Unbundling Water Rights in Australia: State and Federal Perspectives

1. Un bundling Water rights and the water markets in Australia-Professor Jennifer McKay, School of LawSouth Australia DWG 2015 Fortalenza

2. Panel National development planning and defined priority water users and institutional reforms needed for a water secure future panel 24 th November Eiman

3. Unbundling water rights State first but federally driven SA Up until 2009, a licence holder’s rights for taking and using water were lumped together, so that only one licence was need for a variety of purposes. As a result, however, application and approval processes were slow and expensive if a request to alter any of the conditions were made. Water rights are now being separated (or ‘unbundled’) so that they can be managed as four separate items: Water access entitlement (water licence) Water allocation (volume allowed to be taken each year) Water resource works approval  Site use You need only apply for the right or rights you require and can make changes to one of them more quickly and easily

4. Unbundling SA all but MDB Water affecting activity permits already exist alongside water licences and can authorise a number of activities, such as construction of wells and dams or the use of effluent and imported water. These permits continue to exist after water rights are unbundled, but in some cases a water resource works approval can replace the water affecting activity permit.

5. Unbundling in MDB area What information will be reflected on my unbundled River Murray water licence?  The water licence will specify: name of holder and contact details water resource date of issue and expiry (if relevant) dates of any variation whole of licence temporary transfers, including reversion date water access entitlements including • number of unit shares • the consumptive pool (in this case the River Murray Prescribed Watercourse) to which the shares relate • class of entitlement • temporary transfers of water access entitlements including number of unit shares, their class and date of return of any temporarily transferred entitlements conditions - some classes of entitlements may have specific conditions

6. Unbundling MDB • number of unit shares • the consumptive pool (in this case the River Murray Prescribed Watercourse) to which the shares relate • class of entitlement • temporary transfers of water access entitlements including number of unit shares, their class and date of return of any temporarily transferred entitlements conditions - some classes of entitlements may have specific conditions

7. Unbundling classes of water- conversion You can convert from Class 3a to Class 3b or vice versa if you are moving water in or out of the Qualco-Sunlands Groundwater Control Trust Area. You cannot convert between other classes, because the relative reliability of the water allocations under each class has not been fixed in the water allocation plan and depends on the Minister’s decisions in relation to allocation of water during drought

8. water scarce towns in MDBC Source: EBC, RMCG et al (2011a) MDBA website

9. Unbundling conditions MDB area Unless there is a condition on the water allocation, the water can be used for any purpose as long as you have a site use approval that covers that use. For example, Class 3 entitlement allocations can be used for irrigation, domestic, industrial or recreational uses, provided the site use approval covers these purposes.

10. NATIONAL Attributes of water products This section will focus on attributes of water access entitlements and water allocations, which form the bulk of water products traded in Australia, and are the focus of the reports published on this website. Individual water products differ in each state and territory, however they are divided up in a similar manner across jurisdictions. Water products are categorised by the following attributes: whether they are bundled  with land whether they come from surface water or groundwater whether they come from regulated or unregulated water resources whether they are high or low reliability

11. water rights –nb the term means allocation

12. terminology

13. TERMINOLOGY State based

14. Victoria UNbundled bundled with land

15. NSW UNBUNDLED BUNDLED WITH LAND

16. thanks for the opportunity Questions?

18. Panel on environmental flows Dr Barbara Willaarts Water Observatory Madrid –Monitoring status of surface water bodies in Spain lesson learnt and challenges ahead. Dr Stanley Mbofho Liphadzi Water Research Commission South Africa- Sustainable Management of Water in South Africa Dr Maria Leichner General Director Fundacion ECOS Uruguay and RFP South America CSO-GEF Network Environmental flows in Uruguay

19. Framework for Australia

20. SA and Victoria early Political Challenges in Water Allocation between States

21. The caption reads: ’You see I intend to treat you with sisterly regard in the matter. You will observe that the droppings I allow to go to you absolutely without condition’. The caption was a bitter critique of the ‘family’ of Federation, in which the smaller states languished at the mercy of the larger.

22. old inaccurate Dethridge wheels

23. New technology recent science improvements Murrumbidgee Irrigation area NSW Issue- the solar panels were stolen so now on the high pole!

24. Water licences water is not attached to land any more after 1983 Consumptive pool users only have a share of a ground water and / or surface water pool. It is not a right, but a mere licence which can be defeated by a drought announcement or other changes. In the Millennium drought many farmers had zero allocations for many years and the Federal Government sponsored adjustment packages to keep them on the land( like unemployment benefits) but also gave relocation packages in some areas.

