Context for the case studies

This section provides specific background to the NSW carry-over water study and the Victoria pipeline study introduced in Chapter 1.

4.4.1

Water allocation in NSW

The NSW case study is located in the irrigation areas of the NSW Riverina, north of the River Murray (Figure 4.2). These irrigation areas are primarily serviced by Murray Irrigation Limited, although other smaller irrigation organisations also supply irrigation water. At the hub of these irrigation areas is the rural town of Deniliquin, first settled in 1845, which is located on the Edward River, an anabranch of the River Murray. From its early origins as a river crossing point and wool growing region, Deniliquin became a prosperous rural town servicing the Murray Irrigation District. At the time of the case study the population of the area was approximately 8000.

The NSW Office of Water is responsible for water management in NSW. There have been several episodes of restructuring of government agencies and their portfolios in NSW since 2006: at the time of the case study the responsible agency was the Department of Natural Resources (DNR). How water is managed, shared and supplied in the NSW Murray river system is described in a NSW government publication titled Background to water management

(DNR, 2006a). This document sets out the water sharing arrangements between NSW, Victoria and South Australia and describes how water is allocated within NSW to water users that utilise water from the River Murray. The purpose of the document is to "provide an assessment of the reliability of water to supply to NSW licensed water users" (DNR, 2006a:2). It includes a description of the different water entitlements and how water is allocated.

The water allocation system in NSW recognizes different water entitlements according to the level of security of the supply. The two main categories are high security water (for towns, stock and domestic supplies and irrigation of permanent plantings, such as horticulture and viticulture) and general security water (for annual crops and pasture). An annual allocation process determines how much water is available in each of these categories according to the volume of water calculated to be available in the River Murray system. There is a precise formula which calculates what is known as the "announced allocation" and this takes into account water in the system at the time and an estimation of future inflows for the year (DNR, 2006a:22). When calculating future inflows a conservative approach is taken which calculates future inflows to be no more than the minimum inflows in the past 109 years. This method of calculation gives high reliability for high security users and an expectation for general security allocations to reach 70% of their allocation in 87% of years; in one year out of 100 general security would not rise above 10% of allocation (DNR, 2006a:26).

In NSW the allocation policy is to maximise the water available to irrigators each year, leaving minimum water reserves for the following year (DNR, 2006a:14). This is in contrast to the allocation policy in Victoria which takes a more conservative approach by reserving water for the following year. The NSW approach has been adopted in consultation with industry water user groups over many years. It is designed to put the decision-making as to how much water is used at the individual water user level. Individuals therefore have the opportunity to use the water, trade the water, or carry some of the water over to the next season (DNR, 2006a). This ability to carry the water over into the next season is a risk management tool specifically developed to enable individual irrigators to manage their own risk regarding water availability. This carry-over water risk management tool was introduced in 1998 (Martin, 2005) and enables up to 50% of water to be carried over from one year to the next.

The hierarchy reflecting the allocation priority set out by the government determines that carry-over water from the previous year is higher up the ladder than high security entitlements that, in turn, are higher than general security entitlements (DNR, 2006a). This is based on the

Context - water in Australia

80

rationale that carry-over water is "an unused allocation from the previous year" (DNR, 2006a: 20). Irrigators are also able to purchase additional water from other irrigators through a trading scheme.

In the allocation year of 2006-07 the overall water allocation was announced according to procedure in July 2006: 97% for high security and 0% in general security. On October 15, 2006 a government media release advised that cutbacks to the current water allocation would take place immediately (DNR, 2006b). This was announced without prior warning to the irrigation community. A second cutback was announced on November 10, 2006, but this was preceded by discussions with irrigation industry groups. The first cutback reduced the allocation by 20% and the second by a further 32%. The cutbacks applied to any water held on water users' water accounts and included carry-over water and water that had been purchased through the water trading scheme. The irrigation community protested on December 15, 2006. The government refused irrigation calls for targeted compensation regarding the water cutbacks, but did respond to irrigators' financial hardship. A $20 million Extraordinary Assistance Package was announced by the NSW government in January 2007 for "struggling southern irrigators" in which irrigators had to demonstrate "severe financial distress" to access up to $50,000 (NSW Government, 2007a:1/2). This assistance package was subsequently amended in March 2007 to make the application process simpler for irrigators (NSW Government, 2007b).

4.4.2

Water planning in Victoria

The Victoria pipeline case study centres around two locations: Shepparton and irrigation areas in the northern area of the state and Yea in the central area (Figure 4.3). Shepparton is the regional hub for irrigation areas in the Goulburn-Murray Water Region of northern Victoria. It was established as a crossing point of the Goulburn River in the 1850s and has grown to a population of approximately 38,000. The township of Yea was settled close to the Goulburn River in the late 1850s as a farming and timber community. At the time of the case study the population was approximately 1000 and the Yea area was primarily a farming locality with some additional local tourism enterprises.

