September 3rd, 2015 by Dustin Evan Garrick WaterDeeply.org
The celebrated water markets that emerged in Australia are working now because politics remained as important as economics.
The main threat to ongoing reform in Australia’s Murray-Darling region is that the political process that built the market becomes transformed into a purely technical one. The rollout of the Murray-Darling Basin Plan (2010-12) initially suffered this fate before confronting the politics of “ localism ” and making concessions to compensate farmers, irrigation communities and states bearing the costs of reform. Politics matter in all aspects of the water market, but the impact is perhaps most obvious – and unavoidable – in setting and updating diversion limits. Diversion limits determine how much water can be consumed and how historic water entitlements are treated.
The Basin Plan updated diversion limits to achieve sustainability, requiring parallel efforts to “claw” water back for the environment. The Plan received almost 12,000 public comments over about four months in late 2011 and early 2012. The political pushback from all sides – irrigators, environmentalists and states – led to many efforts to engage communities, some more successful than others. In one promising example, the commonwealth government entered into a 5-year, 50-gigalitre partnership (about 40,500 acre feet) with a non-profit organization in South Australia (the most downstream state) to deliver water for local environmental priorities. It is important to keep parochial concerns from dominating reforms.
But politics, coupled with transparency and public engagement, can provide the basis for moving the reform process down a better path. This also strengthens the water market to handle some – but not all – of the key choices about how water is used. Efforts to use the market to move water out of irrigation regions and between states encountered some of the most stubborn barriers, particularly for “buybacks” of water for the environment.
However, by water year 2012-13, interstate water allocation trades (akin to leasing in the U.S.) comprised about 20 percent of the total allocation trade volumes in the Murray-Darling region. Overcoming political resistance to move water across subcatchments and state borders required sustained engagement amid larger questions of community development and rural livelihoods. To put it another way, politics remained an important part of the policy and institutional reforms governing water markets, a constant renegotiation of the boundary between private choices and the public interest.
The same values that threatened to divide water users and states have formed the basis for an ever-fragile common ground. It may be counterintuitive to let politics sneak into development of the market. But therein lies the paradox: The many economic virtues of water markets depend on sound governance and legitimate political discourse – about how to distribute water between states, between consumptive users and the environment.
The architects of Australia’s reforms have noted that the U.S. has yet to feel the pain of deep shortage, the true necessity that is the mother of innovation. But when we do experience the first Lower Colorado River shortage, let’s draw on the real lessons from Australia, not the glossy version.
Charting Our Own Path
The conventional wisdom suggests that drought is a window of opportunity for reform – a call to action, but not to panic. Any proposal for water reform that embraces politics will need to account for local hydrology and culture, which means confronting the legacies – and commitments – of prior water rights. By all accounts, California and the other Colorado River water users are forging their own path. The signs are encouraging, and 2014 was a banner year: the environmental pulse flows to the Colorado Delta, the passage of the 2014 California Water Bond and the Sustainable Groundwater Management Act are all drops in the unquenchable bucket of water reform.
Although progress is slower than we might like, there’s a growing commitment to transparency and sharing information, which is needed for principled political discourse. There are stories of new stakeholders delving into the ugly underbelly of river system models to understand risk and find solutions, of new and old water users sacrificing short-term pain for long-term gain. Also emerging is what Anne Castle, former assistant secretary of the Interior, called the “human connection” to rivers and water that can transform our relationship with ecosystems. Increasingly, the Western U.S. has something to offer Australians and an opportunity to contribute to a long legacy of mutual learning between the two regions.
There are 50 shades of water risk, and water markets are only one tool to manage them. If we want water markets to work, politics can no longer be a dirty word. Dustin Evan Garrick is Philomathia Chair of Water Policy at McMaster University in Hamilton, Ontario, Canada. He has visited Australia five times since its 2007 Water Act was passed, including a Fulbright Fellowship during the rollout of the Murray-Darling Basin Plan in 2010-11. His new book, Water Allocation in Rivers Under Pressure _, focuses on evolution and performance of water markets and river basin governance in the Western U.S. and Australia.
_ Top photo: A flock of sheep drink from a dam at the edge of the dried-up Lake George, about 250 kilometers (155 miles) southwest of Sydney, Australia, on Tuesday, March 3, 2015. Australia’s outback and surrounding regions are a vast, arid and semi-arid area that are perpetually on the verge of, or in the midst of, a drought. Farmers must constantly explore different ways of keeping their livestock hydrated, crops watered and themselves alive by making use of dams, storage tanks, artesian wells and water-sharing agreements.