Australia’s water problem seems to be quite beyond the nation’s politicians.

They’re usually fine with schemes that involve picking a winner from competing interest groups and distributing abundant cash, but when it comes to dealing with a chronic scarcity and saying NO, paralysis sets in.

It seems to me there are two issues that flow from the end of Australia’s 50-year wet: the impending collapse of the Murray-Darling basin due to over-allocation for irrigation, and urban water rationing due to the fact that it is woefully under-priced.

Yesterday I moderated a panel discussion on water at the Australian Institute of Company Directors that included Professor Mike Young from Adelaide University’s school of earth and environmental sciences, Alan Cornell, the chairman of Yarra Valley Water, and David Karpin, chairman of Warrnambool Cheese & Butter and deputy chairman of Racing Victoria.

The consensus was that the price of water in the cities needs to at least double, probably triple.

Currently, according to Alan Cornell, businesses pay $1.10 per kilolitre and individuals pay $1.76. He says the price should be at least $3, which he gets by adding a profit margin to the $2.50 per kL cost (capital plus running costs) of desalinated water from the proposed plant at Warragul.

But he would say that, I suppose, since Yarra Valley Water might be the beneficiary of a big increase in the water price, unless it was all done through taxes. But price is always a better way to deal with shortage than rationing.

Bringing the flexibility of a decent price mechanism to water would allow a higher price to be placed on water guarantees for those who really need it.

And why does industry pay so much less for water than I do? The result of that, surely, is that businesses have little or no incentive to conserve it, while billions of dollars are wiped off the value of residential real estate by the dying of gardens.

As for the distress of the Murray-Darling, Mike Young showed a graph (see p6 of his presentation, available on his web site) that clearly shows why there is a problem. It is the annual inflows into the Murray River system back to 1892.

The period between 1896 and 1950 was basically a long dry period, with four extended droughts, including a 12-year horror from 1938 to 1950. Most of the years during the first half of the century saw inflows below the long-term median of 9,000 gigalitres a year.

From 1950 to 2002 was a long wet period. According to Mike Young’s graph, there were only four drought years – the rest of the time the inflow was above the median.

The past six years have been drought years, the longest since 1938-1950. Young rhetorically asked whether we were prepared for this one to extend to 2014 – that is, what if we are only halfway through the current drought?

That question is answered by yesterday’s leaked report from scientists commissioned by the South Australian Murray-Darling Basin Natural Resource Management Board, which was delivered to ministers a month ago.

It said, in effect, that the Murray-Darling has only six months to live.

Maybe they’re exaggerating for effect – who knows? But the statement that the Murray River is on the brink of ecological collapse should surely have set alarm bells publicly ringing immediately. Instead, we only hear about it through a leak a month later – one-sixth of the way, apparently, through the remaining life of Australia’s largest river system. What a disgrace.

All the Federal Minister, Penny Wong, could say yesterday when confronted on the subject was that it’s a complicated issue. Yes, but it’s not new.

It’s true that we had 50 years of wet and now six years of dry, which is a short enough time for everyone to persuade themselves that it will start raining again soon and everything will be okay. But clearly there is a problem now.

Listening to David Karpin, who was talking as a representative of water users (dairy farming and racing) I was struck by what seemed an obvious fact: Australia’s dairy industry is simply too big. So is the rice growing industry for that matter.

But Australia’s milk production is enormous and 75 per cent of it is exported, so the industry is not there to feed us. It is basically converting water into milk for export to other countries. The water has dried up but we’re still exporting millions of litres of it.

I’m not suggesting that buying dairy farmers off the land is the only solution to the collapse of the Murray-Darling, but it is definitely part of it.

Mike Young is a water evangelist. Last night he was in Kyabram talking to a hostile audience of dairy farmers, which he was supremely confident of winning over with his simple message.

It is that a 10 per cent decline in rainfall leads to a 30 per cent decline in mean storage inflow, and that if evaporation and the flow to the sea remains steady at 2,000 GL each, then water for the environment and consumption falls by 67 per cent. That’s just from a 10 per cent drop in rainfall.

If rainfall declines 20 per cent, there is nothing left for consumption (ie. irrigation) and the environment.

The environment is the vested interest that always loses, according to Mike Young. He says the basis of any sustainable scheme to save the Murray must be to give it a share of the pie that has the same status as other users.

But everyone already knows that. It just requires money and political courage.

There’s plenty of money about these days, but an even greater abundance of things to spend it on.

And as for political courage? Sorry – that’s in a drought.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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