Environmental Water Recovery
Strategy for the Murray-Darling Basin
DRAFT FOR CONSULTATION
November 2012
Please note the date for submissions to the Australian Government’s draft Environmental Water Recovery
Strategy has been extended to 22 March 2013.
Please also note the email address for submissions is waterrecovery@environment.gov.au
Purpose of this document
The purpose of this document is to outline the Australian Government’s current
progress and proposed approach for future environmental water recovery in the
Murray-Darling Basin (the Basin) for public consultation.
The proposed approach to water recovery builds on consultation undertaken with
state governments, as well as with Basin communities, through stakeholder panels,
community meetings, and submissions.
The Government welcomes further comment from stakeholders on the issues
outlined in this Environmental Water Recovery Strategy (the Strategy). Comments
will be used to refine the Strategy.
The Strategy will involve an adaptive approach over the coming years to take account
of Basin Plan developments, such as the operation of the sustainable diversion limit
adjustment mechanism and the realised water yields from the Government’s
investments in infrastructure savings and environmental works and measures.
How to provide a response
Comments on this document can be sent to:
Email: waterrecovery@environment.gov.au
Or by mail to the following address:
Water Recovery Team
Department of Sustainability, Environment, Water, Populations and Communities
GPO Box 787
Canberra ACT 2601
Comments are requested by 28 February 2013.
Further information on the Government’s water recovery programs is available at
www.environment.gov.au/water.
The water recovery numbers stated in this document are expressed in Long Term
Average Annual Yield terms unless otherwise stated.
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Key Points

The Australian Government is committed to restoring the long-term health of rivers and
wetlands in the Basin by acquiring adequate water for environmental use.

In 2010, the Government committed to bridge the remaining gap between what has been
returned for the environment and what is required to be returned by the Basin Plan. This
means that no one will have their water entitlements cut or compulsorily acquired as a
result of the Basin Plan.

The Government is recovering water for environmental use through a combination of water
savings derived from investments in water saving infrastructure and water purchase. There
are also water recovery programs undertaken by state governments.

The Basin Plan includes a reduction in average surface water diversions of 2750 gigalitres
(GL) to meet the sustainable diversion limits (SDLs). As at 30 September 2012 approximately
1577 GL of surface water had been recovered to ‘bridge the gap’ to the SDLs in the Basin
Plan. This represents more than half of what is needed to meet the 2750 GL reduction.

Investments in irrigation modernisation and other water efficiency projects under the
Sustainable Rural Water Use and Infrastructure Program (SRWUIP) are expected to yield
about 600 GL which will count towards bridging the gap to the new SDLs. As at 30
September 2012 approximately 316 GL of this had been secured.

The Government is also working with Murray-Darling Basin states (Basin states) on the
development of new initiatives, including environmental works and measures projects, rules
changes and a review of river management operations that can decrease water recovery
requirements to below the 2750 GL reduction by achieving equivalent environmental
outcomes with less water. The Basin Plan includes an SDL adjustment mechanism to
accommodate these initiatives (called ‘supply measures’) and their extent will be
determined in 2016. The Government will provide funding for agreed supply measures up to
the market value of the SDL ‘offsets’ generated.

For the period up to the end of 2015 the Government’s intention is to set the rate of
environmental water recovery such that 2100 GL of environmental water would be acquired
by 2019 if that rate were to continue. This approach will accommodate the potential for up
to 650 GL of SDL ‘offsets’ to be achieved through supply measures.

Accordingly, water purchasing will be focussed to meet any residual water recovery
requirements necessary to bridge the gap after the contribution from infrastructure and
supply measures is taken into account. Water purchasing will be conducted at a steady and
measured pace to avoid unnecessary disruption to the water market and to provide
communities with time to adjust to the new water sharing arrangements in the Basin Plan. A
steady approach will also allow the pace and pattern of water purchase to be reviewed and
adjusted to account for actual water recovery from other sources.
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
Under these arrangements the pace of residual water purchasing will be substantially lower
than in recent years. No purchase is required in the period up to 2016 in South Australia or
Victoria, reflecting the relatively higher recovery in these jurisdictions (through all sources)
to date and in the case of Victoria, some purchase initiatives already under negotiation.

If NSW secures offsets (as part of 650 GL of offsets Basin wide) in proportion with the NSW
share of diversions, then this volume, combined with water recovery to date and expected
water yields from infrastructure projects, will mean that remaining water purchases to
bridge the gap in NSW will be below the rate of 3 per cent of the baseline diversions per
decade as sought by the NSW government.
In the northern Basin, the conduct of the Northern Basin Scientific Work Program also needs
to be considered when setting water purchase priorities. The Government proposes to focus
largely on the local component of water recovery in the northern Basin until this work
program is finalised at the end of 2015.


For the time being, the Government will largely focus its surface water purchasing in the
northern Basin on the unmet local environmental requirements in the Condamine Balonne,
as well as groundwater recovery in the Upper Condamine Alluvium region.

After the SDL adjustment mechanism has operated in 2016, the Strategy will be reviewed. It
has been agreed by all Basin states that if the volume of SDL offsets is less than 650 GL, any
shortfall can be acquired through purchases. The SDLs will come into effect in 2019 and the
Commonwealth will use the approaches outlined in this Strategy to recover any shortfall.

The Government has also announced new funding of $1.77 billion, including $1.575 billion
with the objective of recovering 450 GL of additional environmental water. The SDL
mechanism in the Basin Plan also accommodates these initiatives (called ‘efficiency
measures’) which will be delivered in the form of new on-farm efficiency works or other
measures that are socially and economically neutral or beneficial as agreed with the
relevant Basin state.

