Following on from yesterday’s post , I note that
Howard has moved quickly to oppose the idea of urban-rural water trade. Putting on my economic rationalist hat, it’s hard to see the rationale for this, and certainly those offered in the article are incoherent.
In thinking about irrigation water and trading, I always find it useful to mentally substitute “land” for “water” and see what conclusions you draw. The analogy doesn’t work perfectly, since water is movable and land is not, but it often works well enough to be helfpul.
To start with lets look at this argument from Murrumbidgee Irrigation Area Commission chairman Dick Thompson
“Selling 15,000 megalitres to Canberra is manageable, but if Sydney wanted to buy 100,000 megalitres that would mean drying out about 2000 high-security farms and that’s a lot of fruit and vegetables to go missing,”
That’s true of course, but I’d be willing to bet many more than 2000 fruit and vegetable farms on the outskirts of major cities have been converted to residential use in the past twenty years. This was a hot issue in the US a decade or so ago, and it’s had an occasional run here in Australia, but it’s never gained much traction. There are good urban planning reasons for keeping green space, including farms, but I don’t think many people would support a general prohibition on the conversion of agricultural land to residential use.
Much the same points can be made in relation to Gary Nairn, who says
cities must learn to use the water they had more efficiently before they considered buying irrigation water from outside their catchments
Again, there’s no general suggestion of applying this rule to land. Sydney’s population could be fitted on a small fraction of its current area if we had the urban densities characteristic of most developed countries.
More generally, Nairn says
“Proposals to transfer water from one catchment to another should only be pursued when all other viable alternatives have been exhausted and only on the basis of rigorous scientific evidence that there won’t be any detrimental impact to those affected river systems … The philosophy ought to be: what have we got, how are we using it and can we use it better?”
But if this means anything, it means that catchments were demand exceeds supply should be compelled to adopt high-cost conservation methods rather than arranging with other catchments to exercise lower-cost options. So water will be wasted where it is plentiful, while it is rationed where it is scarce, with the dividing line being determined by essentially arbitrary catchment boundaries.
In this context, it’s worth looking at another item of news, concerning the Wimmera Pipeline project which replaces a system of open channels running hundreds of kilometres from the Grampian mountains with pipelines. This follows an earlier project covering the Northern Mallee. The project is supposed to save 100GL per year, at a capital cost of $500 million, shared equally between local, state and federal governments. On the face of it, this looks pretty expensive, but I’ll need to look more carefully at the economics.
My main point, though, is that with this kind of money at stake, arbitrary restrictions based on an ill-defined “philosophy” could be hugely expensive, and could lead to less rather than more conservation of water. We really need to adopt a system wide approach here. That doesn’t mean going for unrestricted trade in water rights, but it also doesn’t mean treating trade as a last resort.