Prof. Mike Young Research Chair, Water Economics and Management The University of Adelaide Almond Growers Conference, Barossa Valley, 30 th October 2008 Water

2 Murray River at Wentworth, NSW during 1914 drought (Photo courtesy of the State Library of South Australia)

3 Which future is best?  One that gets the fundamentals right, now?  A system that can be confidently explained as able to cope -- whatever future arrives  One that commits all to more decades of reform and uncertainty?  Incremental progress  No guarantee of resolution of current problems

4 Future-proofing the Basin 1.A sustainable sharing system for ground & surface water 2.Put all states under the same inflow sharing regime 3.100% carry over of all water 4.Require off-set of all land use change that erodes entitlement reliability (forests, dams, SIS) 5. An independent authority making allocations to shareholders 6. If still dry, review system configuration & size from top to bottom 7. Use the $5 billion on offer to restructure the industry quickly

5 Three Concepts 1.Adverse climate change  long drys  droughts  Each challenge needs a separate strategy 2.Rainfall  Yield  Small reductions in rainfall mean big reductions in supply 3.Accounting  When someone takes more someone or something else or the environment must get less  Increased efficiency has a big downside  Groundwater – surface connectivity matters

6 Long drys DRY WET Total River Murray System Inflows (including Darling River) 8 yrs 12 yrs 52 yrs

7 Re-live from

8 Rainfall and yield - 1% - 3%

9 With half as much water Users Environment River Flow Environment River Flow Users

10 Long drys DRY WET Total River Murray System Inflows (including Darling River) 8 yrs 12 yrs 52 yrs

11 Adverse climate change Mean supply 10,000 River & Storage Evap 2,000 Flow to sea 2,000 Deliverable water 6,000 Environment Use 1,500 Consumptive Use 4,500 0 Mean supply 4,000 River & Storage Evap 2,000 Flow to sea 2,000 Deliverable water 0 Environment Use 0 Consumptive Use 0 0 In Mediterranean climates, a 20% decline in mean rainfall results in around a 60% decline in mean storage inflow

12 Is this ground or surface water? Source: Rick Evans

13 Accounting for Forestry 250 mm = 2.5 $3000 /ML * 0.80% = $6000/ha Grass Trees

The state of the system

15 Monthly flows past Euston Extensive overbank flow occurs above this line 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 A decade without water over bank

16 River Murray Active Storage Active storage Average storage Maximum active storage

17 Cumulative System Inflows for selected years 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16, / /082008/09Average Projected

The next challenges

19 Solving over-allocation – where is the water?

20 Volume of Water in the System A sharing regime or a cap?

21 The next challenges 1.Backing the Murray Darling Basin Authority  Murray Darling Basin Authority and a new Basin Plan 2.Developing a Basin Plan that has climate and accounting integrity  A robust sharing regime 3.Securing an environmental share in a timely manner  Combine infrastructure and acquisition money ($3.1b is not enough)  Expedite expenditure 4.Reconfiguring the River, its lakes and wetlands What do we give up? How clever can we be? 5.Removing all barriers to trade and rationalising infrastructure investment

22 “We don’t have all the answers – nobody does – but before we start laying bricks and mortar, we have got to get the foundations right, otherwise the cathedral will tumble with the smallest of tremors.” Peter Cullen Wentworth Group of Concerned Scientists

Contact: Prof Mike Young Water Economics and Management Phone: Mobile: Download our reports and subscribe to droplets at