Water resource allocation has become a critical issue from an environmental, productive and political perspective. The release of the Victorian Government's White Paper Securing Our Water Future Together in 2004 and the Premiers opening stanza claiming that "in Victoria water is at the top of our agenda" is testament to the prominence of these issues. However, whilst the modifications proffered in the White Paper address some of the historical 'misuse' of the resource, there are also grounds for questioning the efficacy of elements of the reform agenda. More specifically, the notion of 'sharing the pain' of reallocation across all sectors of the community is evident in the reform agenda with specific reforms targeted at urban users, in spite of their relatively modest impact on extractions.

This paper specifically explores the impacts of water reforms in urban contexts and contrasts them with the proposed adjustments to irrigated agriculture. The paper argues that the reforms do not meet the narrowly defined efficiency criteria applied by economists but might conceivably be justified on alternative grounds.

Lin Crase is a Senior Lecturer in the School of Business at La Trobe University's Albury-Wodonga campus. His research has focussed on regional resource allocation, particularly water resource reform. He is the author of numerous articles on the impacts of water reform and matters of institutional design on Australia and elsewhere.