Home > Economic policy, Environment > High-cost basin plan water is bad for all

High-cost basin plan water is bad for all

June 2nd, 2012

That’s the title of my latest piece, at ABC Environment. It’s over the fold

The revised Proposed Basin Plan is the latest step in a policy process that began 20 years ago, when a cap was imposed to stop the unsustainable growth in extractions of water from the Murray-Darling Basin. Before the cap, the capacity of the environment to sustain extractions was, for all practical purposes, ignored. This changed with a couple of spectacular environmental disasters, notably including an outbreak of blue-green algae on the Darling River, and the loss of large areas of productive land to salinisation.

Since the imposition of the cap, the environment has had, in effect, the status of a residual claimant. Once the legal entitlements of extractive water users (irrigators and urban communities) are satisfied, what is left over goes to the environment.

The Basin Plan was supposed, at least ostensibly, to turn that around. It was prepared under the Howard government’s Water Act which took control of the Basin from the states, on the basis of the government’s obligations under the RAMSAR convention on wetlands. The proposal was to use a science-based process to determine sustainable diversion limits, then work out how to reduce water extractions in line with these limits.

This was never going to work politically. In the absence of a clear plan to reduce water allocations, irrigators reasonably feared that their allocations would be subject to compulsory cuts, with or without compensation. Moreover, there was no political support for the position that the environment had first priority – it was merely a legal device used to justify the Commonwealth takeover. The first draft of the Basin Plan recognised this in practice, by setting a maximum return to the environment of 4,000 billion litres (gigalitres – GL), and a minimum of 3,000 GL but the accompanying rhetoric was all about putting the environment first.

Following a firestorm of adverse reaction, and a long process of political argy-bargy, we now have a target of 2,750 GL. This is not ideal from an environmental viewpoint, but far more than might have been expected 20 or even 10 years ago.

The big problem lies with the proposal that, instead of continuing to buy water rights irrigators who are willing to sell their entitlements, future policy should focus on engineering works designed to save water. This policy is bad for farmers, bad for the environment and bad for the community in general.

The harm to the community arises from the fact that infrastructure investments are the most expensive way of reducing water use in irrigation. Buying water rights on the open market has cost around $2,000 for each million litres (megalitres -ML) of high security entitlements. By contrast, the Wimmera-Mallee pipeline project was originally estimated to cost $500 million and to save 100 GL each year, yielding a cost of $5,000/ML. In reality, the final cost was nearly $700 million, three or four times the value of the water saved.

The Victorian Food Bowl Modernisation project has been even worse. On the optimistic estimates used to justify the project, the first stage involved spending more than $1 billion to upgrade irrigation facilities in the hope of reducing losses of water through leakage, seepage and evaporation. The water saved as a result, estimated at 225 GL, was to be divided equally between agriculture, the environment and urban use in Melbourne, but a political backlash has led the Baillieu government to shut down the pipeline to Melbourne. If water for irrigators is accorded its market value, the share going back to the environment will end up costing around $10,000/ML.

But these boondoggles were seen as the best options available at the time. There is every reason to think that finding another 1,000 GL through infrastructure projects will be even more expensive. Almost certainly, it will cost more than the $6 billion that was set aside for the process under the Howard government.

The abandonment of buybacks is also bad for farmers. The option of selling water rights proved vital to the survival of many farms during the drought. It is still an attractive option for many, particularly those who want to change from an irrigated crop, where markets may be weak, into some form of dryland agriculture. In Victorian jurisdictions, where annual sales out of a given district are restricted, there is a rush every year when the option to sell becomes available. In some cases, applications to sell fill the available quota on the first day.

Finally, infrastructure projects are bad for the environment because much of the supposed water ‘saving’ is illusory. Lots of water is lost to irrigation systems through leakage (water flowing through the walls of channels) and seepage (absorption of water into the soil from the bottom of channels), but this water is not lost to the environment. Because groundwater and river systems are interconnected, much of this ‘lost’ water eventually returns to rivers.

Unfortunately, at this point, the government appears to be locked in to the infrastructure investment policy, and the Opposition has always supported it. The best we can hope for is that the water returned to the environment, at such high cost, will be used wisely. In this respect, the Proposed Basin Plan has some useful points to offer regarding the design of environmental watering plans for wetlands and other sensitive areas.

