Before getting too up in arms about former National Party leader Mark Vaile moonlighting as a lobbyist - while staying on the public payroll as an MP - let’s look on the bright side and note that he can’t continue to pervert good environmental policy. While in government, the National Party remained the biggest single barrier to fixing the Murray-Darling river system, with their absolute refusal to countenance the idea that governments would have to buy back water allocations.
And now, quietly, without fuss, it’s beginning to happen, as Professor Quiggin discusses approvingly at length:
Three months after the change of government, the seemingly immovable barriers to action have disappeared. The Minister for Water, Penny Wong, has announced a tender to buy water rights back from irrigators willing to sell, allocating $50 million for the current financial year.
Meanwhile, Treasury Secretary Ken Henry has put a case for water - and other - market reforms in a speech advocating near-complete freeing up of water trading, including the replacement of urban water restrictions with variable prices that increase during droughts - not to mention traffic congestion pricing.
For better or worse - and these kinds of reforms have real downsides - we’ll likely see a lot of the ideas put up by Henry get on the political agenda over the next few years.
The freeing up of the water market makes some sense, although I think there should still be a baseline of inexpensive water for residential consumers, but it should be set fairly low. Alternatively, low income households should be able to easily apply for and receive concessions.
I’m an irrigator in SA.
I bought my licence for lots of megalitres about 15 years ago, I sorta recall at about $1000 per megalitre. Today I think its worth about triple that, I could make a nice profit if I sold it.
But the actual water itself, the wet stuff, costs me nothing [when it is available that is, at the moment I’m using 0% of my allocation because my Murray River lagoon is bone dry]. I think that needs repeating, cos most people are not aware of that….water costs nothing to the irrigators.
Meanwhile in the cities and towns domestic users pay roughly $1 per kilolitre.
Use a 100 kilolitres in the town or city, pay about $100 [there something about minimums I’m not sure of but the outcome is that water aware people, with tanks etc, I know in the city are paying about that much currently]. Use 100 million litres out of the Murray as an irrigator….pay nothing for the water. Zero. Zilch.
So talk about water markets makes me giggle.
Currently we are in drought here in SA and irrigators like me and urban users like the more than 1 million people who rely partly or wholly on the Murray are on restrictions.
I can use 32% of my ethereal allocation. Actually I’ve just been offered by the govt. an EXTRA allowance equal to that which I didn’t use last year because of restrictions.
I used zero last year so this year I can use 132% [or 64 whatever, its academic]of my licence. At no cost. If the water existed. Which of course it doesn’t cos those that have got it available are using it before it gets here. Absolutely zero amount of the Qld. floods has or will reach here. Its phantom water [although I believe ONE cotton place snitched 80% of the water that flowed past their place, well it tried to flow past, so it did exist UPSTREAM].
So much for overallocation of water due to stupidity and greed in the past. And present.
The extremely simple fact is that we are taking out of the entire river system too much water.
The extremely simple fact is that we have to do 2 things.
Firstly increase the water going into the river system [stop 10s of 1000s of farm dams from holding and losing, note I didn’t say ‘using’ cos most of it isn’t used, it evaporates and other measures].
Secondly take less out.
The biggest consumer of water is irrigation.
Here in SA irrigators use around FOUR times the amount of water from the Murray [free, remember] as Adelaide’s 1 million people plus a fair chunk of the rest of the state. And the economic value of non-irrigation water use is umpteen times that of the irrigation with an employment umpteen times larger. We have entire small cities that rely virtually entirely on that water. Which they pay for.
In the last drought year water metres recorded that irrigation use decreased only slightly below normal. MOST irrigators used the nearly the same amount of water, for free, despite restrictions, as they use in normal years.
Don’t talk to me about water markets, they do not work.
There has been, as Robert points out, some relatively straight comments made recently about our laughable water system.
