John Quiggin’s blog is on a temporary hiatus, which is a pity as I’d hoped he’d reproduce his article in the Financial Review today to enable it to reach a wider audience. Gary Sauer-Thompson summarises the gist of the article and offers some analysis of his own. Quiggin suggests that “the state of the Murray-Darling system is an indication of the price of ignoring climate change”. Quiggin argues that it’s been known since the 1980s that there was an urgent need to restore flows to the river system, and that the recent proposals have both been inadequate and indeed unable to be implemented because there simply isn’t enough water. The impact of the drought is such that releasing any flows from upstream - say from Cubbie Station in Queensland - would largely be a futile exercise as it’s estimated that 80% would be lost by evaporation or absorption into the water table. What we’re left with - in the absence of any real ameliating action and non-existent or very low flows into the lower part of the Murray from 2002 onwards - is the current choice between one ecological disaster and another worse one with regard to Lake Albert and Lake Alexandrina near the mouth of the Murray River.
All this implies that the cabinet decision today to spend an additional $50 million on purchasing water rights in the northern basin is futile. It really just compensates those irrigators whose allocations were the problem in the past for the rents foregone. It also suggest The Greens are also wrong in suggesting that there is a lifeline from releasing flows which would prove to be insufficient.
Quiggin concludes:
The desparate choices now facing us with respect to the Murray-Darling basin are a small indication of what we will face if the world fails to act quickly to control emissions of carbon dioxide and slow the rate of global warming. Sooner or later the necessity for action will become undeniable, but by then the relatively easy options available now will have been forclosed.
Instead of market-friendly options like emissions trading, we will be looking at command-and-control measures like the water restrictions now prevailing in most Australian cities. As far as the environment goes, the kind of triage operations now being applied to the icon sites of the Murray will be routine. Some vital ecosystems will be saved, at the cost of abandoning others.
Both business lobbies and those who argue for waiting for the world are fond of privileging market based solutions over all others, and indeed “skeptics” and denialists claim that those who warn of the consequences of global warming are attached to central planning. There are (at least) two ironies here. The first is that giving into the voices of polluters on the emissions trading scheme may mean that if it ever becomes rigorous in its effects, it may be too late. There’s a message for the Rudd government there. But the second is that those who argue for inaction are themselves the ones who will make solutions other than market-based ones imperative down the track, as Quiggin suggests.
I was at Goolwa near the Murray mouth last week. Hundreds of boats standing high and dry in their marinas where the water had retreated some 25 or more metres from the riverbank. Totally forseeable and preventable, drought or no drought. Bloody tragic.
A lot of people are asking what the motivation of the denialists is. They’re expending so much credibility and many of them must know that in the next few years they’ll be recognised as laughing stocks even by a lot of their current supporters.
I think one possibility is that the likes of Bolt have cottoned onto Quiggin’s point already and its what they want. They’re hoping to run out the clock on the relatively painless options so that command and control is the only way to go and then they can sit their like spoiled children going “You see, we always told you that environmentalists were all about taking away your freedoms”. The likes of Bolt would much rather be right than save millions of people from drowning, and since it is far too late for them to be right about the science they want to be right about their representations of evil Greenies.
Kim, market-based solutions haven’t been given a chance to help the Murray.
In order to “save” some regional Victorian towns — which are obviously far more valuable than the health of Australia’s greatest river system — the Victorian government imposed a “4 per cent-a-year cap on the amount of irrigated water that can be bought and pumped back into the river system”.
http://www.smh.com.au/news/water-issues/at-last-a-deal-to-rescue-the-murray/2008/07/03/1214950951479.html
In a marvellous spirit of generosity, John Brumby recently agreed to lift the cap to 6% in 2009.
Why can’t Rudd force Brumby to remove the cap completely, right now, and then we’ll see what market-based forces can achieve?
Oh, silly me, there might be an electoral backlash against Labor in some parts of rural Vic. Can’t have that now, can we?
This all underestimates the power of markets (or markets with government-imposed features), even where drastic action is required. I mean, if we mess about for the next ten years and then figure out we need to (say) cut 80% of carbon emissions to avoid the very worst case, then we’ll still want so-called “market based” solutions because those solutions are still likely to be more efficient. It’s more a pricing issue than a “market” vs “command and control” issue, at least for greenhouse emissions and climate change.
BBB
However, if really drastic action is required, market-based solution may end up distributing the pain in such unpleasant ways as to make it impossible.
WWII ration books may have not been the economically optimal solution, but I doubt the alternative of just raising the price of everything enough such that only the very rich could afford to buy anything would have been politically possible.
