April 6th 2002


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COVER STORY: Stem cell research: the way forward

The facts behind the 'people overboard' affair

Opinion: The banks' power over small business

STRAWS: Selective amnesia / Slow boat to China / Tower of Babel

TRADE: Sugar price collapse threatens future of canegrowers

MEDIA: Debating points

New Zealand faces winter of discontent

Manufacturing: an endangered species (letter)

Afghan specialities (letter)

The great water debate: facts and myths

COMMENT: Healthy disinterest no bad thing

UNITED STATES: Behind Washington's self-serving free trade rhetoric

Switzerland, Taiwan seek UN membership

HISTORY: Demons and Democrats: the story of the Labor Split

Books: JOHN GORTON: He Did It His Way, by Ian Hancock

MEDIA: Stem cells: what debate?

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The great water debate: facts and myths


by Paul McGowan

News Weekly, April 6, 2002
NATIONAL DEVELOPMENT

Paul McGowan worked as one of Australia's leading international agricultural consultants, and has an intimate and thorough understanding of the issues associated with water policy.

"Australia is the driest continent"

This often repeated claim may be true on the basis of area; but this fact is of doubtful significance. Far more important is how relevant is this "dryness" in relation to population.

On a per head basis, Australia is the best-endowed continent (excluding Antarctica) and one of the three or four best-endowed countries in the world.

Even if one considers the area south east of a line joining Adelaide and Brisbane, where the majority of the population lives, there is still, on a per head, basis far more water than in many other countries. Beyond this Adelaide-Brisbane line there are vast unutilised water resources (Fitzroy, Ord, Daly, Mitchell, Flinders, etc).

Who can doubt that at some time in the future, political and population pressures from Asia will ensure that these abundant resources will be utilised? In the meantime we have on the Ord a most magnificent dam but have not yet been able to work out how to utilise the vast amount of water stored there.

"Water is a scarce resource"

Admittedly water is a limited resource, but it is not "scarce".

Consider Australia's best known water conservation project, The Snowy Mountains. The policy decision was made to turn inland, for irrigation purposes, the Snowy water that previously had run "to waste" into the sea. The cost of the project would be met by charging for the electricity developed and the supply of irrigation water would be free, with charges made only for the channel delivery.

Even for the delivery infrastructure there are large costs which had to be met by a charge for this service. The new large diversions to the Murray and Murrumbidgee River valleys, where there were already significant irrigation schemes, provided new water for which there had to be constructed a market.

What industry could use these new large volumes of irrigation water? Rice was the only answer, so new irrigation areas (Colleambally, Wakool, etc) were developed in these valleys to use the huge new volumes. From the Government's financial point of view, this was the only practical solution available.

Though concerns were voiced regarding drainage and salinity, these issues were not given the importance that is now given to these matters. All in all, though these decisions may be criticised now , they were fair enough at the time with the knowledge available. Water was not "scarce" but plentiful, and had to be sold with the proceeds used to partially finance the government's financial commitments.

Though this may well have been the correct policy decision then, the question is, "Is this still the appropriate use of water?" Or as is now commonly asked, "Why grow rice in a desert?"

To put water use into relevance the measure of water is a megalitre (ML), which approximates the volume of an Olympic swimming pool. Rice uses about 10 to 12 ML per hectare (ha) whereas in North East Victorian high rainfall areas about 1 ML per ha is used to grow wine grapes.

If water were scarce it would be used for intensive horticulture/agriculture. The water authority with the largest entitlement to water is the Goulburn Murray Water Authority (GMW). It has, by Act of Parliament, an entitlement to over three million megalitres per year. Of this four per cent is used for intensive horticulture but it provides 13 per cent of the value of production.

Value of production from government sponsored irrigation schemes.

No one can deny that government policy to encourage irrigation in the arid inland by conserving and diverting water has created prosperous communities and has provided export income and cheap food for the cities. For this benefit, there are both hidden costs and ongoing government subsidies.

The hidden costs of environmental damage, salinity, etc., are so great that it has been impossible to put a figure on them. It is accepted by all that many areas are irreparably damaged and will never recover. The ongoing money costs are camouflaged by various grants, cross subsidies, and are so embarrassing to government that they are never documented.

Despite subsidies, the largest water authority in Victoria, GMW, has an accumulated loss of $65 million, a loss last year of $25 million and a budgeted loss this year of $19 million. It blames these losses on not having enough water to sell. Water authorities have a twofold problem; how to obtain more water to sell: how to charge more for what they do sell.

It is obvious that if farmers in the river catchment areas conserve the rain that falls on their property in farm dams, the water so conserved will not flow down stream to be available for sale by the authority.

Government policy in the Murray Basin is to deter and prohibit farmers from harvesting these "overland flows" The CEO of the Murray Darling Basin Committee has recently handed his report to the Victorian Government recommending the prohibition of conserving this rain water.

In turn, this policy is being used to act as a precedent to stop Queensland farmers from their traditional conservation measures and to question the NSW policy which currently allows some small amount of conservation.

