Bulletin

Issue: April 2004

News

Water, water - unfortunately not everywhere

Legislators have a unique opportunity to push for more rapid and radical water reform, according to one of Australia's leading water resource management experts.

Dr Lin Crase, Head of the School of Business at La Trobe University Albury-Wodonga, has reached this conclusion following extensive research into the economic relationship between land and water resources.

Dr Crase said that the last few months had seen a flurry of activity at both the state and national levels to further reform the way Australia's water resources were managed.

'The opportunity for more rapid and radical water reform follows mounting evidence of the deteriorating environmental health of many inland rivers and the worst drought in a century,' he said.

'There is a perception amongst much of the community that the rules that we have used to manage water resources in the past have failed and alternative approaches are urgently required.

'At the national level the New Water Initiative released at the end of 2003 has received considerable attention. Under the Council of Australian Governments' framework, the New Water Initiative promises stronger and more clearly defined water rights, including compatibility between and within state jurisdictions.

'This would appear to be premised on the view that investments in water saving technologies are more likely to occur if the rights held by irrigators are more clearly defined. You can't expect irrigators to invest in new technologies if the access to the resource is itself circumscribed by uncertainty.

'Accompanying the impetus for stronger water rights is a commitment to establishing a national water market. The case for water markets is often presented in the context of moving resources to higher value uses. For instance, it is usual to argue that a water market will see lower value users give up their water rights to higher value users, thereby maximising the total benefits that arise from water use. In addition, the water market provides a way of compensating those who choose to exit the industry.

'The water market is also being proffered under the New Water Initiative as a vehicle for achieving environmental benefits. By purchasing water when it is plentiful and supplying it to the environment, the maximum environmental benefits can be gained from high rainfall years and floods.

'Alternatively, leasing or selling water to irrigators in 'naturally' dry times stands to both raise funds for future restoration works (since water is likely to be dearer in these years) and assist irrigators at the same time.

'Regardless of the claimed advantages, there remains considerable debate about the efficacy of some of these reforms. Water is currently a state property right and despite assertions by irrigators that there was an implied right to water gained by paying extra for their land, water remains the property of the Crown.

'The move to shore up the rights of irrigators has even been likened to the land grab era of the squatters. There is also little empirical data to measure the relationship between investment by farmers and the nature of their property rights.

'Others are also cautioning that once water rights have been ceded to irrigators it will be far more costly to claw back additional water for the environment.

'The process of reform over the last couple of decades has already seen the most obvious water savings adopted and further water savings are likely to be more expensive. As water becomes more scarce the price will inevitably rise and there is no guarantee that the State will be prepared or able to afford it.

'Notwithstanding the intuitive appeal of many of the reforms, much more detailed analysis of the relationship between irrigator and bureaucratic behaviour and the proposed new rules is required.'

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