Permanent water-trade will weaken agriculture and regional economies, farmers argue in a long-awaited report.
A long-awaited report has revealed “widespread, vehement community opposition to permanent water-trade” out of irrigation districts.
Permanent water-trade of irrigation is at the core of the federal and state National Water Initiative (NWI) and of the $10 billion federal water plan, promoted by former Prime Minister John Howard and supported by the Federal Labor Party. The NWI separates farmers’ water entitlement from land title in order to make “permanent” water-trading possible.
This has to be distinguished from “temporary” water-trade, whereby a farmer sells the excess water not being used this year to another farmer wanting more water this season. This policy is strongly supported by farmer and makes the most efficient use of water.
Originally, governments told farmers that permanent water-trade would allow water to be traded from low- to high-value agriculture. Later, that changed to allow water to be traded from farms to cities, industries, the environment and any water-buyer, including water barons.
Permanent water-trade is essential for The Living Murray initiative, which aims to purchase 500,000 megalitres (one megalitre is the equivalent of an Olympic swimming pool) for environmental flows, and for the $10 billion federal water plan which aims to purchase another 3,500,000 megalitres for the environment or to extinguish irrigation licences. This would wipe $28 billion off the Australian economy, or 2.9 per cent off gross domestic product.
Farmers have argued that when water is permanently traded out of a region, it debilitates local infrastructure – schools, shops, farm-support industries, hospitals – and other farmers who find that, as water leaves the area, the cost of supplying irrigation water and maintaining water infrastructure becomes uneconomic.
While farmers have been strongly opposed to permanent water-trade for these reasons, governments have proceeded with water-trading policies without consulting irrigation communities in the Murray-Darling Basin.
Now a report, The Economic and Social Impacts of Water-Trading, confirms the negative effects of water-trading and admits that in regional communities there is “widespread, vehement community opposition to permanent water-trade” (p.xiv). Further, “some farmers have been ostracised by their community for selling their permanent water entitlements. With persistent drought, however, there is a greater appreciation that many individuals could be selling unwillingly” as the only way either to survive the drought or to leave farming respectably (p.49).
The report was produced for the National Water Commission (which oversees the NWI), the Murray-Darling Basin Commission and the Rural Industries Research and Development Corporation. It case-studied four areas: three in central and northern Victoria, Pyramid-Boort, Rochester, Kerang-Cohuna, and then Sunraysia, which stretches from Robinvale to Mildura along both sides of the Murray.
It found that there was a net trade of permanent water from the first three areas to Sunraysia, with virtually all the water going to “new plantings on land that [were] not previously irrigated”, i.e., to highly controversial Managed Investment Schemes (MIS).
The report also found that, “Although water trading by entitlement holders is voluntary, the trade also affects third parties. Trade into a region can lead to increased competition in production, queuing for delivery of irrigation water, and higher water-tables. Trade out of a region can lead to increased water-delivery charges to remaining users (the ‘stranded assets’ problem), the build-up of disease and pest plants and animals, and depopulation.” (p.50).
Advocates of water-trading had argued that water traded out of a region would eventually return. However, the report found that the social impacts of water traded out of regions “are not simply a temporary phenomenon associated with the introduction of water-trading; rather, they are likely to be a permanent feature of regional economies exposed to the rapid shifts – facilitated by water-trading – in investment between different types of irrigated agriculture”.
The report says that communities losing water face loss of agricultural service industries, loss of population and social infrastructure.
Scourge of farm sector
However, the report falls short in treating MIS as a normal part of the rural economy, whereas MIS should be shut down. They are the scourge of the farm sector. They are not driven by market forces and the need to make a profit, but by tax concessions to wealthy investors. If governments refuse to subsidise family farmers, why should they be subsidising wealthy investors, giving them huge tax breaks to invest in MIS?
MIS lead to overproduction and the collapse of farm-gate prices, forcing genuine farmers out of business. They are forcing up the price of water and are causing serious environmental problems in some areas.
If the negative impacts of MIS are considered, the report’s findings are even more damning of permanent water-trade, because most of the advantages of water-trading that it outlines are based on treating MIS as a normal part of the farm economy.
– Patrick J. Byrne is national vice-president of the National Civic Council.