The Sustainable Diversion Limit
Adjustment Mechanism
Joint Government Communications booklet
November 2014
© Commonwealth of Australia, 2014.
The Sustainable Diversion Limit Adjustment Mechanism is licensed by the Commonwealth of Australia for use under a Creative Commons By
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This report should be attributed as ‘The Sustainable Diversion Limit Adjustment Mechanism, Commonwealth of Australia 2014’.
The Commonwealth of Australia has made all reasonable efforts to identify content supplied by third parties using the following format ‘©
Copyright, [name of third party] ’.
This booklet is published by the Australian Government on behalf of the New South Wales, Victorian, South Australian, Queensland and
Australian Capital Territory governments, as agreed by Basin water ministers at the Murray-Darling Basin Ministerial Council meeting on 17
October 2014.
Cover: The Murray River, Barmah State Forest (John Baker) Back Cover: Barmah Forest (Jim Mollison)
Disclaimer The views and opinions expressed in this publication are those of the authors and do not necessarily reflect those of the Australian
Government or the Minister for the Environment.
Contents
Acronyms ................................................................................................................................................. 4
SDLs and the Basin Plan .......................................................................................................................... 4
Why we have an SDL Adjustment Mechanism ......................................................................................... 5
Intergovernmental Agreement on Implementing Water Reform in the Murray-Darling Basin ..................................5
Measures that can lead to a SDL adjustment ........................................................................................... 8
Supply measures .......................................................................................................................................................8
Progress on supply measures ...................................................................................................................................8
Efficiency measures ..................................................................................................................................................9
Progress on efficiency measures ..............................................................................................................................9
Constraints measures............................................................................................................................. 10
Constraints Management Strategy ..........................................................................................................................10
Progress on constraint measures ...........................................................................................................................10
How the SDL can be adjusted ................................................................................................................ 12
Assessing and agreeing a package of adjustment and constraints measures .......................................................12
SDL Adjustment Assessment Committee ...............................................................................................................14
Making the adjustment ............................................................................................................................................15
Implementing adjustment measures (beyond 2016) ...............................................................................................15
Acronyms
the Adjustment Assessment Committee
Sustainable Diversion Limit Adjustment Assessment
Committee, comprises senior representatives from
each of the Basin governments.
the Authority
the Murray-Darling Basin Authority
the Basin Plan
the Murray-Darling Basin Plan adopted by the
Commonwealth Minister under section 44 of the
Water Act 2007 (Cth) on 22 November 2012.
the Basin
the Murray-Darling Basin
Basin governments
Includes the Australian, New South Wales, Victorian,
South Australian, Queensland and the Australian
Capital Territory governments.
Basin states
As defined in the Water Act 2007, includes the New
South Wales, Victorian, South Australian,
Queensland and the Australian Capital Territory
governments.
CEWO
Commonwealth Environmental Water Office,
supports the Commonwealth Environmental Water
Holder.
CSIRO
The Commonwealth Scientific and Industrial
Research Organisation
the Intergovernmental Agreement
Intergovernmental Agreement on Implementing
Water Reform in the Murray Darling Basin, signed by
all Basin governments.
Murray-Darling Basin Ministerial Council
Comprises water ministers from all Basin
governments.
SDL
Sustainable Diversion Limit
Southern connected Basin
Comprises the Murray River system, excluding the
Darling River system (upstream of the Menindee
Lakes)
the Strategy
Constraints Management Strategy 2013 to 2024,
prepared by the Murray-Darling Basin Authority.
SDLs and the Basin Plan
In order to maintain a healthy, working river system, the Murray-Darling Basin Plan (Basin Plan)
sets new long-term average sustainable diversion limits (SDLs) on the amount of water that can
be diverted for consumptive use. The SDLs are set for each catchment and aquifer, as well as
the Basin scale.
The SDLs ensure that sufficient water is available to maintain the health of the Murray Darling Basin (Basin)
environment, having regard to social and economic impacts. The Murray-Darling Basin Authority (the Authority) has
estimated that the Basin-wide long-term average SDL for surface water is 10,873 gigalitres (billion litres) per year.
