1. Prof. Mike Young Research Chair, Water Economics and Management The University of Adelaide 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 Melbourne

6. 6 Total River Murray System Inflows (including Darling River) DRY WET

7. 7 Re-live from 1938 2014

8. 8

9. 9 Inflows plus Starting Storage Season to date and last year > 2,500 GL storage used last year

10. 10 Lake Alexandrina Level - 0.5 m

11. 11 Salinity Lake Alexandrina

12. 12 Problems 1.Over-allocation 2.Over-entitlement 3.Interception 4.Inefficient storage management 5.Policy failure 6.Governance and administrative failure

13. 13 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

14. 14 Underlying problems A dredge was put in the Murray Mouth in October 2002 – before the drought! Nature’s solution to this problem has been to debase the reliability of your entitlements until some-one fixes the system In a closed system when-ever one person takes more someone else or something else must get less

15. 15 Flow & allocation interception Reliability debasing activities 1.Increased forestry 2.More farm dams 3.Increased irrigation efficiency 4.More groundwater development 5.More lined channels and more piped water 6.More salinity interception All high security impacts Two Risks 1.Climate change 2.Bushfires

16. 16 Elements of a solution 1.Hydrological integrity - Complete and full accounting for all water use 2.Connected groundwater defined as part of the system 3.An amount set aside for evaporation and minimum flow to the sea 4.Remainder formally shared between the environment and users 5.A Cap such that the River gets the really big spills 6.Expertise-based governance

17. 17 Some Important Detail 1.An expertise-based Authority allocating according to clear objectives 2.A system entitlement register to define state and other entitlements 3.Entitlements defined as shares of high security and general security pools 4.Size of high security pool changes defined using a moving average 5.100% carry forward of all unused allocations adjusted for evaporative losses + tradeable delivery entitlements 6.Entitlement trading as fast and cheaply as the ASX 7.Allocation trading like internet banking 8.One central and several independent river environmental trusts 9.No difference between environmental and other entitlements 10.Groundwater close to the river defined as surface water 11.Salinity credits assigned to those who create them 12.Distribution system managed by existing private and government corporations 13.Land-use control managed by states

18. 18 A three year agenda 1.Robust design and governance A new system designed to cope with and facilitate change 2.Re-store reliability Purchase and tear up water entitlements to offset the impact of interception 3.Re-balance the share Water for the environment without wrecking the market 4.Review river-configuration Explore opportunities to reduce evaporative losses and facilitate efficient management of environmental water

19. 19 Investing in the future Putting money on the table 1.Pay now for a percentage reduction to be implemented in 3 years time (~$2-3 billion now)  Tear up entitlements equivalent to interception and restore reliability and integrity  Transfer the remaining entitlements to local and a central environmental trusts 2.Pay well above market price, say, 150% 3.Pay all exit fees to your water supply company 4.Waive all Govt. water trading charges for next 3 years 5.No capital gains tax if money rolled over

20. 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

21. 21 Adverse climate change Mean supply 10,000 Evap 2,000 Flow to sea 2,000 4,000 Deliverable water 6,000 Environment Use 1,500 Consumptive Use 4,500 0 In Mediterranean climates, a 20% decline in mean rainfall results in around a 60% decline in mean supply 20% less rain water means almost no allocation unless evaporation and environment is resized Mean supply 4,000 Evap 2,000 Flow to sea 200 2,200 Deliverable water 1,800 Environment Use 1,500 Consumptive Use 300 0

22. 22

23. 23 Salinity and Flow