Transcript PowerPoint - Water Droplets – Mike Young

Water
What can the irrigation industry learn from
Australia?
Prof Mike Young
Director, The Environment Institute
Research Chair, Water Economics and Management
The University of Adelaide
31 July 2009
Water
• The irrigation industry depends on
access to water
• Adapting to change
– Urban and industrial demand is drawing
water away from agriculture;
and
– Supply may be decreasing
• Industry prosperity will depend on its
capacity to rapidly access water in an
rapidly changing world.
Some Australian mistakes
• Climate shifts
– We forgot to plan for shifts to a dryer
regimes
– We still call what’s happening “a drought”
• Rights, policy and governance
– We embraced water reform without
establishing a property right system that
was designed for trading
River Murray Inflows (GL)
In 2006/07, we broke the month by month minimum inflow record for 11 months
Inflows have been well below evaporative losses
Managed by running down stocks and reducing evaporation by closing off
wetlands and not replenishing lakes
This last year has been the third driest ever!
Robust planning and water entitlement regimes are
essential. Communities rarely plan for severe adversity!
Last year, high
security licences in
SA on 18%.
This year they start
with 2%!
• When dramatically adverse climate
change occurred, many management
plans has to be suspended!
Symptoms - The River Murray
• Over-allocation
– Dredges in its mouth
since Oct 2002
– Level below the sea
– Rising salinity
– Serious acidsulphate soil
problems
0
2004
300
2004
2001
1998
1995
1992
1989
1986
1983
1980
14% less
2001
1998
1995
1992
1989
1986
400
1983
1980
1977
1974
1971
1968
1965
1962
1959
1956
1500
1977
1974
1971
1968
1965
1962
1959
1956
PERTH
1953
1950
1947
1944
1941
1938
1935
1932
1929
1926
1923
1920
1917
1914
1911
Rainfall (m m )
2000
1953
1950
1947
1944
1941
1938
1935
1932
1929
1926
1923
1920
1917
1914
1911
S tr e a m flo w (G L )
Insufficient planning for step changes
Rainfall for Jarrahdale
20%
less
- 1%
1000
500
0
1000
900
S tre a m in flo w fo r P e rth d a m s (P rio r to S tirlin g D a m )
800
700
600
500
4 8 % le s s
- 3%
66%
le s s
200
100
With half as much water
Users
Users
Environment
River Flow
Environment
River Flow
A robust sharing system
Flood water
Volume of water available
Entitlements
Entitlements
Environment
with a
Environment
fully-specified
share
Water needed to
ensure conveyance
Shared Water
Now buying
back water for
the MDB
environment
$3.1 billion
With half as much water
Users
Users
Users
Environment
Environment
Environment
River Flow
River Flow
River Flow
Which future is best?
• One that gets water fundamentals right, now?
• A system that can be confidently explained as one that
will enable the irrigation industry to cope -- whatever
future arrives
• One that facilitates autonomous adjustment and change
• One that creates opportunity
• One that is always behind, always playing
catch up?
• No guarantee of resolution of current problems
• Lots of impediments to change
• Beyond Triple Bottom Line to system
design for autonomous adaptation
Australian water rights & policy
• Share rather than seniority system
– In rivers, usually two surface water pools
• High security pool
• Low or general security pool
• Formal volumetric allocation systems
– All use is metered and use limited to allocation
• Minimal role for courts and lawyers
– Allocations and rules decided by government of the day
– Legislative plans that fully specify the rules of the
game
– Right to trade held by individual water users not
districts
Water Rights Reform & unbundling
National
Competition
Policy
1993/94
Plus Cap
Single Title
to
Land with a
Water Licence
Water
Land
Tradable Right
Entitlement
Shares
in Perpetuity
Delivery Capacity
Shares
Bank-like
Allocations
Delivery Capacity
Allocations
Price
Use licences
with limits &
obligations
Salinity
Shares
National
Water
Initiative
2004
Salinity
Allocations
Now trying to fix the problems created by the naive introduction of markets bolted onto
an entitlement regimes that lacked hydrological, environmental & economic integrity
Murray-Darling Basin Water Entitlement Transfers - 1983/84 to 2003/04
1 200
1 100
Intrastate
Intrastate
Interstate
Interstate
1 000
Transfer Volume (GL)
900
Temporary (GL)
Permanent (GL)
Temporary (GL)
Permanent (GL)
Water Reform
Trading opened up
800
700
Intra
Intra
Inte
Inte
600
500
400
300
2003/04
2002/03
2001/02
2000/01
1999/00
1998/99
1997/98
1996/97
1995/96
1994/95
1993/94
1992/93
1991/92
1990/91
1989/90
1988/89
1987/88
1986/87
1985/86
1984/85
0
2003/04
100
1983/84
2002/03
200
2001/02
2000/01
Scarcity and Trading
 Source: Murray Darling Basin Commission, 2007.
