No water, no leadership: new Murray Darling Basin report reveals states’ climate gamble


Daniel Connell, Crawford School of Public Policy, Australian National University

A report released today investigating how states share water in the Murray Darling Basin describes a fascinating contrast between state cultures – in particular, risk-averse South Australia and buccaneering New South Wales.

Perhaps surprising is the report’s sparse discussion of the Murray Darling Basin Plan, which has been the focus of irrigators’ anger and denunciation by National Party leaders: Deputy Prime Minister Michael McCormack and NSW Deputy Premier John Barilaro.

In general terms, the Murray Darling Basin Plan was originally intended to make water management in the Murray Darling Basin more environmentally sustainable. Its critics see it as a restraint on development, and complain it has taken water away from irrigators during a time of extreme drought.




Read more:
While towns run dry, cotton extracts 5 Sydney Harbours’ worth of Murray Darling water a year. It’s time to reset the balance


In response to McCormack and Barliaro’s criticisms of the plan in late 2019, federal water minister (and senior National Party figure) David Littleproud commissioned Mick Keelty as Interim Inspector General of MDB Water Resources.

For the new report, Keelty investigated the changing distribution of “inflows” – water flowing into the River Murray in the southern states.

Climate change has brought the inflow to just a trickle. This dramatic reduction over the past 20 years is what Keelty has described as “the most telling finding”.




Read more:
The Murray-Darling Basin scandal: economists have seen it coming for decades


He also investigated the reserve policies under which the three states choose – or don’t choose – to hold back water in Hume and Dartmouth Dams to manage future droughts.

Keelty says there’s little transparency or clarity about how much water states are allocated under the Murray Darling Basin Agreement (the arrangement for sharing water between the states which underpins the Basin Plan). This failure in communication and leadership across such a vital system must change.

Sharing water across three states

One major finding of Keelty’s inquiry is that the federal government has little power to change the MDB Agreement between the three states, which was first approved in 1914-15. Any amendment requires the approval of all three governments.

To increase the volume of water provided to NSW irrigators, South Australia and Victoria would need to agree to reduce the volumes supplied to their own entitlement holders. That will not happen.

Why has the agreement lasted so long?

Over the past century it has proved robust under a wide range of conditions. Its central principle is to share water with a proportion-of-available-flow formula, giving each state a percentage of whatever is available, no matter whether it’s a lot, or not much.

After receiving its share of the River Murray flows, each state is then free to manage its allocation as it wishes.




Read more:
Is the Murray-Darling Basin Plan broken?


Historically, South Australia and Victoria have chosen to reserve or hold back a larger proportion of their shares each year in Hume and Dartmouth dams to use in future droughts, compared with New South Wales.

In part this difference derives from the long-term water needs of orchards and vines in South Australia and Victoria, in contrast to annual crops such as rice and cotton in New South Wales.

As a result, South Australia and Victoria have a higher proportion of high security entitlements. That means they receive 100% most years. Only in extreme drought years is their allocation reduced.

NSW, on the other hand, has a higher proportion of low security general entitlements. In dry and normal years they receive a proportion of their entitlements. Only in wet years do they get the full 100%. (These differences in reliability are reflected in the cost of entitlements on the water market.)

Reliability of water supply

What’s more, each state makes its own decision about how its state allocation is shared between its entitlement holders (95% of water goes to irrigators the rest supplies towns and industry).

South Australia chooses to distribute a much smaller proportion to its entitlement holders than New South Wales. It also restricted the number of licences in the 1970s. That combination ensures a very high level of reliability in supply. Victoria took a similar approach.




Read more:
5 ways the government can clean up the Murray-Darling Basin Plan


But New South Wales did not restrict licences until the 1990s. It also recognised unused entitlements, so further reducing the frequency of years in which any individual would receive their full allocation of water.

When climate change is taken into account these differences between the three states result in their irrigators having significantly different risk profiles.

The climate change threat to the basin is very real

Despite climate denial in the National Party, the threat is very real in the MDB. The report describes a massive reduction in inflows over the past 20 years, approximately half compared with the previous century. One drought could be an aberration, but two begins to look like a pattern.

The report also suggests that in many cases irrigator expectations of what should be normal were formed during the wet period Australia experienced between the second world war and the 1990s.

Added to this have been business decisions by many irrigators to sell their entitlements and rely on the water market, a business model based on what now seems like unrealistic inflow expectations.