Bismarck is supposed to have said that those who wish to enjoy either sausages or legislative arrangements should not watch them being made. The process of developing the B

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  1. stockingrate
    June 2nd, 2012 at 17:45 | #1

    This is perhaps also bad for food and urban water security in that by kidding ourselves that water is saved, we are overestimating the security of water for food and urban use.

  2. Ikonoclast
    June 2nd, 2012 at 19:51 | #2

    Nobody has the slightest idea how to fix any of these issues.

  3. Sam
    June 2nd, 2012 at 23:26 | #3

    “instead of continuing to buy water rights irrigators who” This should be;
    “instead of continuing to buy water rights from irrigators who”

    Also, you trail off in the last sentence.

  4. chrisl
    June 3rd, 2012 at 09:01 | #4

    The pipeline to Melbourne wasn’t closed by the Baillieu because of a political backlash. The storage reservoir that it was feeding (Sugarloaf) is 100% full. With the desal plant coming on line the $ 800 million pipeline will never be used.

  5. Ikonoclast
    June 3rd, 2012 at 09:06 | #5

    I’ll expand. Nobody has the slightest idea how to fix any of these issues because they are “wicked probems”. In fact, now they are “super wicked problems” and “social messes”. You can google these terms.

    In a nutshell, we (civilized humans) have been able to substantially ignore our creation of our own super wicked problems and social messes to date. This has been because accrued environmental “capital” or resources and a certain level of biosphere robustness have underwritten both our creation of the problems and messes and our capability to wriggle out of them. This is no longer the case. The accrued environmental “capital” is close to substantially used up and several system elements of the biosphere have already been pushed beyond their tipping points.

    Roughly speaking, we have used half of all our available environmental capital. In a situation of exponential growth it only takes one more doubling to use the other half. A reasonable estimate on current consumption growth rates (about 4%) is that the next doubling takes about 20 years. Assuming 2010 as the point where half of the key resources were used up, this gives 2030 as the point of general, substantial exhaustion. As a rule of thumb we can assume serious problems will become patently obvious by the halfway point i.e. 2020. I doubt anyone will be able to deny the situation by 2020.

    The human race ultimately has only two or three possible futures (in evolutionary timeframes). These are extinction or a return to hunter-gathering or a low population, renewables run civilization of about 700 million long term; in approximate terms about 1/10th of the current global population. These are the only real possibilities.

  6. John Quiggin
    June 3rd, 2012 at 13:55 | #6

    @Chrisl That is, of course, largely because people in Melbourne are subject to permanent water restrictions. That’s an even more expensive (in terms of social welfare) way of saving water than infrastructure works.

  7. chrisl
    June 3rd, 2012 at 15:07 | #7

    Wrong again John. Melbourne is on Stage one restrictions( ie virtually nil) The reservoirs are at 14 year highs. The sugarloaf Dam which the north-south pipeline runs into is full. Water to fill the dam is pumped from the Yarra River. The infrastructure costs are especially expensive when they will never be used!

  8. Alistair Watson
    June 3rd, 2012 at 18:41 | #8

    chrisl

    ‘Infrastructure costs are especially expensive when they will never be used.’ I thought that was more or less John’s point. The last Victorian Government botched up investment in urban and irrigation water infrastructure by having two separate projects to manage risk. A pipeline and a whopper desalination plant was over the top. The erstwhile Foodbowl Modernisation Project was dreamed up as a square off to the pipeline.

  9. John Quiggin
    June 3rd, 2012 at 19:49 | #9

    @chrisl
    http://www.water.vic.gov.au/saving/restrictions/stage-1-melbourne

    “You can water gardens and lawns using a watering system (manual, automatic, spray or dripper) only on alternate days between 6 am – 10 am and 6 pm – 10 pm.”

    That is, you’re prohibited from using a sprinkler about 85 per cent of the time. If you think that’s “virtually nil”, I think you’ve been used to restrictions for too long.

  10. June 3rd, 2012 at 21:36 | #10

    In Brisbane during the worst of the drought, the people easily absorbed restrictions which took us from something like 230 litres/person/day down to something like 110 (haven’t checked, but that’s roughly correct).

    The only people truly horrified by the easy acceptance of the reality that we had to use less water were the “free-market-fundamentalist” purveyors of water retailing for profit and the big industrial water wasters who were terrified that they would have to reduce usage or pay their fair share.

