The plan to manage water in the Barwon-Darling is not working, according to a draft review released last week.
The New South Wales Natural Resources Commission, which released the draft report, found the Barwon-Darling is an “ecosystem in crisis”. The report provides a robust blueprint for a more sustainable water-sharing plan.
The review confirms criticism the existing plan gives too much water to irrigators and has added to pressures on the entire Murray-Darling ecosystem.
What the plan covers
The draft review examines the 2012 Water Sharing Plan for the Barwon-Darling, which covers 1,600km of the river from Mungindi to Wilcannia. The river here flows south-west through a relatively narrow floodplain with a tightly meandering channel and a highly variable flow pattern.
The river is unregulated and depends heavily on upstream rivers for its water (for example, Condamine–Balonne, Border rivers, Gwydir and Namoi).
January’s massive fish kills around Menindee are only the most recent example of the pressures on the river’s ecosystems. Alongside the fish deaths, research has shown that other aquatic species in the system, such as river mussels, have suffered losses that will take many decades to recover.
Communities that live along the river told the commission people can no longer fish, swim or drink the river water. Graziers struggle to provide water for their stock because the river dries up more often.
Indigenous communities are particularly affected because without water their strong connection to the river – the Barka – is being damaged. A Barkandji elder told the commission:
The river is everything. It’s my life, my culture. You take the water away from us, we’ve got nothing.
While the review found drought, upstream water extraction in NSW and Queensland and climate change have all contributed to these problems, the greatest effect comes from inappropriate water-sharing rules, particularly when water levels are low.
The law underpinning river management in NSW prioritises protecting the environment and basic landholder rights (including native title) over irrigation. However, the commission found the current plan does not achieve this.
In fact, the plan has been highly controversial since it was enacted in 2012. This in large parts arose because major changes were made between the draft plan circulated in 2011 and the actual plan gazetted in 2012. The commission documents 16 such changes in the review and rates six as substantial.
The NSW government did not publicly explain the reason for such significant alteration in 2012, but there has been much speculation powerful vested interests influenced the government to provide more water for irrigation.
The most important effect of these changes was letting irrigators take water even when the river is very low. The review concludes:
These provisions benefit the economic interests of a few upstream users over the ecological and social needs of the many.
What to do?
The review recommends the NSW government urgently change water-sharing rules so these better comply with the legal requirements to protect the environment and other water users, restore community trust and make the river more resilient to future shocks.
Key priorities for the NSW government are:
redesigning the water-sharing rules so environmental protection and basic landholder rights cannot be harmed by lesser priorities such as irrigation
introduce new flow targets to more effectively protect critical ecosystems and enhance river health
change rules relating to water extractions by A Class licence holders during critical low-flow periods, particularly those relating to commence-to-pump, cease-to-pump, and the size of pumps.
introduce and enforce more effective metering and monitoring
develop strategies and rules that address the inevitable impacts of climate change
develop and implement more integrated management of water resources in the northern Murray-Darling Basin.
The commission did note there have been positive changes to the NSW government’s approach to water policy and management since the ABC 4 Corners report Pumped in 2017 and the subsequent Ken Matthews report.
However, the Murray-Darling Basin Plan required NSW to complete a new water resource plan for the Barwon-Darling River by June 2019. The state missed this deadline. The NSW water minister has requested an extension to December 31 2019. A recent assessment by the Murray-Darling Basin Authority suggests NSW is still some way from completing this water resource plan.
While NSW delays, the Barwon-Darling river system and its communities suffer. The NSW government now has an excellent blueprint for a new plan. It must urgently implement the review’s 29 recommendations and complete a new plan for the Barwon-Darling before the end of 2019.
Water prices in the southern Murray-Darling Basin have reached their highest levels since the worst of the Millennium drought more than a decade ago. These high water prices are causing much anxiety in the region, and have led the federal government to call on the Australian Competition and Consumer Commission to hold an inquiry into the water market.
