The key ingredients for success of the Murray-Darling Basin Plan

April 1st, 2013

Adrian Piani, URS, Australia

In 2005, in the middle of Australia’s worst drought on record, the Prime Minister John Howard announced a $10 billion water reform package. This included creation of a new independent authority to take over the management of the Murray-Darling Basin – Australia’s most important food producing area.

A new Water Act was passed in 2007 using constitutional powers to enable the Australian Government to take over management of the Basin from the state governments that had controlled it since Federation in 1901. The Prime Minster stated that managing water for the nation ‘ requires an end to the parochial pursuits of state interests’.1

Through the Act the newly created Murray-Darling Basin Authority (MDBA) had to develop a Basin Plan to set new limits on water use based on environmental needs. Specifically the new Sustainable Diversion Limits were to be developed to ‘not compromise’ environmental values and to ‘optimise’ social, environment, and economic outcomes. In 2010, the MDBA released the draft guide to the Basin Plan calling for between 3,000 and 4,000 Giga Litres of water to be returned to the environment.2 This is around 30% of total water use in the Basin. Community backlash in irrigation areas was extreme and media coverage was intense. Not long afterwards, the MDBA Chair and CEO left, and a new Minister had taken over. A new team was in charge and the MDBA starting working towards a revised Basin Plan.

After intense political speculation, the Plan was accepted by the Minister at the end of 2012. The Basin Plan is now law and is moving into implementation.

What changed? What were the key issues or processes that enabled the Basin Plan to be passed after such a problematic start? If anyone was contemplating a major water reform process, what could they learn from the Australian experience? This paper reflects on this.

The Water Act

Fundamental to the water reform process was the Water Act 2007. This was the ‘bible’ for the MDBA to develop the Basin Plan. At its heart was a definition of the environmentally sustainable level of take which would not compromise environmental assets, ecosystem functions, the productive base, and environmental outcomes.

It is by no means a perfect document, and there can be much discussion on what ‘compromise’ and ‘optimise’ really mean, but it provided strong enough direction for the Plans development.

Leadership

The failure of Basin Plan Mark I, and the somewhat surprising success of Basin Plan Mark II, can be attributed to the change in leadership that occurred with a new Minister, and a new Chair and CEO of the MDBA:

A Minister who knew how to communicate with the public and negotiate with the states at a political level;

A Chair who as a previous politician was involved in a complicated water reform at a state level and understood the value of talking to stakeholders directly; and

A CEO who by all accounts, lifted the morale of the MDBA staff and engendered a stronger spirit of collaboration and ownership.

After the issues with Basin Plan Mark I there was a strong industry consensus that the Basin Plan was dead. Strong leadership, combined with the dedication of the bureaucrats involved, has to be considered a key part of the eventual success of the Basin Plan.

Water trade and the entitlement process

Important water reforms commenced in the 1990’s to separate the right to use water from land ownership. Irrigators now own a water licence, commonly termed an ‘entitlement’. This is much like a land title. It can be bought and sold as with any other property right. Irrigators can also sell the water that accrues to the entitlement. For example, a farmer may have an entitlement to receive 100 Mega Litres per year. They may decide not to grow a crop in one year and they can sell the water that accrues to that entitlement, whilst still retaining the entitlement for the future.

Different classes of entitlement exist such as ‘irrigation’, ‘industrial’ or ‘urban’. In addition, a new class was created called ‘environment’. This class of water is specifically for environmental use.

The creation of entitlements, the breaking of the link between land and water, the development of a water market, and the creation of an entitlement type for environmental water, all combined to enable the Australian government to buy water. Some $3 billion was set aside for this purpose and so far around half of this money has now been expended.

In theory the government may have been able to compulsorily acquire water entitlements from irrigators, or cap water use without changing entitlements, but this was never publically explored. No doubt, this type of approach would have been politically difficult and un-acceptable to rural communities.

The ability to buy-water from willing sellers was politically palatable, and enabled a market-based solution to over-allocation.

