www.harveywater.com.au/annual/Annual.asp [accessed 30 March 2006].Google Scholar
South West Irrigation Management Cooperative (SWIMCO) (2006), ‘Annual Report’, available at: http://www.harveywater.com.au/annual/Annual.asp [accessed 30 March 2006].Google Scholar
Vitaliano, P. (1983), ‘Cooperative Enterprise: An Alternative Conceptual Basis for Analyzing a Complex Institution’, American Journal of Agricultural Economics, 65 (5): 1078–1083.CrossRefGoogle Scholar
Young, M. D. and McColl, J. C. (2003), ‘Robust Reform: The Case for a New Water Entitlement System for Australia’, Australian Economic Review, 36 (2): 225–234.CrossRefGoogle Scholar