Water Policy in the MDB
The Basin Plan - have we finally got it right?
University of Queensland workshop, Brisbane
Jim Donaldson
21 October 2010
The Basin
Murray-Darling Basin
• Directly supports 3 million people
• Feeds approximately 20 million people
• Significant environmental values
• 14% of Australia (size of Spain & France)
• Australia’s three longest rivers
• 40% Australia’s farmers
• Agricultural exports earn $9b/year
• Gross value of agricultural production $15b (40%
Australia) – irrigation: $5.5b (15%)
• Home to 34 major Indigenous groups
Value of MDB Irrigated
Agricultural Production
(07/08 GVIAP not yet available)
($ Million)
Flow generation
Hydrological complexity of the Basin
7
“dreams of taming the rivers, greening the desert, and
making land productive, run deep in the national psyche”
Major water storages in the MDB
Change?
Total Water
Water Use
Historical Climate
23,417
11,327 (48%)
2030 Median Climate
20,936
10,876 (52%)
2030 Dry Extreme
15,524
8,962 (58%)
(CSIRO Water Availability – 2008)
Amplification decreases in
runoff
Ecosystem Health Assessments 2004-07
Growth in Basin diversions
12,000
10,000
GL/year
8,000
6,000
4,000
2,000
0
1930
1940
1950
1960
1970
1980
1990
2000
15
The Need for Reform
• Return extraction to a more sustainable level
• Building a more certain future
• Managing Basin Water resources for future
generations
• Support ecological health of the Basin
• Sustained economic output
16
Building on past reform
1901
Constitution
1914
River Murray
Commission
1987
Murray-Darling
Basin
Commission
1990’s
Cap on
Diversions &
Water markets
2004
National Water
Initiative
&
The Living
Murray First
Step
2007
Commonwealt
h Water Act
&
Murray-Darling
Basin
Authority
2008
COAG
Agreement
2010
Guide to the
proposed Basin
Plan
17
Brief history of water policy
•
1890’s – 1980’s development era: “drought, royal
commission, new dam”
•
1994 COAG reforms: environmental flows,
unbundling water and land “titles”
•
1995 MDB “Cap” on more extractions
•
National Water Initiative 2004: reaffirms
commitments to reform agenda, e-flows and role
of markets in reallocating water
•
2007: Water Act
What does the Water Act say?
• Water Act sets out quite specific basis for
developing the Basin Plan – environment!
• There is a hierarchy of objectives and
considerations guiding Basin planning
• Socio-economic related objectives are to
be pursued to the extent they do not
compromise other objects of the Act
– such as ensuring return to environmentally
sustainable levels of extraction
Objectives of the proposed
Basin Plan
• Ecological health
– optimise social, cultural and economic
wellbeing
•
•
•
•
•
Sustainable limits on take
Environmental resilience
Appropriate water quality
Efficient and effective water markets
Transition path to implementation
20
Phases and Timelines
After the Basin Plan
Key Elements of the Basin Plan
Page 8 of the Concept Statement
Conceptual Cycle
• Identify Key Environmental Assets and Key
Ecosystem Functions
• Determine environmental water requirements
of the Key Environmental Assets and Key
Ecosystem Functions
• Calculate possible SDL
• Assess socio-economic impact
• Consider alternative scenarios
• Implement thru Environmental Watering Plan
• Simplicity belies complexity
SDL proposals - process
How much additional
water does the
environment need?
What are the
potential impacts on
the community?
What are the
sustainable diversion
limit proposals?
How to manage the
transition?
