optimising the socio-economic outcomes under the murray- darling basin plan – water policies and...
TRANSCRIPT
OPTIMISING THE SOCIO-ECONOMIC OUTCOMES UNDER THE MURRAY-DARLING BASIN PLAN –
Water Policies and Programs
Presentation to ABARES Outlook Conference, Canberra 2 March 2011
by Tony Slatyer, Water Reform Division
www.environment.gov.au
The Government’s objectives
“They key challenge before the Parliament is for this
to be a term in which action is taken across the
Basin to restore the system to health. We need to
do this in a way which delivers three core outcomes: healthy rivers strong communities food production”Minister for Sustainability, Environment, Water, Population and Communities, 25 October 2010
www.environment.gov.au
The broad policy context
Water resource constraints
Environmental decline
Climate uncertainty
Socio-economic factors
www.environment.gov.au
Resource constraints: the effect of drought on Victorian Murray and Goulburn system allocations
0
50
100
150
200
250
Murray Gouburn Linear (Gouburn) Linear (Murray)
www.environment.gov.au
Resource constraints: the effect of drought on Murrumbidgee River Valley allocations
0
20
40
60
80
100
120
140
1608
2-8
3
84
-85
86
-87
88
-89
90
-91
92
-93
94
-95
96
-97
98
-99
00
-01
02
-03
04
-05
06
-07
08
-09
pe
rce
nt
www.environment.gov.au
River regulation and water diversions have resulted in:
doubling of the average period between environmentally
beneficial flooding of the major floodplain and wetland
systems (to at least 3.5 years)
average period between the flood events, which are
required to flush the Murray river mouth, has increased
from 1.2 years to 2.2 years
Environmental decline
www.environment.gov.au
The scale of environmental decline
20 out of 23 catchments
rated poor to extremely poor
Source: MDBA Sustainable Rivers Audit
www.environment.gov.au
Economic costs of environmental decline
Reduced water quality, increasing treatment costs
Reduced scope to harvest native fish
Reduced tourism
Reduced recreation opportunities
Increased erosion and sediment accumulation
Reduced natural flood control
Risk to natural pollination services
Risk to natural pest control services
www.environment.gov.au
Uncertainty about climate change impacts
Impact of climate change on average surface water availability
0
500
1,000
1,500
2,000
Avera
ge w
ate
r availa
bility
(G
L/y
)
Historical climate
Median 2030 climate
0
1,500
3,000
4,500
6,000
CSIRO (2008) Water Availability in the Murray-Darling Basin
www.environment.gov.au
Climate change risks Median water availability decline = by 2030
4% reduction in average diversions under current plans
24-30% further reduction in average end of system flows
“Current surface water sharing arrangements in the MDB
would generally protect consumptive water users from
much of the anticipated impact of climate change but
offer little protection to riverine environments” CSIRO (2008)
Water Availability in the Murray-Darling Basin
www.environment.gov.au
www.environment.gov.au
Socio-economic context Basin population increasing slowly
4.3% between 2001 and 2006, compared to an increase
of 5.8% for Australia as a whole
many Basin towns have had long term population decline
Agricultural sector employment falling rapidly
down by 12.4% (2001 to 2006) while total Basin
employment has increased by 8.3% in this period.
unemployment rate similar to national average
Exchange rate up by 50% (trade weighted)
www.environment.gov.au
Total water use in the Basin fell in the drought from
10,500 GL (2000-01) to 3,100 GL (2007-08), while ABS
has estimated the Gross Value of Irrigated Agricultural
Production (GVIAP) remained steady
rapid growth in water trade (6% per annum average
growth in allocation trades)
rapid improvement in water use efficiency (eg rice by 90
per cent and fruit by 76 per cent) (ABS Cat No. 4610, 2007-08)
Socio-economic context (continued)
www.environment.gov.au
The policy response: the Basin Plan
Basin wide planning framework
sets the ground-rules for states based plans
considers future water availability, and all significant water uses,
in setting new limits on water use in the Basin
placing water use in the Basin on a more sustainable footing
enabling people to plan for their future with greater
confidence
must optimise economic, social and environmental outcomes.