Examples of the additional benefits which can be achieved through the recovery of the
additional environmental water include improvements to the health of river floodplains and
river water quality, estuarine health, Murray mouth opening, higher average levels at the
Lower Lakes and increased in-stream flows and variability. The investment in measures to
recover additional water for the environment is expected to commence in 2016-17, once
the SDL adjustment mechanism has operated.

In addition, $200 million will be used to remove priority constraints that currently limit the
volume of environmental water that can be efficiently conveyed through river systems, in
order to maximise the benefits of environmental water. Investments will be made where
the constraints are both feasible and cost effective to address.

The new funding of $1.77 billion for addressing constraints and recovering additional water
for the environment will be held in a special account.
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Key Acronyms and abbreviations
SDL – Sustainable Diversion Limit
BDL – Base Diversion Limit
The Authority – Murray-Darling Basin Authority
CEWH – Commonwealth Environmental Water Holder
CEWO – Commonwealth Environmental Water Office
SRWUIP – Sustainable Rural Water Use and Infrastructure program
RTB – Restoring the Balance in the Murray-Darling Basin program
GL – Gigalitres
ML – Megalitres
5 ENVIRONMENTAL WATER RECOVERY STRATEGY FOR THE MURRAY-DARLING BASIN – DRAFT FOR
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Contents
1. INTRODUCTION ................................................................................................................................... 7
A. Background ..................................................................................................................................... 7
B. Inquiry into the impact of the Murray-Darling Basin Plan in Regional Australia............................ 8
2. PROPOSED APPROACH TO WATER RECOVERY ................................................................................... 8
A. Water recovery to date .................................................................................................................. 8
B. ‘Local’ and ‘downstream’ component of water recovery............................................................... 9
C. Adjustments to the sustainable diversion limit ............................................................................ 10
D. Future approach to surface water recovery ................................................................................. 11
3. COMPOSITION OF WATER RECOVERY ............................................................................................. 13
A. Investment in efficient irrigation infrastructure........................................................................... 13
B. Environmental works and measures ............................................................................................ 15
C. Review of river operations ............................................................................................................ 17
D. Water purchasing ......................................................................................................................... 17
E. Additional water recovery for the environment ........................................................................... 20
4. NEXT STEPS ....................................................................................................................................... 21
ATTACHMENT A – PROGRESS OF WATER RECOVERY AGAINST 2750 GL SDL REDUCTION .................. 22
ATTACHMENT B – ENVIRONMENTAL WATER RECOVERY AND SDL ADJUSTMENT MECHANISM ........ 23
ATTACHMENT C – VOLUME OF GOVERNMENT SURFACE WATER PURCHASES TO BRIDGE THE GAP TO
2750 GL ................................................................................................................................................. 24
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1. INTRODUCTION
A. Background
1. The health of the Murray-Darling Basin is facing the prospect of deterioration over the
long term as a result of, among other factors, past water allocation decisions and climate
change. Economic and social viability of Basin communities is also linked with the health
of the Basin’s rivers. The objective of the Government’s reforms is to have a healthy
working Basin that can support healthy rivers, strong communities and sustainable food
and fibre production.
2. The independent Murray-Darling Basin Authority (the Authority) was established in 2008
to develop a plan to determine sustainable limits on diversions from water resources in
the Basin. The SDLs set under the Basin Plan reflect a balanced judgement by the
Authority about the amount of environmental water needed to achieve sustainable
economic, social and environmental outcomes.
3. In 2008, the Government commenced a program of environmental water recovery to
transition to lower levels of water use. The funding for this water recovery forms part of
the $12 billion Water for the Future commitment to support healthy rivers and help
communities adjust to a future with less water.
4. In 2010 the Government made a commitment to bridge the remaining gap between
what has been returned for the environment and what is required to be returned by the
Basin Plan. Nothing in the Water Act 2007 (Commonwealth) allows or authorises the
Government to compulsorily acquire water entitlements. The water acquired by the
Government to bridge the gap will come only from those who wish to offer water
entitlements for this purpose under Water for the Future programs for water purchase
or infrastructure investment. The Government’s commitment to bridge the gap also
extends to groundwater.
5. The Government’s two key programs that recover water for the environment are:
 the Sustainable Rural Water Use and Infrastructure Program (SRWUIP) which aims to
improve water use efficiency and management and deliver water savings for the
environment. The program is largely focused in the Basin where around $5 billion of
SRWUIP funds are already committed
 the Restoring the Balance in the Murray-Darling Basin (RTB) program to purchase
water entitlements for the environment.
6. The water yield from entitlements acquired by the Government through these programs
is used for the benefit of the environment. As for any other water entitlement holder,
the volume of water allocated against entitlements held by the Government will vary
from season to season. The Government pays all the fees and charges normally due on
these entitlements.
7. The Commonwealth Environmental Water Holder (CEWH) is responsible for managing