Read more:
Don’t blame the Murray-Darling Basin Plan. It’s climate and economic change driving farmers out


In effect, successive New South Wales governments – a significant part of the state’s irrigation sector in the southern part of the state and the National Party – gambled against the climate and are now paying a high price.

In desperation, they’re focusing on alternative sources. This includes the water in Hume and Dartmouth held under the reserves policy of the two other states; environmental entitlements managed by the Commonwealth Environmental Water Holder; the very large volume of water lost to evaporation in the lower lakes in South Australia; and the possibility of savings resulting from changes to management of the system by the Murray-Darling Basin Authority.

Failure in leadership and communication

For reasons already outlined, the state reserves policy is not likely to change and use of the Commonwealth Environmental Water Holder environmental water entitlements would not be permitted under current legislation.

Management of the lower lakes is being reviewed through another investigation so is not discussed in the report. The report also states that management of the MDB Authority is subject to regular detailed assessment by state governments, and they have assessed its performance as satisfactory.




Read more:
A referendum won’t save the Murray-Darling Basin


However the report was critical of the performance of all MDB governments with regard to leadership and communications suggesting that failures in those areas were largely responsible for the public concern which triggered its investigation.The Conversation

Daniel Connell, Research Fellow, Crawford School of Public Policy, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Last summer’s fish carnage sparked public outrage. Here’s what has happened since



Graeme McCrabb/AAP

Lee Baumgartner, Charles Sturt University and Max Finlayson, Charles Sturt University

As this summer draws to a close, it marks just over a year since successive fish death events at Menindee in Lower Darling River made global headlines.

Two independent investigations found high levels of blue-green algae and low oxygen levels in the water caused the deaths. Basically, the fish suffocated.




Read more:
We wrote the report for the minister on fish deaths in the lower Darling – here’s why it could happen again


The conditions were caused by a combination of water extraction and extremely dry conditions which effectively stopped the river from flowing. Both investigations concluded that until more water flowed in the Darling, in western New South Wales, further fish kills were very likely.

So what’s happened since, and does the recent rain mean the crisis won’t be repeated?

Federal and state government action

In April last year the federal government committed A$70 million to improve the river’s health and prevent more fish deaths. Let’s examine what’s been done so far:

– Native fish management and recovery strategy: Parts of a draft native fish management and recovery strategy have been released for public consultation. The plan has included governments, academics, the community and indigenous groups.

– Native fish hatchery: Government hatchery facilities at Narrandera in NSW will be upgraded to hold and breed more fish. But reintroducing fish into affected areas is challenging and could be a decades-long program.

– Research: The government committed to new research into hydrology and climate change. A panel has been formed and the oversight committee is scoping the most effective research outcomes to better manage water under a changed climate.

– Fish passage infrastructure: Fish ladders – structures that allow fish to travel around obstacles on a river – are needed at sites on the lower and upper Darling. Fish ladder concept designs have progressed and are also part of the NSW government’s Western Weirs project.

-In-stream cameras: Live-stream feeds of the Darling River are not yet available.

-Meter upgrades and water buybacks: Discussions have begun as part of a commitment to buy back A-class water licenses from farmers and return water to the rivers. Rollout of improved metering is due over the next five years.

Progress on these actions is welcome. But the investigation panels also recommended other actions to help fish populations recover over the long term, including ensuring fish habitat and good water quality.

Further fish deaths

In 2003, basin native fish communities were estimated to be at 10% of pre-European levels and the spates of fish deaths will have reduced this further.

Over spring and summer in 2019, conditions in the Darling River deteriorated. A series of smaller, but significant, fish deaths prompted government agencies and communities to conduct emergency “fish translocations”.. Aerators were deployed in a bid to improve the de-oxygenation. Fish were moved to more suitable water bodies, or to hatcheries to create insurance populations.

By spring, once-mighty rivers such as the Darling and Macquarie had dried to shallow pools. As summer progressed, more than 30 fish die-offs occurred in the Macquarie, Namoi, Severn, Mehi and Cudgegong rivers and Tenterfield Creek.

What about the rain?

Strong recent rainfall means upper parts of the Darling catchment are now flowing for the first time in more than two years. Flows are passing over the Brewarrina Weir and associated fishway.

A flowing Darling is great, but it raises questions over future water management. Farmers have been waiting for years for the Darling to flow and will be eager to extract water for agricultural productivity. Likewise, the environment has been awaiting a “flush” to reset the system and restore ecological productivity.




