Inland Waters Theme Report

Australia State of the Environment Report 2001 (Theme Report)
Prepared by: Jonas Ball, Sinclair Knight Merz Pty Limited, Authors
Published by CSIRO on behalf of the Department of the Environment and Heritage, 2001
ISBN 0 643 06750 7

Water resources (continued)

Surface water resources (continued)

Responses — management of surface water resources

  • Water pricing
  • Environmental flow allocations
  • Water trading
  • Institutional reform
  • Demand management for drinking water
  • Water resource planning in forest management
  • Regulation of off-stream farm dams
  • Messages about surface water management
  • -->

    Unsustainable irrigation development is responsible for the over-allocation of water in many river systems. In other less-developed areas, water is currently allocated within sustainable limits and there is an opportunity to protect aquatic ecosystems through careful water resources planning. In response to the environmental effects of water extraction and the requirements of the National Competition Policy, a number of major reforms were initiated in the 1990s as part of the National Water Reform Framework.

    State and territory governments have agreed to water reforms under the National Water Reform Framework established in 1994. These reforms set the general course for changes in the water industry and the management of water resources, many of which were already under way. The key elements of the reforms are:

    • pricing based on principles of full-cost recovery and transparency (or removal) of cross-subsidies;
    • future investment in new irrigation schemes, or extensions to existing schemes, to be undertaken only after appraisal indicates it is economically viable and ecologically sustainable;
    • comprehensive systems of water allocations or entitlements, backed by separation of water property rights from land and clear specification of entitlements in terms of ownership, volume, reliability, transferability and, if appropriate, quality;
    • formal determination of water allocations or entitlements, including allocations for the environment as a legitimate user of water;
    • trading, including cross-border sales, of water allocations and entitlements, within the social, physical, and ecological constraints of catchments;
    • providing an integrated catchment management approach to water resource management;
    • the separation of resource management, standard setting and regulatory roles of government, from the role of providing water services;
    • a greater degree of responsibility for local management of irrigation areas;
    • public education about water use and consultation in implementing the water reforms; and
    • appropriate water-related research and use of efficient technologies (HLSGW1999).

    Assessments of the status of the major mechanisms for water reform are presented in the following sections.

    Water pricing [IW Indicator 4.9]

    Water pricing reforms under the National Water Reform Framework and the National Competition Policy aim for full-cost recovery (including environmental costs) from water consumers and the removal of cross-subsidies for existing and proposed developments. The environmental benefits of this reform encourage more efficient use of water and promotes increasing water use in areas with lower environmental costs.

    Reform of urban water pricing is generally on target in all states and territories (HLSGW 1999). Pricing reforms in rural areas have been fully implemented in Victoria and Western Australia and the reform process is under way in other states and territories. One of the main concerns regarding the current pricing reforms is that the significant system-wide environmental costs of water extraction (such as reduced flows in waterways, waterlogging, salinisation, nutrient and pesticide pollution, and alteration of seasonal flow regimes) are still not accurately reflected in the pricing of water. These costs are still being met by the community (through government funds) rather than by the water users (HLSGW 1999). In the short term, it is unlikely that water pricing will reflect the true environmental cost of extraction because of difficulties of distinguishing the environmental costs of water extraction from other impacts such as land clearing.

    Environmental flow allocations [IW Indicator 4.4]

    Environmental flow allocations are progressively being developed for each river system by state and territory governments. In Australia: State of the Environment 1996 (State of the Environment Advisory Council 1996), it was noted that environmental flow allocations receive serious consideration during water resource planning but they were only developed for a few river systems. The determination of environmental flow allocations is an exhaustive process that can be an inexact science based on current knowledge. By June 2000, only 13% of river systems in Australia had formal environmental flow allocations operating (NLWRA 2001a). The approaches taken and progress made in developing environmental flow allocations by each state and territory are discussed below.

    In New South Wales, environmental flow rules were defined in 1998 for six major inland regulated rivers and the Barwon-Darling system. Environmental flow objectives have been established for 31 catchments in New South Wales (NSW EPA 2001), and these objectives are implemented via water management plans. An embargo on the issuing of new licenses for water extraction from most unregulated coastal streams has been in place since 1995. The hydrologic and ecological pressures affecting 680 subcatchments in the state has been assessed. The Healthy Rivers Commission is also establishing specific criteria for water resources sustainability and environmental protection in critical catchments. The Healthy Rivers Commission has completed studies on the Williams and Hawkesbury-Nepean Rivers. They are under way for the Clarence, Bega, Woronora and Shoalhaven Rivers, and have been announced for the Georges, Tweed and Hunter Rivers.