Peter Cullen was on Lateline recently and diplomatically made the points that some irrigators will have to disappear [far fewer than the number of Mitsuibishi wokers who are losing their livelihoods] and water economist Mike Young has published a report which has a lot of ideas and inclues this statement:
“”The causes of the Murray-Darling Basin’s problems stem from a
flawed allocation regime…… The short answer to the question: “Can the arrangements set out in the new Water Act be confidently presented as likely to work well in
times when water is abundant, in drought and cope during a
prolonged dry period?â€? is NO.”
So clearly someone has to make some hard decisions.
And sorry, cute as Penny’s $50 million buyback statement was, and I’m a bit of a fan of her, as an answer to the problem it needs to be multiplied by about a factor of around 100.
True, but the principle has now been established: the government is buying back water on the open market.
Since you mention Vaile, and freeing up regulations, it’s worth noting that Wilson Tuckey is <a href=”http://www.abc.net.au/news/stories/2008/03/06/2181603.htm”also going overseas on a holiday lobby junket paid for by wheat growers. And at the same time, the Rudd government has introduced new draft laws that will deregulate the bulk wheat export market.
Not surprisingly, AWB LTD is delighted with the new laws:
I’d like to know if AWB LTD is funding Tuckey’s trip.
(Sorry if this is getting a wee bit off-topic but WTF: at least it’s not an irrelevant and pedantic sidetrack)
“In a well functioning water market, drought-induced increases in the price of water would reallocate water among users, with a higher proportion of it flowing to those who valued it more highly. In any place, or at any time, at which its marginal value fell short of its price, water would not be used. On the other hand, if a suburban gardener valued her roses sufficiently highly, she wouldn’t have to stand by and watch them die.”
Ken Henry has picked a very a bad example to push his case. A priority for rose bushes and probably nature strips, for those who can afford it, over every human beings basic right to water suggests he is now a man stuck in dogma and out of touch.
The so called free market solution is no way to deal with the distribution of this now very scarce resource.
‘The so called free market solution is no way to deal with the distribution of this now very scarce resource.’
Surely some combination of per capita allocation and free market would be the way to go. At present Brisbanites are consuming around 130 litres a day per person. You could allocate a ‘free’ volume of say 80 litres a day per person and allow the excess amount to trade. How much excess is allowed would be determined by the overall cap imposed by the water supply authority. That way, lower income households could profit from their careful use of water. There wouldn’t be any benefit in cheating, whereas at present cheating is a rewarding experience. Also at present, households with more residents - eg large families - are unfairly penalised by a system that sees a single-resident household getting the same allocation. By the same token, people who invest heavily in their gardens - for whatever reason - ought to be able to access the water saved by others if they’re prepared to pay for it.
joe2: why is it any more of a basic right than food or petrol, neither of which is rationed?
Water restrictions are an extremely silly way to reduce water consumption. As I’ve noted before, they arbitrarily privilege some forms of water saving over others which are cheaper and more convenient.
There are a dozen blokes near me using 1,200,000,000 litres to grow potato crisps.
The water is free.
Do the arithmetic.
People make a living out of roses too - it’s called the gardening industry. Why is their livelihood worth less than the bloke growing potato crisps, cotton or rice? Who’s stuck in dogma and out of touch?
“There are a dozen blokes near me using 1,200,000,000 litres to grow potato crisps.
The water is free.
Do the arithmetic.”
Glad you did not say… “Do the math”, hannah’s dad.
Water wasted on junk food, at not much cost, apart from land degradation and medical costs down the line, is it?
Oh, the wonders of the free market!
You also remove the problem of people watering their gardens on days their allowed to simply because they’re allowed to on that day and not on others, rather than because they really need to. For most people the cost of water is not high enough to act as a disincentive to water the garden.
The point surely is, that just because you put a price on something does not mean that people will behave rationally or responsibly. When it comes down to water and food, the most basic needs of life, all games should be off.
I find it a bit sad that i need to mention this here.