This represents a reduction of 2,750 gigalitres per year of water from the 2009 baseline diversion level. The
Australian Government has committed to recovering the 2,750 gigalitres through a combination of investment,
prioritising infrastructure efficiency projects over water buybacks. A copy of the Australian Government’s Water
Recovery Strategy is available at www.environment.gov.au/resource/water-recovery-strategy-murray-darling-basin
The SDLs begin on 1 July 2019 and will be implemented through State water resource plans. The Basin Plan also
includes a mechanism to adjust SDLs applying to catchments in the Basin where this will achieve equivalent or
better social, economic and environmental outcomes.
Why we have an SDL Adjustment Mechanism
During the development of the Basin Plan, Basin water ministers requested the Authority include a mechanism to
provide flexibility in setting the SDLs. The mechanism allows equivalent environmental outcomes to be achieved
with less water, and for the volume of environmental water to be increased with neutral or improved social and
economic outcomes.
On 21 November 2012 the Australian Parliament agreed to legislation to amend the Commonwealth Water Act
2007 to provide a transparent and efficient mechanism to allow the Commonwealth Minister, on the advice of the
Authority, to adjust the SDL within defined limits to achieve equivalent or better environmental, social and economic
outcomes.
The mechanism adds flexibility by allowing the environmental outcomes sought by the Basin Plan to be achieved
through more efficient use of water. It also provides for improved environmental outcomes to be achieved through
the recovery of additional water providing that water can be recovered in ways that have neutral or beneficial social
and economic impacts on communities.
The SDL Adjustment Mechanism set out in the Basin Plan enables the Basin SDL to be changed up or down by no
more than five per cent (i.e. approximately 544 gigalitres for surface water SDLs), as long as environmental, social
and economic outcomes are not compromised. Other safeguards ensure no change to the reliability of supply for
consumptive users and place limits on changes to environmental outcomes.
The Australian Government and all Basin state and territory governments have signed the Intergovernmental
Agreement on Implementing Water Reform in the Murray-Darling Basin (the Intergovernmental Agreement) and in
doing so, are committed to the co-operative implementation of the SDL Adjustment Mechanism for surface water.
Prior to the operation of the SDL Adjustment Mechanism, Basin governments will develop and agree a package of
constraint, supply and efficiency measures (described below). The protocol to determine the package is set out in
the Intergovernmental Agreement.
Intergovernmental Agreement on Implementing Water Reform in the MurrayDarling Basin
On 5 June 2013 an Intergovernmental Agreement between the Australian Government and Victorian, South
Australian and Australian Capital Territory governments on implementing water reform in the Basin came into
effect. In February 2014, the New South Wales and Queensland governments also became signatories to this
agreement.
The Intergovernmental Agreement on Implementing Water Reform in the Murray-Darling Basin (the
Intergovernmental Agreement) includes an agreed way of implementing the Basin Plan. The Intergovernmental
Agreement details cooperative arrangements to support delivery of the Australian Government’s commitment to
recover water to meet the Basin Plan’s sustainable diversion limits, and collaboration on the management of
environmental water.
A copy of the Intergovernmental Agreement is available on the Council of Australian Governments’ website at
www.coag.gov.au/node/506
Key steps in the implementation of the SDL Adjustment Mechanism are at Figure 1.
Figure 1: Key steps in implimentation of SDL Sdjustment Mechanism
A winery, Waikerie (John Baker)
Measures that can lead to a SDL adjustment
SDL adjustments can be achieved in two ways, through supply measures or efficiency measures. These measures
are collectively known as ‘adjustment measures’.
Supply measures
Supply measures are actions where equivalent environmental outcomes can be achieved with less water. These
actions may include environmental works (e.g. installation of infrastructure such as regulators and levee banks),
changes in river operations (e.g. changes in the operating rules of dam releases) and evaporative savings (e.g. reconfiguring lakes or storage systems in ways that reduce evaporative losses).