    In Victoria, environmental water allocations (or flow sharing arrangements) have been developed in consultation with water users, government agencies and the community, for 70% of regulated river systems (HLSGW 1999). Streamflow management plans, which include environmental flow allocations, are being prepared for unregulated streams.

    In Queensland, water allocation and management plans (WAMPs) are being developed in major catchments, and water management plans (WMPs) are being developed in smaller catchments. WAMPs or WMPs are currently being undertaken for all Queensland sections of the Murray-Darling Basin.

    In South Australia, catchment water management plans (CWMPs) and water allocation plans (WAPs) are being prepared for six Catchment Water Management Board areas. CWMPs were prepared in the early 1990s for the Patawalonga and Torrens River catchments in metropolitan Adelaide (DWR 2000). WAPs are being prepared for the Barossa Valley, Murray River and Clare Valley. Constraints on further development have been placed on the Marne River and Grenock Creek catchments, pending further scientific investigations.

    In Tasmania, environmental flow assessments are being undertaken and will be incorporated into water management plans. The plans are required by legislation to be reviewed every five years. Licensed water allocations have been capped on most rivers and streams in the state over the December to April period, pending the implementation of environmental water provisions (NLWRA, unpub. a).

    In the Australian Capital Territory, environmental flow allocations have been developed and aim to preserve low flows below the 80th percentile flow, high flushing flows above the 20th percentile flow and special purpose flows such as flows during fish spawning periods (NLWRA, unpub. b).

    In the Northern Territory, five projects are being undertaken to establish environmental flow allocations for aquatic ecosystems (NLWRA, unpub. b). The projects are in the Daly River Basin and include modelling dry season flows and examining the water requirements for Vallisneria nana, riparian vegetation, phytoplankton and periphyton.

    In the Murray-Darling Basin, water extractions have been capped at 1993/94 levels by the Murray-Darling Basin Ministerial Council (1995). As part of the process of setting the cap, each state and territory was given the responsibility to determine the volume and rate of water that could be sustainably extracted from each river system every year based on 1993/94 levels of development. Compliance with the cap is assessed by comparing actual water use with the capped volume. Review of the states' and territories' caps and assessment of compliance with the cap is undertaken by an independent review body. Environmental water allocations are included within the cap.

    After several years of annual reporting on cap compliance, the Ministerial Council produced a review of the operation of the cap (MDBMC 2000). Water extractions in Victoria and South Australia have complied with the cap, whereas New South Wales has exceeded the cap in the Barwon-Darling system in 1997/98 (MDBMC 2000). In most other New South Wales river systems, extractions were close to exceeding the cap (NSW EPA 2001). Queensland and the Australian Capital Territory are yet to determine their cap on water extraction from river systems in the Murray-Darling Basin. This is of major concern in relation to Queensland as there is evidence that irrigated agriculture is becoming more widespread in the Condamine catchment (see the Land Theme Report).

    It was concluded in the review of the cap that:

    While the Cap is an important first step in providing for the environmental sustainability of the basin, the Commission recognises that 'there is no certainty that the Cap on diversions at its current level represents a sustainable level of diversions'.

    Without the Cap, there would have been a significantly increased risk that the environmental degradation of the river system of the Basin would have been worse.

    The degradation caused by the current level of diversions (the Cap) may well become more severe than that now apparent (MDBMC 2000).

    Further to these conclusions, it was recommended that:

    A high priority should be given to further improving the knowledge base available to natural resource managers, especially our understanding of the ecology of the Basin.

    The level at which the Cap is set should continue to be refined to reflect our increased understanding.

    It is likely that the Cap will be revised downwards in some river basins as knowledge about the ecological requirements for water in particular river basins becomes known more precisely (MDBMC 2000).

    The MDBC is currently developing environmental flow allocations and water quality objectives for the Murray River and it has initiated the development of a Sustainable Rivers Audit to assess the health of rivers in the Basin.

