Dr Emily Gibson, Science, Technology, Environment and Resources
Integrated and sustainable management and use of Australia’s water resources is essential for national water security.
The Murray-Darling Basin, Australia’s most important river system, continues to face critical threats to its health. The Basin Plan, to be jointly implemented by the Australian and Basin state governments, still needs to be implemented in full to secure environmental, social, and economic outcomes for the benefit of all Australians.
Australia is the world’s
driest inhabited continent and experiences high variability in rainfall. Around
10% of annual rainfall reaches waterways, water storages or groundwater
aquifers, while the rest evaporates, mainly through vegetation (p. 2). Much of the country is vulnerable to drought, which affects agriculture, natural ecosystems, human health,
communities and our national economy.
The Millennium drought affected most of southern Australia (other than parts of central Western
Australia) over the period 1997 to 2009, while the return of drought conditions
over much of the country during 2017–19 culminated in severe bushfires in the summer of 2019–20. Conversely, while drought conditions currently
persist in parts of Tasmania, the Northern Territory, South
Australia, and Victoria, southern
Queensland and NSW received a year’s worth of rainfall from
February to early April 2022 and were impacted by severe flooding.
The variability in
Australia’s rainfall is strongly influenced by climate drivers including El Niño, La Niña, the Indian Ocean Dipole and the Southern Annular Mode. However, the State of the climate report 2020 identifies concerning long-term trends in Australia’s
rainfall record (see Figure 1):
There has been a
shift towards drier conditions across the southwest and southeast, with more
frequent years of below average rainfall, especially for the cool season months
of April to October. In 17 of the last 20 years, rainfall in southern Australia
in these months has been below average. This is due to a combination of natural
variability on decadal timescales and changes in large-scale circulation caused
by increased anthropogenic greenhouse gas emissions. (p. 6)
Figure 1 Rainfall
deciles over the last 20 years
(a) April to
(b) the Northern
CSIRO and Bureau of Meteorology, State of the Climate 2020, (Canberra: Australian Government, 2020),
6–7; reproduced by permission of the Bureau of
Meteorology, © 2022 Commonwealth of Australia.
According to the Intergovernmental
Panel on Climate Change’s (IPCC) Sixth assessment report, climate change projections indicate there will be
less winter and spring rainfall in southern Australia, more winter rainfall in
Tasmania, less autumn rainfall in south-western Victoria and less summer
rainfall in western Tasmania, with uncertain rainfall changes in northern
Australia (p. 11 – 4).
Management of Australia’s
water resources is often viewed solely through the prism of its production
value. For example, 67% of water taken for consumptive use in 2019–20 was
used for agriculture (p. 5). In that
year, the gross value of Australia’s agricultural production was
$61 billion, with $16.5 billion generated from irrigated agriculture. Around 70% of agricultural production is exported, contributing 12% of Australia’s total goods and
services exports (pp. 2; 7). In 2019–20, water markets in Australia had an estimated turnover of $7 billion (p. 4), while the value of water entitlements in the
southern Murray-Darling Basin doubled from $13.5 billion to $26.3 billion in the
5 years to 2019–20 (p. 30).
However, water’s value is not limited to economic impacts. Integrated and sustainable management of Australia’s
water resources underpins broader concerns about water security and ecological significance. Observing that water
security involves complex and interconnected challenges, UN-Water defines water security as:
the capacity of a
population to safeguard sustainable access to adequate quantities of acceptable
quality water for sustaining livelihoods, human well-being, and socio-economic
development, for ensuring protection against water-borne pollution and
water-related disasters, and for preserving ecosystems in a climate of peace
and political stability. (p. 1)
The Australian Government does not have direct constitutional powers for managing water resources; these powers lie with
the states and territories. However, the Australian Government still has an
important role in water policy. The Council of Australian Governments (COAG) water reform framework was agreed in 1994, followed by the National water initiative in 2004, and the Howard Government’s $10 billion National plan for water security in 2007.