Read more:
Aboriginal voices are missing from the Murray-Darling Basin crisis


After the rains, the NSW government allowed irrigators to harvest floodwaters to reduce the threat of damage to private infrastructure. Now that threat has subsided, governments are working together to “actively manage” the event – meaning water rules will be decided as the flow progresses, in consultation with water users and environmental managers.

But there is still significant debate on how best to manage water over the longer term.

Water use on the Darling River remains highly contested.
Dean Lewins/AAP

Is a flowing Darling a return to normal?

The current flows in the Darling are far from a return to normal conditions. NSW is still in drought, and the river flows are yet to reach the Lower Darling. Many children in the Menindee township have not seen a flowing Darling in their lifetime.

Indigenous elders and recreational fishers – those who remember when the river flowed freely and was full of fish – are lamenting the recent declines. In parts of the system, dry riverbeds and isolated pools are still begging to be connected so fish can move about, spawn, and naturally recover.




Read more:
Friday essay: death on the Darling, colonialism’s final encounter with the Barkandji


River flows could take up to six weeks to reach the lower Darling, and follow-up rain is urgently needed to avoid another summer of fish carnage. Future water sharing strategies must protect both upstream and downstream communities. Some people are lobbying for the Menindee lakes to be listed as internationally important under the Ramsar Convention on Wetlands to ensure biodiversity and water management work together.

Undoing over 200 years of fish declines will require a sustained effort, with a significant investment in recovery actions over a long period. We must recognise Australia is a country of long droughts and flooding rains, and develop a proactive native fish strategy that reduces the probability of a similar disaster in future.

But unfortunately, as history has shown that when we transition from drought to flood, our memories can be short.The Conversation

Lee Baumgartner, Professor of Fisheries and River Management, Institute for Land, Water, and Society, Charles Sturt University and Max Finlayson, Adjunct Professor, Charles Sturt University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Don’t blame the Murray-Darling Basin Plan. It’s climate and economic change driving farmers out


Sarah Ann Wheeler, University of Adelaide

For the thousand or so farmers in Canberra in the past week venting their anger at the federal government, it’s the Murray-Darling Basin Plan to blame for destroying their livelihoods and forcing them off the land.

We can’t comment directly on their claims about the basin plan. But our research, looking at the years 1991 to 2011, suggests little association between the amount of water extracted from the Murray-Darling river system for irrigation and total farmer numbers.

That’s not to say there aren’t fewer farms in the basin now than a decade ago – there are – but our analysis points to the more important drivers being the longer-term influences of changing climate, economics and demographics.

Indeed our study predicts another 0.5℃ increase in temperature by 2041 will halve the current number of farmers in the basin.

Hostility to water recovery

The waters of the northern basin run to the Darling River and the waters of the southern basin run to the Murray River.
MDBA

Over many decades state governments in Queensland, New South Wales, Victoria and South Australia licensed to farmers more entitlements to water than the river system could sustain. The basis of the Murray-Darling Basin Plan, enacted in 2012, was to rectify this through buying back about a quarter of all water licences to ensure an environmental flow.

A water entitlement, despite its name, does not guarantee a licence holder a certain amount of water. That depends on the water available, and that is determined by the states, which make allocations to each type of licence based on its type of security and current conditions.

With drought, farmers have seen their allocations severely cut back, sometimes to nothing. And partly because they see there’s still water in the River Murray, some are very angry.




Read more:
The water crisis has plunged the Nats into a world of pain. But they reap what they sow


Hostility to water recovery in fact predates the plan’s enactment, to when the federal government began buying back water entitlements in 2008. The Commonwealth now holds about 20% of water entitlements across the basin. More than two-thirds of these licences were recovered between 2008 and 2012.

Lack of correlation

Our research thus covers the period of most significant water buybacks. It also covers the period of the Millennium Drought, from 2001 to 2009, when the amount of water extracted from the river system dropped by about 70%.

Yet we see little evidence reduced water extractions led to more farmers exiting the industry.

As a very broad overview of the situation, the following graph illustrates the lack of correlation between measured water extraction in the Murray-Darling Basin and decreasing farmer numbers.



Water extractions have varied significantly between years, with a big decline over the decade of the 2000s even while farmers’ need for irrigated water increased due to lack of rain. La Niña brought record rains in 2010-11. The current drought across the basin took grip from about 2017.

