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water reform: flaws « Previous | |Next »
October 18, 2006

Andrew Macintosh, from the Australia Institute, has an op-ed in the Canberra Times entitled 'Water reform doomed to fail' that makes some good points. He says that the water reforms are doomed to fail because they involve setting up a market for water before the biggest problems have been resolved: the over-allocation of water licences and excessive agricultural subsidies. He says:

There are two main problems with the management of water in rural areas: over-allocation and misallocation among water users. That is, too much water is being extracted from rivers and aquifers and the water that is extracted is not being put to the most productive uses. The plan that has been devised to address these problems contains four main elements: provide secure property rights in water, promote water trading, improve water pricing and recover water for the environment. In theory, this strategy is sound. But what governments seem to be overlooking is the need for these reforms to be ordered appropriately and the fact that existing agricultural subsidies must be removed to ensure the desired efficiency gains are achieved.

That is spot on. The 'drought' may be a good time to address this since there is little point in subsidising inefficient and unsustainable farms. Climate change is making many farms unviable. The federal and state governments are much better buying out the water entitlements of those who want to leave the land.

He adds:

The proper ordering of water reforms is essential if water is to be recovered for the environment in a cost-effective manner. If secure property rights in water are created and water trading commences in earnest before water has been recovered for the environment, the price of water will increase, making buy-backs more expensive for governments and the cancellation of licences less politically palatable.

This is just not happening. The emphasis is finding surplus water from water savings from upgraded infrastructure because of the opposition from irrigators. Irrigation is money and, as MacIntosh says, this is:
...why governments have tended to prefer to try to recover water through infrastructure improvements rather than cancelling or buying back licences. Although infrastructure programs are neither effective nor efficient, they are palatable to irrigators because they are generally left with the same amount of water as they started with. The political clout of irrigators also explains why governments have been reluctant to introduce full cost-recovery pricing for water services in rural areas. In contrast, water market reforms that provide irrigators with greater security over their water entitlements are popular, even if there are some reservations about water trading.

So water recovery for the environment lags behind market reforms. As the market reforms gather pace, the price of water will continue to rise and therefore the cost to buy it back, creating greater headaches for governments and placing ecological sustainability further out of reach. MacIntosh says:
Existing agricultural subsidies like drought relief and subsidised water delivery are only exacerbating the problems associated with recovering water. Irrigators are less likely to relinquish their entitlements while they continue to be propped up by governments.

I cannot see either political party biting the bullet on this. So the problem is going to get worse. The Darling River is dying and a dead river means no irrigation. Yet there is still no push to address the overallocation of water and ensure environmental flows. So rural communities based on irrigated agriculture, such as Bourke, are going to slowly die.

| Posted by Gary Sauer-Thompson at 5:53 AM | | Comments (1)


With all my respect to authors’ English skills, I would say in plain tongue, that lacking of an elementary engineering logic and willingness to bring about change would NEVER succeed.

Either in water reform or any other project, where outcome only is changing the ownership of billiards of borrowed overseas dollars.