1. Prof. Mike Young Research Chair, Water Economics and Management The University of Adelaide NSW Farmer’s Federation Coleambally 14 th February 2008 Water Where is your future headed?

2. 2 Changes in rain and water supply - 1% - 3%

3. 3 Sydney - 25% - 75%

4. 4 If it gets drier Less rain means much less run-off much less water

5. 5 Total River Murray System Inflows (including Darling River) DRY WET

6. 6 Re-live from 1938 2014

7. 7 Inflows plus Starting Storage Season to date and last year > 2,500 GL storage used last season

8. 8 Lake Alexandrina Level - 0.5 m

9. 9 Problems 1.Over-allocation 2.Over-entitlement 3.Interception 4.Inefficient storage management 5.Governance and administrative failure 6.Lack of planning for long dry periods

10. 10 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 7,000 River & Storage Evap 2,000 Flow to sea 2,000 Deliverable water 3,000 Environment Use 1,500 Consumptive Use 1,500 0 In Mediterranean climates, a 10% decline in mean rainfall results in around a 30% decline in mean storage inflow 10% less rain water means a 67% reduction in allocations unless the system is resized

11. 11 Elements of a solution 1.Hydrological integrity - Complete and full accounting for all water use including groundwater 2.A regime that decouples the past from the future 3.Timely, just and fair financial recompense 4.A new future-proofed bulk entitlement system superimposed on the existing system  Share for irrigators  Share for the environment 5.An entitlement market that facilitates and expedites adjustment and adoption of new technology 6.Irrigator and Irrigation company driven solutions

12. Volume of Water in the System A future-proofed regime for states Volumetric allocation for evaporation, required transfers and losses

13. 13 National Plan Water Security

14. 14 Implementation 1.A new MDBC Agreement 2.Bulk entitlement shares to each state and to environment trusts 3.Choose $5 billion now, in your control or $10 billion over 10 years Put, say, $1 billion aside in an inflation proofed fund for restructuring 4.Option 1 - Transfer the remaining $4 billion to industry as soon as a new agreement is in place Cheques to irrigators Cheques to irrigation companies Waive entitlement trading charges 5.Option 2 – Start with smaller environmental share and use major share buy back to source the remainder quickly  Environment starts with, say, 10%  Tender to buy the rest 6.Begin new regime in three season’s time 2010/11?

15. 15 What future do you want?  One that fixes the problem now by getting the fundamentals right?  A system that can cope with whatever future arrives  One that commits us to more decades of reform and uncertainty?

16. Contact: Prof Mike Young Water Economics and Management Email: Mike.Young@adelaide.edu.au Phone: +61-8-8303.5279 Mobile: +61-408-488.538 www.myoung.net.auwww.myoung.net.au Subscribe to our Droplets at www.myoung.net.au