Legal Matters Environmental Water Trusts Kathryn Ridge LLB (Hons)BSc MAICD kathryn@ridgelegal.com

Australia – Who manages water? Traditionally in our system of government (Federation), the States manage access to water. Usually regulated by declared areas or by licence. The right to access water was riparian in origin, and very much linked to land. Australian federation founders recognised that our largest river, the Murray Darling flowed through four states, and there was a need to have some control over State’s use of water – primarily to protect trade along the river. There is a constitutional guarantee. Recent reforms paved the way to have more national control, to oversee more parochial decisions of States….

Council of Australian Governments Initially, there was a Water Reform Framework (1994), where the Commonwealth and State governments agreed: that action needs to be taken to arrest widespread natural resource degradation in all jurisdictions occasioned, in part, by water use and that a package of measures is required to address the economic, environmental and social implications of future water reform; to implement a strategic framework to achieve an efficient and sustainable water industry comprising the following elements (pricing, unbundling of water entitlements from land, facilitating trade, integrated resource management, community engagement, greater protection of the environment).

Establishing Good Governance In 2000, the NSW Government passed the Water Management Act 2000 . The Act provided for key elements of reform, such as: separation of water entitlements from land ownership planning processes for delivery of environmental flows managing access to consumptive water users such as town water supplies and irrigation integration with natural resource and planning laws. Under the Water Management Act 2000, all water that flows into an identified water source is allocated to consumptive and non- consumptive uses through water-sharing plans.

National Water Initiative Objective to achieve a nationally compatible market, regulatory and planning based system of managing surface and groundwater resources for rural and urban use that optimises economic, social and environmental outcomes. 8 Interrelated elements of water management Outcomes Water access entitlements and planning • clear and nationally-compatible characteristics for secure water access entitlements transparent, statutory-based water planning statutory provision for environmental and other public benefit outcomes, and improved environmental management practices complete the return of all currently over-allocated or overused systems to environmentally-sustainable levels of extraction progressive removal of barriers to trade in water and meeting other requirements to facilitate the broadening and deepening of the water market, with an open trading market to be in place clarity around the assignment of risk arising from future changes in the availability of water for the consumptive pool water accounting which is able to meet the information needs of environmental management and non-farm management policy settings which facilitate water use efficiency and innovation in urban and rural areas addressing future adjustment issues that may impact on water users and communities recognition of the connectivity between surface and groundwater resources and connected systems managed as a single resource. Best practice water pricing Water markets and trading Water resource accounting Urban water reform Knowledge and capacity building Community partnership and adjustment Integrated management of environmental water

Commonwealth – Water Act 2007, Basin Plan Critically provides, by reliance on the international affairs power, the Commonwealths’ ability to drive reforms through a Federal Act, and providing $10 Billion in funding; establishing clear sustainable diversion limits Basin Wide, and at a Water Resource level; Basin Plan which contains clear benchmarks for State Plans to meet. Establishes some capacity at a Commonwealth level to manage the large storages, Hume Dam, Menindee Lakes. Useful balance against the natural inclination of the States’ to focus purely on their interests.

Audit progress – National Water Commission

Outcomes after 20 years of reform States Further work Robust tradeable entitlements All None Water rights separate from land Markets still thin in some places Stable Water Plans 80% water use covered Groundwater plans need work Community engagement Where plans are - good Monitoring. evaluation and reporting needs work Secure Environmental entitlements MDBA good Ensuring environmental water provided to particular environmental needs remains a challenge Overallocation correction MDBA good – sustainable diversion limits by 1 July 2019 Identification of pathways to recovery still requires work Risk allocation MDBA good – Commonwealth accepted risk of reforms State reforms Indigenous access to water NSW best, Basin Plan promotes Most jurisdictions failed to provide for Indigenous rights in water

Establishing the Water Trust In 2005, the Nature Conservation Council of NSW won their court of Appeal proceedings against the NSW Government for subverting the intention of the Water Management Act 2000 when writing the Gwyidr Water Sharing Plan. The submission of the Respondent that it was sufficient for the Plan to deal with “an abstract concept” of water, rather than actual water, rejected. What is required by the Act is water that is constantly provided for and which, absent acute drought conditions, will in fact be available to protect fundamental ecosystem health. A rule expressed in terms of an amount in excess of an “extraction limit” was not a rule for the “identification, establishment and maintenance of water” within the meaning of the Act.

Conservation needed water licences We reviewed the international water trusts – Colorado, Washington, Oregon, Texas. Interviewed a range of conservation stakeholders, irrigation sector, government Spoke to Munich Re about evolution of water trading market, and ability to provide reinsurance, etc Chose to establish the Nature Conservation Water Fund Pty Ltd, and the Environmental Water Trust; Charitable purposes, including trade of water entitlements to fund business of EWT.

Environmental Water Trust Purposes The purposes of the Trust are solely to support environmental purposes and in particular: to protect and enhance the natural water resources of Australia which includes protecting, enhancing, and restoring water sources, their associated eco-systems, ecological processes and biological diversity throughout Australia; to provide information or education, or to carry on research, about the natural water resources of Australia; to apply for, acquire, manage, hold or dispose of Water Access Licences as the Trustee determines for the purposes set out in this clause 3.1; to establish and maintain a public fund to be called the Environmental Water Fund which will operate for the specific purpose of supporting the environmental purposes of the Trust; to support or establish any charitable institution or charitable object anywhere in Australia which the Trustee in its absolute discretion considers to be consistent with the purposes;

Outcomes to date – very modest The Environmental Water Trust has two wins to date: Stopped the auction of 8000 ML of water on the Warrego River by the Queensland Government in 2007 and instead the water was gifted to the Commonwealth Environmental holdings; Purchase of Naree Station – containing nationally significant wetland, refuge for both northern and southern water birds (170 species).

TNC and MDWWG partnership - EWT Structural Considerations – ownership, contractual obligations, market matters Liability issues – investor information, watering events Costs – water availability vs investor certainty, not just an investment product therefore higher costs to other investment offers Water planning – long lead times, involves landowners, many layers of government etc

We can create a better future together….