Implications of water reforms for the national economy

Product Information

From humble beginings in the 1880s by individual farmers along inland rivers and, in particular, the efforts of the Chaffey brothers at Renmark and Mildura in 1887, the irrigation industries in Australia have expanded to where they now use three quarters of all water used, have a combined area of about 2.6 million hectares under irrigation and produce agricultural outputs worth over $9 billion. Irrigation industries are an integral part of many regional economies and the national economy, and, on one estimate, make up nearly half of the profits earned from agriculture, but from only about 0.5 per cent of agricultural land (NLWRA 2002).

Increasingly, however, use of Australia’s water resources have been on a less than ecologically sustainable basis, and over the past decade govern-ments have been pursuing reforms of the way water is managed. Water management is primarily a state responsibility under the constitution, but the Australian Government has taken an active part in the reform process through the Murray Darling Basin Ministerial Council, the Council of Australian Governments (COAG) and other processes and programs. In particular, a large impetus to reform has come through the National Competition Policy (NCP), which has linked the progress of water reforms in the states to fiscal payments to the states.

In relation to irrigation in Australia, water reforms are pursuing four key objectives — all four being interconnected:

• increased environmental outcomes;
• maintenance or enhancement of the economic and social well being of irrigation industries and associated regions;
• increased water use efficiencies — technical efficiencies on and off-farm — and allocation efficiencies where water is put to best use; and
• improved security of water access entitlements, improved water trad-ing and full cost recovery charging for water.

Trade-offs between the first two are perhaps at the centre of the debate but the other objectives are heavily intertwined with these.