The Victoria pipeline study is concerned with two water infrastructure projects initiated by the Victorian government. These are the Food Bowl Modernisation Project and the North South Pipeline. The Food Bowl Modernisation Project is a broad-based irrigation initiative to upgrade irrigation infrastructure across the Goulburn-Murray Water Region (Figure 4.3) in order to save water lost in transmission. The North South Pipeline is a new 75 km pipeline designed to take a share of the water saved in the irrigation upgrade from the Goulburn River near Yea to the Sugarloaf Reservoir just north of Melbourne (Figure 4.3).

Figure 4.3 Victoria case study area

These two projects were developed by The Department of Sustainability and Environment (DSE), a Victorian government agency which carries out water planning for the state and provides advice to the Victorian government. In 2004 the Victorian government published its plan for water security in the state (DSE, 2004), and in June 2007 published the next phase: Our Water Our Future: The Next Stage of the Government's Water Plan (DSE, 2007). This plan outlined an investment of $4.9 billion in water infrastructure projects and described the Food Bowl Modernisation Project and North South Pipeline. The context for this plan was the long- standing drought of over 10 years and the low levels of Victoria's water storages which had resulted in widespread water restrictions In addition the plan outlined the impact of climate change and the recent record low inflows to Melbourne's storages which indicated that a "step- change" in the region's climate may have already taken place (DSE, 2007:21). Thus this latest plan published in June 2007 was seen as an emergency response to the record low inflows (DSE, 2007; Auditor-General, 2008).

The Food Bowl Modernisation Project was planned in two phases: a first stage investment of $1 billion would build on current upgrades already taking place and enable water savings up

Context - water in Australia

82

to 225 Gigalitres to take place. These initial savings of 225 Gigalitres would be split three ways: a third for the environment, a third for irrigators and a third for Melbourne. The water for Melbourne, 75 Gigalitres, would be diverted from the Goulburn River through the North South Pipeline. This amount of 75 Gigalitres represented "less than 5% of the total volume of water available in the Goulburn system" (DSE, 2007:9). The pipeline would be ready for use in 2010 (DSE, 2007). These projects were part of an expansion of the Victorian Water Grid which would enable water to be transferred between water systems (regional river valleys), thereby increasing water security and facilitating water trade (DSE, 2007). The Victorian water plan stated that up to 900 GL of water were lost annually from a total amount of 3500 GL in the Goulburn Murray irrigation area. This was due to "poor measurement, leakage, seepage, evaporation and an outdated irrigation delivery system" (DSE, 2007:8).

To achieve the water savings in the Goulburn Murray Irrigation District a Steering Committee would be set up "to guide the further development of the project" and include "local councils, interested groups, the Food Bowl Alliance and the broader community" (DSE, 2007:4). The plan also announced that "work will begin immediately to develop" the pipeline from the Goulburn River to the Sugarloaf Reservoir (DSE, 2007:28). Of the two routes considered, the Melba highway route from Yea to the Sugarloaf Reservoir had been chosen "as it is shorter and will be quicker and less expensive to build" than the alternative route along the Hume Highway (DSE, 2007:9).

In April 2008 the Victorian Auditor-General published a report which was critical of aspects of the Victorian government's water plan described above (Auditor-General, 2008). The criticism centred on two areas: "minimal stakeholder consultation" and "inadequate levels of rigour applied to estimate the costs, benefits and risks of some of the key component projects" (Auditor-General, 2008:2). While the report acknowledged that the recent water plan was an emergency response to the lowest recorded inflows to water storages in 2006, it also concluded:

It is incumbent on the government to provide full, accurate and timely information on its financial commitments and projects put before the community. The Victorian water plan did not provide this information. There were widely varying levels of rigour around the plan's costs and expected water savings benefits. The documentation did not explain this. This is essential information, especially when an emergency situation requires streamlined processes. (Auditor-General, 2008:2)

The report outlined 10 recommendations which included that a detailed analysis of the water savings estimates and costs of the Food Bowl Modernisation Project should be published.

4.5

Summary

In presenting the broad context for the case studies this chapter has provided a brief overview of some biophysical aspects of water in Australia and associated cultural and

institutional arrangements that have developed around the use of water. Thus, the chapter has shown that there are complex sets of linkages between social and ecological systems (Chapter 3) that need to be broadly understood in current-day water management arrangements and decision-making processes.

Further contextual information derived from the interviews is provided in the next two chapters which form the first level of analysis of the case study data.

84