For supply measures, more efficient use of available environmental water allows for higher SDLs, and, hence, a
reduction in the Basin Plan’s environmental water recovery target (2,750 gigalitres). This is because the supply
measure effectively replaces water that was to have been recovered from consumptive use and made available for
environmental use. In this way, supply measures offset the need to recover the full volume of water originally
anticipated in the Basin Plan, thereby reducing the social and economic impacts of water recovery.
An increase in the SDLs made possible by supply measures is referred to in the Basin Plan as a supply
contribution. The Authority will share the supply contribution between individual Basin catchments in a way which
complies with any agreement relating to the apportionment of supply contributions that has been reached by Basin
governments.
Progress on supply measures
The Australian Government has provided $34.5 million for Basin state governments to develop business cases for
prospective supply measure projects. The types of projects that are under development include the installation of
regulators and ancillary infrastructure to enable achievement of environmental outcomes through more frequent
inundation of key environmental sites across the floodplain while using less water.
Supply measure projects, which will deliver a supply contribution of up to 650 gigalitres will be funded by the
Australian Government up to the market value of the environmental water that would otherwise have been
recovered from the consumptive pool of water entitlements.
A list of current proposals can be found at www.mdba.gov.au/what-we-do/water-planning/sdl/proposals
Basin governments, in consultation with their communities, are responsible for identifying and developing supply
measure proposals. Further details on proposals can be obtained from state government agencies.
Method for calculation of supply contribution
The Basin Plan requires the Authority to determine whether supply measures deliver equivalent environmental
outcomes. The Basin Plan outlines the default method for calculation of supply contribution, including a method to
assess whether SDL adjustment proposals will achieve equivalent environmental outcomes.
The Authority, in consultation with Basin governments, has been developing a benchmark model against which the
outcomes associated with proposed SDL adjustment measures will be assessed. A successful ‘supply measure’
will allow the volume of water recovery to be reduced, whilst maintaining equivalent environmental outcomes
compared with the benchmark.
The Authority, in consultation with the CSIRO and Basin governments, has developed a method to score
environmental outcomes in the southern connected Basin, which will be used as the basis for the ‘environmental
equivalence test’. The test compares environmental outcomes for fish, waterbirds and plants achieved under the
Basin Plan, with environmental outcomes achieved for a scenario including the supply measures, coupled with
higher SDLs (an SDL adjustment scenario). Further work is underway to apply the method to projects in the
northern Basin.
Further information on the environmental equivalence test can be found on the Authority’s website at
www.mdba.gov.au/what-we-do/water-planning/sdl/sdl-adjustment-mechanism-surface-water
Efficiency measures
Efficiency measures improve the environmental outcomes under the Basin Plan by recovering additional water for
the environment (increasing the environmental water recovery target of 2,750 gigalitres), but only where there are
neutral or improved social and economic outcomes. Funding is available to recover 450 gigalitres of additional
water for the environment.
For efficiency measures, the volume of water required and available for consumptive use is decreased, and water
saved in this way will be available for environmental use. Some examples of efficiency measures include:

replacing or upgrading less efficient methods of on-farm irrigation

lining channels to reduce water losses within an irrigation network.
Progress on efficiency measures
The Australian Government has legislated over $1.5 billion for potential efficiency measure projects that are
expected to commence in 2016–17 (financial year) and deliver 450 gigalitres of additional environmental water.
The additional water can only be recovered in ways that ensure social and economic outcomes for Basin
communities are maintained or improved.
Under the Intergovernmental Agreement, the Australian Government has committed to prepare programme
guidelines and consult closely with Basin states on the design of efficiency measure programmes (including
targeted volumes of water recovery and their regional distribution) and on arrangements for their subsequent
delivery and implementation, particularly in securing farm-level participation and the achievement of neutral or
improved social and economic outcomes.
The Australian Government currently administers a number of programmes similar to the proposed efficiency
measures programme. Experience with delivering these programmes is informing the development of the efficiency
measure programme. Basin states will be consulted on the proposed programme design.