25
Env Water Requirements
Determined using 2 integrated components
1. Assessment of indicator assets
– Detailed assessment of 18 floodplain and wetland sites
– Environmental water requirements are typically high
flows/floods
– High flows contribute most volume, so biggest impact on
SDLs
2. Assessment of key ecosystem functions
– Broader assessment of flows at 88 sites across the Basin
– Main contribution are low flow environmental water
requirements (high flows already assessed by assets)
– Also provides a mechanism to check the impact of the
indicator asset approach on high flows across the whole
Basin (other key environmental assets)
Indicator
Assets
Lower Balonne River
Floodplain System
Gwydir Wetlands
Narran Lakes
Booligal Wetlands
Lachlan Swamps
Great Cumbung Swamp
Lower Murrumbidgee Wetlands
Macquarie
Marshes
Lower Darling
River System
Hattah Lakes
Riverland – Chowilla
Floodplain
Mid Murrumbidgee Wetlands
Coorong, Lower
Lakes and
Murray Mouth
Wimmera River
Terminal Wetlands
Barmah Millewa Forest
Edward Wakool River System
Gunbower Koondrook Perricoota Forests
Lower Goulburn River Floodplain
30,000 wetlands
2,442 key
environmental assets
4 key ecosystem
functions
106 hydrological
indicator sites
18 KEAs 88 KEFs
Range of additional
surface water for the
environment:
3,000 - 7,600 GL/y
28
Flow Events & Frequency
Env Water Requirements
Examples of
Environmental
Water
Requirements
Key Ecosystem Functions
Assessment of flows required by 4 physical processes
• Creation and maintenance of habitats - for use by
plants and animals
• Transportation and dilution of nutrients, organic
matter and sediment
• Providing connections along the river - for migration
and recolonisation by plants and animals (incl. fish)
• Providing connections across floodplains, adjacent
wetlands and billabongs - for foraging, migration and
recolonisation by plants and animals
Key Ecosystem Functions
• The 4 processes require a variety of flow types
• Each flow type is important
• Each flow type is assessed
Modelling and SDLs
• SDLs informed by modelling of
environmental water requirements (assets
and functions), and other analysis
• SDL in each region is affected by
environmental water requirements in that
region, and also downstream requirements
• Models are very important tools, but they
can’t answer all policy challenges and
therefore can’t determine SDLs on their own
MDB Surface and groundwater models
Warrego IQQM
Nebine IQQM
Paroo IQQM
Lower Balonne IQQM
St George SGCS13NT
Barwon-Darling IQQM
Middle Condamine IQQM
Condamine MODFLOW
Menindee IQQM
Bidgee IQQM
Lower Bidgee
MODFLOW
Murray BigMod
Murray MSM
Eastern Mt Lofty Ranges
6*WATERCRESS
Southern Riverine
Plains MODFLOW
Wimmera REALM
Daily
Weekly
Monthly
Avoca REALM
GSM REALM
Ovens REALM Mid Bidgee MODFLOW
Upper Condamine IQQM
Border Rivers MODFLOW
Border R. and Mac B. IQQM
Moonie IQQM
Lower Gwydir MODFLOW
Gwydir IQQM
Upper Namoi MODFLOW
Peel IQQM
Namoi IQQM
Lower Namoi MODFLOW
Macq-Castlereagh 6*IQQM
Macquarie MODFLOW
Lachlan IQQM
Mid-Lachlan MODFLOW
Lower Lachlan MODFLOW
Snowy SIM_V9
ACTEW REALM
Upper Bidgee IQQM
Current diversion limits
• Includes all take (total 13,700 GL/y)
• For surface water this includes:
– Watercourse diversions (10,940 GL/y)
• Diversions from streams
• Floodplain harvesting
– Interception activities (2,740 GL/y)
• Farm dams
• Forestry plantations
35
SDL proposals
• Draws on social and economic assessments and
environmental water requirements
• Indicates a range of reductions:
– 3,000 GL/y, 3,500 GL/y and 4,000 GL/y
• Surface water reductions > 4,000 GL/y
– Unacceptable social and economic outcomes
• Surface water reductions < 3,000 GL/y
– Outcomes do not meet the environmental
requirements
• Groundwater:
– Aggregate 186 GL/y reduction across 11 aquifers 36
SDL proposals - considerations
• Satisfy environmental water needs in each
tributary catchment
• Connected catchments can contribute to Murray
or Darling environmental water needs
• Some disconnected catchments – e.g. Paroo,
Lachlan
• Darling River system – limited ability to
contribute to Murray needs
• More highly developed catchments can make
bigger contribution to environment water needs
37
SDL proposals - considerations
• Equal % reductions in current diversion limits
(watercourse diversions and interception)
• Where reductions large to satisfy internal
catchment needs, no further reductions
• Constrain maximum reduction in watercourse
diversion component
38
Water resource plan areas
19 surface
water resource
plan areas
(29 SDLs) 39
SDL proposals
Basin-wide
Surface
water:
Current diversion
13,700 GL/y
13,700 GL/y
13,700 GL/y
10,700 GL/y
10,200 GL/y
9,700 GL/y
3,000 GL/y
(22%)