www.environment.gov.au
The ‘optimisation’ requirement
“... where a discretionary choice must be made between a
number of options the decision-maker should, having
considered the economic, social and environmental impacts,
choose the option which optimises those outcomes”
Australian Government Solicitor 2011
www.environment.gov.au
The policy response: ‘Bridging the Gap’
Current diversion limit
Sustainable diversion limit
Water recovery
Basin Plan comes into effect
Temporary Diversion Provisions (if required)
Water recovery to bridge the gap through
water purchase and investmentin water saving infrastructure
www.environment.gov.au
The role of the water buyback
Government purchase of water entitlements to progressively and directly recover water for the environment while respecting water property rights no compulsory acquisition
As at 31 January 2011, Government has recovered
entitlements that will provide 670 gigalitres (GL) of water on
average, or 22 percent of a 3,000GL reduction.
www.environment.gov.au
The role of infrastructure programs
Infrastructure and efficiency investments of around $4.9
billion in Basin
water efficiency savings are retained for use in
irrigation, as well as water being returned to the
environment includes funding for infrastructure planning
www.environment.gov.au
Sustainable Rural Water Use and Infrastructure Program
SRWUIP
State Priority Projects $3.7b
Other Policy Announcements
13 State Led Projects
4 Commonwealth Led Projects
33 Components, including:
Vic $1.103b
SA $420M
QLD $160m
NSW $708m
ACT $85m
NSW PIIOP $650m
SA PIP $110m
Modernisation Planning $5m
On-Farm IrrigationEfficiency $300m
Strengthening Basin Communities $200m
Hot-spots $23mother
www.environment.gov.au
Examples of SRWUIP investments to dateFirst round of the On-farm Irrigation Efficiency Program
~$33M to Murray Irrigation Limited ~$24M to Ricegrowers Association of Australia ~$26M to Goulburn Broken CMA ~$12M to Australian Processing Tomato Research Council Inc ~$4M to Lachlan CMA ~$1.5M to SA Murray-Darling Basin Natural Resources
Management Board Total $100M
Round 2 round is open now and closes in March 2011
www.environment.gov.au
Examples of investments to date (continued)
Private Irrigation Infrastructure Operators Program in NSW (PIIOP)
Round 1 grants:
~$51M to Coleambally Irrigation
~$50M to Murrumbidgee Irrigation
~$9.5M to Marthaguy Irrigation Scheme
~$37.5M to Tenandra Scheme
~$115M to Trangie-Nevertire Irrigation Scheme
Total $263M
Round 2 opened 18 February 2011
www.environment.gov.au
Policy response: other reforms
Market opening reforms
transparency
consistency
trading rules
National Water Market Common Registry System
Water information reforms
BOM Water data
www.environment.gov.au
Net impact of reforms Will depend on the size of the ‘gap’ and the final location, type and sale of infrastructure investments Effects if a 3,500 GL SDL scenario occurs, and Water for the Future investment, based on current
infrastructure investment proposals:
Without Water for the Future
investment
Effect of Water for the Future
investment
Net effect with Water for the
Future investment
Irrigation Gross Value ($) -15.1% +5.0% -10.1%
Irrigation Profit ($) -7.8% +3.2% -4.6%
Regional employment (no.) -0.1% +0.2% +0.1%
Economic Activity (GDP) ($) -1.3% +0.6% -0. 7%
Note: Effect of SDLs with and without Government water recovery actions – change from baseline (no SDLs) in per cent for the whole Basin in 2018
www.environment.gov.au
Net impact of reforms
Forecast of economic growth (GRP) in the Basin under a 3,500 GL reduction scenario
79.3
63.4
78.3 78.7
0
10
20
30
40
50
60
70
80
90
2010 2018
Baseline (no policy change)after SDLsafter SDLs and WftF
$ billion
From ABARES study
www.environment.gov.au
In summary:To ensure sustainable water use into the future, there will be new
limits on water use in the Murray Darling Basin. In deciding these limits, the MDBA must optimise social, economic
and environmental considerations. The Commonwealth’s Water for the Future policies programs aim
to assist irrigation communities to adjust to these changes, with: buybacks to protect remaining entitlement holder from reductions
infrastructure investment to improve water use efficiency;
funds to assist local governments to improve local water security
market opening
water information reforms