There remains, however, no
nationally agreed definition of water security in Australia and, over the past
decade, Australian Government engagement in water policy has been oriented to
the augmentation of supply (that is, developing dams) and
reducing the impact of existing regulation on private sector water users (p. 33). The Productivity Commission’s report, National water reform 2020, which recommends renewal and modernisation of the National
water initiative, identifies several opportunities for adopting a more
holistic approach to water security. These include (among others) (pp. 9–12):
- the adoption of best practice water
planning, which takes into account all water uses (including floodplain
harvesting) and provides for the rebalancing of environmental and consumptive
uses as a result of climate change
- improved arrangements to make the best use
of environmental water to achieved agreed (or where possible, better)
- securing Aboriginal and Torres Strait Islander peoples’ interests in
water, supporting the achievement of the 2020 National Agreement on Closing the Gap, including adopting management measures to achieve cultural flows
and economic outcomes for Aboriginal and Torres Strait Islander communities
- the adoption of best practice urban water
system planning, supported by community-driven objectives for water security,
and additional support to ensure small rural water utilities provide acceptable
levels of service.
Urban and rural water use
Urban uses account for 22% of Australian water consumption. Households paid an average of $3.46 per kilolitre and
industry $0.46 per kilolitre in
2019–20, with the difference driven by factors including the cost of treating
water so that it is suitable for human consumption. Most water, especially for
supply to major urban areas, is sourced from surface water sources such as
rivers and lakes (75%), with the remainder sourced from groundwater (aquifers),
desalination plants, recycling (including groundwater replenishment) and stormwater harvesting.
Water scarcity may become
an increasing issue for urban water supplies in the future. For example, groundwater provides two-thirds of all water used in
urban Western Australia. However, winter
rainfall has declined 28% since 2000, with reduced groundwater recharge, while demand is increasing due to population growth.
This is prompting a focus on water-sensitive urban design and climate-resilient water sources, including
desalination in some areas. Perth, along
with other state capitals (Adelaide, Brisbane–Gold Coast, Melbourne and Sydney) now have large seawater desalination plants.
The quality of drinking
water in urban areas is usually high, but can be more variable in regional and
remote areas due to the presence of natural-occurring contaminants (such as nitrates and uranium) and more limited capacity
to treat the water. Water service provision in regional and remote
be more complex, and costly, due to poor water quality sources, water
distribution and treatment challenges, and fragmented arrangements for delivery
audits have found that water service provision in remote Aboriginal and Torres Strait Islander
communities often fails to meet the Australian Water Quality
Guidelines. Poor standards of water and wastewater services compound
historical hardships and reinforce disadvantage, can worsen
existing health issues and increase
risks of disease and infection. Infrastructure
Australia states ‘there is clear evidence that services in many … remote
communities do not meet United Nations’ Sustainable Development Goal (SDG) 6:
clean water and sanitation for all’ (p. 619).
Urban waterways, and their
associated ecosystems, also provide important habitat for native animal and
plant species as well as a myriad of recreational opportunities. The Australian
Labor Party (ALP) has committed $200 million to an Urban Rivers and Catchments Program that will provide community grants supporting wetland
restoration, naturalisation of riverbanks, and revegetation.
Water storage and irrigation schemes
With over 500 major water storages, several thousand small
storages, and in excess of 2 million farm dams (p. 21), Australia has the highest per capita
surface water storage capacity in the world. According to the Bureau of
Meteorology, the capacity of Australia’s accessible storage capacity is about
81,000 GL. At the end of May 2022, they were 69.3% full.
Water harvesting, storage
and distribution schemes have been central to urban and regional development in
Australia. While dams and associated irrigation schemes have increased water
availability, infrastructure and works interrupt natural flow regimes, waterscape
connectivity and the operation of aquatic ecosystem processes that require the
run of the river.
Water resources assessments have suggested that a combination of groundwater,
large dam and farm-scale water storages have the potential to support the
development of irrigable agriculture in some areas across Australia’s north.