Joe2, the Australian water market is far from free. This is what experts like Quiggin and Henry are pointing out. The problem is that the market is not allowed to function - to date, water cannot be purchased out of the agricultural sector, for urban use or environmental flows. As a result, hugely costly enterprises are tried to increase the efficient use of agricultural water, like lining waterways to prevent seepage. Only the savings can be transferred out of the ag sector. This is much more expensive than other options such as desalination, and the water produced costs so much more than it trades for in the agricultural water market.
The ‘free market’ solution would be to buy the water from the ag sector. Inefficient farmers will get a good deal for their water, and the water would go to the environment or urban uses - avoiding desalination.
I agree, joe2. Free lunches are a basic human right.
kymbos, Ken Henry, if you read carefully, is talking about domestic consumption as well. He believes, ultimately, it is ok for the rich to tender their roses while the poor get the last drip from their hose.
Let them eat drip not cake.
Joe2, you’re right about Ken Henry. He is saying that water should be paid for by those who are willing to pay for it. So to summarise your position, you’re saying that water is very valuable, so it should not be paid for. Sounds more worthless than priceless.
Henry points out that equity is the only thing going for water restrictions as an allocation approach. But there’s an equity issue in everything. Why must my aged parents be prevented from enjoying the one recreational activity they have left to them? This is what water restrictions does. If you want a true equity position, why not ban all watering at home, and irrigate our public parks? Currently public parks are going bone dry while we water at home. Doesn’t sound very equitable to me.
kymbos
“this is much more expensive than other options such as desalination,”
kymbos the cost of desalination is enormous.
Adelaide’s proposed desal plant will cost, if you believe the pollies, more than $1 billion dollars to be able to produce about 50 gig [that’s 50,000,000,000 litres] of water per year.
Thats a billion bucks just to build it. No water produced at that stage.
For the same cost you could buy back from SA irrigators 4 times that quantity of water roughly, at VERY generous prices.
So you would have your 50 GL for Adelaide [thats about 1/3rd to 1/2 its normal Murray water use], 100 GL for the river before it karks it completely [the river badly needs more but that will do for starters], and 50GL in reserve.
And you haven’t added to the cost or greenhouse gases by paying for the electricity to make desal water. Cos remember its a billion plus just to build it, if you want it to make water thats extra and greenhouse gas and other nasties are a by-product.
Give the irrigators some compo, give them jobs that are productive in the region, give them job training, we can do without the crisps [the Tasmanians will be happier], the lousy wine and citrus is not a major industry [tourism is much higher value dollar earner and employer along the river] and a 30-40% decrease in irrigation along the river will have minimal impact economically. Several hundred workers are about to lose their jobs at Mitsuibishi here and in terms of human and economic cost that is at least equal to whatever readjustments would be necessary along the river.
I don’t think people realize how enormous are the quantities of water used in the Murray-Darling Basin. It doesn’t seem to sink in that the place across the river from me for example [and there are many larger sites] uses as much water as a small city, highly indirectly subsidised, hugely inefficient in its water usage [it sprays it into the air], causes massive pollution, and employs bugger all people.
I despair when people talk about city usage as if that is a major player in the problem.
The main value I see in water restrictions in the cities is to develop public awareness, the amount of water saved, no matter how hard people try, is …wait for it….a piddle in the ocean, compared to irrigation usage.
HD, we’re in furious agreement. I must have been unclear. My point was that as expensive as desal is, the fact that we can’t buy water out of the ag sector at very low cost means we are forced into stupid high cost options such as channel lining which are much more expensive than even desal.
Desal water is around $3-$4 per kilolitre. Water saved through ‘efficiency gains’ like channel lining are an order of magnitude higher. Water traded on the ag market is an order of magnitude lower. On this basis, the solution is fairly simple if we allow ourselves to do it.
sorry kymbos I thought you were supporting desal. My mis-interpretation probably, it usually is *sigh*.