Turf farm, Echuca (Copyright Department of the Environment)
Constraints measures
Constraints are rules and structures that influence the volume and timing of regulated water delivery through the
Basin, including the delivery of environmental water. Constraints may include physical structures (e.g. low-lying
bridges), river management practices and river height operational limits.
Constraints measures are activities that remove or ease constraints on the capacity to deliver environmental water.
While easing or removing constraints will not in itself lead to the recovery of more water, previous work by the
Authority has shown that it will enable better outcomes to be achieved from the use of environmental water,
including any additional water recovered for the environment through efficiency measures.
If constraints to environmental water delivery are eased, river operators would have more flexibility in certain years
to use environmental water to better connect rivers to environmental assets. Such actions would result in improved
environmental benefits and lead to a healthier Basin.
Constraints Management Strategy
During the development of the Basin Plan, Basin water ministers requested the Authority to complete a study of
constraints, in consultation with Basin states and the public. The Constraints Management Strategy 2013 to 2024
(the Strategy) has been developed under the Basin Plan to identify priority constraints that impede efficient
environmental water delivery across the Basin and to identify options to overcome these constraints. The Strategy
proposes a timetable for phased assessment and implementation over the next ten years. It involves a
collaborative approach with Basin state governments and a strong focus on community involvement throughout the
process.
The Strategy will assist Basin governments to develop constraint proposals with a package of measures to be
determined by Ministers prior to June 2016. A key requirement is that projects avoid any adverse impacts on third
parties. The Strategy will not create new risks to entitlement reliability and the implementation of measures
identified by the Strategy will not flood towns. If the impacts cannot be mitigated or managed then the constraint will
not be included in the final package.
Constraints measures also have the potential to interact beneficially with supply and efficiency measures.
The type of projects that could be considered include purchasing easements on private land, undertaking access
works (such as lifting bridges and changing culverts), amending river operating rules, and increasing outlet capacity
in dams and other water storages.
Further information on managing constraints and the Strategy is available on the Authority’s website at
www.mdba.gov.au/what-we-do/water-planning/managing-constraints
Progress on constraint measures
The Australian Government is providing $200 million to help remove or ease agreed physical or other constraints.
This includes up to $5 million for Basin states to develop business cases.
The Strategy was released to the public on 28 November 2013. A report on feedback from community consultation
and how it influenced the final Strategy was also released. The development and release of the Strategy has
improved understanding of the likely impacts of constraints in seven key focus areas, and identified knowledge
gaps, community issues and concerns.
In 2014 the Authority will continue work under the Strategy by conducting a Basin-scale analysis of priority
constraints. This will include ongoing consultation with landholders, industry groups and State governments, further
modelling, inundation mapping, a preliminary assessment of the impacts of changes to constraints within the river
system. The Authority will submit an annual report to the Murray-Darling Basin Ministerial Council providing its
recommendations to Basin Ministers on potential options.
The easing of constraints will improve flexibility, efficient delivery, and the outcomes of the entire pool of available
water in the Basin, not just water recovered through efficiency measures. While the primary reason for easing or
removing constraints is to facilitate the delivery of environmental water, they may also have the potential to benefit
all users, whether through relaxing channel capacity constraints, improving property access, or incidental
productive benefits from environmental watering.
An explanation of water recovery and programs is at Figure 2.
Figure 2: Murray Darling Basin Plan — Water Recovery
#
Basin Plan requirement to achieve these outcomes or their environmental equivalent.
*
Other Commonwealth Recoveries and State Recoveries as at 30 September 2014. Other Commonwealth Recoveries include water
recoveries from SARMSP, water gifted by the Queensland Government to the Commonwealth and water recoveries secured through
the Water Smart Australia Program which contribute to ‘Bridging the Gap’ to the new sustainable diversion limits.
^
This funding represents the commitment from the Infrastructure component of Sustainable Rural Water Use and Infrastructure
Program for water recovery projects. A total of $5.6bn is committed to the Infrastructure component and funds national investment in
rural water use and efficiency including planning and water knowledge.
SARMSP is the South Australian River Murray Sustainability Program.