Inevitably, whenever an important good becomes more expensive – be it housing, electricity or water – there is a rush to identify potential causes and culprits. In the past few years high water prices have been blamed on foreign investors, corporate speculators, state government water-sharing rules, new almond plantings and the Murray-Darling Basin Plan.
While some of these factors have had an effect on the market, they are in many ways a distraction from the simpler truth: that high water prices have mostly been caused by a lack of rain.
Supply drives the market
Market reforms in the 1980s and 1990s enabled water trading in many parts of Australia. By far the most active market exists in the southern Murray-Darling basin, which covers the Murray River and its tributaries in northern Victoria, southern New South Wales and eastern South Australia.
The market allows users – mostly irrigation farmers – to trade their water allocations (effectively shares of water in the rivers’ major dams). This trading helps ensure limited water supplies go to the farmers who value them the most, which can be crucial in times of drought.
Historical data shows the main driver of water market prices in the southern basin is change in water supply.
The following chart shows storage volumes (in orange) and water prices (in red) in the southern basin since 2006. Prices peaked at the height of the Millennium drought in 2007. During the floods of 2011, they fell near zero. Prices have increased again during the latest drought, and are now at their highest levels in a decade.
Lower rainfall, higher temperatures
While water prices have always been higher in dry years and lower in wet, we’ve been getting a lot more dry years in recent decades.
Over the past 20 years, rainfall, run-off and stream flow in the southern basin has been far less than historical conditions.
The below chart shows modelled flow data for the Murray River, assuming historical weather conditions and no water extraction, over the past century. It shows that average water flows this century are about 40% below the average of the 20th century.
Lower rainfall and higher temperatures also make crops thirstier, increasing demand for irrigation water. This was evident in January, when temperatures exceeded 35℃ for 14 days and irrigators’ demand for water spiked from about 4.5 gigalitres to 7 gigalitres a day.
The basin plan in perspective
The Murray-Darling Basin Plan seeks to improve the environmental health of the river system by recovering water rights from irrigation farmers. To date, more than 1,700 gigalitres of water rights – about 20% of annual water supply – have been recovered in the southern basin.
By reducing supply, water recovery was always expected to increase water prices. However, the effects of water recovery on supply – while significant – are still small relative to the effects of climate over the same period, as shown in the below chart.
Measuring the precise effect of water recovery on prices is difficult. Water buybacks are straightforward and have been modelled by ABARES and others. But the effects of infrastructure programs – where farmers return a portion of their water rights in exchange for funding to upgrade infrastructure – are harder to estimate.
‘Carryover’ rule changes
Historically farmers had to use water allocations within a 12-month window. The introduction of “carryover” – most recently in Victoria in 2008 – means users can now hold their unused water in dams. This rule change was a good thing, as it encourages farmers to conserve water and build up a buffer against drought.
But it might also have contributed to anxiety about the water market’s operations.
Since water allocations can be bought and held for multiple years, information about future conditions can have a big effect on prices now. For example, we see large jumps in price following news of worse-than-expected supply forecasts. This may have helped fuel concern about “speculators”.
Over the longer-term, the ability to store water helps to “smooth” water prices, with slightly higher prices in most years offset by much lower prices in drought years. Again this is a good thing, but it may have added to the perception of higher prices in the market.
Water demand is rising
When a profitable new irrigation activity is willing to pay more for water – as is the case with almond farms in the southern basin – competition for limited supplies can potentially drive up prices.
ABARES’ research shows that between 2003 and 2016 there was little change in irrigation demand (aside from that linked to rainfall). Growth in demand from expanding activities such as almonds and cotton was offset by reductions in others including dairy, rice and wine grapes. However, there is evidence since 2016 that demand for water has started to increase, contributing to higher water prices. Longer-term projections suggest this trend may continue.
With drought and climate change reducing water supply, and demand for both environmental and irrigation water increasing, high water prices are only likely to become more common in the basin in future.
The New South Wales government last week revealed plans to ease shooting restrictions on feral deer. If the plans go ahead, deer will be stripped of their status as a game animal and will no longer be afforded protection under the state’s animal control laws.