    Water trading

    Water trading encourages a more productive use of water, and allows water users in catchments where water extraction is constrained to import water from other catchments. All states and territories have instigated processes to separate water entitlements from land entitlements and allow permanent water trading to occur (HLSGW 1999). Most of the current water trading activity has occurred in the Murray-Darling Basin, where a transfer of 91 GL of permanent and 690 GL of temporary water supplies between different river systems occurred in 1998/99 (MDBC 2000). Also 3.6 GL was permanently transferred to South Australia from New South Wales and Victoria, while 15 GL was temporarily transferred into Victoria from New South Wales (MDBC 2000).

    The High Level Steering Group on Water suggests that more could be done to support the developing market and to promote greater trade in water. An example of a successfully developed marketplace for water trading is the Northern Victorian Water Exchange, which was established in 1998. Trading volumes and prices are publicly reported each week by Goulburn-Murray Water on the Internet and by notice at regional centres, and are available by phone. The water exchange has demystified the water trading process for many farmers, made them aware of the value of their water licences, and enabled them to directly participate in water trading. The water exchange also provides a benchmark price for private water trading (HLSGW 2001).

    When transferring water from one river system to another, an assessment of the impact of the transfer on water supply security and the environment should be made because:

    • the security of supply generally decreases
    • in the absence of environmental flow provisions, the maintenance of security of supply may be at the expense of the environment. (As noted by the HLSGW (2001) 'water trading cannot be responsibly introduced until there is certainty as to the relative allocation between the environment and other users'.)
    • downstream flows are reduced, thereby reducing the volume of water available instream to dilute incoming pollutants
    • not all water entitlements should be transferred from a property as some water is required to prevent land salinisation and support any remnant vegetation (HLSGW 2001).
    Institutional reform

    The National Water Reform Framework called for the separation of powers in the water industry to ensure the independence of water resource management, standard setting and regulatory enforcement and service provision. From an environmental viewpoint, these reforms mean that there is no conflict of interest between the agencies supplying water (which have a financial interest in selling more water) and the agencies managing the environment. Similarly, the agencies that set standards and ensure compliance are separate from the water suppliers.

    All states and territories have moved or are moving to implement these new institutional arrangements (HLSGW 1999). In the Northern Territory for instance, the separation of powers in the water industry occurred in 1997 and since then the Power and Water Authority is the sole water supplier and the Department of Lands, Planning and Environment is the resource manager and regulator (HLSGW 1999). A similar arrangement now also exists in the Murray-Darling Basin with the separation of water supply from natural resource and/or policy setting through the creation of the River Murray Water business unit of the Murray-Darling Basin Commission. River Murray Water operates the major storages in the Murray-Darling Basin and delivers water to water users.

    These changes to institutional arrangements are supported by legislative change, which have specified the role of government agencies and have allowed water authorities and irrigation trusts to become corporatised or privatised.

    Demand management for drinking water [IW Indicator 4.1]

    Reducing per capita use of potable water is the most effective management response to meet the increased urban demand for water due to population growth and avoid or delay the construction of new dams (which are environmentally unacceptable to the community). The programs are called demand management strategies.

    A detailed discussion of the changes in urban and domestic water use is contained in the Human Settlements Theme Report. Their findings are summarised below.

    In most urban areas there has been a downward trend in household water use. Average per capita household water use in major urban areas has decreased from 278 litres per person per day in 1993/94 to 258 litres per person per day in 1998/99. The three urban areas that showed marked decreases in water use were Brisbane, Hobart and the Central Highlands in Victoria. Decreases in water use have been achieved through pricing reforms, water conservation campaigns and strategies, the installation of water-efficient devices and greater public awareness.

    Water resource planning in forest management

    In Australia: State of the Environment 1996 (State of the Environment Advisory Council 1996) the absence of water resources planning in forest management was identified as an emerging issue. Water resources planning in forest management is now widespread and is undertaken in catchments where logging is a major activity. For example, as part of the development of a regional forestry agreement for the Otway Forest, it was estimated that catchment yield would change by less than 5% if logging continued but that the yield would increase by up to 28% if logging ceased (Sinclair Knight Merz 2000c). Other studies have noted that afforestation of grasslands results in reductions in catchment yield, which has implications for areas where tree planting is required for remedial activities such as the control of dryland salinity. While the area of land reafforested is small compared to the total area of land in Australia, increases in afforestation in the future may have local effects on water yield.