the portfolio of water entitlements in accordance with the Water Act. The CEWH
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publishes water use plans, portfolio management statements, an annual outcomes
report and regular updates of registered holdings on its website at
www.environment.gov.au/ewater.
B. Inquiry into the impact of the Murray-Darling Basin Plan in Regional Australia
8. In October 2010 the Government established a new Standing Committee on Regional
Australia, to inquire into the Murray-Darling Basin Plan. The Standing Committee is
chaired by the Member for New England, Tony Windsor MP, and includes members
from both sides of the House.
9. In June 2011 the Standing Committee tabled its report to the Parliament, titled
Of droughts and flooding rains. In response the Government agreed to a number of
actions to ensure its reforms in the Basin deliver a healthy river system, sustainable food
and fibre production and strong communities, specifically to:
• develop and publish a water recovery strategy to provide greater transparency and
certainty to communities about the water recovery program
• prioritise spending on infrastructure projects over water purchase in the coming
years
• consult further with industry on a program to integrate water purchasing with
infrastructure reconfiguration
• not run general tenders in the southern Basin prior to 2013.
10. In July 2012, the Standing Committee tabled a further report into certain matters
relating to the Basin Plan. One of the recommendations in this report was that the
Government release a water recovery strategy for consultation. This document presents
that strategy as a draft for consultation.
11. The Government welcomes comments from stakeholders on this document. Comments
will be used to inform subsequent updates to the Strategy.
2. PROPOSED APPROACH TO WATER RECOVERY
A. Water recovery to date
12. There has already been significant progress in environmental water recovery across the
Basin through various programs conducted by the Australian and state governments.
13. Prior to 2009 around 960 GL of water was returned to the Basin’s environment through
programs such as the Living Murray Initiative, Water for Rivers and revisions to state
water sharing plans. Recovery from these sources has been accounted for in the
‘baseline diversion limits’ (BDLs) outlined in the Basin Plan.
14. From the 2009 surface water BDL of 13 623 GL, the Basin Plan includes a reduction in
diversions of 2750 GL to establish a new Basin-wide surface water SDL of 10 873 GL.
15. Water recovery from 2009 onwards contributes to the 2750 GL reduction required to
meet the surface water SDLs in the Basin Plan. As at 30 September 2012, 1577 GL of
8 ENVIRONMENTAL WATER RECOVERY STRATEGY FOR THE MURRAY-DARLING BASIN – DRAFT FOR
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environmental surface water recovery had been contracted in the Basin towards
bridging the gap. This recovery included:
• 1094 GL of secured water purchases
• 316 GL received or scheduled for transfer under infrastructure works contracts
• 154 GL recovered through state government actions
• 11 GL gifted by the Queensland Government and 2 GL of other recovery.
16. Through this recovery effort, 57 per cent of the 2750 GL reduction in surface water
diversions in the Basin Plan has already been achieved.
17. The Basin Plan also includes SDLs for groundwater resources in the Basin. Under the
Basin Plan, groundwater extractions only need to be reduced in the Upper Condamine
Alluvium groundwater SDL resource unit in order to reach the SDL. Recovery actions
which will bridge the gap to this SDL are yet to commence.
B. ‘Local’ and ‘downstream’ component of water recovery
18. The Basin Plan presents the SDL reduction in two separate parts: a ‘local’ component to
provide for environmental needs within each catchment and a shared ‘downstream’
component to ensure the overall health of the Basin’s major trunk rivers, the BarwonDarling in the north and the Murray in the south.
19. By its nature, the local component must be recovered from within the relevant
catchment. However, the downstream component could physically be sourced from any
hydrologically connected catchment. The downstream components in the Basin Plan are
971 GL in the southern Basin and 143 GL in the northern Basin.
20. All Basin states have agreed that the downstream component of water recovery should
be allocated between catchments in a consistent, equitable and transparent manner. In
the southern Basin, governments have agreed that the shared downstream component
will be apportioned between states based on their share of surface water diversions. It
has also been agreed that each state will determine the apportionment of its share of
the downstream component to catchments within their state. Each state will advise the
Authority of an initial apportionment of the downstream component. A final
apportionment will be advised following the operation of the SDL adjustment
mechanism. After the initial apportionment by the states, this Strategy will be reviewed.
It will be further updated to reflect the final apportionment in 2016.
21. Apportioning the downstream component to states, and by states to catchments, will
provide more certainty to Basin communities, giving them a clearer understanding of
the volume of environmental water recovery that will take place in their region.
22. In the northern Basin, Australian and state governments have agreed to establish a
program of work to be completed by the end of 2015 to review the basis for the
northern shared downstream component and its equitable apportionment. This
Northern Basin Scientific Work Program may include consideration of impacts of the
northern Basin downstream component on the anticipated environmental outcomes of
9 ENVIRONMENTAL WATER RECOVERY STRATEGY FOR THE MURRAY-DARLING BASIN – DRAFT FOR
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this recovery. The Strategy will be updated in 2016 to reflect the outcome of this
program of work.
C. Adjustments to the sustainable diversion limit
23. The Basin Plan sets SDLs for the surface and groundwater resources of the Basin. The
Basin Plan includes a Basin-wide surface water SDL of 10 873 GL, which is 2750 GL less
than the BDL of 13 623 GL.
24. An ‘SDL adjustment mechanism’ has been included in the Basin Plan for surface water
and groundwater. Initiatives relevant to the SDL adjustment mechanism fall under two
categories:
a. ‘Supply measures’ which allow the environmental outcomes associated with a
2750 GL reduction in diversions to be achieved with less environmental water.
Such measures ‘offset’ the need to recover water entitlements for the
