1 Dec 2010

Water policy down under

David Furphy emailed to ask if I'd seen the Murray Darling Basin Authority's recent Guide to the proposed Basin Plan, and what I thought of it.

I took a quick look and said:
I see that it says "and detailed social and economic analyses to assess the potential impacts of meeting the environmental water requirements of the Basin"

So, can you inform me on those impacts, vs. the impacts on the environment? As you may know, California is currently wrapped up in a similar exercise on its Delta.
I then asked Furphy for a summary/guest post of what's in the Guide and he wrote:
I think you quoted from the foreword of the document. It's ironic that you picked that comment and a major criticism of the plan -- acknowledged publicly by the Murray-Darling Basin Authority (MDBA) chairman -- is a paucity of such analysis. Most the reports on the day of release (e.g., here, here and here) lead with the MDBA's 800 job loss figures which were immediately seized upon as misleading at best or "complete bullshit" at worst. Later the MDBA tried to explain this as a result of an equilibrium model assuming alternative jobs were available nearby. This also was somewhat inflammatory when such assumptions obviously would not hold in many small irrigation based communities.

Another example of misleading use of figures came from, among others, Quentin Grafton who claims the plan's impacts will be less than the recent drought and since the drought's impact was supposedly small there is nothing to worry about. He points out that gross value of irrigated production hardly changed between 2000 and 2007 despite large reductions in water use. He fails to mention, though, the huge increase in commodity prices during that particular period. If only those 2007 prices had held there would be many very wealthy irrigation communities.

So after much fury, backpeddling, legal discussion and political manouvering, I'm not sure where we stand. I do know handling a major reform effort in this way has damaged trust and may have destroyed any chance of a successful outcome (socially, economically or environmental). I certainly believe changes are needed.

I wrote an article as did farmer David Merrylees amid the initial furious response and was startled by the hostility to irrigators from some commenters.

It's curious too me that in spite of all the criticism of the the proposals, I think its biggest flaw has been largely overlooked. It seems to me that it fails to provide a framework for dealing with further challenging water shortages due to climate change which many predict for the south

Obviously there are many complexities, like in all water issues, so I don't know where you would start. Maybe you might be able to draw comparisons with reforms underway in California.

I imagine you might see the solutions largely in "the market". I would mostly agree, but am concerned about the effects such pure market solutions would have on other parties, e.g., remaining irrigators left to pay for underutilised delivery infrastructure, and the non-irrigator community members.
To this very useful summary, I responded with:
As for stranded capital costs and third party impacts, I think that these problems can be addressed with severance fees and a slowly-lifting ceiling on exports of rights from localities, respectively.

As for hostility, yes I am also surprised. People LOVE farmers,* except when they seem to be in the way of their showers!
to which he replied:
Interesting that you mention severance fees and limits on export of rights. Both have applied in some areas and have been subject to intense political and even legal challenge [pdf] on the grounds they are "anti-trade". The 4% p.a. limit in Victoria has been partially over-ruled to allow Fed government to precede with current round of water buybacks. Following an inquiry by Aust. Competition & Consumer Commission we now have unbundled "delivery shares" to which termination fees may be applied. (Just found this media release from ACCC.  Apparently Murrumbidgee Irrigation has been reprimanded and fined for not complying with rules on termination fees.)

It's been suggested to me that some of the hostility to irrigators may be residual anger about the current (centre-left) government's recent backdowns on greenhouse gas abatement policies and mining "super profits" tax
I'm not sure that I have a lot to add to this discussion. It seems to me that California (and the US) is far behind Australia at considering these difficult questions (water markets, environmental water, climate change, etc.) and most of the current "debate" seems to center on yelling about how one's position is inviolate and perfect while others are taken by idiots. It's even worse when we see how farmers' disproportionate political strength translates into inaction, subsidies and policies that make things even worse.

Bottom Line: Anyone interested in the institutional details of conflict over managing scarce resources should copy Australia's successes (markets for temporary and permanent water) and avoid their failures (good rains makes it likely that Brisbane will mothball its desalination plant, but ratepayers face back to back 20%+ increases in their water bills.)

* David sent me a link to this video in which Australia's Green Party makes fun of hick farmers. I guess that some greens feel that way about some farmers in the US, but I reckon that a lot of them have no idea that most of their latte-lifestyles are not derived from small-scale, polyamourous, multi-ethnic, bio-organic tree-huggers.

** David sent these updates on the debate: Scientists say socio-economics getting too much emphasis, Local govt say environmental science needs to challenged and Irrigators say "man-made" floods could trigger compensation claims.


Susan said...

Hi David,

I came across your blog today and found your two posts on the Murray-Darling Basin interesting. I would be very curious to know what you and your international blog readers think about the barrages.

I am a 'yank' living in Adelaide. Have you seen these barrages the Australians have? These dam like structures were built in the 1940's to create an elevated pool of fresh water so that farmers can irrigate the land around the Lower Lakes. During the most recent drought, these barrages (all 7km's of them) kept out the seawater that would have normally filled this formerly estuarine basin. Why should anyone care? The Lower Lakes require 2000 GL of fresh water and are expected to be the primary recipient of the 'environmental flows' from the MDBA basin plan. When the Lower Lakes don't get enough water they become a dust bowl and the environmentalists and local fresh water 'scientists' have this iconic symbol to rally around.

Hardly anyone has the courage to say, 'what about those barrages' and maybe it's time to bring the estuary back and operate the Lakes at sealevel. Even the MDBA did not include the barrages and the operating regime (fresh vs. seawater) as something that could be evaluated. It was 'too contentious' an issue.

That's one reason the irrigators up river are so irate. Sending fresh water down the river on the pretense that the Lower Lakes need to be operated as large swimming pools.

I would appreciate your opinion of this website www.Lakesneedwater.org where we have a collection of articles about the Lower Lakes of the River Murray and why the discussion of restoring the Lakes to estuaries needs to be part of any long term plan for the basin.



David Zetland said...

@Susan -- sorry. Your comment got buried. I think I've driven past the lower lakes (on the way to Adelaide) and saw the salt and dust and BIRDS. I reckon that you're dead right that the barrages are hardly natural and perhaps taken a little too much for granted. But you'd start WWIII going after such a familiar, but bad idea...

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