1. Prof. Mike Young Research Chair, Water Economics and Management The University of Adelaide AARES Symposium, Climate, Water & Adaptive Responses, Adelaide 22 nd May 2008 Future Proofing the MDB

2. 2 “The country that takes top prize in water management is Australia” The next prize depends upon industry & community willingness to support pursuit of robust permanent solutions

3. 3 Which future is best?  One that gets the fundamentals right, now?  A system that can be confidently explained as able to cope -- whatever future arrives  One that commits all to more decades of reform and uncertainty?  Incremental progress  No guarantee of resolution of current problems

4. 4 P5. Insufficient planning for less water - 1% - 3%

5. 5 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

6. 6 Planning for long drys DRY WET Total River Murray System Inflows (including Darling River)

7. 7 Re-live from 1938 2014

8. 8 Current system Cap on Diversions  Normal years  NSW and Vic % Share inflows + obligation to supply SA  SA gets 1850 GL + Responsibility for maintaining bottom of system + 100% entitlement but no carry forward  Special accounting  Each get ~ 1/3  Exceptional circumstances  Special arrangements & new rules possible

9. Volume of Water in the System Indicative template for sharing water among States and with the environment

10. 10 Interception & double counting 0GL1,200GL2,400GL3,600GL Plus salinity interception Plus overland flow capture Solution Require interception to be offset (save 1500+ GL) Surrender entitlements equal to deemed impact

11. 11 Use it or sell it because you can’t save it Back to empty Inflows have dropped 68% but use has only dropped 12 Solution Allow saving (Carry forward) of all water with an adjustment for evaporative losses Change MoU, Agreement and Act to allow SA to carry forward water.

12. 12 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 4,000 River & Storage Evap 2,000 Flow to sea 2,000 Deliverable water 0 Environment Use 0 Consumptive Use 0 0 In Mediterranean climates, a 20% decline in mean rainfall results in around a 60% decline in mean storage inflow 20% less rain water means the system has to either be reconfigured or abandoned!

13. 13 System reconfiguration options (Reducing evaporation) More dams  What will you fill them with? New sources  None have yet to passed detailed analysis Leakage and seepage  Most eventually reaches the river (for a gain most can’t be shared)  Better control  A short term gain Evaporation  Real savings  Lakes, wetlands, weir pools, river height, etc

14. 14 Environmental security The environment is the interest that always loses  Irrigation Security at cost of Environmental Security  83% reductions from environment  17% reduction from users Solution Give the environment a share that has the same status as that given to all other users (as in NWI) Allow environment to carry over water {Entitlement purchases for environment are doing this!} First priority to maintenance water needed for conveyance, evaporation, etc

15. 15 Future-proofing the Basin www.myoung.net.au 1.A sustainable sharing system for ground & surface water Maintenance water (conveyance, evaporation + min flow to sea) Shares for all non-flood water 2.Put all states under the same regime and give all the opportunity to save water Share inflows (no cap the diversions) Shares issued to environment and States 3.100% carry over of all water Continuous accounting – similar to Dudley’s capacity sharing system 4.Require off-set of all land use change that erodes entitlement reliability (forests, dams, SIS) State shares reduced as interception increases 5.An independent authority making allocations to shareholders 6.If still dry, review system configuration & size from top to bottom  Search for evaporative savings

16. 16 $5 billion now or up to $10 billion over 10 years? 7.Pay $3.5 billion just and fair compensation now to southern irrigators and irrigation companies for a future-proofed regime to commence in 3 irrigation season’s time. Waive all govt. water trading charges. Informed by CSIRO modelling, environment’s share, could be phased in. (A confident step change, a new Agreement, a predictable sustainable future)

17. 17 Willing buyers and willing sellers Use money for a “Coles-Myer” like share buy-back Work with irrigation companies for targeted reconfiguration

18. 18 Offer form (SA High security licence) Type of Licence South Australian River Murray Licence Offer 1 …………….. ML @ not less than $2,500.00 per ML Offer 2 …………….. ML @ not less than $2,800.00 per ML Offer 3 …………….. ML @ not less than $3,000.00 per ML Offer 4 …………….. ML @ not less than $3,300.00 per ML Offer 5 …………….. ML @ not less than $3,700.00 per ML Signatures Licence holders …………………………………… ……………………………… Registered interest (if any) ………………………………………..

19. 19 Future-proofing the southern MDB 1.Future-proofed entitlement systems  First commitment is to maintain the system  Then to share the remaining non-flood water 2.Environment as equal shareholder 3.Enforceable register and accounts 4.Efficient storage and adjustment markets  Carry-forward - so we can all start rebuilding (some safety)  Instantaneous, low cost trading 5.Require offset of all increases in un-metered and un-meterable water use  Forestry, dams, salinity interception, leakage prevention, etc 6.No selective government investment in infrastructure  A level playing field with full cost pricing  Financial recompense paid to all entitlement holders and adequate warning about the nature of the once-off change to be made 7.Re- set the system as quickly as possible Send out the money now and engage all Rapid Coles-Myer like buy-back Work with companies to target inefficient areas

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 Download our report from www.myoung.net.au