25. Environmental flows The overall objective of environmental flow recommendations is to ensure that sufficient water is made available to support the needs of the entire riverine ecosystem. Methodologies differ between the States Previously, these assessments have focused largely on minimum flow requirements for instream fauna (such invertebrates and fish) by employing the instream Flow Incremental Methodology (IFIM) or other desktop approaches. However, new holistic methodologies that incorporate natural variability in stream flow, and the high flow water requirements of entire riverine ecosystems

26. Environmental flow- ideal method The process involves four main steps in Tasmania: Identify freshwater ecosystem values in each catchment in order to define the objectives of the environmental flow assessment. Develop conceptual models that identify the ecosystem processes that support these values. Identify representative river reaches, conduct assessments using hydraulic and hydrological models to characterise physical habitat and biological diversity of the system, and identify specific flow events that relate to these attributes. Conduct hydrological analyses of flow data to define the pattern of occurrence of important flow events and the availability of important habitats for fauna. Recommend a flow regime that meets the objectives of the environmental flow assessment, including rules for water abstraction.

27. Environmental flows and water planning Environmental flow assessments essentially describe the importance of different flows to the aquatic values of riverine systems. It is critical when interpreting environmental flow assessments that they are considered in the context of the community's environmental, economic and social objectives for the river(s) being examined. Thus, assessments provide an essential input to DPIPWE's water management planning process; however, all water users within a catchment are considered by DPIPWE during the development of water management plans. During this process, environmental water requirements are negotiated and implemented as environmental water provisions, which aim to balance economic, social and environmental values within catchments

28. Water Laws and plans in Australia States

29. Are Statutory Water Plans the right way? YES - 61.5% But also pointed out some concerns: • unfairness in the processes for public consultation, • lack of knowledge of local, • cost of development and implementation of water plans, and • uncertainties in the science.

30. Environmental flows Throughout Australia, environmental flow assessments are used to estimate the quantity and timing of flows required to sustain identified aquatic values in riverine environments. Typically, water management planning and other natural resource planning processes use environmental flow assessments to make informed decisions about water management.There is no single standardised method for estimating environmental flows in Australia or in other countries; instead several  methods are available, and their application is often tailored to meet the specific requirements of each assessment

31. National issue Research Projects funded Daly Basin Projects Environmental flow requirements for Australian arid zone rivers Productivity and water flow regulation in the Ord River of northwestern Australia (WA) Snowy River benchmarking study (NSW) Assessment of the impact of private dams on seasonal flow (Vic) Importance of flood flows to the productivity of dryland rivers and their floodplains (Qld) Environmental Flow Requirements on the Paroo / Warrego Rivers (NSW

32. Environmental flows in MDB in 2011 Using the best available science, and drawing upon a wide body of peer-reviewed work, in October 2010 the Murray-Darling Basin Authority came up with a volume of water for the environment equal to 3,856 GL/year, on average. This would give a “high uncertainty” of conserving key environmental assets and ecosystem functions. It also had a larger number of 6,983 GL/year that would give a “low uncertainty” of conserving key environmental assets and ecosystem functions

33. Water Act 2007 Commonwealth (under multiple powers in section 51, including the referral of powers from the States) enacts the Water Act to apply to M D Basin Commonwealth accreditation of all State Water Plans which must aim to achieve ESD ,gives a role to Australian competition and Consumer Commission to regulate process and enhances the Commonwealth environmental water holder. Buy backs of land and water start.

34. Environmental flows Based on these volumes, the Authority recommended that the increase in environmental flows should be between 3,000 and 4,000GL/year. That means between 27% and 37% reduction in water extractions by irrigators if this extra water were obtained entirely from reductions in water course extractions. The upper limit was set at 4,000GL/year rather than 7,600 GL/year by the Authority because it believed that reducing irrigation diversions by more than 4,000 GL/year would result in unacceptably high socio-economic costs

35. environmental flows uncertain science According to Freeman “…the assets and functions are now yielding numbers below 3,000GL/year”. Whether this is old or new, all science used to make public policy decisions should be scrutinised and, wherever possible, be subject to peer review. If not, the evidence is compromised. Yet, so far, the Authority has refused to establish an independent scientific assessment panel to review its “new science”, despite an explicit request to do so by the Wentworth Group of Concerned Scientists, the Australian Conservation Foundation and others

36. conflict resolution measures

37. New model for water utilties Model of water business enterprise. Source: McKay J (2003) & McKay J, Water Policy (2005) 1-20

