Economic Impacts of SDLs and Water for the Future Peter Gooday 22 October 2010

Objectives of the reports To examine the effect on agriculture and regional economies of –The Basin plan (3500 GL option) –Water for the Future –Government additional funding commitment to bridge any remaining gap

Methodology

Model Regions

AusRegion model baseline RegionGRPAg. share of Output $ billion% of GDP% Northern NSW % 17.6 Riverina NSW % 26.8 Western NSW1.50.2% 25.2 North East VIC8.61.1% 12.7 North West VIC % 17 Queensland MDB7.91.0% 14.5 South Australia MDB3.30.4% 30.9 MDB Total597.8% 18.3 Australia Total %3.6

Employment in MDB and Australia by sector, 2006 Murray-Darling BasinAustralia Number employed Proportion of people employed No.% Agriculture90, Services to agriculture5, Manufacturing83, Electricity, gas and water supply8, Retail128, Government administration and defence94, Education71, Health and community services97, Other industries340, Total employed persons921,300100

Data & Model Assumptions Regional SDL data were provided by MBDA Data provided by DSEWPaC included –Original water purchase (WP), average price is $2073/ML –Infrastructure Investments, average price is $4606/ML –Infrastructure water savings occur when SDLs are implemented –Additional WP to bridge the gap to SDLs occurs between now and when SDLs are implemented

Limitations Water supply variability is not investigated Analysis provides estimates over large regions, estimates at finer scale are not available due to limitations in the models Considers only productivity improvement from increased water use efficiency through infrastructure investment

Effects of the Basin Plan and ‘Water for the Future’ water entitlements in the MDB – a conceptual outline Environmental water Consumptive water SDL Existing Diversion Limit (the ‘Cap’) Farmer’s Share Commonwealth’s Share Water to be reallocated from consumptive to environmental use Gap to be addressed by continued buy-backs System savings from infrastructure investments on and off farm Buy-back

Impacts on Irrigated Agriculture

Impacts on Irrigated Agriculture

Economy-wide impacts

% change in GVIAP by region

GVIAP by region

Town Level Analysis

Towns that are highly reliant on irrigation expenditure

Land Use in Murray & Murrumbidgee

Land use in Condamine–Balonne, Gwydir & Namoi

Sensitivity Analysis Reduction in Basin GVIAP, with and without interregional trade

Sensitivity Analysis Basin GVIAP by industry, with interregional trade

Thank you Science and economics for decision-makers