    Same goes for wasteful usage of coal-generated electricity. The retailers of such electricity must do everything to ensure more is used. The producers of such electricity are in the same position.

    The fact that we could easily get by with about 20% of current coal-generated electricity (via efficiency and renewables) without any noticeable reduction in our standard of living is not considered a serious topic of discussion.

    As with carbon emissions, water usage and waste in general – the discussion itself is considered “off-topic” by those whose business model is predicated on waste.

    That should be where democracy and government come in, unfortunately we don’t own our government or democracy anymore.

  11. June 4th, 2012 at 00:50 | #11

    PS: Just on the point of industrial users of our publicly funded and owned (for now) water infrastructure.

    A few years ago the whole “poo-water” debate was raging with the usual suspects spouting the usual pro-techno stuff. Unsurprising stuff (eg: ‘It’s more pure than the water you drink now’, etc.. – assuming no human error or cost-cutting-caused failure).

    So I asked Carlton Breweries at Yatala how much ‘poo water’ would be used in our beer. The answer was absolutely none, zero, zilch – under any circumstances. We would flatly never do it. We would use poo water to wash our trucks etc.. but NEVER put it in the beer.

    Why not? Because (a) if people knew we used poo-water in our beer we’d never sell the stuff and, (b) in the unlikely event that something went wrong and some real poo found its way into the beer we could be sued for a lot of money, and then even fewer people would want to drink our poo-beer.

    So WE should drink it, but corporations who pay a tiny fraction of the price we do for water don’t have to use it?

  12. Sam
    June 4th, 2012 at 00:51 | #12

    @Megan
    I lived in Brisbane through that time. I found water restrictions hugely destructive to my quality of life. Being told by Labor party hacks like Beattie and Bligh that there was no need to reconsider high immigration levels; and that people would continue to simply reduce their quality of life to satisfy the demands of the pro-growth brigade, was galling to say the least.

  13. Ikonoclast
    June 4th, 2012 at 09:49 | #13

    @Sam

    Sam says; “I found water restrictions hugely destructive to my quality of life.”

    This seems like a bit of an exaggeration to me. In my household we noticed no real change to our quality of life. We had enough water for all household requirements. I was a tad annoyed at the reduction in water pressure as pressure limiters were put somewhere between us and the local water tower. I felt quite capable of reducing our water use with pressure limiting, indeed we had already done so before the limiters were put in place. Only unreasonable people who want to sprinkle grass all day and grow water hungry gardens of exotics unsuited to Brisbane’s climate would think themselves inconvenienced.

    Having said that, I agree that we need to halt population growth in Australia. There is no need for us to have any immigration program at all other than taking some bona fide refugees. We should balance the equation to natural increase plus immigration equals emigration. With regard to water supplies, the thing we need to remember is that this wet phase will not last. Another drought of ten years duration is easily possible and it could commence quite soon. Global warmign with further reduce rainfaill in most parts iof Australia and increase evaporation. All our extra pieces of water infrastructure will soon be needed for sure.

  14. PM
    June 4th, 2012 at 09:49 | #14

    Sam @ 12…

    Really? I lived in Brisbane through that time too and I have to say that I didn’t think that the water restrictions were a big deal. 3 minute showers seemed a bit short on a cold winter morning but hardly hugely destructive to my way of life.

    I think that the city looked a bit dry and dusty and perhaps few people’s overwatered gardens died back a little but really the city was just starting to look more like the surrounding bushland naturally does.

    It might also be a little disingenuous to talk about Labour party hacks like Beattie and Bligh talking up immigration seeing as there was little they could do about the levels of immigration to SEQ whatever their stance on the issue.

  15. Sam
    June 4th, 2012 at 10:44 | #15

    @PM
    Well it was harsh to me. To be honest, I ended up simply ignoring the restrictions completely after a time. I’m proud to say I took 30 minute showers during the drought.

    The analogy I have is with a long sea voyage back in the age of sail. Imagine being low on water with a danger of running out before you reach port again. Imagine accepting harsh water rations in the name of solidarity with one’s fellow crew members. Now imagine that halfway through this gruelling time of headaches and nausea and listlessness, your captain decides that you’ll probably make it into port with water to spare after all, so he sells some of the stocks to another passing ship and divides the money among the first class passengers. After this, do you think you’d be so willing to sacrifice to the greater good? I certainly wasn’t.