38. References cited Keremane, G., Mckay, J., Ettehad, E. & Wu, Z. 2013. The Evolution of Business Models for Non-Major Desalination Plants in Australia- Issues for Governance. The International Desalination Association World Congress on Desalination and Water Reuse. Tianjin, China. Keremane, G. B., McKay, J & Wu, Z (2012), ‘Sustainable Water Planning in Australia-A survey of our sustainability water policy entrepreneurs’, Water, 39 (5):62-65. Wu, Z, McKay, J & Keremane, G.B. (2012), ‘GOVERNANCE OF URBAN FRESHWATER: Some views of three urban communities in Australia’, Water, 39 (1):88-92. McKay, J. M. (2008). Insubstantial Tenuous and Vague Laws - The Achievement of Ecologically Sustainable Development by Water Supply Business CEO’s , Australian Business Law Review, 36(6):432-445

39. Thank you for invitation Questions?

41. An old conflict They hang the man and flog the woman That steal the goose from the common, But let the greater villain loose That steal the common from the goose. English folk poem, 1764

42. Water Markets legal issues in Australia Constitutional Institutional Structures Monopolistic behaviour of water barons but this can be regulated by ACL Separation of water from land aspect liked by farmers but not the broader community. Community adoption of sustainable development ideals, loss of roles and collectivity in rights and obligations –a move away from the yeoman farmer of the last 200 years The Water Act 2007 Basin Plan and regional water plans how these could assist communal management and have an impact on State Water markets

43. Long term issues The longer term social impacts of the effects of water markets are unclear and the distribution of them may not make a significant contribution to sustainable communities or to equitable regional development (McKay and Bjornlund 2001). 2014 Paper Compensation for loss of water allocation is limited . This was a major issue. Water Plans at a regional level can contribute to conversations in the local region to induce a collective approach. McKay 2013

44. Water markets-rural community concerns While the available data are relatively scarce, they do suggest that rural community members fear the effects of water markets on their communities. There is evidence that they disagree with water markets being the primary method of allocating water Bjornlund 2004a; Tisdell and Ward 2003). Disquiet about water markets among residents of rural communities is centred on an apprehension that the sustainability of rural communities will be diminished and that ‘ emerge and manipulate the market for individual or corporate benefit (Bjornlund 2004b; Tisdell and Ward 2003).

45. Water Markets community response Fenton found that while 50% of respondents believed that individuals had the right to sell their water allocation, approximately 65% were nonetheless opposed to water trading. Hence people living in rural communities appear to distinguish between the right of individual farmers to sell their water and an evaluation of whether this is desirable; there is a disjuncture between people’s perceptions about what is good for individuals as opposed to what is good for their community.

46. Tisdell and Ward separating water entitlements from land- initial pillar of the new water markets while almost two-thirds (61.8%) of farmers they surveyed accepted that water entitlements should be separated from land, only about half (50.8%) of community members shared this view (2003: 66). More community members than farmers supported intervention by water authorities if the economic viability of communities is threatened (Tisdell and Ward 2003: 68).

47. Water markets – the hopes market-oriented approach was developed. The market-based approach was first set out in the communique of the 1994 COAG meeting and was developed more fully in the National Water Initiative announced in 2004 (Council of Australian Governments 1994, 2004a, b). The central idea was to replace bureaucratic systems of water allocation based on licenses with tradeable water rights. It was hoped that markets would ensure that water was allocated to its most socially valuable use. The market-based approach to policy has thus far had only limited success. A number of problems have become evident.

48. National intervention in water since 1994 INTERGOVERNMENTAL AGREEMENT ON A NATIONAL WATER INITIATIVE 2008 Between the Commonwealth of Australia and the Governments of New South Wales, Victoria, Queensland, South Australia, the Australian Capital Territory and the Northern Territory PREAMBLE 1. Water may be viewed as part of Australia’s natural capital, serving a number of important productive, environmental and social objectives. Australia’s water resources are highly variable, reflecting the range of climatic conditions and terrain nationally. In addition, the level of development in Australia’s water resources ranges from heavily regulated working rivers and groundwater resources, through to rivers and aquifers in almost pristine condition.

49. RIGHTS TO WATER no property, common property, state property and private property no ``best'' regulation and that a mix of regimes can be found in most cases and environmental destruction can be found in all regimes. However, it is possible to identify conditions for the success of specific regulative systems conditions for the success of specific regulative systems. In the Australian context, I see this as the regional water plan, but there is a way to go in the administration of these and pressures such a coal seam gas.

50. water markets Calls for a Commonwealth takeover of water policy have also been justified on the basis of the supposed desirability of a uniform policy approach. However, given the differences in climate and catchment hydrology between the states and the fact that, with the exception of the Murray–Darling Basin (which is already governed by well-established federal institutions) there is no real possibility of trading water between states, there is no obvious reason to expect uniformity to yield beneficial outcomes. Rather than a one-size-fits-all solution, it would be better to adopt policies based on local circumstances, and the democratic choices of local electorates.