Market-based systems take a while to properly prepare and introduce, and their effects sometimes take a while to work through the system. For example, the recent petrol price rise is an example of how a market based system might work. There were some fairly immediate reactions to the price rise - increase in public transport use, decrease in car trips. But the longer term market outcomes - super efficient petrol engines, hydrogen and electric cars, larger investment in public transport - have yet to work their way through the system.
In contrast, ‘command and control’ measures are very quick to develop and implement. The car example would be banning certain cars on certain days of the week (I think Mexico had a colour code for certain days). The water example is water restrictions.
If a crisis hits, and suddenly, it may be too late for market-based systems. To be fair to the water market, it’s hard to trade water when allocations are at zero percent. But there has never been very open trade, as Paulus noted. I think the big fear of government has been trading from the agricultural sector to urban areas - political death.
Imagine privatised Brisbane water over the past year in an unregulated market. The water company would have made a mozza and at least half of Brisbane would have been dry. As it was with controls, sharing and goodwill we came through brilliantly.
There is an argument that if water was actually priced at what it is worth, Brisbane’s water availability would not have become so dire. As availability decreased, price would have gone up and people would have used less.
Satellite evidence of illegal new water storages on the Paroo R. is typical of farming attitudes to conservation in Murray-Darling catchments. Queensland take a bow. And maybe Goolwa residents could take a look at Lakes Entrance to quieten fears of returning the Murray to an estuarine environment.
paulus, I think more generally you will find that over the past fifteen years that Kennett, Bracks and Brumby have been burning more political capital and doing more to fix the Murray-Darling than any NSW or Queensland government.
And yeah, they are responsible to voters. That’s called politics. Got a more realistic approach?
kymbos, a privatised water company with no regulations would have had the option of sitting on the existing resource and milking the profits from those who had the money to pay against investing in increased supply to cater for low margin consumers.
But the comparison I was making was what you do when an emergency is identified.
But the climate change story is where you get hit by conditions that are simply unprecedented. In Brisbane in the 2004-5 summer storage improved from 40% to 60% from memory. There was some alarm when the following summer produced record low inflows, but people thought that would be corrected in the following summer. The following summer yielded even less - practically nothing.
A similar pattern has caught the Murray Darling system, though the time-scales are longer. The dry has been here before in the Federation drought, but with higher temperatures and greater on-farm catchment the runoff has collapsed, quite apart from the ‘greedy’ up-river irrigators.
On the Murray there is further factor that Quiggin mentions in his article. Historically the system near the mouth has been an estuarine system with inflows from seawater oscillating with freshwater flushes. We built barrages to make it a freshwater system. Opening the barrages as some suggest with no prospect of a freshwater flush would now be a different kind of disaster, as the river and lakes are not adapted to sea water. Also it would threaten town water supplies.
In Brisbane there was a lack of awareness that extra capacity was needed, given the pattern of rain and runoff in living memory, on the part of the authorities charged with looking after such things (Brisbane Water Board? - I’m unsure of the title but it wasn’t the state government). It’s highly doubtful that a privatised system would have been more alert. In the Murray the problem of over-allocation has been known for decades.
zorronsky, I think you are referring to this story. You’ll notice that it is contested by the Qld Government. There was more detail on their position in the Courier Mail today. They reckon the NSW mob have mis-interpreted what they saw.
I’m not excusing the Qld government, and when the issue of the Paroo has come up in the past I’ve always thought any water harvesting should be banned. As I understand it the Paroo drains into important and fragile wetlands in NSW.
Also I know you are talking about attitudes. I think it’s unclear what the Bligh Govt attitude is. Certainly the amounts of water are of no significance to the people on the lower Murray.
Brian - a privatised system with no regulations? Despite that being a libertarian fantasy, there would have been a large number of private companies who would have happily satisfied the demand of thirsty (and wealthy) backyard Brisbane waterers who had the money to buy water, but no water to buy. Desalination, water recycling - there are a number of higher cost water supply options that the market would have happily provided under such a system.
This would have given the existing privatised water supplier a strong incentive to prevent the entry of competitive water suppliers by better managing the resource. Milking monopoly profits doesn’t work forever if there can be new entrants to a market.
This article tackles not one but two very different topics; a linkage which muddies rather than clarifies the current Murray-Darling crisis.
1. Market-based solutions and global warming - a topic which is, I feel, on blogs like this (a) preaching to the converted (b) just about done to death
2. A dry continent & dry-climate farming & living … long-established problems for which climate-change is a smokescreen & an excuse.