Yet farmer numbers have declined at a relative steady rate. Within the basin in the time-period we modelled, they fell from about 90,000 in 1991 to 70,000 in 2011. This can be seen as part of a wider trend, with total farmer numbers in the four basin states falling from more than 230,000 in 1976 to barely 100,000 in 2016.

It might be argued that because irrigated farms make up only a quarter of all farms, the overall numbers might mask a greater correlation between water extractions and decline in irrigated farms. While the specific impacts on irrigation farming in recent years warrant further study, there’s no signal in our data pointing to extractions making a discernible contribution to farmer numbers throughout the basin.

Modelling farmer movement

Our findings are based on a specialised data set of population and agricultural census information from statistical local areas from 1991 to 2011. We used climate risk measures from 1961 onwards.

The following infographic shows the exit pattern of farmers by local area between 1991 and 2011.



We included as many climate, economic, farming, water and socio-demographic characteristics as possible to capture historical farmer movements and create a model able to predict movements based on variables such as average temperature.

Need for a multifaceted response

Overall our modelling results suggests the most significant and largest influences on farmer exit are rising temperatures and increased drought risk, followed by the economic factors that have have been reducing the proportion of the population engaged in farming for more than a century.

Declining commodity prices, higher unemployment and urbanisation are strongly associated with farmer exit. Urbanisation, for example, has made it attractive for farmers on city fringes to sell their land to property developers and exit the industry.

Research suggests irrigators in psychological distress are more likely to want the basin plan suspended. Our research suggests their distress is probably not primarily driven by the federal government buying water entitlements from licence holders who sold them willingly. Water recovery and the basin plan is simply an easier focal point of blame than the longer-term trends making the farming lifestyle less viable.




Read more:
Scarcity drives water prices, not government water recovery: new research


Nothing will be gained by focusing on short-term “fixes” at the cost of longer-term environmental harm. The problems facing all farmers cannot be addressed in isolation from longer-term global climate and economic trends.

As a society we have to decide what we value: do we want to see such a mass exodus of farmers from the land in the face of a drying climate? If not, future policy for the Basin must consider the real long-term drivers of farm exit and take a multi-faceted approach to climate change, water, land, drought and rural development.The Conversation

Sarah Ann Wheeler, Professor in Water Economics, University of Adelaide

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Paddling blind: why we urgently need a water audit



There’s broad support from communities and farmers for proper water audits.
John/Flickr, CC BY-SA

Quentin Grafton, Crawford School of Public Policy, Australian National University and John Williams, Australian National University

In the wake of a damning royal commission and an ABC Four Corners investigation, the federal government has created an Inspector General for the Murray-Darling Basin, to combat water theft, ensure water recovery and efficiency projects are delivered properly, and essentially make sure everyone is acting as they should.

While this is a laudable aim, the Inspector General – currently former Australian Federal Police Commissioner Mike Keelty – cannot hope to do this job without knowing how much water is being used in the Basin, by whom it is used, and where.




Read more:
Billions spent on Murray-Darling water infrastructure: here’s the result


This might seem like basic information, but the Bureau of Meteorology, the Murray-Darling Basin Authority and state water accounts are not up to the task.

We urgently need a comprehensive audit to track the water in the Murray Darling Basin, so Inspector General Keelty can effectively investigate what he has already described as a “river ripe for corruption”.

Up the creek

Back in 2004 all governments in Australia agreed to track and provide information on water in terms of planning, monitoring, trading, environmental management, and on-farm management.

But water accounts still lack many essential features including double-entry accounting. When applied to water, double-entry accounts means that when one person consumes more water, someone else must consume less.




Read more:
Aboriginal voices are missing from the Murray-Darling Basin crisis


The technology to track this already exists: satellites that can quantify surface water are successfully being used used in the United States.

If we had monthly water consumption measurements, we could see how much water is being used, by whom, when and where. This would help decision makers see problems before they emerge, such as the mass fish deaths in the Darling River, and respond in real time.

As a recent report from the Natural Resources Commission shows, without proper accounting, too much water is taken upstream – seriously harming downstream communities.

Wide support for an audit

An independent Basin-wide water audit is supported by communities and some irrigators.

In July NSW farmers voted in support of a federal royal commission into “the failings of the Murray Darling Basin Plan”. In our view, this vote shows many farmers support much greater transparency about how much water is being consumed, and by whom.