environment. This means the social and economic outcomes are improved as
there is more water available for consumptive use without compromising
environmental outcomes
b. ‘Efficiency measures’ which lead to better environmental outcomes than those
associated with a 2750 GL reduction in diversions through additional water
recovery projects that are conducted without adverse effect on the social or
economic outcomes under the Basin Plan.
25. Examples of supply measures that could reduce the need for environmental water
recovery include environmental works and measures, rules changes and improved river
operations. Such measures may offset the need to recover up to 650 GL of water for the
environment through other means.
26. Efficiency measures to increase the volume of environmental water recovery without
adverse social and economic impacts include additional on-farm water use efficiency
projects. The Government has announced $1.575 billion of new funding to enable the
recovery of 450 GL of additional environmental water, thereby improving the
environmental outcomes compared with those associated with the 2750 GL reduction
benchmark in the Basin Plan.
27. The Government is also providing $200 million for the removal of priority river system
constraints which impede the effective delivery of environmental water, including the
additional water recovered through efficiency measures. The relaxation of constraints
may also contribute to SDL offsets. The funding for additional environmental water
recovery and removal of constraints is set out in the Water Amendment (Water for the
Environment Special Account) Bill 2012.
28. The combination of measures that increase or decrease the surface water SDL is limited
to a net five per cent deviation from the initial SDL. With an initial surface water SDL of
10 873 GL this limits the net adjustment to 544 GL.
10 ENVIRONMENTAL WATER RECOVERY STRATEGY FOR THE MURRAY-DARLING BASIN – DRAFT
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D. Future approach to surface water recovery
29. The Government’s approach to environmental water recovery will be responsive to
changing recovery targets due to developments such as:
• the distribution and volume of recoveries from infrastructure projects
• the operation of the SDL adjustment mechanism
• the final apportionment of downstream requirements between catchments.
Water recovery until 2016
30. For the period up to 2016 the Government’s general approach will be to set the pace of
environmental water recovery so that 2100 GL of environmental water would be
acquired by 2019 if that pace of recovery were to continue to 2019. Water entitlement
purchasing will be used only as a residual where the water returns expected from
SRWUIP investments and other sources are not sufficient to reach this target.
31. This approach will accommodate the potential for up to 650 GL of SDL offsets to be
achieved from supply measures such as environmental works and measures, rules
changes and improved river operations. The implications of this approach for the
composition of future recovery is summarised in the table below.
32. In the northern Basin, the Northern Basin Scientific Work Program will investigate the
shared downstream component and its equitable apportionment. The work program will
be completed in 2015. In the intervening period, the Government intends to focus
largely on the local component of water recovery in the northern Basin until the work
program is finalised. This means that purchasing to recover the unmet portion of the
northern Basin downstream component will not meaningfully begin until 2016.
SDL reduction in the Basin Plan
2750 GL
Contracted recoveries contributing to bridging the gap as at 30
September 2012*
1577 GL
Estimated future yield from infrastructure savings contributing to
bridging the gap to 2750 GL
284 GL
Possible contribution of supply measures
Up to 650 GL
Potential purchases required to bridge the gap to 2750 GL (subject
to review of SDL adjustments in 2016).
239 GL
Remaining recovery task for downstream component in the
northern Basin*
approx. 75 GL
Residual water purchase task pending outcome of northern Basin
review and SDL adjustment mechanism “supply measures’
approx. 154 GL
*This estimate assumes that recovery in all northern Basin catchments can contribute to the shared
downstream component in the northern Basin.
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33. Attachment B illustrates how the interim approach to water recovery would operate in
combination with the SDL adjustment mechanism.
Water recovery from 2016 onwards
34. The operation of the SDL adjustment mechanism will take place in 2016, confirming the
set of agreed supply and efficiency measures. The Northern Basin Scientific Work
Program will also be completed by this time.
35. As a result, the review of the Strategy in 2016 will factor in the final adjusted SDLs and
state advice on apportionment of the downstream component to catchments, to revise
the pace and composition of water recovery actions. Water entitlement purchasing will
continue to be used as a residual approach where the water returns from SRWUIP
investments and other sources are not sufficient to bridge the gap to the final SDLs. This
will include purchasing to recover water to meet the northern Basin shared downstream
component consistent with the outcomes of the Northern Basin Scientific Work
Program. If the volume of SDL offsets is less than 650 GL, Basin governments have
agreed that any shortfall can be purchased. The SDLs will come into effect in 2019 and
the Commonwealth will use the approaches outlined in this Strategy to recover any
shortfall.
Implementation of proposed approach to water recovery
36. The approach outlined above will mean that the volume, pace, composition and location
of future water recovery (including water purchase) will depend on:
• The extent to which 650 GL of environmental offsets are achieved
• how offsets are distributed between Basin states
• the volume of water savings secured through infrastructure projects
• how each State chooses to apportion the downstream component between
catchments.
37. The proposed approach to water recovery over the period up to 2016 gives communities
considerable certainty over the volume of water purchasing which can be expected in
their regions.
38. Pending the SDL adjustment outcomes in 2016, the need for further water purchases in
the southern Basin is very limited. In South Australia no further purchase is required
before 2016. In Victoria, the current negotiations to purchase water rights from the
Wimmera Irrigation Area and the prospective return from a program of purchasing
integrated with the implementation of the Goulburn-Murray Water Connections
