Prof. Mike Young

Research Chair, Water Economics and ManagementThe University of Adelaide

"Irrigation Technology to Achieve Water Conservation,” Zaragoza, Spain, 12-15th May 2008

Non-point pollution control & irrigation: Some Australian experience

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Main Non-Point Pollution Problems

1. Irrigation salinity (Murray-Darling)

2. Sediment & nutrient pollution (Great Barrier Reef)

3. Nitrate contamination of groundwater & surface water systems.

Case Studies River salinity in the Murray-Darling Basin

Hunter River

Geographe Bay

Dryland salinity trading

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Institutional Structures

Federation Responsibility with individual state

governments

States Environmental duty of care on land users.

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Education & Governance

56 Natural Resource Management Region Boards established

Accessing National money

Emerging Regional Autonomy

Employing own staff

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Market – Based Instrument Trial Conclusions

First Round ($5 million)

Auctions, cap & trade (for point sources) & offsets work

MBI’s can deliver large savings

MBI’s require testing & adaptation for landholders to participate

MBI’s need to be tailored to individually, no one-size-fits all

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Interstate Salinity trading

Aim to keep river salinity at Morgan <800 μS/cm of electrical conductivity for 95% of the time

States pay for cost of off-setting the damage they would otherwise do

Salinity impacts recorded on “A” & “B” salinity register

“A” salinity register – all recent causes of salinity change

“B” salinity register – ‘legacy of history’ impacts

Debits to the “A” salinity register charged to States according to estimate of economic impact of each unit of salinity as measured at Morgan

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Hunter River - tradeable salinity permit

Limited to factories in the Hunter

Factories receive permits and allowed to minimise costs of disposal

Number of permits required to discharge a unit of salt into the River is a function of ambient river salinity

Firms have incentive to store saline wastewater and discharge when ambient salinity is low

Trading is now well established

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Busselton Bubble Licensing

Town of Busselton wanted to expand and dispose treated sewage into Geographe Bay Dairy industry responsible for 95% of the nitrates

and phosphates that flow into Geographe Bay

5 % only from town

Treatment of town sewage would cost $5 million plus $200K per annum

Cheaper to reduce pollution from dairying Needed to employ people to negotiate

agreements

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Dryland Salinity Trading (Bet Bet, Victoria)

Bet Bet, Victoria is one of the largest contributors to salinity in River Murray System Trial to invite farmers to participate in a program that

would enable them to trade salinity reduction credits

Allow farmers to deliver the contracted outcome in the most efficient way possible

Reward payment made to all farmers if the trial delivers agreed outcome

Conclusions More efficient and cost effective than regulation

Collective group incentive payment (a reward) increases community interest and participation

Reward “first-mover proofed” the trial

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Salinity Levy - Victoria

Trade from

Trade to LIZ 1 LIZ 2 LIZ 3 LIZ 4 HIZ

Perm Perm Perm Perm Perm

Outside area

$26.60 $65.00 $130.00 $260.00 No Trade

LIZ 1 $0.00 $39.00 $104.00 $234.00 No Trade

LIZ 2 $0.00 $0.00 $65.00 $195.00 No Trade

LIZ 3 $0.00 $0.00 $0.00 $130.00 No Trade

LIZ 4 $0.00 $0.00 $0.00 $0.00 No Trade

HIZ No Trade No Trade No Trade No Trade No Trade

Salinity levies charged for permanent trades between High Impact Zones (HIZ) & Low Impact Zones (LIZ). (No trade is allowed within or into a High Impact Zone)

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Salinity off-sets (SA)

SA uses off-set approach to manage salinity

Irrigation areas classified into 3 zones

1. Low impact

2. High impact

3. High impact zones behind a salinity interception scheme

Off-set trading has lead to increase in irrigation development opportunities at no cost

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Salinity off-set policy (SA)

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Environmental Benefit Indices

Indices enable objective evaluation of relative merits of different project outcomes

Dramatic increase in returns per public dollar invested

Experience Most benefits of MBIs derive from the benefit

index

Tenders more cost-effective if uniform payment per unit of benefit delivered is paid

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Applicability & recommendations

Countries should consider using market-based approaches they work! Greater flexibility in achieving control

Leave greater opportunity for innovation

Allow non-point source control at less cost

Lessons Underpin with regulations & implement at local scale

Focus on land use change & keep simple

Consider community reward schemes

Use indices

Point source controls can be used to deliver non-point benefits

Contact:

Prof Mike YoungWater Economics and ManagementEmail: Mike.Young@adelaide.edu.auPhone: +61-8-8303.5279Mobile: +61-408-488.538 www.myoung.net.au

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