This will mean that a game hunting licence would not be required for recreational, commercial and professional hunting of deer species. Restrictions on how and when deer can be hunted would also be lifted.
Feral deer will be treated the same as other pest animals in NSW, including red foxes, feral cats and rabbits.
Deer are already considered a pest
Last year the NSW government approved 11 regional pest animal plans, each of which declared deer as a priority pest species. Several hunting regulations have already been suspended to manage abundant deer populations, and in February 2019 the government announced a A$9 million deer control program described as the most extensive of its kind.
Removing the game status of deer is the next logical step towards controlling existing deer numbers in NSW, and slowing their spread to new areas. Deer currently cover 17% of NSW, and this area has more than doubled since 2009.
Without urgent and effective control, the deer population could spread throughout the entire state and beyond.
The impacts of deer
Feral deer remain one of Australia’s least studied introduced mammals. Yet the evidence shows they have a substantial impact on Australia’s ecosystems and agriculture.
Since 2005, grazing and environmental damage by feral deer has been listed as a key threatening process under NSW legislation. Deer are known to graze on threatened plant species, and also cause erosion and soil compaction. They damage pasture; destroy fences and contaminate water sources; harm trees via antler rubbing; rip up the ground during rutting season; and potentially contribute to the spread of livestock diseases.
Deer are a threat to humans too. The Illawarra region south of Sydney, a hotspot for deer activity, has seen one death and multiple serious injuries between 2003 and 2017 due to vehicle collisions with deer.
Deer can also carry pathogens that cause human disease such as Leptospirosis and Cryptosporidium.
Choosing the right control method
Ground-based shooting is the main way to manage deer in the urban fringes, regional areas and national parks. Unfortunately, coordinated ground shoots have only been effective for areas of less than 1,000 hectares, and there is no evidence that uncoordinated shooting by recreational hunters actually works to control deer on a widespread basis.
Aerial shooting can potentially be more successful over large tracts of land, but may not be a good option when tree cover is high and visibility is low. Poison baiting could help, although there is no method available to deliver baits safely, effectively and specifically to deer.
Irrespective of the control method, a coordinated approach is needed. We need a strategy that not only controls deer where damage is worst, but also prevents their spread to new areas. This will require NSW to work closely with the ACT and Victoria.
Rigorous monitoring will also be vital. This is important to gauge success (how many deer were culled, and the ethics of shooting, trapping and baiting), and to determine whether the control efforts have unintended impacts on the environment, such as deer carcasses providing food for scavenging pests.
The protected pest: deer in Australia
Scavenging pests have been observed feeding on carcasses, but whether culling deer and other feral animals actually increases their abundance and impacts is unknown. Carcasses also provide a source of food for native scavengers such as eagles and ravens, and are integral to the structure and function of ecosystems.
The negative and positive impacts of deer culling on the broader ecosystem therefore needs consideration when developing and implementing monitoring plans. NSW can be the leader in this regard, starting from day one after removing the status of the deer as a game species.
Nations behave wisely, Israeli foreign minister Abba Eban observed five decades ago, “once they have exhausted all other alternatives”.
One can only hope that proves the case with water policy in Australia’s Murray-Darling Basin, the nation’s largest river system and agricultural heartland.
The ABC’s Four Corners program Cash Splash, aired last night, illustrates how thoroughly we are exhausting the options that don’t work to keep rivers being sucked dry by irrigators. Billions of dollars have been spent on infrastructure schemes that have failed to deliver any measurable improvement in water flows or the state of the environment.
This failure is no surprise to economists who have studied the problems of the Murray-Darling Basin for decades.
The central problem is well understood, as are the workable (and unworkable) possible responses.
The basin covers four states: Queensland, New South Wales, Victoria and South Australia. All state governments have allocated permits to extract water for human uses (irrigated agriculture and urban water). The allocations grew rapidly in the second half of the 20th century, exceeding the sustainable capacity of the natural environment.
One sign of the failure became dramatically obvious in 1991, with an outbreak of toxic blue-green algae over 1,200 km of the Darling River. Algal blooms are fed by nitrogen and other nutrients in fertiliser runoff and sewerage. They continue to occur.