Funding

It would be unforeseeable that the reform could not occur without substantial funding.

The Prime Minister realised this and the water reform strategy was accompanied by a significant funding promise as the price to gain the commitment of the states and to garner the support of communities.

Indeed, the $10 billion initially allocated, quickly climbed to $12.9 billion, and was increased again to $14.6 billion during the last stages of negotiation.

The major funding commitments were to buy-back water and to invest in water saving infrastructure ($6 billion).

There is no doubt that this major water reform could not have proceeded without this huge promise of investment.

The science – ecohydrology and modelling

Part of the reason the first attempt failed so spectacularly was the initial modelling process used to assess the environmental water needs of the Basin. The modelling was done in a short timeframe and could not achieve the level of detail the MDBA initially wanted.

Basin Plan Mark II included a much more sophisticated approach to the modelling. This approach used 116 hydraulic indicator sites across the Basin to determine environmental water needs. Historical water flows, current flows, and required flows were all modelled.3

Although still challenged in the scientific and community arena, the modelling was a vast improvement on the initial attempt, and should be considered world leading in its attempt to model environmental water needs in a large and complex Basin.

Key issues to be progressed

Now that the Basin Plan has passed through parliament it’s time to commence implementation. There is no doubt that this will be as challenging as the creation of the Plan. Key issues include:

The relationship between the Australian and state governments are bruised and will require time and effort to improve. This will be a particular challenge for the MDBA which will now need to work closely with the states to implement the Plan;

After all the science and modelling that has been undertaken, there are still fundamental gaps in understanding how aquatic ecosystems work. Linking flow regime to environmental outcomes, the domain of the ‘eco-hydrologists’, requires on-going scientific research. 4 The monitoring and evaluation component of the Plan now becomes vital; and

The monitoring and evaluation component of the Plan now becomes vital; and Basin Plan Mark I failed to adequately explore the socio-economic impacts of reduced water use on communities. Additional work was undertaken as for Basin Plan Mark II but further work could still be beneficial. For example, no combined hydrological and economic model was developed to enable an explicit assessment of trade-offs.

Conclusion

Water reform is hard. It is rarely or never completed without intense political and community debate. The Basin Plan process provides a great case study of a major reform process that eventually succeeded, even if there were a few bumps along the way. As with most processes, there was no ‘silver bullet’ but key ingredients could be summarised as good leadership with strong engagement and consultation, good science, significant funding, and a sound legal/management framework.

References:

1. Howard, J 2007, Speech to the National Press Club, Viewed 26 February 2013, http://pandora.nla.gov.au/pan/10052/20070321-0000/www.pm.gov.au/media/Speech/2007/speech2341.html.

2. Murray Darling Basin Authority 2010, Guide to the proposed Basin Plan: Technical background, Murray-Darling Basin Authority, Canberra.

3. Murray Darling Basin Authority 2012, Hydrological modelling to inform the proposed Basin Plan – methods and results, MDBA publication no 17/12, Murray Darling Basin Authority, Canberra.

4. Poff, N. L. and Zimmerman, J. K. H. 2010, Ecological responses to altered flow regimes: a literature review to inform the science and management of environmental flows. Freshwater Biology, 55: 194-205. doi: 10.1111/j.1365-2427.2009.02272.

Adrian is the manager for the Australian Capital Territory region for URS and is a member of the Australian Sustainable Built Environment Council (ASBEC). Prior to this Adrian has worked on various water projects as a consultant for Hyder Consulting and as a policy officer and engineer for Goulburn-Murray Water. Adrian has also spent a number of years as a committee member of Engineers Australia and the Australia Water Association.

The views expressed in this article belong to the individual authors and do not represent the views of the Global Water Forum, the UNESCO Chair in Water Economics and Transboundary Water Governance, UNESCO, the Australian National University, or any of the institutions to which the authors are associated. Please see the Global Water Forum terms and conditions here.