The Environment’s water is not Agriculture’s overdraft

Blog post prepared by Dr. David Adamson

The Murray-Darling Basin Plan is based on the concept of ‘common property’ were a set of environmental rights are established and managed in the national good (economic, society & the environment).  The environments rights were purchased from farmers either: directly via market mechanisms (i.e. buy-back where rights were traded); or obtained as part of the water saved when on and off-farm irrigation infrastructure was upgraded with the assistance of public funds (i.e. water use efficiency).  The costs of this purchase of environmental rights from farmers is estimated at between $10-13 billion in public expenditure.

The story today in the Guardian (here ) where politicians are calling  for the farmers to be able to purchase environmental water goes against everything that the Basin Plan stands for and highlights one of my personal fears.  In short the environmental water is not an overdraft facility that can be used when farmers failed to account for the risk and uncertainty associated with this land ‘of droughts and flooding rains’ (Mackellar, 1911).  Nor should the environment’s water be used to provide base or conjunctive flows. 

For too long, the environment’s share has been utilised for private gain at social & environmental cost.  This is how we operated before the Basin Plan.  The environments water is the environments water.  The environment can experience irreversible losses when it fails to receive its share.  If farmers want water, they can buy the water from other farmers. 

I will provide a word of warning that people still fail to consider here.  With all things considered (see the excellent charts by ABC) this drought is in its infancy when compared to the Millennium Drought. If this drought turns into a long and persistent drought, there may be real welfare gains from buying more water for the environment from the allocation market.

If the environmental manager is willing to pay the most, why would we prevent willing sellers from maximising their income.


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