However, large-scale developments face significant hurdles, including economic
viability, environment sustainability, and heritage concerns.
Over the last decade the
Australian Government has announced numerous initiatives to support regional
water infrastructure, including the:
In May 2020, the NWGF
replaced the NWIDF, with the $2 billion in unspent funding from the Loan Facility transferred
to the NWGF (p. 140). The Morrison
Government’s 2022–23 Budget
provides an additional $6.9 billion over 12 years for investments through the
NWGF (p. 147). This includes commitments for water infrastructure projects such
as the Hells Gate
and Urannah dams
in Queensland and the Dungowan Dam
in NSW. This brings total investment available under the NWGF to $8.9
The ALP’s Water for Australia plan includes re-establishing
a National Water Commission, supporting renewal of the National water
initiative, and broadening the National Water Grid Investment Framework (which
sets out how
investment from the NWGF will be targeted) to allow it to fund a wider
range of water supply projects (rather than only agriculture projects). The ALP has indicated water infrastructure projects
will only proceed if they provide value for money.
The Murray-Darling Basin (MDB) covers an area of 1
million km², is home to more
than 40 First Nations, and hosts a wider population of 2.3 million
people. The MDB produces
food and fibre worth $22 billion and provides tourism services worth $11
billion each year. Two-thirds
of Australia’s irrigation water is used in the MDB. However, evaporation
rates in the MDB are high, with 94%
of rainfall used by plants or evaporating. The demand for water has
resulted in significant pressures on freshwater ecosystems and degradation
of water quality. Water storage levels across the MDB increased from 58% to 90% between May 2021 and
In January 2007, in the midst of the Millennium
drought, the Howard Government announced
a $10 billion National plan for water security to improve water
efficiency and address the over-allocation of water in rural Australia,
including in the MDB. In August 2007, the Australian Parliament passed the Water Act 2007
which establishes the legislative framework for managing water in the MDB in
the national interest and for providing information on Australia’s water
resources. The Basin states (Qld, NSW, Vic, ACT
and SA) subsequently referred limited powers to the Commonwealth to allow for new arrangements in the MDB to take
effect, including the establishment of the Murray-Darling
Basin Authority (MDBA).
The Basin Plan
The Water Act is
implemented through the Basin Plan 2012, which was legislated in November 2012 following a multi-year
negotiation process. The Basin Plan specifies the surface water and groundwater
long-term average sustainable diversion limits (SDL) for the entire MDB, as well as for each surface
water and groundwater unit and water resource plan area.
The SDLs are essentially
the maximum amount of water that can be extracted in a year. The original surface water SDL for the whole basin was set at
10,873 gigalitres per year (GL/y). In July 2018, the SDL was increased by 70
GL/y to 10,945 GL/y after the Northern
Basin review. The SDLs came into operation
on 1 July 2019, along with a mechanism for their adjustment.
The establishment of the SDL was accompanied by the
setting of a water
recovery target of 2,750 GL/y (also referred to as the ‘bridging the gap’
target). This represented the gap between the water being used prior to
implementation of the Basin Plan and the SDL.
Under the Basin Plan, the
Basin states manage water resources within their jurisdiction using their own respective
water legislation. States were required to prepare water resource plans (WRPs) for specific areas that are consistent with the Basin Plan and
relevant SDLs by 30 June 2019. WRPs set out how water will be used, how much water will be made
available for the environment, how water quality standards will be met, and how water resources will be managed in extreme dry periods.
The WRPs of all Basin states- other
than NSW- have been accredited by the MDBA. The MDBA and NSW have entered into a bilateral agreement to ensure that key elements of the Basin Plan are
implemented while NSW’s WRPs are being prepared. In June 2022, the
Inspector-General for Water Compliance (IGWC) argued
that the Commonwealth Water Minister should utilise ‘step-in powers’ in the
Water Act to ensure that NSW’s WRPs are completed as soon as possible. In
August 2021, the compliance and enforcement powers of the MDBA were transferred
to the IGWC. This followed numerous reviews, including the Five-year assessment
of the Murray-Darling Basin Plan (see Box 12.1 at p. 301), to assess water
management compliance across the Basin.
