How do Water Markets Function in Droughts and other Hard Questions: Learning from Law Reform in Australia .

Since 1994 Federal and state governments in Australia have embarked on an ambitious agenda for reform. The reforms were based on two main objectives – to introduce a water market while at the same time protecting environmental uses of water. Ten years on, the Council of Australian governments have confirmed the direction for reform and agreed on a further reform agenda called the National Water Initiative.

The first part of the paper will give a broad summary of the factors that gave rise to that policy and law reform, and a description of the features of the new legal framework for water. It will then give a concise analysis of the problems that have been encountered in the implementation of the reform, outline where early reform has succeeded and consider the issues that continue to be a challenge. As the reform framework relies on water resource planning, the third part of the paper considers issues relating to participatory planning in water and suggests how this may be addressed particularly in remote communities. I also discuss a current project which attempts to provide for more transparent decision-making in planning and for the provision of social, cultural and economic values of indigenous people in the water resource plans.