Program need to be factored into future purchase plans. When these two projects are
taken into account, there is no further need for purchasing in Victoria before 2016.
39. In southern NSW there is still a need for water purchasing, but the amount of purchasing
will be very modest compared with the scale of buyback over recent years.
40. If NSW secures offsets (as part of 650 GL of offsets Basin wide) in proportion with the
NSW share of diversions, then this volume, combined with water recovery to date and
12 ENVIRONMENTAL WATER RECOVERY STRATEGY FOR THE MURRAY-DARLING BASIN – DRAFT
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expected water yields from infrastructure projects, will mean that remaining water
purchases to bridge the gap in NSW will be below the rate of 3 per cent of the baseline
diversions per decade as sought by the NSW government.
41. Similarly in the north, the combination of contracted water recoveries and anticipated
future infrastructure recovery is likely to be sufficient to meet the local requirements in
most catchments in the northern Basin. The largest unmet local needs are in
Queensland in the Condamine Balonne catchment. For the time being, the Government
will largely focus its surface water purchase efforts on the unmet local environmental
requirements in the Condamine Balonne.
42. Under this approach, the future rate of surface water purchasing will be considerably
slower than in recent years. This is highlighted in the figure at Attachment C which
factors in the outcomes anticipated under the new SDL adjustment mechanism, and
reasonable assumptions about the yield from future infrastructure investments.
43. Water purchasing will also be needed to bridge the gap to the SDLs in the Upper
Condamine Alluvium groundwater region. This will be another priority for the water
purchase program during the period before 2016.
44. Work has commenced to develop a strategic approach to groundwater recovery in the
Upper Condamine Alluvium which will achieve the objectives of the Basin Plan. The
approach will operate within the framework of current water sharing and compliance
arrangements in that region.
45. The Government is working with Queensland to progress a number of issues regarding
legislative and management arrangements which will help provide certainty for
groundwater entitlement holders and the Government. The Government’s strategic
approach to groundwater recovery will also include the most practical and cost effective
arrangements for holding and managing, or retiring, the recovered groundwater
entitlements.
46. The Government will consult annually with Basin states on its approach to water
recovery, taking into account developments such as the yield from infrastructure
investments, the implementation of ‘offset’ projects under the SDL adjustment
mechanism and Basin states’ in-valley apportionment of the downstream component of
the SDL reductions. This annual consultation will specifically consider the pace and
distribution of water purchasing in each state to ensure these developments are
appropriately considered when setting purchasing priorities.
3. COMPOSITION OF WATER RECOVERY
A. Investment in efficient irrigation infrastructure
47. The Government has prioritised spending on infrastructure investments over water
purchasing in the coming years. This reflects the Government’s commitment in response
to the Inquiry into the impact of the Murray-Darling Basin Plan in Regional Australia.
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48. Approximately $5.8 billion has been committed for water infrastructure and
management projects under the SRWUIP, of which around $5 billion is currently
committed to the Basin.
49. The SRWUIP includes a wide variety of projects to improve water use and management,
however the main emphasis is on projects to modernise irrigation infrastructure, both
on-farm and off-farm, and for the water savings generated from these projects to be
shared between the Government for environmental use, and irrigators for consumptive
use.
50. Obtaining water savings from infrastructure investments is a more costly approach to
water recovery than direct water purchase. However the Government’s investment in
these projects reflects a broader range of factors in determining value for money, such
as the contribution these projects make to the long-term productivity of irrigated
agriculture and strengthening regional communities.
51. The SRWUIP also funds some projects that do not directly involve irrigation works. For
instance, funding has been provided for the development of irrigation modernisation
plans to underpin the design of investment proposals, and water loss ‘hotspot’
assessments to identify parts of irrigation systems where water losses are greatest.
These plans have helped to inform irrigation water providers’ decisions on where and
how to best reconfigure and upgrade their infrastructure to improve the efficiency of
their delivery networks and prepare them for the future. Over 80 per cent of irrigation
water entitlements by volume are now covered by such plans in the Basin.
52. SRWUIP investment is primarily directed towards projects that:
• deliver substantial and lasting returns of water to the environment
• secure a long-term sustainable future for irrigation communities
• deliver value for money in the context of the first two tests.
53. The Government’s share of water saved through infrastructure investment must be in
the form of a secure and transferable water entitlement that can be used to meet the
environmental watering priorities identified in the Basin Plan.
Progress with irrigation infrastructure projects
54. The infrastructure program initially focussed on sound planning, design and detailed due
diligence assessment to support the large investment of public money. Most of this
preparatory work is now complete and on-ground work for many substantial
infrastructure projects is underway across the Basin.
55. As part of its commitment to prioritise spending on infrastructure projects the
Government is developing a simplified outcomes-based approach to accelerate the roll
out of infrastructure funding to state governments. The Government is also considering
ways to maximise water savings that are made through existing and proposed
infrastructure programs, and to target investments to areas where there is the greatest
need to recover water.
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56. The following table highlights some of the major water recovery projects funded
through SRWUIP.
57. The Australian and NSW Governments are also working together to develop a water
saving project at Menindee Lakes through possible changes to infrastructure and the
