Prof. Mike Young Research Chair, Water Economics and Management The University of Adelaide "Irrigation Technology to Achieve Water Conservation,” Zaragoza, Spain, th May 2008 Non-point pollution control & irrigation: Some Australian experience

2 Main Non-Point Pollution Problems 1.Irrigation salinity (Murray-Darling) 2.Sediment & nutrient pollution (Great Barrier Reef) 3.Nitrate contamination of groundwater & surface water systems. Case Studies  River salinity in the Murray-Darling Basin  Hunter River  Geographe Bay  Dryland salinity trading

3 Institutional Structures Federation  Responsibility with individual state governments States  Environmental duty of care on land users.

4 Education & Governance  56 Natural Resource Management Region Boards established  Accessing National money  Emerging Regional Autonomy  Employing own staff

5 Market – Based Instrument Trial Conclusions First Round ($5 million)  Auctions, cap & trade (for point sources) & offsets work  MBI’s can deliver large savings  MBI’s require testing & adaptation for landholders to participate  MBI’s need to be tailored to individually, no one-size-fits all

6 Interstate Salinity trading  Aim to keep river salinity at Morgan  <800 μS/cm of electrical conductivity for 95% of the time  States pay for cost of off-setting the damage they would otherwise do  Salinity impacts recorded on “A” & “B” salinity register  “A” salinity register – all recent causes of salinity change  “B” salinity register – ‘legacy of history’ impacts  Debits to the “A” salinity register charged to States according to estimate of economic impact of each unit of salinity as measured at Morgan

7 Hunter River - tradeable salinity permit  Limited to factories in the Hunter  Factories receive permits and allowed to minimise costs of disposal  Number of permits required to discharge a unit of salt into the River is a function of ambient river salinity  Firms have incentive to store saline wastewater and discharge when ambient salinity is low  Trading is now well established

8 Busselton Bubble Licensing  Town of Busselton wanted to expand and dispose treated sewage into Geographe Bay  Dairy industry responsible for 95% of the nitrates and phosphates that flow into Geographe Bay  5 % only from town  Treatment of town sewage would cost  $5 million plus $200K per annum  Cheaper to reduce pollution from dairying  Needed to employ people to negotiate agreements

9 Dryland Salinity Trading (Bet Bet, Victoria)  Bet Bet, Victoria is one of the largest contributors to salinity in River Murray System  Trial to invite farmers to participate in a program that would enable them to trade salinity reduction credits  Allow farmers to deliver the contracted outcome in the most efficient way possible  Reward payment made to all farmers if the trial delivers agreed outcome  Conclusions  More efficient and cost effective than regulation  Collective group incentive payment (a reward) increases community interest and participation  Reward “first-mover proofed” the trial

10 Salinity Levy - Victoria Trade from Trade to LIZ 1LIZ 2LIZ 3LIZ 4HIZ Perm Outside area $26.60$65.00$130.00$260.00No Trade LIZ 1$0.00$39.00$104.00$234.00No Trade LIZ 2$0.00 $65.00$195.00No Trade LIZ 3$0.00 $130.00No Trade LIZ 4$0.00 No Trade HIZNo Trade Salinity levies charged for permanent trades between High Impact Zones (HIZ) & Low Impact Zones (LIZ). (No trade is allowed within or into a High Impact Zone)

11 Salinity off-sets (SA)  SA uses off-set approach to manage salinity  Irrigation areas classified into 3 zones 1.Low impact 2.High impact 3.High impact zones behind a salinity interception scheme  Off-set trading has lead to increase in irrigation development opportunities at no cost

12 Salinity off-set policy (SA)

13 Environmental Benefit Indices  Indices enable objective evaluation of relative merits of different project outcomes  Dramatic increase in returns per public dollar invested Experience  Most benefits of MBIs derive from the benefit index  Tenders more cost-effective if uniform payment per unit of benefit delivered is paid

14 Applicability & recommendations  Countries should consider using market-based approaches they work!  Greater flexibility in achieving control  Leave greater opportunity for innovation  Allow non-point source control at less cost  Lessons  Underpin with regulations & implement at local scale  Focus on land use change & keep simple  Consider community reward schemes  Use indices  Point source controls can be used to deliver non-point benefits

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