Role of Sectoral Transformation in the Evolution of Water Management Norms in Agricultural Catchments: A Sociohydrologic Modeling Analysis

Abstract This study is focused on the water‐agriculture‐environment nexus as it played out in the Murrumbidgee River Basin, eastern Australia, and how coevolution of society and water management actually transpired. Over 100 years of agricultural development the Murrumbidgee Basin experienced a “pendulum swing” in terms of water allocation, initially exclusively for agriculture production changing over to reallocation back to the environment. In this paper, we hypothesize that in the competition for water between economic livelihood and environmental wellbeing, economic diversification was the key to swinging community sentiment in favor of environmental protection, and triggering policy action that resulted in more water allocation to the environment. To test this hypothesis, we developed a sociohydrology model to link the dynamics of the whole economy (both agriculture and industry composed of manufacturing and services) to the community's sensitivity toward the environment. Changing community sensitivity influenced how water was allocated and governed and how the agricultural sector grew relative to the industrial sector (composed of manufacturing and services sectors). In this way, we show that economic diversification played a key role in influencing the community's values and preferences with respect to the environment and economic growth. Without diversification, model simulations show that the community would not have been sufficiently sensitive and willing enough to act to restore the environment, highlighting the key role of sectoral transformation in achieving the goal of sustainable agricultural development.