Leaks from the Murray-Darling Basin Authority draft paper indicate that today it will call for water-allocation cuts from 27% to 37%, a move that has the backing of conservation groups and select researchers.

This also has echoes of the Australian fishing industry restructure through quotas, quota cuts and trading, which has led to the fleet being reduced by two thirds, the doubling of the price of fish and the loss of thousands of jobs in coastal towns.

Cuts in water allocations has similarly been predicted to raise the prices of agricultural products and to even more rural job losses.

Over the past two decades, with the support of the environment movement, federal and state managers have been privatising the allocation of water in the Murray-Darling system.  The theory behind it is straightforward: by allocating water shares or quotas and then allowing them to be traded, the most efficient farmers would end up with the most water and provide the best return for the taxpayer from their once-public resource. The flows to the environment would also be guaranteed — but not during droughts as we have just seen.

Water quotas, however, unlike fish quotas, are not variable.  When Canberra decides a species on quota is over-fished, the catch available for each unit of quota is simply cut.  To reduce the amount of water used, it can be regulated so that cuts of 90% mean you keep all your quota but can only access 10% of it to sell or use — and many sell profitably.

The proposed buyout of water allocations, however, does not translate litre-for-litre back to the river system —  nothing like it.  When the Commonwealth, on behalf of the taxpayer, buys out all the quota in a given area, only the allocated flow — in many cases 10% or less — actually makes it way back into the river and only then is there is flow to be used.  Great if you are a water trader but not so good if you are a taxpayer trying to get water back into the Murray-Darling.

The assumption that the stream flow is relative only to the amount of rainfall — less that taken up by irrigators — is a very rough calculation.  Forested parts of the Murray-Darling catchment absorb rainfall and release that water for longer after rain. They provide a large percentage of the rivers’ dry-time flow for their area compared to agricultural land.  The quality of the water is vital to its useable volume, too — blue-green algal blooms in river systems can effectively “remove” all the available water in  those parts of the system affected.

This water quality in the Murray-Darling Basin has been improved by planting of millions of trees across thousands of kilometres of streams and roads.  There has been a restoration of wetlands throughout the system over the past three decades, but the positive effects of this investment by farmers and taxpayers remain disconnected from the market.  Presently such land management cannot be traded — despite its obvious additional benefits for the environment, stream flow and sequestering carbon. (Swamps are where coal is made after all.)

Whatever the environmental benefits of more water for the Murray-Darling, they will be small when compared to its greatest environmental compromise caused by locks and damsLake Alexandrina was once Australia’s largest estuary, which fed the rich fisheries of Adventure Bay. Seals went hundreds of kilometres up river to the Darling River and beyond. Dolphins still access the Murray as far as Murray Bridge in South Australia until the barrages cut this river system from the sea. The sea eagles of the Hume Weir are testimony it this recent connection. The tourism value of seals in the Murray would be significant.

Another investment of $2 billion-$4 billion — rumoured to be  committed for water quota purchase — would be to put in the bank and the 4% interest annually then used to pay farmers to grow bush and restore wetlands and manage their water production. This could generate $80 million-$150 million annually and would secure the management of 20,000-60,000 hectares of land forever. This way the market would select the best farmland for agricultural production and the worst for water management and carbon sequestration.

There appears to be additional market-driven opportunities to integrate better land management for water production and carbon sequestration, which keeps farmers on their land and timber workers in the forest with their skills and invaluable local knowledge.

Peter Fray

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