Living in & farming a dry continent
29 Jan 1788 - the First Fleet arrives, just in time to deal with the onset of the Foundation Drought, which seems to break not long before James Ruse develops rust-resistant wheat. What we know about approximate numbers of Aborigines, and the time-frames of their ancestors’ penetration of the continent, indicates a fragile land which has trouble supporting a nomadic population much in excess of a million.
1890-c1907 - the Federation Drought adds to the woes of the 90’s economic downturn; but demonstrates that irrigation presents a “golden opportunity” for massive cropping (for export) of very marginal land, much being destroyed by grazing, esp sheep (for fleece export). The white population is about 5 million. Note: The Federation Drought was probably the worst in the history of white settlement, but a small total population and only a small amount of river-damming & irrigation limited its impact.
c1991-20?? - the Millennium Drought.
Irrigation, most of it in old open channels (very little of it surface or root “drip” irrigation, even when the nature of crops makes mould/fungi-minimising drip a better option) is an established practice in once-marginal land along just about every accessible metre of every tributary of the Murray-Darling system. Cropping had become “broad acre” farming (requiring tree massive clearing) & water-hungry rice and cotton are now grown in marginal lands.
Population now c20 million - all but a small percentage dependent on urban water supply. Murray River water also supplies much of the electricity for states near the Murray.
Although urban water-recycling (out of/into rivers & some dams) became common in most major European urban after World War II, the driest continent has, by 2000, not one major urban area recycling waste water back into rivers or dams. Even after years of very low dam levels, only one major area (SE Qld) has tackled large-scale recycling back into dams; a couple have built or are building major desalination plants, and a couple more are talking about building them.
In 1890-1907, had the population been 20 million, farming methods and irrigation methods the same as they are now, would the Murray, even without Cubby Downs, have reached SA’s lower lakes in 1908?
What, then, is SE South Australia doing to limit dependence on & to replenish the Murray? How far advanced is its urban recycling? How many desalination plants are under construction? What changes has the state made to irrigation systems, eg how much is “root drip” (in-ground)? What “water grid and “drought proofing” plans has the SA government put in place to diminish its dependence on the Murray?
Blaming one’s problems on others - the federal government, other states, properties like Cubby Downs - is only acceptable when one has done all in one’s power to solve the problem one’s self.
SA’s current problems almost certainly would - given Australia’s record of “turn of the century droughts” - have occurred irrespective of “climate change”, and result from (a) farming practices unsuited to most of the Murray-Darling region, especially in the Murray from Mildura down-stream (b) failure to develop mass urban water-recycling & other “drought proofing” systems inc. desalination.
So let us not confuse bad (or non-existent) farming & water-conservation practices with climate change! All that does is let bad or non-existent “downstream” farming and water-saving practices, and very poor public & state government planning, off the hook.
PS: I’m from the Toowoomba area, where the recycling battle has just been won after more than two traumatic years. Our rates have skyrocketed and we and the state will be paying for it for years to come. But OH and I have been recycling advocates for three decades and, like most SE Qlders, are willing to pay for what “drought-proofing” our part of the Dry Continent costs.
So yes, I do feel very strongly about South Australia’s “Everyone else’s responsibility but ours” attitudes! Time its whingers and demonstrators grew up and took responsibility for themselves!
Meanwhile, the QLD Government should be exposed as the environmental criminals they are:
http://www.abc.net.au/news/stories/2008/08/15/2336253.htm?section=australia
What just happened in Toowoomba on recycling, DeeCee?
kitty, from your link:
And we are still not informed about the current Bligh Government’s attitude to these things.
kymbos at 13, OK, I stacked the deck a bit. In the real world we usually have some kind of a mix. I’m quite happy with the mix we have at present with a Commission at arm’s length from the government balancing community needs and planning for the future in a transparent and consultative way.
Some of the actual work is being done by private enterprise, eg. the design of the desalination plant, building it and I believe the water grid will be operated by a private outfit.
If declaring interests is the go, I have some Leighton shares. John Holland, one of their construction companies, is doing the heavy lifting. But there is a public body firmly between private operators and the public, which is the way I like it.
Gotta go now. See you tonight.
I don’t want to speak on Quiggin’s behalf, but my reading of the parallel at any rate was that market based solutions for water in the Murray hadn’t really been tried because of all the vested interests and political heads in the sand (including a long period where bugger all appears to have been done). I think - among other things - he’s suggesting a similar pattern might be emerging with the eventual design of an ETS. Or that might just be me, but I think it’s at least a logical inference.
As to BBB’s comment, this is not the sort of problem where you can happily tinker and toy with policy settings when the damage may have been done to a point where it’s basically irreversible. You then have a new set of facts, and any response to them will be much harder, more drastic, and less effective.