This event underlined the need to leave enough water in rivers for “environmental flows” to keep the system healthy.
Acting with what now seems like impressive promptness, the Murray-Darling Basin Ministerial Council (made up of the water resources ministers from the basin states, the Australian Capital Territory and the federal government) imposed a cap on water extractions in 1995. It limited extractions to the volume of water capable of being taken out by the infrastructure (pumps, dams, channels, management rules) that existed in 1993-94.
The cap was supposed to be a temporary measure. It wasn’t intended to solve the problem, just stop it getting any worse in the short run.
The long-term solution was to be a system of trade in water rights, introduced by the Council of Australian Governments in 1994. Combined with the right price signals from environmental purchases, this system was meant to allocate water to its most productive uses while reducing extractions to sustainable levels.
A quarter-century on, the cap is only now being phased out, and a vast array of measures have come and gone, including the National Water Initiative, the Water Act of 2007, Water for the Future and the Murray-Darling Basin Plan.
The failure of these initiatives rests on one simple fact: the refusal of irrigation lobby groups to countenance the government buying water rights on the open market to increase environmental flows. Their opposition has been immovable, despite many individual irrigators being keen to sell their water rights and use the money to invest in alternative cropping activities or retire.
On the other hand, there are a lucky (often politically well-connected) few who have done very well from “strategic” purchases of water. Investigative journalist Michael West has noted the National Party’s Barnaby Joyce has been publicly hostile towards buybacks of water entitlements but authorised, as federal water resources minister, three major “strategic purchases”.
Instead of water purchases, politicians like Joyce have put their faith in subsidies to infrastructure, to improve the efficiency of water use.
The idea has a lot of intuitive appeal. If less water can be used, it should be possible to increase flows in the river system without reducing agricultural output. With rare exceptions, this appealing vision has dominated the thinking of politicians and much of the public.
The reality is sadly different. The failure of infrastructure-based water recovery was both predictable and predicted.
Is the Murray-Darling Basin Plan broken?
I pointed out the main difficulties in a piece for ABC Online in 2012. The article didn’t contain any remarkable insights. It simply stated views shared by every independent economist who has worked on the issue.
The illusion of efficiency
Among the many problems with infrastructure schemes, two have stood out.
First, the measured cost of saving water through infrastructure schemes is two to three times as much as that of buying water on the open market.
Second, and more importantly, much of the supposed water savings are illusory. Much of the water “wasted” in irrigation systems is not lost to the environment. Most of the water leakage and seepage from irrigation channels eventually returns to rivers through groundwater systems. So “saving” this water through infrastructure efficiency doesn’t actually add anything more to environmental flows.
My 2012 analysis assumed a scientifically based effort to secure water savings at the lowest possible cost to the public. As the Four Corners report has shown, that assumption was massively over-optimistic. In reality, the scheme has been characterised by lax monitoring, cronyism and rorting.
After the expenditure of billions in public money, the system may be worse off than before. As a result, environmental disasters keep on happening.
Along with recurring algal outbreaks, we are witnessing disasters such as the massive fish kills like that in western New South Wales in January. The massive fish kills have been attributed to little or no flow in the Darling River combined with plunges from high temperatures, starving the water of oxygen.
As the riverine environment keeps deteriorating, there’s no sign of any positive change in policy.
Eventually, though, we must hope Abba Eban will be proved right. Having exhausted all the options that don’t work, we will have to turn to those that do.
Earlier this year, researchers suggested the amount of water returned to the Murray Darling Basin under a federal program has been “grossly exaggerated”, to the tune of hundreds of billions of litres.
The report argued that government investment in irrigation improvements might even result in a net loss of water for the environment.
To investigate these claims, the Murray Darling Basin Authority commissioned us to undertake an independent review to examine the best available data for every irrigation efficiency project funded across the basin.
We found the government investment into irrigation efficiency projects has achieved 85% of the 750 gigalitres per year target. The remaining 15% of the target may be affected by unintended side-effects.