And of course we shouldn’t be buying water from the irrigators [such as me] because they don’t own it.
It belongs to all of us including particularly the river,
The fact that they think its their god given right to have more than their fair share of the water [at no cost as I constantly emphasize] is what needs to be changed with or without their approval.
Water efficiency, not just around here, is a joke, an unfunny one. I have seen water being sprayed into the air on 40 degree high wind days.
It will be happening as I type.
Irrigators have been claiming high effeciency [HAH!] without really addressing the problem despite being aware for decades.
Basically if it [the crop] needs to be watered by open channel or spray then we shouldn’t grow it. Its that simple. If its a perennial which needs massive quantities just to survive from year to year without necessarily producing anything [think citrus, other trees, vines] then they need to be replaced, ie eliminated, in favour of annuals where water can be turned off if necessary, That is a valid point made by Peter Cullen.
I’m avoiding talking about ‘the water market’ because, quite frankly, I wouldn’t have one.
Incidentally, I don’t think we pay for water in the city either. We pay for its processing and delivery, which is why fixed costs are such a large component of water bills. This is the same as for irrigators, isn’t it?
Gee, how about some action to capture and store some of the water we’ve been pissing into the ocean this summer? If Quiggan considers this action, he’s not likely to direct Die Hard 5.
Nope.
I have never paid a cent for any of the water in any shape or form I have used in the decade plus that I was able to use it here on the river. Thats standard.
Clearly there is a difference in the delivery cost of water to city houses [pipes for example]and to my property but the difference is not that between roughly $1/kilo litre [city] and $0/any amount for me and my ilk.
Its effectively a subsidy of irrigation.
City water bills charge for services and allow a certain minimum water usage and then charge extra for ‘excess’ but the minimum is such that most suburban houses have excess and pay about $1/ kilolitre. Or at least thats what I recall from my city days and what friends and rellies tell me.
In addition the irrigators are not directly billed for salt removal or chlorination of the water to make it potable, both costs largely due to irrigation and agriculture systems along the river.
Just to try and put the picture in perspective. I come from a rural industrial city of about 25,000 people with employment of 1000s and an economy worth billions to the state. Despite being totally reliant on the Murray for water it probably only uses around the same amount as just one irrigation [of many] property near me which employs about a dozen people.
We have to take less irrigation water out of the river.
Craig, if you’re talking about the Murray-Darling, there is no water pissing into the ocean. None. There’s been no flow over the barrages since 2006.
“I agree, joe2. Free lunches are a basic human right.”
Yep Liam, food and do not forget water.(We kiss and hold hands)
Let’s go further and guarantee to provide housing …no matter how good or bad people have been.
Correct. But on the other side of the dividing range it’s another story altogether.
“how about some action to capture and store some of the water we’ve been pissing into the ocean this summer?”
Because it’s easier and cheaper to take the salt out sea water
So a desalination plant for the Murray Darling then? I don’t think that’s what you mean. I was talking about redirecting such water inland. Of course that’s been suggested many times before and subsequently ignored up because of the uber-Snowy size of the project.
That doesn’t mean we won’t get to that point though. A lack of water has an opportunity cost, and one day it will come close enough to the project cost.
From what I’ve read, water from a desalination plant is about 17 times more expensive than from a dam, and provides nowhere near the capacity - at least here in Victoria.
Desal isn’t cheaper than water recycling, but it’s easier to use. People don’t want to drink recycled water, so a use for it has to be found (usually agriculture, or ‘third pipe’ - used for gardening, toilets, washing machines). The ag sector compares recycled water with very cheap river water, and third pipe is very expensive to retrofit into an existing house. Desal can go straight into the same pipes as all potable water, making it easy to use.
Desal is much more expensive than existing dam water, but that’s not what it’s being compared with. The alternative to a desal plant is the next dam we build, which is not cheap or easy to find.
