Lin Crase on Murray-Darling management

The early-October release of the Guide to the proposed Basin Plan has lead to vigorous debate involving governments and their agencies, the agricultural sector, environmentalists and the communities connected to Murray-Darling river system.

Professor Lin Crase, an economist and water policy expert from La Trobe University, offers his perspective on the key issues.

Transcript

Narrator:

The early-October release of the Guide to the proposed Basin Plan has lead to vigorous debate involving governments and their agencies, the agricultural sector, environmentalists and the communities connected to Murray-Darling river system.

Professor Lin Crase, an economist and water policy expert from La Trobe University, offers his perspective on the key issues.

Professor Lin Crase:

I think main thing that people have to understand is that the historical problems relate to over- allocation. So this is recognized by all governments in the COAG reforms and reaffirmed in 2004 as one of the major problems. In essence, what has happened is the state governments have - for many, many years - allocated water generously to extractive users, particularly irrigation, and, as a consequence of that, that means ostensibly there is not enough water to maintain the health of the River - and at the same time that is undermining the reliability of supply for those people who have rights to draw that water. So the main issue that people have to understand is how do we address over-allocation, which is giving away too much water.

Narrator:

Managing a complex ecosystem such as the Murray-Darling Basin while satisfying both environmental and human needs presents a range of challenges.

Professor Lin Crase:

So one of the major challenges is around coming to a better arrangement for managing water is how do we balance the various trade-offs around the various demands for water. So the water act talks about the needs of the environment, it talks about the economic needs that relate to water and it talks about social needs. Now, of course, in trying to balance all those things, you need some way of measuring them, and, on this campus, we spend a lot of effort trying to understand the science and the ecology and yet it's still a very important gap in our knowledge. So if you're going to balance anything, if you're going to optimize anything, you then need to be able to measure and value those things and, of course, we don't have that information. So the Act talks about optimizing and then it transposes that and accidently talks about maximizing, so anybody who knows anything about this knows you can't maximize three things at once when they are all trading off. But optimizing is very, very difficult, because we don't have ways of assigning weights to those things. So the real issue is about how "politically" we address this challenge, because we don't have the information to do it as an empirical exercise. So it ultimately rests on the political decisions as to how we balance the social, economic and environmental demands of water.

Narrator:

Without sufficient environmental water, the long-term sustainability of the Murray-Darling ecosystem is under threat – which, in turn, threatens economic sustainability within the Basin. Any resolution of the key issues involves significant change management challenges for all stakeholders.

Professor Lin Crase:

Yeah, the future for how we manage water is a little uncertain at the moment obviously. There's going to inevitably be a lot of discussion in the next few months about what the trade-off's are and who's been dudded as a result and who's benefiting from different changes to water allocation. But I think the only way we can resolve this long-term is to make sure we have appropriate, flexible and transparent mechanisms for re-allocating water. So just fixing it now is not going to resolve the problem, because what will happen over time is our tastes and our preferences for these different things will change. So regardless that people want to tell us that our food security apparently is going to be threatened - which, of course, is a complete ruse - regardless of that, the fact is that as a country like Australia continues to increase its wealth, the population will invariably place greater emphases on environmental outcomes. So even saying now, setting aside 27 or 37% of water for the environment - that may not be enough in the future. So what we need to be doing is thinking about what is the best way to address this flexibly and transparently in the future.

Now quiet clearly in my view, as an economist, the way we need to do this would be to use markets. Markets are a way for us to see the values in practice; people express those values in the market place through the price - and buy-back, which is obviously on the table at the moment, is the most appropriate means of dealing with this. It's transparent - people who want to sell water can sell water to another user who is willing to pay for it. That is a far more appropriate response than fiddling with publically funded infrastructure or other sorts of nonsense around trying to address this.

Narrator:

The 2007 Commonwealth Water Act frames the requirements relating to the Guide to the Basin Plan, including consideration of the potential socio-economic impacts on the river system communities.

Professor Lin Crase:

My thoughts about the Guide and the Act are, I feel, I guess I feel a great deal of sympathy for the people in the Basin Authority. I think widely it's acknowledged that the Act could have been written more carefully and could have been better considered - and the people within the Authority have done their best to deliver on that Act. Unfortunately, I think there is a lot of political rent-seeking that is happening around this; there is a lot of politicians who are trying to make ground out of this and I don't think that is very productive. I'm also desperately concerned that there is a large number of lobbyists who are making a living out of this and, in my view, many of those lobbyists are not really interested in the welfare of communities. What we are talking about here is a transition process. We've got money on the table to help people change from what everybody acknowledges is an unsustainable position to something else - and my concern is that if this opportunity is missed, in five or six or ten year's time when the problem re-emerges again, we may not have a mineral's boom in order to help this industry transition. My concern is that, in that five or six year's time, all of the lobbyists and the like - and the politicians who are making grand statements around this - of course would have moved onto other careers and we will have regional communities who potentially may not have the public funds to assist with transition. So my great concern is we are missing a tremendous opportunity here. The country is wealthy enough to help communities change, but if those communities resist change as a result of being duped by lobbyists, politicians and the like, I think that's ultimately going to be very harmful for them.

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