operating regime for the lakes. There will be public consultation as the project develops.
Water recovery from infrastructure
58. The total surface water return from SRWUIP infrastructure investments to bridge the
gap is projected to be approximately 600 GL. At the end of September 2012, 316 GL of
surface water had been secured under infrastructure works contracts towards bridging
the gap to the SDLs in the Basin Plan.
59. A further 284 GL is projected to contribute towards bridging the gap from the remaining
SRWUIP investments. This projection will be refined as further projects come under
contract and the volume and location of water savings from remaining projects is better
understood. Water recovery through SRWUIP-funded infrastructure projects is updated
monthly at:
www.environment.gov.au/water/basin-plan/about.html#progress
60. The status of water recovery (from all sources, including infrastructure investment) as at
30 September 2012 is presented at Attachment A.
B. Environmental works and measures
61. Environmental works and measures are examples of ‘supply measures’ that can help
deliver water more efficiently and effectively to meet environmental objectives. Some of
these projects have the potential to provide SDL offsets by achieving equivalent
environmental outcomes using less water.
62. Basin governments have funded environmental works and measures projects in the
past. For instance, under the Living Murray program governments have invested $287.8
million for works to deliver and manage environmental water to five of the six Living
Murray ‘icon sites’.
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Project
Funds
Committed
(up to $m)
Australian
Government
water savings
(average annual
yield GL)*
Status
State Priority Projects, state-led
Vic - Northern Victoria Irrigation Renewal
Project (NVIRP) package, including onfarm component
Under way
1000
112
NSW - Metering Scheme, including pilot
221
32
Under way
NSW - Basin Pipes
137
26
Under way
83
12 (pilot and
main project)
Pilot complete. Main
project contracted
($83m)
Qld - Healthy Headwaters On-Farm Water
Use Efficiency
115
19
SA - Riverine Recovery Project
100
13.5
NSW - Irrigated Farm Modernisation
Under way
Under way ($89m)
State Priority Projects, Australian
Government-led
NSW Private Irrigation Infrastructure
Operators Program
SA Private Irrigation Infrastructure
Operators Program
Under way
650
112
One project
completed
2.7
Under way
(Rounds 1 and 2,
$14.4m)
450
107
Two rounds under
way. Third round
under assessment.
River Murray Improvements Program (SA)
180
36
In development
Strategic Sub-System Reconfiguration
Program
200
TBD
Program design in
final stage
110
Other Projects
On-Farm Irrigation Efficiency Program
*These figures are indicative only - some elements may not yet be under contract and others include potential
recoveries. This table does not include water saving from projects which have been agreed only in principle,
unallocated SRWUIP funds or water savings from groundwater.
63. The Government is currently providing $10 million to assist Basin states and
communities to investigate new environmental works and measures projects. The types
of projects being investigated include the removal of impediments to environmental
16 ENVIRONMENTAL WATER RECOVERY STRATEGY FOR THE MURRAY-DARLING BASIN – DRAFT
FOR CONSULTATION
flows, building regulators to deliver environmental water more efficiently to wetlands,
and purchasing flood easements.
64. Feasibility studies are now under way for 17 projects nominated by state governments
for investigation. In addition, each Basin state is undertaking a state-led process to
identify community proposals for environmental works and measures and to test these
through pre-feasibility studies. For an update on this work, see:
www.environment.gov.au/water/policy-programs/srwui/e-works.
C. Review of river operations
65. SDL offsets may also be achieved by improving the efficiency of water management
operations and practice and the delivery of environmental water.
66. The Government is working with Basin States and the community to ensure the current
operational and regulatory framework facilitates the most efficient and effective
management of water in the Basin.
67. For instance, the Australian and state governments are jointly reviewing the MurrayDarling Basin Agreement to examine options for more efficient river operation
arrangements in the Basin. This review is expected to report in 2014. A River Murray
System Operations Review is also underway.
68. In addition, on 4 November 2011 the Murray-Darling Basin Ministerial Council,
convening as the Legislative and Governance Forum on the Murray-Darling Basin, agreed
that a work program would be developed to assess the potential for new and revised
river management arrangements to improve the efficiency and effectiveness of
delivering environmental water.
D. Water purchasing
69. Water purchasing is a cost-effective way to acquire water for the environment. It also
provides flexibility to acquire a portfolio of water entitlement types that most efficiently
meets environmental needs.
70. The role of water purchasing is to complement the projected water recovery from
infrastructure, SDL offsets and any other sources, thus enabling the task of bridging the
gap to be completed by 2019.
71. As discussed above, the pace and location of water purchasing will be regularly adjusted
to take into account the latest information on water recoveries from the various
sources. This includes adjusting the pace and location of water purchasing if the volume
of SDL offsets from supply measures is less than 650 GL.
Key principles of water purchasing
72. Key principles underlying the Government’s approach to water purchasing are to:
• purchase water entitlements only from those who wish to sell (no compulsory
acquisition)
• purchase a portfolio of water entitlements that can be efficiently and effectively
used to meet environmental needs identified in the Basin Plan
17 ENVIRONMENTAL WATER RECOVERY STRATEGY FOR THE MURRAY-DARLING BASIN – DRAFT
FOR CONSULTATION
•
•
•
•
•
ensure value for money from the use of public funds is consistent with Government
procurement requirements
integrate water purchasing with opportunities to rationalise or reconfigure irrigation
infrastructure wherever possible
operate in the water market with the same rights and obligations as other market
participants
deliver a fair, equitable, transparent and accountable process for sellers
consult with states over the approach to purchasing in each Basin jurisdiction.
What type of water entitlements to purchase
73. The Government is seeking to purchase permanent water entitlements that supplement