In Victoria’s case, the dam site is easy to find, and much cheaper than the desal plant to build. Then there’s the running costs. Not to mention the warm and fuzzy “greenhouse-friendly” which should be popular around here.
So of course, we’re getting the desal plant instead.
What’s the dam site you’re referring to, Craig Mc?
Yep, please tell, Craig Mc.
We are waiting with ears open for the dam site you propose.
Not much real rain happening, lately, in victoria.
You must know best where to stick the dam thing.
Looking forward to your always wise advice.
The Mitchell River. We’ve had two floods go down it in the last twelve months. Melbourne Water had plans decades ago to pipe water from it into metropolitan dams.
“So to summarise your position, you’re saying that water is very valuable, so it should not be paid for. Sounds more worthless than priceless.”
A most unkind summation of my view, Kymbos, but glad to hear another opinion.
So where do you think a convenient site for that dam would be, Craig? Just below the Den of Nargun, perhaps?
The smart place for Melbourne to get more water from would be to make the pipeline they’re building from the Goulburn bigger, and buy more water off irrigators.
Anywhere in that artificial farce of a national park will be fine.
hannah’s dad,
I think I remember reading in The Independent Weekly that irrigators use something like 80% of our (SA’s) water and only 7%-8% is used domestically and the rest goes in evaporation, does that sound about right?
For Jacques at #36
http://www.abs.gov.au/ausstats/abs@.nsf/7d12b0f6763c78caca257061001cc588/569770beee255ea3ca2572c6001d5a9d!OpenDocument
This link will give a lot of relevant information.
Some excerpts:
Adelaide usage [may ?? include the rest of the state]
“In the dry 2002-03 period, lower annual inflows to the local reservoir catchments in the Mount Lofty Ranges resulted in an increased demand for water from the River Murray with 72% of the water delivered by SA Water in this period obtained from this source (Graph 1). Furthermore the 2002-03 summer had a large number of days with temperatures in excess of 32oC, which contributed to an increased demand for water by SA Water’s customers (SA Water, Annual Report 2002-03). In 2002-03, 282 GL of water were delivered by SA Water, compared with 266 GL in 2001-02 and 246 GL in 2003-4.”
………………………
Irrigation usage
” For the dry period 2002-03, the estimated diversions were 531 GL; the 2001-02 and 2003-04 diversions were 494 GL and 490 GL respectively. The average annual diversion for irrigation usage for the five years 2000-01 to 2004-05 was 508 GL per year. The irrigation diversions include an Environmental Land Management Allocation for the Lower Murray Swamps of 22.2 GL/year.”
Adelaide used, in a bad year, about 200GL of Murray water , normally its much less.
At the same time irrigators used more than 500 GL, usually its about 660 GL.
About 22 GL went to the southern part of the river [below the Blanchetown lock] which includes, I believe, the Lakes and Coorong . The evaporation figure comes out of that and/or decreases the level of the Lakes and River [hence my lagoon and others drying up].
There is more of interest in the link.
The only sensible response to those who talk about ‘wasted water’ going out to sea:
http://www.abc.net.au/cnnnn/profiteering/tiltaustralia/
Even funnier than CNNN, but meant totally seriously unfortunately, was the magical ‘twin lakes’ [catchy name eh?] proposal of a few years ago..
An earthen wall inside Lake Alexandrina, 100 km around, 10 metres high, 1 km. wide at a cost of $300 million [well that was the claim].
Try to visualize that.
Aim? To turn L.Alex. into a salt water lake and “save” 300 GL from evoparation.
Note:
Lake Alexandrina would have become an isolated salt water lake, no fresh water at all ever! Completely and permanently changing its ecology.
Absolute environmental vandalism but it was mooted strongly around the traps for some time [the company tried to get $5 million from the government for ‘research’] before collapsing under the weight of its own stupidity.
Try googling in Australia for ‘twin lakes alexandrina’ to get more detail and to see how far this crackpot idea penetrated various bureaucracies without ever receiving the derision it deserved.