With regard to pricing of water to authority customers, the theoretical policy is simple: "full cost recovery" and the right to trade water. The theory is that to ensure that water is put to its most valuable use, a farmer can sell all or part of his entitlement to the "right " to water.

In the Goulburn Murray system, the auction price for this annual "entitlement" varies from $20 to $200 per ML. The farmer using the water still has to pay the Authority for delivering the water at about $20 per ML.

The interesting question arises: If the farmer will pay his neighbor $20 to $100 for the access to extra water why should not the authority charge enough to recoup its losses? The unpalatable answer is that if there were full cost recovery, the authority could not sell its traditional allocation, proving that water was not "scarce"; it is only scarce because it is sold so cheaply.

To make matters even more puzzling, GMW is proposing to increase the water rights of its customers by 60 per cent so that even more trading can eventuate. In NSW, problems have arisen because farmers cannot access their allocated water rights since too much has been allocated and naturally they are seeking compensation.

Why is Victoria determined to follow the same path when it is obvious that similar compensation claims will be forthcoming in the future?

Where to from here? Is there political will to adopt hard decisions?

Care for the environment and efficient use of water should be the key considerations in deciding where irrigation should take place.

Salinity is the biggest worry with irrigation. One only has to look at the older civilisations of the world to see the irreparable damage done by salt in ancient irrigation areas.

The Nile delta, the lower Tigris and Euphrates and many other areas make clear the dangers. To try and simplify a problem that is complex one only needs to consider that areas which were under the sea in recent geological times are more likely to contain salt than high mountain valleys.

Sometimes, as in Holland or in the Rhine delta, salt can be washed out, but it is costly. In saline areas further from the existing sea shore but still at low elevations solutions are very difficult.

Clearly it is easier and cheaper in the short term to flood irrigate flat land at the bottom of a river valley (even though we know it is saline) than in the high catchment where there is less flat land.

Australian policy has been to follow the easy and cheap option. The time will come, if it is not here now, to consider the alternatives. In the higher reaches of the rivers there are many valley floors that have no salt in the soils nor in the rivers.

For example, a June 2001 report by the Victorian Department of Agriculture identifies in the Murray Valley above Lake Hume 19,000 ha of land highly suitable for horticulture but there are licences available for only 1000 ha. Admittedly these areas are smaller and the cost of distributing water is higher.

In the large flat river valleys, flood irrigation is easy. But new technology of sprinkler and drip irrigation which were undreamed of when Snowy water was diverted, now make new decisions possible.

Yes, it will be more costly in the short term, particularly if we persist in not calculating the full cost of present policy, to say nothing of costing the long term environmental damage. In the long term it is the only fully sustainable policy.

For water efficiency, a small amount of water is required to supplement the already good rainfall, but to grow any horticultural crop some supplementary watering is necessary in most areas. But, for example, we are looking at using 1 or 2 ML for grapes instead of 10 ML.

The present policy is to prohibit development in high rainfall areas and pass this water down stream for sale to government-sponsored schemes. The long-term sustainable policy is to encourage the use of rain as near as possible to its source for both environmental and water efficiency reasons. And we will not be growing rice, we leave that for the areas meant by nature to grow it.

The practicality of diverting coastal rivers inland.

The concept of diverting coastal rivers inland has been advocated for many years. Both North Queensland and northern NSW have large rivers, which frequently flood, and water is "wasted" to the sea. If these could be diverted by tunnels through the Great Dividing Range they could develop the inland and mitigate current problems of the Murray Darling Basin.

Leaving aside the environmental issues, the concept is impractical from an engineering aspect. Admittedly engineers can do almost anything if money is unlimited but an economic analysis makes the concept impractical.

The reason is simple but difficult to express. The coastal rivers rise in the mountains where they receive the high rainfalls. The portion of the catchment that is of high elevation is relatively small compared with the total catchment.

On the inland side of the Range, the land elevation is relatively high so that a tunnel delivering water inland must emerge, if fed by gravity flow, at a level that equates to a small proportion of the coastal river catchment.

In other words, the bulk of water falling on the ocean side is too low to be diverted by gravity inland. We have looked at schemes whereby there are two levels of dams. The high dam can divert a small amount of water inland or it can generate hydroelectricity to pump water from the lower. It cannot do both.

The lower dam can generate hydro-electricity to pump water from the lower dam to the higher dam, but this water used for electricity generation is lost to the diversion system.

A pumped system is costly and puts such a high price on the diverted water that costs could not be recouped. A gravity system produces a volume that is either too small or requires such a long tunnel to capture more water and divert it that it likewise is not attractive.

It is more logical to develop irrigation in the lower reaches of the coastal rivers - as has happened on the Burdekin - even if that appears more costly than the current heavily-subsidised existing inland schemes.

What is needed now is the political will to revise the whole policy of where irrigation should occur. To remedy past mistakes and acknowledge that water should be used efficiently, as near the source as possible and in an environmentally friendly manner, is asking a lot of the political system. It must happen eventually, so why not start the process now?




























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