entitlements acquired through other water recovery programs to best meet the
environmental needs in each catchment.
74. Ultimately, a balanced portfolio of entitlement types will provide water to meet the
environment’s needs in a range of water availability situations. For instance, high
reliability entitlements provide water in periods of low water availability and are
therefore best suited to maintain base flows in rivers and protect drought refuges.
Medium-to-low reliability entitlements may be the most cost-effective way to increase
the size or duration of beneficial flood events to support vital floodplain ecological
processes. However, their usefulness during drought is limited.
75. Other factors need to be considered to maximise the environmental benefits from water
purchase in unregulated systems. This may include consideration of the extent to which
flow conditions and geographical proximity of entitlements influence the level of
benefits that can be provided to key environmental assets.
76. As a general rule, the Government will aim to acquire a balanced portfolio of
entitlements, representative of the relative yields from each entitlement type, in each
Basin jurisdiction and catchment.
77. The proportion of each entitlement type in the Commonwealth’s environmental water
holdings will be monitored to ensure that the final portfolio of environmental
entitlements can deliver the environmental outcomes sought in the Basin Plan. The
CEWO and the Authority will provide further guidance on the optimal mix of water
entitlements.
78. The outcomes of the review of river operations and environmental works and measures
projects may provide further information or result in changes which also need to be
taken into account in determining the mix of entitlements that best meets
environmental water needs.
How water entitlements are purchased
79. The majority of Government water purchases have been made through open market
tenders. This purchasing approach has been preferred because it best addresses
Government procurement requirements to be equitable, transparent and achieve value
18 ENVIRONMENTAL WATER RECOVERY STRATEGY FOR THE MURRAY-DARLING BASIN – DRAFT
FOR CONSULTATION
for money. It also provides flexibility to acquire those water entitlement types that most
efficiently meet environmental needs. It is likely that open market tenders will continue
to be a part of the mix of water recovery activities employed by the government to
achieve the environmental water recovery task – to bridge the gap - in the Basin Plan,
albeit at a slower pace as discussed above.
80. The Government is also considering a range of targeted purchasing approaches to
complement open market tenders. Targeting purchasing will include the introduction of
a new program to integrate water purchasing with infrastructure reconfiguration and
rationalisation. The Government has provided $200 million over four years for this
program which is currently being developed following extensive consultation with
irrigation stakeholders.
81. The new program will provide water savings though the reconfiguration of inefficient
off-farm delivery infrastructure, with associated water purchases from irrigators on
delivery channels to be decommissioned. Proposals will be developed at a local
community level and will involve infrastructure operators and their irrigation customers.
82. The Government has also put in place arrangements for state and territory governments
to make water sale offers directly to the Government for consideration. The first
example of this was the sale of 102 GL of water to the Government by the Victorian
Government. This parcel is part of the water saved from the infrastructure works to
improve water efficiency in the Northern Victoria Irrigation Renewal Project – Stage 2.
The Government will explore further opportunities for water purchases from state and
territory governments in the Basin, as well as the possibility of state and territory
governments playing a more direct role in the implementation of the water purchase
program.
How the Government’s water purchase program has affected sellers
83. A survey was commissioned in late 2011 to gain a better understanding of the impact of
water purchasing on irrigators. A summary of the survey results is presented in the
following box.
19 ENVIRONMENTAL WATER RECOVERY STRATEGY FOR THE MURRAY-DARLING BASIN – DRAFT
FOR CONSULTATION
Survey of water sellers
A recent survey of more than 500 irrigators from across the Murray-Darling Basin who
have sold water to the Government over the first four years of the purchase program
found that almost 80 per cent said that selling water to the Government had been a
positive decision for them. The primary reason given for selling water entitlements to
the Government was to generate cash flow, with the intention to retire debt,
supplement farm income, or to fund on-farm efficiency improvements.
The survey results show that the majority of proceeds from water sales remain within
the local region, and that many of those who sold water through the program have
changed their farming operations to maintain production levels. Many irrigators were
able to sell water to meet financial needs during the drought, with evidence from the
survey indicating that water sales generated much needed cash flow which helped them
survive those difficult times.
See: www.environment.gov.au/water/publications/mdb/survey-seller-rtb-program.html
E. Additional water recovery for the environment
84. The Government has announced new funding of $1.77 billion which includes:
• $1.575 billion for environmental water recovery projects that have neutral or
improved social and economic impacts. It is expected these projects will deliver up
to 450 GL of additional environmental water
• $200 million to remove priority constraints to maximise the benefits of the
additional environmental water.
85. The Commonwealth program will take the form of on-farm efficiency works that
generate water savings for the environment. The new program will commence in
2016-17.
86. The model for additional water recoveries through on-farm irrigation upgrades is that
half the savings from the project will come to the Government as a return for
infrastructure project investment, and the other half as a linked water sale from the
participating irrigator to the Government at market value. In return, participating
irrigators will receive a modernised on-farm irrigation system enabling equivalent or
enhanced productive capacity compared to the pre-project position, albeit with reduced
water holdings. It is expected that competitive grant processes will be used to secure
value for money projects. The program delivery arrangements are likely to be similar to
