WATER: by Patrick J. ByrneNews Weekly
Federal water plan could wipe 2.9 per cent off GDP
, September 15, 2007
The Prime Minister's plans for the Murray-Darling Basin would remove so much water from irrigation, it could wipe $28 billion, or 2.9 per cent, off Australia's GDP. Australia is now facing the worst drought in its history, while national water policy is in major crisis, reports Patrick J. Byrne.At the current flows-rates to South Australia, it estimated that the Murray valley will be completely out of water in approximately 35 weeks, unless there is rain in the catchment dams.
The recently passed federal water bill allows the Prime Minister's $10 billion water plan (of January 25) to proceed, while the country is in a crippling drought.
The Prime Minister's plan proposes:
• Buying back water licences, at a cost of $3 billion, because of "over allocations". That amount would buy between 1,500,000 megalitres and 3,600,000 megalitres, depending on the price of water, which varies according to its security level and seasonal conditions.
• Investing in water-savings measures, at a cost of $6 billion, in order to save 3,100,000 megalitres, half for the environment and half for farmers. The savings are to come from efficiency gains in water delivery, on farms, in metering and measuring, and in river and other water storages. The problem is that water experts and irrigators argue that these savings targets as grossly unrealistic.
• Delivering between 3,050,000 megalitres and 4,550,000 megalitres for environmental flows down the Basin's rivers, which is six-to-nine times the 500,000 megalitres of environmental flows agreed to under The Living Murray
Given the gross overestimates of possible savings, it is reasonable to assume that the federal plan could take out 3,000,000 megalitres net from the irrigation system, to extinguish licences and for environmental flows. Another 500,000 megalitres are to be purchased for environmental flows under The Living Murray
Hence, irrigators stand to lose 3,500,000 megalitres, or about 29 per cent of all irrigation water, in the Basin.
In economic terms, this would cost $7 billion at the farm gate (1 megalitre on average produces $2,000 on farm) and a staggering $28 billion across the Basin's communities (regional economic benefits average four times the farm-gate value). This would wipe 2.9 per cent off Australia's GDP!
Taking so much water out of production would dramatically force up the price of irrigation water, as the service costs would have to be spread over a much smaller volume of irrigation water, forcing more farmers out of business and causing more economic losses.
Meanwhile, reservoirs in the Basin are at record lows, with irrigators along the Murray allocated only 5 per cent of their normal water entitlements, while calls for a weir at Wellington on the Murray - to conserve up to 1,000,000 megalitres lost annually through evaporation in the lower lakes of South Australia - have fallen on deaf ears.
If this combination of bad drought and gross mismanagement of the Basin's water continues over the next few months, Australia's richest food-producing region faces a massive die-off of fruit trees, nut trees and vines and huge losses from broad-acre farming, such as dairy, feed stocks and vegetables. Many thousands of farmers are facing bankruptcy, and consumers will have to pay more for food.
Irrigators are calling for an emergency plan.
They want a three-year moratorium on the permanent trade of water outside of irrigation regions until there has been full, comprehensive consultation with all stakeholders in the Murray-Darling Basin, region by region, to determine a water plan for the Basin. Permanent trade within
irrigation regions, and temporary trade, should continue.
Strong strategic authority must be given to the Murray-Darling Basin Authority to manage the devastating crisis now gripping the Basin.
There should be no purchases of water for environmental flows during this drought period and no environmental flows allocated during a proclaimed drought, except for dilution flows. It is a disgrace to have governments purchasing water for environmental flows, claiming farmers are "willing sellers" when those farmers are in financial crises due to severe drought.Emergency
An emergency weir must be built immediately at Wellington in order to conserve water before it reaches the lower lakes in South Australia.
Other emergency plans are needed for the short-term survival of farmers and communities, and a long-term structural plan put in place to rebuild destroyed capital, such as permanent plantings and dairy herds.
Water policy is in chaos, both at the federal and state levels. It took 13 years to negotiate the original water-sharing agreement between the states, finalised in 1917.
Politicians should be prepared to spend several years working closely with farmers to work out any new water arrangements for the Basin. It cannot be done in the time framework of a state or federal election.