    There simply isn’t any point in conserving these kinds of resources when our leaders insist on such mad policies. Any drop I save is another drop given to billionaire industrialists or used to justify higher immigration. If during the next drought our politicians renounce their insane fetish on these matters I’ll be happy to do my part.

    Bligh and Beattie might not have had a direct say over national immigration levels, but they were explicit in their pro-growth stance. They clearly encouraged breakneck industrial growth (which they did have direct control over), and were enthusiastic about the resulting population increase.

  16. John Quiggin
    June 4th, 2012 at 10:52 | #16

    I’m with Sam. For anyone who wanted to keep a garden alive (not necessarily an exotic one) there was a huge cost in wasted time. It was probably necessary during the drought, but it is crazy to keep policies like this in place under normal conditions rather than setting an appropriate price for water, then letting people decide what they want to do with it.

    The kind of moralism that says that people should let their gardens die even when the dams are full of water does not appeal to me.

  17. Ikonoclast
    June 4th, 2012 at 12:47 | #17

    @John Quiggin

    I agree with JQ but would not go the whole way of agreeing with Sam. In summary;

    (1) Restrictions were necessary when we were down to about 16% storage (from memory) and all of us without a crystal ball did not know when the drought would lift.

    (2) Maintaining restrictions when we reached say 60% and then later 100% plus storage capacity is just plain stupid. In fact, I was and remain in favour of progressively lifting restrictions from 60% capacity and having them totally removed at 90% capacity.

    So, I am not saying that people should let their gardens die even when the dams are full of water. Pricing water sensibly is fine but I think that is best achieved by keeping water as a state monopoly. Privatisation has hadmuch to do with the push to create artificial scarcity and artificially high prices in water and power. (Periods of artificial scarcity do not mean that real scarcity cannot happen also.)

    As a parting shot I would say this. Don’t forget the next drought is just around the corner. The next one could last ten years with climate change exacerbating matters. Our current water glut won’t last long. So fine, it’s no good restricting use when the dams are full but we need to be ever vigilant and keep dams high at 90% plus for a s long as possible because we do not know when the next dry spell could turn into a ten (or even twenty) year drought with global warming playing a role.

  18. Sam
    June 4th, 2012 at 13:33 | #18

    @Ikonoclast
    With smart leaders I would agree with your point (1) Ikonoclast. With the leadership we had however, indulging puritanical demands for water austerity merely made room for bad decisions. It pushed back the inevitable day of reckoning, while further enriching the owners of industrial and real estate capital. I actually remember Beattie pointing to the population’s ability to reduce consumption as evidence that there was no need to constrain growth. I’m paraphrasing here, but he said something like “If we have some problems due to growth, then they are problems I’m happy to have.”

    I’m all for charging the real price of water. I’m against policies that would increase that real price.

  19. John Quiggin
    June 4th, 2012 at 13:59 | #19

    @Ikonoclast
    I agree with all of this

  20. kymbos
    June 6th, 2012 at 16:20 | #20

    “I’m proud to say I took 30 minute showers during the drought”.

    Suggest you question the origins of your sense of self worth.

  21. Baz
    June 7th, 2012 at 10:27 | #21

    Water restrictions are aimed at resetting expectations as much as conserving water.
    I remember before the last long drought, seeing open sprinklers running in the heat of the day, saturating large lawns to point that water was running off into the gutters.
    By the end of the drought, most of the lawns had been converted to drought tolerant native gardens with smaller lawn areas, often with underground irrigation.

    Restricting sprinklers to the hours when evaporation is not so intense is good sense, not a threat to individual life-styles!
    Likewise, encouraging storm water capture through rainwater tanks, and grey water reuse.
    (Of course, regulations have to be sensible and enforceable, but public ridicule via the web is some help here.)

    Promoting efficient use of resources is a win for everyone except the crony capitalists who have looted our public infrastructure and only want to maximize their profits without regard to the long-term.

  22. Freelander
    June 7th, 2012 at 18:51 | #22

    Freedom is 30 minute showers during a drought. If one cannot have an un-time-restricted shower during a drought, what did we fight two world wars for?

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