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What’s Missing from the Murray-Darling Basin Plan?

By Robert White

How can up to 30% of the Murray-Darling Basin's water allocations be recovered?

There is no doubt that one of the most crucial issues for water management in Australia today concerns the Murray-Darling Basin (MDB), a region where most of our irrigated agriculture occurs and which accounts for 39% of agricultural production.

The Guide to the Proposed Basin Plan (2010) states that ‘the Basin is under enormous stress as a result of past water management decisions and a severe and prolonged drought’, However, drought followed by flooding rains is not unusual given the extreme natural variability in the Australian climate, a variability that may not be fully expressed in the relatively short period of 110 years for which we have reliable rainfall and temperature records.

The Murray-Darling Basin Authority, established under the Commonwealth Water Act 2007, has the task of developing a plan for managing the Basin’s water resources in the national interest. A mandatory requirement for the Authority is to determine the amount of water needed for the environment by establishing long-term sustainable diversion limits (SDLs) for both surface water and groundwater. The Guide makes clear that the SDLs quantify the amount of water available for consumptive use (irrigation, stock and domestic and industry) after the environmental needs of the Basin have been met.

How much for the ‘environment’?
Based on scientific analysis rather than historical practice, the Authority has determined that the amount of additional water needed for the ‘surface’ environment is between 3,000 and 7,600 gigalitres (GL) per year. However, because the Water Act requires the Authority to optimise ‘economic, social and environmental outcomes’ for the Basin, it decided to recommend that the additional environmental 'take' for surface water should not exceed 4,000 GL/yr. In determining the environmental take, the Authority allocated the long-term average rainfall of ‘about 500,000 GL/yr’ .

Given that the National Water Commission (NWC) has defined low, medium and high levels of use as <10%, 10-30% and >30% of inflows respectively, it is clear that, at least for surface water, the consumptive use is unacceptably high at 42%.

Of the 13,700 GL/yr consumed, the Authority estimates that 2,740 GL/yr is taken by farm dams and plantation forestry (referred to as ‘interceptions’), leaving only 10,960 GL/yr for diversions from watercourses and by floodplain harvesting. While diversions from watercourses are regulated by legal entitlements (and annual allocations), the Authority acknowledges that interceptions are generally not as closely regulated. The NWC’s report (2005) goes further in stating that ‘types of water diversion and extraction that do not require an entitlement are likely to have little (if any) information available about them’.

Because it is most unlikely that any Australian Government buyback of water for the environment will be directed at non-entitled interceptions, the full force of reductions in current diversion limits (CDLs) to the new SDLs will fall on watercourse diversions of approximately 11,000 GL/yr, an overall reduction of 27-37% annually. According to the Guide, in some catchments such as the Loddon, Ovens and Kiewa in Victoria, the reduction in watercourse diversions would be as high as 40-45%.

For groundwater, the additional environmental take is set at 99-227 GL/yr, resulting in an aggregate reduction in CDLs in the Basin’s groundwater systems of 186 GL/yr (11% overall). However, this reduction is to be concentrated in the overdeveloped systems, reaching as high as 40% in the Lachlan, Murrumbidgee, Barwon-Darling and Lower Darling regions.

Reductions in surface water and groundwater use of 40-45% cannot be achieved by buybacks alone without devastating irrigated agriculture in these catchments. Rather, incentives should be provided for on-farm improvements in water use efficiency and buybacks targeted to catchments where the benefit to cost ratio for improving irrigated agriculture is unfavourable.

Some obstacles
The Guide claims that at 30 June 2010, the equivalent of 705 GL/yr of water has been purchased from willing entitlement holders. Furthermore, the Australian Government has ‘indicated’ it will buy the gap between the final SDLs and the CDLs of entitlements for surface water. However, this undertaking does not include the 3% of the claw-back attributable to the effect of climate change on future water supplies, considered to be the responsibility of individual entitlement holders.

One must assume the Commonwealth buyback will apply on a regional basis, so what happens if there are few willing sellers in a region with a large reduction target, such that the Commonwealth has to buy back some 20-30% of the current diversion limit? Will market forces prevail (the price offered rises to induce more selling), and if so, what will be the consequences for those remaining in the region in terms of increased costs of operating a less-efficient irrigation infrastructure – the problem of ‘stranded assets’?

A further obstacle is the Australian Constitution, clause 100 of which states that ‘the Commonwealth shall not, by any law or regulation of trade or commerce, abridge the right of a State or of the residents therein to the reasonable use of waters of rivers for conservation or irrigation’. Thus, management of MDB surface waters has been the subject of successive agreements between the Basin States and the Commonwealth to reconcile the legitimate needs of States to allocate water, with attempts to manage water in a Basin of 1.1 million square kilometres that crosses state borders. Perhaps because of this tension, the Guide does not address some obviously wasteful situations, identified below, that are currently under state jurisdiction.

Solving some of the problems
There is a large potential to save water by examining the storage of water in the Menindee Lakes in New South Wales and the impoundment of freshwater in the Lower Lakes of South Australia. Both storages are inefficient in the sense that, when full or nearly so, they have large surface areas, shallow average depths and hence high evaporation rates, estimated to be of the order of 1000 GL/yr each.

Of the total potential storage of about 1700 GL in the Menindee Lakes, there is an essential 10 GL/yr required for Broken Hill and an additional 289 GL/yr allocated to irrigation, industry and stock and domestic supplies. Allocation of this water is under the control of the NSW government. By decommissioning one or more of these lakes, there is the potential to reduce the considerable losses from evaporation (and an unknown amount of deep seepage), but still supply essential water needs.

Before the construction of the barrages, completed in 1940, the Lower Lakes at the Murray mouth were estuarine with variable salinity, depending on the flow of water in the Murray. The impounded lake water has subsequently been used for irrigation and supporting a freshwater marina at Hindmarsh Island. However, during the recent drought, water levels dropped, salinity increased (through evaporation) and acid sulfate sediments (ASS) that had accumulated following the impoundment were exposed. The South Australian government is most reluctant to open the barrages and allow sea water back into the lakes, which could ameliorate the ASS problem, and also avoid the large loss of fresh water by evaporation. This is another area that could be targeted for water purchases from the relatively few irrigators still operating there.

The Guide states that, after allowing for environmental water already recovered by governments but not including the allowance for climate change, some 2295-3295 GL/yr of water remains to be recovered. Part of this can be recovered through improvements in irrigation infrastructure through an ‘in principle’ commitment of funds amounting to $3.7 billion. But much of the water lost from irrigation channels is by seepage that contributes to groundwater and indirectly to river flows, so the environmental gains from this program may not be as large as expected.

If the recovery of 2295 to 3295 GL/yr (21-30%) is to be achieved entirely through buybacks from current entitlement holders, irrigated production in the Basin will inevitably be seriously affected, with some regions more seriously affected than others. This pain could be assuaged if the operating strategies for the Menindee Lakes, the Lower Lakes, and other inefficient storages such as Lake Victoria, were radically revised to produce savings that could be as large as 1500 GL/yr. In addition to the savings already made by irrigators and industry, further savings could be made if financial incentives to improve on-farm water use efficiency were targeted at the more stressed catchments of the Basin.

Australian Water Resources (2005)

Guide to the Proposed Basin Plan Volume 1 (2010)

Robert White is Professor Emeritus at the Melbourne School of Land and Environment