Kim, re Quiggin - that’s exactly what JQ is saying.
Re market solutions - they’ll work with systems in the green zone. They can work when conditions are amber if well designed and mature.
But you won’t get a market solution, an immature one at that, to work when it’s two seconds to midnight, you’ve got bodies everywhere and one band-aid.
Yep, that’s what I was thinking, Roger.
Being a Gladstone resident and a lefty, I’m skeptical of market based solutions regarding vital areas such as water supply. It may be true that anyone can set up a desalination plant but the DELIVERY SYSTEM is a natural monopoly - whoever contols it will control the price.
As I have posted many times on many other forums, the monopoly situation hit home here when the privately run water retailer here announced price hikes of between 300% and 1200%. The problem was not too little water - rather, it was FAR too much. The resevoir was full but the biggest customers had slashed their consumption and the private monopoly holder was determined that ordinary residents would make up the shortfall in it’s margin. From memory, they actualy issued a press release stating that “people needed to understand that water was a business and business must turn a profit”.
So…………….where else were we going to get our water from? We couldn’t refuse to use the stuff in protest.
Nahh, market based solutions are no solution when it comes to vital services like water supply.
Kumbos @ 16 asked: “What just happened in Toowoomba on recycling, DeeCee?”
For those not aware of the Toowoomba Water Recycling saga: Toowoomba, a city built to service the easiest Range Crossing in N-NSW & SE Qld, is in the 750mm per year rain belt and has no natural above-ground water (but some bore water). It and areas c70Ks or so to the north & west are serviced by three dams, all 30-50Ks north of T, the last built in the 1970s. There is no other suitable dam site. Since then, there has been a population explosion, esp in “dormitory” towns to the north & west. In addition, old dairying land with access to the water pipeline was converted to “tree-changer” acreage, intensive flower & some fruit farming - some in-ground, some hydroponic.
Dams were last full in 1998. The last good rain fell in the dam areas in Feb 01. In a normally cool area, summers from 2000 onwards were blazing and most winters very warm. Water restrictions slowed usage; but by 2005 the situation was dire & Council investigated possible solutions, inc: other dam sites, piping from local bores; piping in from Artesian basin and/ or coal-seam gas water, and water-recycling. Although bores, Artesian & coal-seam gas water could provide some water, only water-recycling provided a long-term viable option if dams were low. Reports on these investigations are available http://www.toowoombawater.com.au/home/
Intensive exploration of OS water-recycling, esp of new “reverse osmosis” processes in Singapore & California, made this the best option. The plan, though controversial, was passed by Council whose Mayor, Di Thorley, was ALP … so the issue rapidly became political. Local fed member Ian McFarlane was originally supportive. Opposition to recycling was led by National Cr Lyle Shelton (would stand, unsuccessfully, for the ALP_held state electorate of Toowoomba North) & the no-campaign bankrolled mainly by former Nat minister millionaire local developer Clive Berghofer. McFarlane rapidly wussed it & Howard made Federal funding subject to a referendum.
Held on 29 July 2006, the result was overwhelmingly “No” (over 60%). http://www.jennifermarohasy.com/blog/archives/001511.html
2006 continued dry. In early 2007, dam water levels fell below 11%. Rain during 07-08 barely kept the dam levels above 11%. Public opinion began to turn, and was running against the anti-recycling candidates by the time of March 2008 elections for the new Regional Council. Just before the election Premier Bligh announced that Toowoomba dams would be linked into the SE Qld recycling water-grid, including Brisbane’s Wivenhoe by pipeline. In the election, anti-recycling candidates were thrashed (c11.3% of the mayoral vote).
On 9 July 2008, recycling, and connection to Wivenhoe was a done deal; so much so that, according to The Chronicle, even Berghofer had stopped fighting it. A report on the 9 July announcement is here. http://www.toowoombarc.qld.gov.au/index.php?option=com_content&view=article&id=944:toowoomba-regional-council-welcomes-wivenhoe-pipeline-project&catid=9:newspublications&Itemid=21
Currently, dams have dropped to 10.5%; we’re also using local “harder than industrial diamonds” bore water (leaves copper blue & brown stains on toilet despite cleaning) Artesian & Coal-seam-gas water will add to our “water-grid”, probably even after Wivenhoe water (to which Brisbane’s recycled water is added) reaches here.
Meanwhile, the very day SA protestors were all over Sunday’s national news, Anna Bligh laid the last part of the Gold Coast-Wivenhoe water-exchange pipeline (A$901 million), and the sea-cocks were opened on the Gold Coast desalination plant. Several months ago, Brisbane industrial-strength grey-water reached the Tarong Powerhouse (near Kingaroy). Reverse-osmosis purified recycled water will be pumped into Wivenhoe in 2009.