3,500 GL/y
(26%)
4,000 GL/y
(29%)
limits
SDL proposals
Reduction
% reduction in
watercourse
diversion
component*
27%
32%
37%
Max reduction for an
SDL area
26%
30 %
35%
Max reduction in
40%
watercourse
diversion
* If only this component is reduced
component*
40 %
45%
40
When it takes effect
proposed
Basin Plan
2010
Final
Basin Plan
2014
2020
41
Assessing impact on communities
• Impact of different reductions
• Impact of reductions on different
farming sectors
• Off-farm (flow-on) impacts
• Impact of reduction at Basin and
regional scales
42
What we were asked to do
• Assess the likely economic and
social implications of setting SDLs
and developing the Basin Plan
– Inform setting of SDLs
– Report on implications to government
Socio-economics beyond SDL’s
• Socio-economic info can also be used to:
• Advise on mitigation arrangements
– Temporary Diversion Provisions, risk allocation,
trade rules, Buyback
• Inform state water resource plan requirements
and development
Socio-economic impact assessments
Studies undertaken:
• Baseline socio-economic circumstances
• Review of previous studies in the Basin
• Review of structural adjustment pressures
• Economic modelling and analysis
• Local profiles and assessments
• Indicators of community vulnerability & adaptive capacity
• Effects of change in water availability on Indigenous
people
• Assessment of benefits
• Responses of financial institutions to changes
45
Consumptive water use
8,000
7,000
6,000
5,000
GL
4,000
3,000
2,000
1,000
0
Agriculture
Mining
Manufacturing
Other
industries
Households
Water supply
industry
ABARE Economic Modelling
• Modelling of economic implications of potential
reductions in water availability
• Focus of project:
– Basin-wide, inter-regional, economic modelling
– Consider scenarios of reductions
– Agricultural sector and regional flow-on effects
• Report on changes in value of irrigated
agriculture, land use and water use
– Magnitude and indicative distribution of impacts
– Report on impacts at national, basin, regional levels
ABARE’s Approach
• Irrigated agriculture model of MDB
– Shocked with changes in SDLs
– Regional level estimates
– Industry crop estimates
• AusRegion CGE model
– Regional economy impacts (GRP, employment)
• Some downscaling possible but limitations
• Impacts of reduced farm expenditure on towns
• Results compared with other models
– UQ, Monash CoPS, PC, Wentworth
Local profiles & analyses
(Marsden Jacob Associates)
• Socio-economic assessments of likely local
implications of reductions in SDLs
• Focus of project:
– Community profiles for regional communities
– Identify industry impacts and flow-on effects
– Assess vulnerability and adaptive capacity at
local scale in 12 targeted irrigation districts
– Interviews with regional stakeholders and
business and community phone surveys
– Consider a range of water use reduction
scenarios
Project overview
• To assist the MDBA with
– enhanced understanding of social and
economic circumstances of communities
– likely impacts of reduced water availability
• Vulnerability
• Adaptability
• Consortium led by Marsden Jacob Associates
– RMCG, Geoff McLeod, Tim Cummins, and
expert advisors EBC, Anthony Hogan, DBM
Irrigation districts (15)
Scenarios (surface water)
2,000
Efficiency project savings
(Committed)
1,800
1,600
Buybacks (GL) (already
delivered, or committed
to)
1,400
1,200
1,000
LTCE allocation volume
less buybacks and recent
or near future efficiency
800
600
400
-20% of LTCE
200
Riverland
GMID
Nyah to Border (incl. NSW
& Vic Sunraysia)
Irrigation Region
NSW Central Murray
Murrumbidgee
Lachlan
Macquarie
Namoi
Gwydir
Border Rivers
0
Lwr Balonne
LTCE
(GL, approx, rounded)
2,200
-40% of LTCE
-60% of LTCE
Context of study
• ‘Near-worst case’
– No compensation
– No government transition support
– Then discuss impact mitigation (better than
‘worst’)
• Impact analysis methods provide a
spectrum of results
– Consultative approach – ‘stated intentions’ of
respondents, consensus across sectors and
regions, at a regional scale, validation of results
Conclusions (MJA)
• Impacts of change vary by sector and region
– 1 in 4 surveyed would exit at 20% adjustment and 1 in 3 at 40%
– Magnitude of impact of 20% reduction varies across sectors
– Impact of 40%+ reduction significant for all sectors
• Flow on impacts
– Impacts on towns may be great but will be lost at the larger region,
basin or national scale
– Small irrigation dependent towns likely to be most impacted
– Given 75% of farm expenditure is local, impacts will quickly flow to
towns
• Range of factors will influence the impact
Indigenous interests
• Review and synthesis of current
knowledge of Aboriginal interests