Read more:
The Darling River is simply not supposed to dry out, even in drought


Double-entry water consumption accounts would help identify whether the billions of dollars planned in subsidies to increase irrigation efficiency will actually deliver value for money. But irrigation improvements only generate public benefits when more water is left or returns to flow in streams and rivers. Such flows are essential to healthy rivers and sustainable Basin communities.

Irrigators’ crops benefit from increased efficiency, so subsidies help farmers greatly – but it is very unclear whether they do anything for the public good. In fact, they seem to reduce the amount of water that finds its way back into the rivers. Research also shows infrastructure subsidies to improve irrigation efficiency typically increases water consumption at the Basin level.

Our research, published earlier this year in the Australasian Journal of Water Resources shows federal irrigation infrastructure subsidies may have reduced net stream and river levels. This is even after accounting for the water entitlements irrigators provided to the government in exchange for these subsidies.




Read more:
5 ways the government can clean up the Murray-Darling Basin Plan


Independent audits

Just like financial accounts, water accounts must be independently audited.

For the average taxpayer, who has to justify every dollar they get from the government, it’s hard to imagine how some corporations can be given millions of dollars in subsidies without actual measurements (before and after) of the claimed water savings.

If Newstart recipients need to report and manage their income and have a job plan, as part of a system of appropriate checks and balances, shouldn’t the Australian government also be checking whether billions spent on subsidies for irrigators actually saves water?




Read more:
The Murray-Darling Basin scandal: economists have seen it coming for decades


A water audit would cost less than 1% of the money already spent on water infrastructure subsidies in the Basin. Unlike irrigation infrastructure subsidies, a water audit is value for money.

Importantly, independent water consumption accounts would allow the Inspector General for the Murray-Darling Basin to effectively manage our most critical nature resource, water.The Conversation

Quentin Grafton, Director of the Centre for Water Economics, Environment and Policy, Crawford School of Public Policy, Australian National University and John Williams, Adjunct Professor Environment and Natural Resources, Crawford School of Public Policy, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

NSW’s water plan is ‘not working’ but we can save the Barwon-Darling


Barry Hart, Monash University

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.




Read more:
5 ways the government can clean up the Murray-Darling Basin Plan


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.




Read more:
We wrote the report for the minister on fish deaths in the lower Darling – here’s why it could happen again


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.

Bad priorities

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.




Read more:
The Darling River is simply not supposed to dry out, even in drought


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.




Read more:
Drought and climate change are driving high water prices in the Murray-Darling Basin


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.The Conversation

Barry Hart, Emeritus Professor Water Science, Monash University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Drought and climate change are driving high water prices in the Murray-Darling Basin


Neal Hughes, Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES)

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.




Read more:
The Murray-Darling Basin scandal: economists have seen it coming for decades


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

The waters of the northern basin run to the Darling River and the waters of the southern basin run to the Murray River.
MDBA

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.


Water allocation prices and storage volumes in the southern Murray-Darling Basin.
State government trade registers, BOM, Ruralco Water, ABARES estimates.

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.


Modelled ‘without-development’ annual Murray River flow, 1900 to 2018.
Murray-Darling Basin Authority.

We know these reductions are at least partly related to climate change, driven by both reduced winter rainfall and higher temperatures.

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.




Read more:
Droughts, extreme weather and empowered consumers mean tough choices for farmers


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.


Water allocation use in the southern basin with and without water recovery.
State government agencies, Department of Agriculture, ABARES estimates.

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.




Read more:
Billions spent on Murray-Darling water infrastructure: here’s the result


‘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 Conversation

Neal Hughes, Senior Economist, Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES)

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Billions spent on Murray-Darling water infrastructure: here’s the result


Q J Wang, University of Melbourne and Avril Horne, University of Melbourne

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.




Read more:
The Darling River is simply not supposed to dry out, even in drought


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.

Mass fish deaths earlier in the year raised serious concerns about the health of the Murray-Darling system.
DEAN LEWINS/AAP

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.




Read more:
We wrote the report for the minister on fish deaths in the lower Darling – here’s why it could happen again


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.




Read more:
Aboriginal voices are missing from the Murray-Darling Basin crisis


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.The Conversation

Q J Wang, Professor, University of Melbourne and Avril Horne, Research fellow, Department of Infrastructure Engineering, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.