It all costs a packet - many $$ billions - but there really is no other way to assure long-term water supply for rapidly expanding SE Qld (esp the dry Toowoomba Region). Even if we get a string of very wet summers (it will take Noah’s flood to fill our dams) the population keeps expanding and frequent droughts will still occur.
It took a mere 19 months for 60+% “NO” to recycling on 29 July 2006 to became a 11% vote for the anti-recycling Mayoral candidate in March 2008 - in Australia’s most conservative city by far.
All it takes is the Will to recycle and what ex-premier Pete Beattie called an Armageddon situation
Have you ever heard of ‘the German economic miracle’? Market systems dynamically adjust as fast as the various participants feel they have to. They efficiently distribute information about who wants what across indirectly connected sectors. That’s why economists keep banging on and on about market-based solutions.
Our economy is so heavily reliant on carbon emissions that introducing C&C mechanisms for carbon use is pretty close to introducing C&C for large parts of the economy. It’s well known at this stage that such a thing is, putting it bluntly, a stupid idea.
So yes, we marketdroids are privileging the market. Not because we understand in advance what it will do — we can’t — but because we understand what the alternative can’t and won’t do. To turn old leftist phraseology on its head, climate change is too important to leave to governments.
Jacques: might I suggest you’ve ignored most of what I said?
Yes, if you want to decarbonize the economy in a great hurry, you could put a carbon tax of $500 per tonne on emissions. Let’s see how long the Economic Purity Party which imposes such a policy lasts in government…
Roger Jones @ 20 - the traffic light analogy is one I’ve used before, too. The ETS idea was perfect if we had only introduced it properly around the globe in the early 90’s, for instance.
Question for you - where, in your opinion, do we stand on climate change right now? Amber just about to turn red? Or are we in the red already?
Robert, issues of economic burden can be dealt with as a supplement to any market-based system. Issues of gross inequality can be dealt with over any timescale. Why you think that anyone would seriously propose a very steep carbon tax (in the “two seconds to midnight” scenario) without some form of redistribution is beyond me, given that even today’s relatively painless market-based policies recognise the need to compensate sections of the community.
BBB
Indeed.
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It’s interesting how discussion of policies and habits pertinent to sustaining modern civilization by not destroying its ecological basis have been sucked into the theological grindstone of 19th and 20th century ideological conflict. If people in general had paid heed to the ecological price a little contemplation told us that we would have to pay way back in the late 40s market solutions wouldn’t be the default preference as they are today. Then it was Keynes not Friedman who was the Economic Guru and being a socialist was acceptable (communist not really).
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Would the solutions’ve been better?
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I don’t know. The socialist agenda also put a high value on industrial production and growth so the left once upon a time was just as inclined to pooh-pooh ‘Malthusian’ fear as the right. Nowadays the left almost universally endorses the AGW hypothesis. Given the defeat of the Soviet system and the roll back of Social Democracy since the 70s many people on the Leninist and non-Leninist Left have jumped on the environment bandwagon as a new tool to kick Capitalism with.
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Those sections of the New left whose primary basis is not ‘the victory of the proletariat’ are not included necessarilly in this group (a feminist isn’t necessarilly ‘anti-capitalist’). And of course there is the environmental movement, whose ideological origins are heterogenous and related at least in my experience to associational anarchism, have long seen the impact of the industrial system regardless the ideology as ‘the problem’.
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Nevertheless it is, I think, true that those agents in political debates who are the main voices of environmental policy favour regulatory solutions.
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Partially thru the reluctance to accept anything that will hault growth, raise taxation or re-regulate enterprise, partially because the call is a left-wing one, there are people on the right who are almost insanely obtuse about the evidence that our economic success is damaging the environment on a serious and global level. Some argue for market solutions when none are apparent. The trouble with hard-wired ideology is that you tend to assume all sorts of things you shouldn’t. The Sovs assumed they could stop people being selfish for example.
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I tend to think we should scrap both the default to market-based solutions and the hostility to capitalism in developing environmental responses. Market-based solutions may not be available and even Friedmanites like Arnold Schwarzanegger and John Humphreys attest to this. On the other hand going to war with Capitalism may waste a lot of energy. Ultimately Capitalists live on the planet as well. And private enterprise is very good at something governments are not - creativity.
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Well except the banks.
The Murray-Darling tragedy is just one of the topics I saw on another serious discussion website at http://www.climatechangetriage.net. Posters there seem to be advocating that it is indeed almost too late for this renowned estuary. Perhaps comments there add grist to the mill here