• Case studies – Barmah-Millewa,
Brewarrina, Hay
– Mixture of interests – consumption,
environmental, relationship with country
– Paucity of information
– Desire for greater role in determining
allocations to meet their water interests
Economic impacts
Gross impacts
Scale
Surface water sustainable diversion limit
10,700 GL/y
10,200 GL/y
9,700 GL/y
• minor
• - 0.11 % GDP
• minor
• - 0.13 % GDP
• minor
• - 0. 15 % GDP
Basin-wide • - 13% GVIAP*
• - 1.1% GRP
• - 15% GVIAP*
• - 1.3% GRP
• - 17.0 % GVIAP*
• - 1.5% GRP
National
* with inter-regional trade
All scenarios include groundwater reduction of 186 GL/y
57
Socio-economic impact assessment
Impacts net of Government investments
Scale
10,200 GL/ y surface water diversion limit
Gross impacts
Net impacts
National
• minor
• - 0.13 % GDP
• minor
• - 0.12 % GDP
Basin-wide
• - 15% GVIAP*
• - 1.3% GRP
• - 10.1% GVIAP*
• - 0.72% GRP
* with inter-regional trade
All scenarios include groundwater reduction of 186 GL/y
58
Socio-economic impact assessment
Industry impacts
High
Irrigated broadacre agriculture
Medium
Cotton and dairy
Low
High value perennial horticulture
(trade a major contributing factor)
Regions most impacted (by $ value)
Southern
Murrumbidgee, Goulburn-Broken,
Basin
NSW & Vic Murray, LoddonAvoca
Northern
Gwydir, Condamine-Balonne,
Basin
Namoi, Macquarie-Castlereagh
59
Basin Plan analysis context
• Rebalancing water use in the MDB
– Between consumption and environment
– Set environmentally sustainable limits on
the extraction of water (SDLs)
• Trade-offs: optimise economic, social
and environmental outcomes
• What’s the baseline for comparison?
• Scale of analysis: Basin-wide to local?
– Inform decisions to be made by MDBA
What’s the issue?
• Rebalancing water use in the MDB
– What’s the right balance?
Optimal water allocation?
What’s the issue?
• Rebalancing water use in the MDB
– What’s the right balance?
• Nature of the problem: optimise
outcomes
– Measuring the benefits and the costs
– Water Act sets environmental thresholds
Costs (and benefits)
• Agriculture
– Irrigated
– Non-irrigated (e.g. floodplain grazing)
• Other industries
– Mining, manufacturing, forestry, fishing
• Household water supply
• Tourism and recreation
• How do these values change with
SDLs?
Benefits
• Diffuse and difficult to measure in
consistent units, including monetary
– Ecological values
– Environmental valuation review done
• Non-use values (eg fish, birds, veg etc)
– e.g. 1% improvement in native veg: $143m
• Avoided costs, e.g. salinity & WQ ($353m)
• Tourism and recreation ($57m/yr Coorong)
• How do these values change with SDLs?
What’s the impact of SDLs?
• It depends …
– many factors influence the impacts
• Structural adjustment is ongoing
– climate, markets, policy
– mining, GFC, wine grapes, redgums
• Basin Plan and state water plans
• How the SDLs and Basin Plan are
implemented
Main insights …
• Financial costs of water availability reduction
on irrigators depends on extent of risk
assignment and Buybacks
• Social and economic impacts could be
significant for dependent local communities
which are not directly compensated
– particularly in short term
Factors affecting impacts
• Implications of reduced water availability
depends on a range of factors:
–
–
–
–
–
–
–
–
Magnitude of reductions
Where environmental water is sourced
Whether losses are compensated or not
Support for regional community adjustment?
Water market flexibility – trade and adjustment
How environmental water portfolios are managed
Information, consistency, trust, confidence, certainty
Timing and sequencing of transition arrangements
Future directions
• Analyse potential transitional arrangements
–
–
–
–
Structural adjustment support, risk sharing etc.
Identify community preferences for adaptation
Provide clarity for people to plan on
Crosses multiple agencies/portfolios/tiers of gov’t
• Understand likely impacts with effective
transition support – at a sub- and regional level
Predicting the Future
Prediction is very difficult,
especially about the future
(Niels Bohr)
Analysis to inform judgement
Issues and challenges
• Scope of research
– Costs and benefits to other industries, urban
and manufacturing uses
– Land use changes / interception activities
– Infrastructure and water delivery efficiency
• Scale of analysis and interpretation is
important
• Assessment needs to be whole of basin yet
relate to local level
• It is difficult to predict the future!
• What next?
Other issues
•
•
•
•
•
•
•
•
Environmental works and measures
River operations
Relationship to NRM activities
Critical human water needs
Aboriginal cultural flows
Evidence base
Overbank flows
Environmental water holdings
73
end