This result highlights the need for continued review of risks to the basin plan, as Australia grapples with the management of an extraordinary complex natural system.
How is water for the environment recovered?
The Water Act 2007 introduced significant reforms aimed at setting aside more water for the environment. At the time, record high levels of surface water were being consumed. Aiming to save 2,750 gigalitres of surface water (water flowing in the open air, rather than underground) the federal government began buying back water rights and investing in more efficient infrastructure.
The Commonwealth is providing A$3.1 billion to buy these water rights, of which A$2.5 billion has been spent. It is also providing more than A$8 billion for modernising infrastructure and water efficiency improvements, of which more than A$4 billion has so far been spent.
These projects aim to improve water delivery – reducing leaks and evaporation – and make irrigation more efficient. The water saving generated from these projects is shared between the governments for environmental use, and irrigators.
What are “return flows”?
To understand why the government investment in irrigation efficiency projects have not achieved 100% of the original target, we need to talk about return flows.
When water is diverted from the river for irrigation, not all of it gets consumed by the plants. Some water will make its way back to the river. This is called return flow. A large part of the return flow is through groundwater to the rivers, and this part is extremely difficult to measure. More efficient infrastructure and irrigation generally means less return flow to the river.
If these reductions are not considered when calculating the water savings, it is possible there will be implications for irrigators, the environment and other water users downstream, that previously benefited from return flows.
What we tried to determine is how much the efficiency projects reduced return flow.
Are the water savings real?
For the first time, we attempted to bring together data on individual projects in order to assess return flows across the basin. We developed a framework for calculating return flows, which took into account water in the rivers, groundwater, and efficiency projects.
This is the first attempt to bring together the existing data on individual projects to assess return flows in the basin at a detailed level. A large portion of the data used in this study was collated for the first time and not previously available in a readily accessible format.
We found a reduction in return flow of 121 gigalitres per year as a result of the government funded projects. This is comparable to 16% of the recovery transferred to environmental entitlements.
What does this mean for the Basin Plan?
There are several important details that must be considered to assess the importance of the return flow volume for the environment and Basin Plan objectives. We do not attempt here to quantify the outcomes, but instead to raise a number of important considerations beyond simply “volume”.
1. Recovered water should be legally protected
Return flows are good for the environment, but are essentially accidental. As irrigation becomes more efficient, inevitably they will diminish.
On the other hand, formally allocated environmental water entitlements are legally protected. It is more secure for the environment – and far easier to keep track of.
2. It’s not ‘efficiency vs the environment’
Part of this debate centres around the idea that reducing return flows means less water for the environment. But in Victoria and New South Wales, before water is allocated to anyone (irrigators or the environment), a base level is set aside. This is the minimum required to keep the rivers physically flowing and to meet critical human needs.
Efficiency projects mainly affect this base-level flow of the river. This means the water reduction is shared across everyone who holds a water licence – the majority of which are irrigators.
This policy means it does not make sense to compare the effect of efficiency projects directly with the recovery of environmental water.
3. Volume is a crude measure of environmental benefit
The focus of the debate around return flows has been based on the annual volume of returned environmental water in comparison to the stated Basin Plan target.
However, the real objective of the water recovery is to achieve environmental objectives in the Basin. This is not just about annual volumes, but the quantity, timing, and quality of fresh water.
How should we move forward?
Our review has particularly highlighted the need for better ongoing data collection and regular evaluations.
Both taxpayer investments and the water market are changing irrigation to become more efficient and reducing the river’s base flow. With this in mind, we need to regularly reexamine how we share water between everyone (and everything) that needs it, particularly in extended dry periods.
The Murray-Darling Basin is a constantly changing system, both in terms of climate and irrigation. Return flows are one of a number of potential threats to the Basin Plan. As the system is continually changing, these threats will need to be reassessed with each Basin Plan review.
A Four Corners program on the $13 billion Murray-Darling Basin Plan will air on ABC at 8.30pm on July 8.
This article was co-written by Glen Walker, a former CSIRO employee and now private consultant, who worked with the University of Melbourne on the independent review.