Water Prof Mike Young Research Chair Water Economics

Water Prof. Mike Young Research Chair, Water Economics and Management The University of Adelaide Almond Growers Conference, Barossa Valley, 30 th October 2008

Murray River at Wentworth, NSW during 1914 drought (Photo courtesy of the State Library of South Australia) 2

Which future is best? § One that gets the fundamentals right, now? § A system that can be confidently explained as able to cope -- whatever future arrives § One that commits all to more decades of reform and uncertainty? § Incremental progress § No guarantee of resolution of current problems 3

Future-proofing the Basin www. myoung. net. au 1. A sustainable sharing system for ground & surface water 2. Put all states under the same inflow sharing regime 3. 100% carry over of all water 4. Require off-set of all land use change that erodes entitlement reliability (forests, dams, SIS) 5. An independent authority making allocations to shareholders 6. If still dry, review system configuration & size from top to bottom 7. Use the $5 billion on offer to restructure the industry quickly 4

Three Concepts 1. Adverse climate change long drys droughts § Each challenge needs a separate strategy 2. Rainfall Yield § Small reductions in rainfall mean big reductions in supply 3. Accounting § When someone takes more someone or something else or the environment must get less § Increased efficiency has a big downside § Groundwater – surface connectivity matters 5

Long drys Total River Murray System Inflows (including Darling River) WET DRY 8 yrs 12 yrs 52 yrs 6

Re-live from 1938 2014 7

Rainfall and yield - 1% - 3% 8

With half as much water Users Environment River Flow 9

Long drys Total River Murray System Inflows (including Darling River) WET DRY 8 yrs 12 yrs 52 yrs 10

Adverse climate change In Mediterranean climates, a 20% decline in mean rainfall results in around a 60% decline in mean storage inflow Mean supply 10, 000 Mean supply 4, 000 River & Storage Evap 2, 000 Flow to sea Deliverable water 6, 000 2, 000 Deliverable water Environment Use 1, 500 Environment Use 0 Consumptive Use 4, 500 Consumptive Use 0 0 11

Is this ground or surface water? Source: Rick Evans 12

Accounting for Forestry Trees Grass 250 mm = 2. 5 ML/ha/yr @ $3000 /ML * 0. 80% = $6000/ha 13

The state of the system

Monthly flows past Euston 9, 000 8, 000 7, 000 6, 000 5, 000 Extensive overbank flow occurs above this line 4, 000 3, 000 2, 000 1, 000 A decade without water over bank 15

River Murray Active Storage Active storage Average storage Maximum active storage 16

Cumulative System Inflows for selected years 16, 000 2006/07 14, 000 2007/08 2008/09 Average Projected 12, 000 10, 000 8, 000 6, 000 4, 000 2, 000 17

The next challenges

Solving over-allocation – where is the water? 19

Volume of Water in the System A sharing regime or a cap? 20

The next challenges 1. Backing the Murray Darling Basin Authority § Murray Darling Basin Authority and a new Basin Plan 2. Developing a Basin Plan that has climate and accounting integrity § A robust sharing regime 3. Securing an environmental share in a timely manner § Combine infrastructure and acquisition money ($3. 1 b is not enough) § Expedite expenditure 4. Reconfiguring the River, its lakes and wetlands • What do we give up? How clever can we be? 5. Removing all barriers to trade and rationalising infrastructure investment 21

“We don’t have all the answers – nobody does – but before we start laying bricks and mortar, we have got to get the foundations right, otherwise the cathedral will tumble with the smallest of tremors. ” Peter Cullen Wentworth Group of Concerned Scientists 22

Download our reports and subscribe to droplets at www. myoung. net. au Contact: Prof Mike Young Water Economics and Management Email: Mike. Young@adelaide. edu. au Phone: +61 -8 -8303. 5279 Mobile: +61 -408 -488. 538 www. myoung. net. au