How the SDL can be adjusted
In 2016, the Authority will determine the extent to which it considers a SDL adjustment can be made, by
considering a package of proposals for adjustment measures that have been agreed by all Basin governments.
Assessing and agreeing a package of adjustment and constraints measures
The Intergovernmental Agreement envisages a package of supply, efficiency and constraint measures to meet the
aspirations of the parties.
The Intergovernmental Agreement outlines how Basin governments will propose, assess and agree to the package
of SDL adjustment and constraints measures.
Aerial view of the Trangie-Nevertire Irrigation area around Dubbo (Copyright Department of the
Environment)
As constraints measures will be important for securing improved environmental benefits from the use of held
environmental water, they may improve the capacity for supply measures to achieve their intended environmental
outcomes. A package of constraints measures will first be determined before the final package of adjustment
measures.
Solar powered flume gate, Echuca (Copyright Department of the Environment)
SDL Adjustment Assessment Committee
The Intergovernmental Agreement established the SDL Adjustment Assessment Committee (Adjustment
Assessment Committee) to evaluate SDL adjustment and constraints measures proposals. The Adjustment
Assessment Committee comprises representatives from each Basin government, with observers from the
Commonwealth Environmental Water Holder and the Authority.
In 2016 the Adjustment Assessment Committee will recommend to Basin governments a package of measures for
potential SDL adjustment and a package of measures to ease constraints. An agreed package will then be
provided to Basin water ministers for their consideration and agreement. The agreed package will then be provided
to the Authority by 30 June 2016.
Superb parrot (Brian Furby)
Proposals for constraints and SDL adjustment measures are being considered in three phases.
Phase 1 – Feasibility
During the feasibility phase, Basin states identify proposals most likely to achieve the most effective outcomes and
that merit further evaluation. Proposals are brought to the Adjustment Assessment Committee to assess whether
they are feasible and will achieve the stated outcome. A list of proposals being considered is published on the
Authority’s website. Basin governments decide which proposals will advance to Phase 2.
Phase 2 – Business case
For each proposal agreed to advance to this phase, Basin states are preparing a Business Case. This considers
alternative solutions and identifies assumptions, benefits, costs and risks. The Adjustment Assessment Committee
assesses each Business Case.
At the end of this phase, the Authority will conduct an initial assessment of how the proposals could contribute to
an SDL adjustment, environmental outcomes and impacts on state water shares and states’ water resources.
Basin governments decide which proposals will advance to Phase 3.
This phase is anticipated to be completed by 30 June 2015.
Phase 3 – Confirmation
In this phase, the proponent confirms that conditional funding approval has been obtained and the process for
necessary approvals and other matters have been secured.
Assessment guidelines
The Adjustment Assessment Committee has developed guidelines for supply and constraint measure Feasibility
and Business Case assessment. These guidelines are informing the development of business cases for supply and
constraint proposals by Basin governments.
All phases are expected to be completed by 31 December 2015.
Cotton plantation, Toowoomba (Arthur Mostead)
Making the adjustment
An adjustment of the SDL requires an amendment to the Basin Plan. As soon as practicable after 30 June 2016,
and following consideration of advice from Basin states and public submissions, the Authority will determine the
adjustment to the Basin Plan. The Authority will then prepare appropriate amendments to the Basin Plan, for
adoption by the Commonwealth water minister, based on the package of agreed measures.
SDL adjustments adopted by the Commonwealth water minister will be tabled in Parliament and are subject to
disallowance.
Implementing adjustment measures (beyond 2016)
Basin states will have until 2019 to reflect the SDLs in their own water resource plans. All SDL adjustment projects
that have been assessed and approved as part of the SDL Adjustment Mechanism must have entered into
operation by 2024. If necessary, the Authority will undertake a reconciliation of measures and make any necessary
SDL adjustment.
Due to the 5 per cent limit on the total SDL adjustment, efficiency measures may be needed to offset supply
measures, for example to enable 650 gigalitres of supply measures to be agreed, a minimum of 106 gigalitres
would need to be recovered through efficiency measures.
Agreed supply, efficiency and constraint measures will be implemented from 2016 to 2024.
environment.gov.au