News Latest News Wentworth Group releases controversial report on Murray-Darling
Wentworth Group releases controversial report on Murray-Darling
With the first draft of the Murray-Darling Basin Plan due for release and public comment at the end of next month, the Wentworth Group of Concerned Scientists has released a report which seeks to identify the scale of water entitlement reduction required within each of the 18 catchments of the Basin. The report also reviews the most cost-effective way to obtain the necessary water while also assisting the businesses and communities in the Basin capitalise on opportunities and adapt to a future with less water. You can view a backgrounder on the development of the Murray-Darling Basin Plan here.
Wentworth Group Report on Sustainable Diversion Limits
The Wentworth Group of Concerned Scientists, an independent group comprising leading Australian environmental, economists, scientists and business leaders with conservation interests, have developed an outstanding track record over the last eight years of providing timely and robust policy advice to government on issues relating to management of Australia’s land, water and marine resources.
In their most recent report, they review the choices and complexities facing Federal, State and local governments, and the Authority itself, in delivering the Murray Darling Basin Plan. Under the Federal Water Act, the new Murray-Darling Basin Authority is required to develop a Basin Plan. This plan will set ‘Sustainable Diversion Limits’ that will define the maximum “quantity of water that may be taken from the Basin water resources as a whole”. Once the Sustainable Diversion Limit has been set the challenge for Governments will be to reduce diversions to meet the new limit in the most economically and socially effective ways.
The Wentworth Group's report seeks to identify the scale of reductions in diversions required within each of the 18 catchments of the Basin. It also looks at the cost of achieving these reductions based on best-available economic modelling. Finally, it evaluates three possible policy options to determine the most cost-effective way to obtain the necessary water at the least cost to the communities in the Basin.
Report Findings in Brief
Level of Reduction Required The approach uses a broad rule of thumb that suggests there is a substantial risk that a working river will not be in a healthy state when key system level attributes of the flow regime are reduced below two-thirds of their natural level. To achieve a level of two-thirds natural flow in all the catchments of the Basin the environment’s share of the existing Cap on diversions would need to be increased by approximately 4,400GL.
This represents a reduction of approximately 40% of the current Cap on diversions. This implies that the Sustainable Diversion Limit for the Basin should be defined in a manner that is equivalent to a Cap of approximately 7,170GL.
Where should these reductions come from? The analysis used a combined economic and hydrologic model to evaluate the net profit per megalitre of water used in each of the 18 catchments. It then selected water from the least profitable activities in each catchment so that the required volume of environmental water could be obtained at the lowest economic cost.
This analysis was used to identify the reductions in diversions that would be required in each catchment to achieve a 30% reduction of water use in the Basin at the lowest economic cost. It was found that in most catchments, the required reduction is less than 10%. However, in two catchments - the Murray and Murrumbidgee - the reductions are significantly greater, in the order of 39% and 65% respectively.
What is the cost of these reductions? The research also analysed the economic impact of these reductions in diversions in each catchment. Because the economic model used to derive these reductions preferentially took water from the least profitable activities within each catchment, the relationship between the reduction in diversions and the reduction in profits is not linear. The modelling suggests that in most catchments, the reduction in profits would be less than 3%.
In the Murray and Murrumbidgee catchments, however, the reduction in profits would be in the order of 12% and 26% respectively. The reports suggests that these are significant dislocations for the communities of these two catchments if undertaken without a process to facilitate the adjustment and assist communities in the Basin capitalise on opportunities and adapt to a future with less water.
Overall, this analysis also suggests that the economic impact (expressed as the net present value of the lost profits) resulting from a further 30% reduction in water use in a year of near average diversions would be in the order of $2.7 billion.
What is the most effective way of achieving this?
The report evaluates three approaches:
- Option 1: Continuing to implement the Federal Government’s current Water for the Future program, which includes separate funding allocations of $3.1 billion for water buyback and $5.8billion for water use efficiency.
- Option 2: Combining these separate funding programs into a single fund to purchase environmental water through the most cost-effective means (either buyback or infrastructure investment) according to a cost-benefit based environmental benefits index.
- Option 3: Combining these separate funding programs into a single fund and working with local communities to acquire water for a price equivalent to a ‘reasonable return’ on lost profits, and funding an economic development program to assist regional communities transition to a future with less water.
The report found that the current Water for the Future program (Option 1), is not capable of delivering this outcome within the funding allocated. Under this option, all the available funding will go directly to individual irrigators, or be invested in state and cooperative-owned irrigation infrastructure. It will provide no support to those with no water to sell or who are not directly involved with irrigation. These people represent large sections of the communities of the Basin.
Of the two alternative approaches evaluated, both are capable of achieving this outcome. However, the report demonstrates clear support for the third option: what the authors refer to as the "Reasonable Return and Community Development" approach.
The great advantage of the Reasonable Return and Community Development approach is that it can deliver the required volumes of water to satisfy the requirements of Water Act in a much more cost-effective and socially responsible way. It is most likely to achieve all three objectives of the Water Act and represents much better value for money for Australian taxpayers. In doing so, it can free up significant financial resources that can be used to assist communities re-build their regional economies and adapt to a future with less water.
Responses to the Report
- National Farmers Federation president David Crombie, who has been a strong critic of the way sustainable diversion limits are being determined, dismissed the report, calling it a grenade thrown from the sidelines.
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Danny O'Brien from the National Irrigators' Council says the study is too narrow and should be ignored. "We've always said that the Basin plan needs balance." - President of the NSW Irrigators Council Col Thomson said the report should be disregarded because "there would be some areas that probably almost cease to exist".
- Chairperson of Murrumbidgee Irrigation Gillian Kirkup suggested that such drastic moves recommended by the report would only pit communities against each other, saying "If the Wentworth Group truly believe that it is within their power to unilaterally redistribute people's rights, and displace whole communities, then I invite them to the Murrumbidgee Valley. They can identify who is to stay and who is to go."
- Elsewhere, Murrumbidgee Irrigation chairperson Gillian Kirkup critiqued the focus on the Murrumbidgee catchment: "The assertion that in order to restore the Murray-Darling Basin to health you simply target one or two catchment communities and drain them of their livelihood in the national interest is dangerous in the extreme and well beyond the remit or expertise of the Wentworth Group as scientists.”
- Victorian Farmers Federation water council chairman Richard Anderson says the Federal Government must ignore the recommendations and engage in a collaborative basin planning approach.
- South Australian Water Minister Paul Caica said he respected the Wentworth Group and expected the report would be considered by the Murray-Darling Basin Authority as it drafted a new plan expected to be released later this year.
- Federal Water Minister Penny Wong said she hadn't seen the report but welcomed the contribution, saying "We have to prepare our food bowl ... for a future where we're likely to see less water."