    Regulation of off-stream farm dams

    Generally instream dams require licensing under state and territory water management legislation, whereas off-stream dams are poorly regulated in most states and territories. In New South Wales, landholders are permitted to harvest 10% of run-off from their properties without a licence (Government of New South Wales 1998). Farm dams that capture more than 10% of run-off now require approval and licensing. Currently in Victoria, only farm dams located in a waterway require licensing. In recognition of the impact of off-stream dams on streamflows, Victoria is moving towards greater regulation of these storages and has undertaken a comprehensive stakeholder consultation program before implementing any changes in licensing (see ~farmdams/welcome.htm). In Western Australia, the regulation of off-stream dams has been rejected by the state government (see farm dams).

    Messages about surface water management
    • National water reforms are gradually being implemented in all states and territories. This includes the separation of water regulation and water supply responsibilities.
    • Current water pricing reforms may not accurately account for all the environmental costs of water extraction.
    • Only 13% of river systems had operational environmental flow allocations in June 2000. Environmental flow allocations for many river systems are currently being determined by state and territory governments and it is likely that preliminary allocations will be established for most regulated rivers in the next five to ten years.
    • Water extraction from the Barwon-Darling river system in 1997/98 exceeded the cap on water extractions in the Murray-Darling Basin. The Queensland government has yet to determine the cap on water extractions from its Murray-Darling Basin river systems.
    • Demand management programs to reduce water use in urban areas have been successful in some states, and overall there has been an 8% reduction in average per capita water use.

    Case study 2: Irrigation efficiency [IW Indicator 4.10]

    Our current irrigation practices and water distributions systems are inefficient, and consequently a large proportion of the water extracted for irrigation is wasted. Some of these losses are unavoidable. Upgrading existing water distribution and irrigation infrastructure, embracing new technology and improving irrigation practices, however, can save much of this water. The water saved by these increased efficiencies can either be returned to the environment (e.g. Snowy River) or be used to irrigate new areas and increase the productivity of a basin.

    Water can be lost in distribution systems before it reaches an irrigator. A study of the Goulburn-Murray Water, First Mildura Irrigation Trust and Sunraysia Rural Water Authority irrigation systems in northern Victoria found that the delivery efficiency of open channel systems ranged from 66% to 86%, while the delivery efficiency of piped systems ranged from 78% to 100% (Sinclair Knight Merz 2000a). Over 50 GL/year of potential water savings were identified, which will allow water to be transferred back to the Snowy River without reducing the existing flows at the Murray River mouth in South Australia. Water savings could also be used to increase instream flows in the Murray River.

    Over-irrigation of crops also wastes substantial volumes of water in Australia. Applying up to 15% more water than the crop needs is generally considered acceptable to prevent the accumulation of salt near the crop root zone. A number of studies (KSTS 1997; LMIAG 1999; Skewes & Meissner 1997a, 1997b) along the Murray River in Victoria and South Australia have found that irrigation practices vary from farm to farm. For instance, in the Loxton Irrigation District in South Australia, over-irrigation occurs on some properties with up 59% of water applied being wasted because it exceeded the crop needs, whereas on other properties under watering was occurring (KSTS 1997).

    Apart from wasting water, over-irrigation can also have adverse impacts on agriculture and the environment. The wasted irrigation water not used by the crop can 'leak' into the groundwater, causing water tables to rise, waterlogging of surface soils and land salinisation. Irrigation-induced salinity is discussed later in this report.

    Improvements in irrigation practices in the Sunraysia region of Victoria have led to reductions in drain flows and salt loads discharging into the Murray River. In the Merbein, First Mildura Irrigation Trust and Red Cliffs Irrigation Districts, drain flows and salt loads have decreased significantly over recent years (Sinclair Knight Merz 2000b). While the magnitude of the reduction may have been affected by the recent dry period, there is a clear and sustained reduction in drain flow since the introduction of the salinity management plan for the area in 1990. Links have been made between these drain flow reductions and rebates for activities such as property management plans, farm budgets and water meters (Sinclair Knight Merz 1999).

    New irrigation developments have the potential to introduce best practice irrigation management. Proposed developments such as Stage 2 of the Ord River Irrigation Scheme in Western Australia or the Deakin Irrigation Development in Victoria are projects which are likely to set the benchmark for irrigation practice.