Trading has been good for the Australia’s irrigation industry
Reform Outcomes
• Positive
– Facilitated considerable greenfield development
• Grapes
• Almonds
–
–
–
–
Massive innovation
Massive wealth creation
Many more irrigators survived the current long dry
Movement of water out of areas with salinity
environmental problems
• Negative
– Over-allocation still not solved
Water reform created Wealth
1200
Cotton Index
1100
Sugar Index
1000
Total crops sector Index
800
Total Livestock sector
Index
Milk Index
700
Total prices received Index
900
Total Grains Index
600
Waterdex
500
400
2000
2001
2002
2003
2004
2005
2006
Year
Psi-Delta 2007
Bjornlund and Rossini 2007
Water reform
• Driven by political realization about the
importance of getting water right
• States have referred MDB planning powers to
Federal Government
– New independent Authority of 6 people to produce
a new Basin Plan
• Buying water entitlements for the
Environment
• Investing in water efficiency
• Trying to remove remaining barriers to trade
• Taking climate change risk seriously
CSIRO Sustainable Yield Project, 2008
Advice from the lessons Aust has learned
Regime arrangements
1.
2.
3.
4.
5.
6.
System connectivity – manage GW and SW as one
Capping use – cap entitlement potential not use
Return flows – account for them
Unmetered uses – include them in the entitlement system
Climate change – plan for an adverse shift
The environment’s share – define it and allocate to it
1.
2.
Registers – validate them early
Entitlements - define entitlements as shares of defined
pools
Trading – Get costs and settlement time down & keep
lawyers out
Control – Unbundle so you can manage at correct scales
Inter-seasonal risk management – allow markets to
optimize carry forward (don’t worry about beneficial use)
Exit fees – Allocate water to individuals or them to trade
out of districts – communities will be OK
Trading risk – develop tagged trading
Individual license arrangements
3.
4.
5.
6.
7.
Water reform and your industry
1. Encourage discussion of and planning for very long drys
– build system to manage with very little water before
the big dry comes
2. Encourage transfer of ownership to individuals
3. Encourage replacement of seniority system with a
share system designed for adverse climate change
4. Encourage connected management of ground and
surface water as a single system
5. Encourage preparedness for a different water future
and need to trade water on a daily basis
Embrace water reform – trial it
Without reform you do not have a secure future!
South Australia’s new water security plan
South Australia’s new water security plan
Download our reports and
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www.myoung.net.au
Contact:
Prof Mike Young
Water Economics and Management
Email: [email protected]
Phone: +61-8-8303.5279
Mobile: +61-408-488.538
www.myoung.net.au
Water Use-Efficiency in Australia
 Australian irrigators have increased water use
efficiency significantly
– 1991 -2001 water use per hectare down by 50%
– Area under irrigation only reduced by 6%
 This has been driven by
– Low rates of agricultural protection
– Water reform - since 1994
• Improved entitlement and risk specification
• Water trading
• Separation of policy from delivery
– Impact of prolonged drought since 2001
24
16
Over last 25 years rice yields have risen from 5 to 10 tonnes per hectare1.6
14
1.4
12
1.2
10
1.0
8
0.8
6
0.6
4
0.4
Measured field water use (ML/ha)
Grain yield (t/ha)
Water productivity (g/L)
Linear (Measured field water use (ML/ha))
2
0
1980
1982
1984
1986
1988
1990
1992
1994
1996
25Source: Modified from Humphreys and Robinson (2003).
1998
2000
0.2
0.0
2002
Water productivity (g/L)
Water use (ML/ha) or Yield (t/ha)
Trends in Rice productivity, MIA
National Water Reform
• Competition policy followed by a
National Water Initiative
1. Recognition of Scarcity – freeze on new
licences
2. Separation of water title from land and
trading
3. Administrative separation
4. Full cost pricing (Lower Bound)
5. Formal Planning
6. Reduced allocations per entitlement
26
Competition payments to MDB states (A$millions)
Year
State
97-98 98-99 99-00 00-01
01-02
02-03
03-04
04-05
05-06
NSW
126.5 138.7 148.6 155.9
242.5
251.8
203.5
233.6
292.5
Vic
92.8
102.0 109.2
114.7
179.6
182.4
178.7
201.6
197.9
Qld
74.2
81.6
81.5
73.0
147.9
138.9
87.9
143.3
178.7
SA
34.3
38.4
34.5
35.9
55.7
57.1
40.7
50.4
54.3
NSW fined A$26 million for non-delivery of water reform milestones
Source: NCC. 13th January 2008.
27
Administrative separation - Murrumbidgee
Murrumbidgee Irrigation: Index of costs in real terms since privatisation
1.15
1.10
1.05
Index of costs
1.00
0.95
0.90
0.85
Bulk Water Costs
Overheads and environment
0.80
Water distribution & maintenance
Total costs
0.75
0.70
1999
2000
2001
2002
2003
2004
2005
Separation of policy from water supply has lowed costs.
 Source:
After
Young et al. 2006.
Allow
irrigators to own and run their
supply
systems
28
Year