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Shepherding Water Professor Mike Young Research Chair, Water Economics and Management Executive Director, The Environment Institute The University of Adelaide.

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Presentation on theme: "Shepherding Water Professor Mike Young Research Chair, Water Economics and Management Executive Director, The Environment Institute The University of Adelaide."— Presentation transcript:

1 Shepherding Water Professor Mike Young Research Chair, Water Economics and Management Executive Director, The Environment Institute The University of Adelaide MDBA Northern Basin Ecological Assets Forum, February 2009

2 “Careless shepherd make excellent dinner for wolf.“ Earl Derr Biggers

3 Regulated v’s unregulated systems Capture of episodic flows as they go past 1.Unregulated river systems 2.Overland flow harvesting Entitlement definition –Flow-rate thresholds announced on a daily basis –Maximum daily volume –Maximum storage volume Entitlements can be complicated –Many licences operate under 2 or 3 flow-rate thresholds –Some licences contain more than 20 flow-rate thresholds

4 Questions 1.How can trading be facilitated? 2.What administrative arrangements needed to “shepherd” water to the end of the system? 3.What is the best way to deal with shifts –To a drier climatic regime? –In environmental preference? –In system state?

5 Sharing the available water Complexity - a simple system or one that considers –System dryness –Health of downstream wetlands –Needs of downstream entitlement holders –Interests of landholders whose animals graze on floodplains The more that flow is used, the more sophisticated the system needs to be and the more it costs to manage!

6 Flow sharing Flow rate (ML/day) Volume in the system

7 Trading Existing allocation system likely to be sub-optimal in an ever changing world Strong case for facilitating trade –To allow better consumptive use –To allow purchase for environmental asset enhancement Within reaches Among reaches Among systems

8 Facilitating Trade When entitlements defined solely by flow rate at the pump or diversion structure, trading does not make sense when others can take it. Solution to divide system into reaches and define each entitlement by flow rate at the top of the reach => within-reach trading Trading among reaches requires capacity to raise or lower the flow rate announcement thresholds on event by event basis.

9 Between reach trading Flow rate (ML/day) Volume in the system Flow rate (ML/day) Volume in the system

10 Accounting for transmission losses Options 1.Conservative Exchange Rate –Inefficient 2.Tagged trading –Assigns long-run exchange rate risk to trader –Allows refinement of models

11 Upstream v’s downstream When one moves the pumping or diversion point upstream, the interests of other pumpers, landholders who benefit from grazing floodplains and the environment need to be taken into account. To protect floodplain and grazing interests –Only allow trading downstream? –Allow trials using tagged trading (esp. through reaches) But remember that, the further water is traded downstream, the greater are the losses.

12 Shepherding water downstream From Queensland to South Australia –Every announcement threshold would need to be changeable on an event by event basis –Require a considerable degree of co- ordination and communication among river managers and jurisdictions –Refinement of interstate water sharing agreements would be necessary

13 Adverse climate shifts In most unregulated systems, entitlement holders get access to a larger proportion of the volume of low flow events –Possible solution would be to define flow-rate thresholds as a function of a long-run moving average –Note also that if there is a shift to drier climatic regime, all downstream users will get fewer opportunities to harvest water.

14 Flow management? Less water is required to optimise the value of ecological assets if the system form can be manipulated

15 Where to from here? 1.A dynamic Basin Plan? 2.New interstate water sharing agreement? 3.Definition of reaches and monitoring points at top of each reach? 4.Redefinition of entitlements? 5.New (tagged) trading rules? 6.New governance system that allows shepherding and empowers river and environmental managers? 7.System structure manipulation?

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 Download our reports and subscribe to Jim McColl and my droplets at www.myoung.net.au www.myoung.net.au The PowerPoint slides from this talk can be downloaded from our website

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