those for the existing on-farm irrigation efficiency program which uses local delivery
partners to assemble and manage tranches of irrigators’ on-farm upgrades.
87. There is also scope for other water recovery activities sponsored by state governments
to be funded provided that they meet the criteria set out in the SDL adjustment
mechanism. Examples could include sale by state governments of surplus water held by
urban utilities or water which has been acquired through irrigation network
improvements.
20 ENVIRONMENTAL WATER RECOVERY STRATEGY FOR THE MURRAY-DARLING BASIN – DRAFT
FOR CONSULTATION
88. To complement the additional water recovery projects the Government will also provide
$200 million for addressing priority delivery system constraints where such action is
shown to be feasible and cost effective. The type of projects that could be funded under
this element include acquiring flood easements, providing access works such as lifting
bridges and culverts, changing watering regimes including river operating rules and
increasing outlet capacity in dams and other water storages.
89. Funding for the additional water recovery and constraints removal will be provided
through creation of a special account with a special appropriation. This is reflected in the
Water Amendment (Water for the Environment Special Account) Bill 2012.
4. NEXT STEPS
90. The Government is seeking feedback from stakeholders on the issues outlined in this
document. Comments will be used to inform subsequent updates of the Strategy.
91. The Strategy will involve an adaptive approach over the coming years to take account of
Basin Plan developments such as the operation of the SDL adjustment mechanism,
apportionment of downstream recovery requirements to catchments and the realised
water yields from the Government’s investments in infrastructure savings and
environmental works and measures.
92. Comments on this draft strategy are welcome, and can be submitted:
By email to: waterrecovery@environment.gov.au, or
by mail to the following address:
Water Recovery Team
Department of Sustainability, Environment, Water, Populations and Communities
GPO Box 787
Canberra ACT 2601
Comments are requested by 28 February 2013.
21 ENVIRONMENTAL WATER RECOVERY STRATEGY FOR THE MURRAY-DARLING BASIN – DRAFT
FOR CONSULTATION
ATTACHMENT A – PROGRESS OF WATER RECOVERY AGAINST 2750 GL SDL REDUCTION
SDL Resource Unit/Catchment
0
Warrego
Gwydir
8
8.0
42
50.0
Northern Basin
Condamine-Balonne
1
1.0
100
32.0
Intersecting streams (including NSW
Warrego)
0
Moonie
0
1.1
Namoi
10
17.5
Macquarie-Castlereagh
65
89.2
Queensland Border Rivers
8
4.4
NSW Border Rivers
7
4.6
Barwon-Darling
6
22.3
Ovens
143
390
8.1
0
0.0
344
333.9
Broken
0
0.0
Loddon
12
2.9
Campaspe
18
18.4
Murrumbidgee – NSW
320
Goulburn
Southern Basin
Shared
Component
(GL) (1)
Contracted
water
recovery at
30
September
2012 (2)
0.0
Paroo
Nebine
Disconnected
Tributaries
Local
Component
(GL) (1)
Total
reduction
incl shared
component
(GL) (1)
Kiewa
Eastern Mount Lofty Ranges
0
971
174.6
2289
-
Volume
to be
recovered
by 2019
(3)
Percentage
of
Reduction
Recovered
152
61.1%
999
56.4%
0
-
NSW Murray
262
282.3
Victorian Murray
253
372.8
SA Murray
101
102.8
Lower Darling
8
2.8
Murrumbidgee – ACT
0
Marne Saunders / SA Non Prescribed
0
NA
-
Lachlan
48
NA
64.9
0
100%
Wimmera-Avoca
23
NA
0.0
23
0%
BASIN TOTAL
1,636
-
N/A
71
1,114
2,750
1593.5
1,173
57.3%
Notes:
1. Reductions to Sustainable Diversion Limit’s data are sourced from the Basin Plan.
2. Includes water secured by contract under the ‘Restoring the Balance in the Murray Darling Basin’ program, water savings received and
agreed under ‘Sustainable Rural Water Use and Infrastructure’ program (SRWUIP) works contracts, both to 30 September 2012; water
gifted to the Commonwealth by the Queensland Government; water recoveries made through the Water Smart Australia Program which
have not already been accounted for by the MDBA when calculating the baseline diversion limit; and state government environmental
water recoveries to 30 June 2012. Contracted water recovery figures are calculated using SEWPaC’s estimates of the long term average
annual yield of each entitlement. It was advised in the Murray-Darling Basin Ministers’ Communiqué of 4 November 2011 that these
would be used to determine how much of the ‘gap’ between the Baseline Diversion Limit (BDL) and the Sustainable Diversion Limits (SDL)
has been ‘bridged’ through purchase and infrastructure projects. SRWUIP water recovery was previously reported (August 2011 and prior)
at the point at which water savings were secured in a water transfer contract. Reported numbers from September 2011 onwards now
include SRWUIP water recoveries which have been received, estimated or agreed based on signed project works contracts. Until water
transfer contracts have been exchanged however, these figures may be subject to change over time. Not all environmental water recovery
will contribute to bridging the gap.
3. In the Lachlan catchment contracted water recovery above the local component does not contribute towards the shared downstream
component as the Basin Plan identifies the Lachlan as a disconnected catchment. All northern Basin catchments have been included in the
northern shared zone, subject to a review of the northern Basin shared component and its equitable apportionment to be completed by
2015.
22 ENVIRONMENTAL WATER RECOVERY STRATEGY FOR THE MURRAY-DARLING BASIN – DRAFT
FOR CONSULTATION
ATTACHMENT B – ENVIRONMENTAL WATER RECOVERY AND SDL ADJUSTMENT
MECHANISM
3,200 GL*
Up by as much as 450 GL
("efficiency measures" with no
adverse effect on social or
economic outcomes)
3000
Application of
SDL
adjustment
mechanism
(in 2016)
2,750 GL*
Down by as much as 650 GL
("supply measures" that achieve
environmental outcomes with less
water)
Any shortfall below 650 GL will be
purchased from 2016
2500
2,100 GL
Indicative residual
water purchase, 239 GL
(to 2,100 GL)
2000
Indicative future
infrastructure yield
towards 'bridging the
gap', 284 GL
1500
1,577GL
Contracted
infrastructure
recoveries towards
'bridging the gap',
316 GL
SRWUIP
total est.
yield 600 GL
1000
Total contracted recoveries towards 'bridging
the gap' as at 30 September 2012 = 1,577GL
Contracted purchases,
& other
Commonwealth
recoveries
1,107 GL
500
0
State recoveries,
154 GL
Category 2
* The amount of held environmental water will reflect the outcome of the operation of the SDL adjustment mechanism.
23 ENVIRONMENTAL WATER RECOVERY STRATEGY FOR THE MURRAY-DARLING BASIN – DRAFT
FOR CONSULTATION
ATTACHMENT C – VOLUME OF GOVERNMENT SURFACE WATER PURCHASES TO BRIDGE THE GAP TO 2750 GL
24 ENVIRONMENTAL WATER RECOVERY STRATEGY FOR THE MURRAY-DARLING BASIN – DRAFT FOR CONSULTATION