1. Neville Crossman | Principal Research Scientist 17 th March 2015 LAND AND WATER FLAGSHIP Drought and Australia Overview for UK Drought Workshop

2. Outline Climate variability in Australia Water management and reform Water markets; Water Act 2007; Water for environmental purposes The Millennium Drought: worst on record; happening again?? Water markets and drought Australian drought policy 1999-2014 ‘Exceptional Circumstances’ Now: Monitoring systems Drought and Australia | Neville Crossman 2 |

3. Climate variability in Australia I love a sunburnt country, A land of sweeping plains, Of ragged mountain ranges, Of droughts and flooding rains. I love her far horizons, I love her jewel-sea, Her beauty and her terror - The wide brown land for me! Dorothea Mackellar, ‘My Country’, 1911 Drought and Australia | Neville Crossman 3 |

4. Drought and Australia | Neville Crossman 4 |

5. Water management and reform Up to 1980s, water considered free – little incentive to be efficient Major reform motivated over- extraction & declining ecosystem health – salinity; native vegetation Move to recognise economic value of water in Murray-Darling Cap on diversions 1994 Movement to free water trade after 1994 Then came the Millennium Drought Drought and Australia | Neville Crossman 5 |

6. The Millennium Drought Formally ran from 1999-2010 Impacted the Murray-Darling River System: Australia’s Food Bowl Lowest average inflows on record (since 1890s) Major ecosystem impacts – exacerbated by over-extraction for irrigation Catalyst for major water reform $3.8 billion in acquiring water for environment $8 billion in irrigation infrastructure efficiency improvements Drought broken by major floods in 2011 and 2012 Parts of the Murray-Darling are back into drought Drought and Australia | Neville Crossman 6 |

7. Rainfall Deciles, Millennium Drought Drought and Australia | Neville Crossman 7 |

8. Annual inflows to River Murray since 1892 Drought and Australia | Neville Crossman 8 |

9. Monthly storage in Murray-Darling Basin Drought and Australia | Neville Crossman 9 |

10. Ecosystem stress Drought and Australia | Neville Crossman 10 |

11. Drought and Australia | Neville Crossman 11 |

12. Water management and reform Various commitments to increase environmental flow – cap on abstractions Water Act 2007 Aim 1 – protect, restore Basin ecological outcomes Aim 2 – optimise economic, social and environmental outcomes; efficient and cost effective water management Reduce irrigation use; Australian Government purchase water entitlements for the environment Water reform has been controversial Drought and Australia | Neville Crossman 12 |

13. Water markets and drought But water reform (i.e. markets) allowed irrigators to buffer against drought Water trade provide options for irrigators during drought: Valuable water licenses motivated efficiency and/or other behaviours Sell permanent water licenses – high price; retire from irrigation Sell temporary water – income for supplementary feed; other farm costs Buy water – keep alive permanent plantings …rising commodity prices also helped. Drought and Australia | Neville Crossman 13 |

14. Drought and Australia | Neville Crossman 14 |

15. Australian drought policy Policy of Exceptional Circumstances 1999-2014 Climate and soil moisture indicators used to declare drought areas Bureau of Meteorology use blend of current and forecast conditions Uptake mostly by dryland farmers –Interest rate subsidies and support payments –$2.6 billion subsidies 2001-11 Criticised for being unfair –‘lines on map’ are poor indicator of neediness –Farm businesses are heterogeneous –Potentially rewards poor farm businesses Drought and Australia | Neville Crossman 15 |

16. Drought and Australia | Neville Crossman 16 |

17. Australian drought policy New approach avoids ‘lines on a map’ Combination of climate/soil conditions and case specific farm financials ‘Farm Household Allowance’ assessed on case-by-case basis Delivered through welfare agencies Also includes concessional loans package Assistance made on condition that farmers take a risk management approach Drought and Australia | Neville Crossman 17 |

18. Conclusion Australia a land of high climate variability Experiences drought relatively regularly Water reform aimed to provide balance between irrigation and environment Water markets help irrigators be resilient during drought Market also support environmental stewardship during droughts Dryland farmers have less options Financial support offered by governments Climate/soil indicators used to determine who qualifies for support Drought and Australia | Neville Crossman 18 |

19. LAND AND WATER FLAGSHIP Thank you Land and Water Flagship Dr Neville Crossman Principal Research Scientist t+61 8 8303 8663 eneville.crossman@csiro.au wwww.csiro.au/