The Basin Plan also
The Basin Plan will not be fully implemented until 30 June 2024, when the agreed constraints measures and ‘supply’ and ‘efficiency’ measures under the SDL
Adjustment Mechanism are completed.
Figure 2 Water
recovery under the Basin Plan
Source: Parliamentary Library adaptation
from Sally Farrier, Simon Lewis and Merran Kelsall, First Review of
the Water for the Environment Special Account, Report to the
Commonwealth Minister for Water Resources as required under Section 86AJ of the
Water Act 2007, (Canberra: Australian Government, March 2020), Figure 1,
SDLs and water buybacks
The establishment of SDLs- at an environmentally sustainable level of water use or take- has
been one of the most contentious elements of the Basin Plan. The 2010 Guide
to the proposed Basin Plan considered that water recovery ‘needed to
ensure a sustainable level of take, is between 3,000 GL/y and 7,600 GL/y, on a
long-term average basis’ (Volume 2, p. 166). This became politically
untenable: South Australia argued for at least 3,200 GL/y to be recovered
as environmental water, while NSW and Victoria wanted less than 2,750 GL/y to
As a compromise, the Australian Government
established 2 mechanisms:
Australian Government funding is supporting 3 types
of measures or projects in the MDB. Supply
measures deliver water for the environment more efficiently so less water
is needed. Efficiency
projects change water practices, such as improved irrigation methods, and
save water for the environment. Constraints
projects overcome some of the physical barriers that impact water delivery.
In January 2018, the Basin Plan was amended to
provide for the implementation
of supply projects to allow 605 GL/y of additional water to remain
available in the system (altering the water recovery target to 2,075 GL/y),
while still achieving the same or better environmental outcomes. This was
dependent on the recovery of a minimum of 62 GL/y through efficiency
projects by 30 June 2019. The
62 GL/y is a subset of the larger 450 GL/y target.
Progress on water recovery
Substantial progress towards
water recovery targets has been made, however, as at 30 April 2022, there was
significant shortfall in the recovery of water for the environment. Only 2
GL of the required 450 GL/y water
recovery for enhanced environmental outcomes has been delivered, although
23.9 GL/y has been contracted.
The MDBA’s annual
progress reports for the SDL Adjustment Mechanism and the First review of
the water for the environment special account indicate that it is
unlikely the full amount of 450 GL will be recovered by 30 June 2024, putting
the overall SDL adjustment at risk. The Water Act makes provision for
the MDBA to
recalculate (reconcile) an appropriate adjustment amount and prepare an
amendment to the Basin Plan in these circumstances. The Australian Government would
then need to consider the best options for bridging the water recovery gap to
ensure the outcomes of the Basin Plan are achieved.
The Australian Government initially purchased water
entitlements directly from landholders (‘buybacks’) to support the achievement
of the 2,075 GL/y water recovery target; 1,227 GL had been
purchased by the Commonwealth at a cost of $2.7 billion by October 2017 (p.
4). In September
2015, the Water Act was amended to cap the volume of water that
can be purchased at 1,500 GL (subject to exceptions). The relevant provisions
to operate when the first 10-year review of the Basin Plan is completed (p.
7). In September 2020, the Morrison Government ruled
out further buybacks; however, a substantial
shortfall in water recovery raises the prospect that the targets will not be met
by 2024 and further action will be required.
The Morrison Government
had committed to delivering the Basin Plan in full, including the 450 GL
water for the environment. However, in July 2021, National
Party senators attempted to move amendments to the Water Act that would have removed a requirement to deliver the
450 GL of water for the environment, prohibited further water buybacks,
and extended the deadline for delivery of water recovery projects.
The incoming Albanese
Government’s Water for Australia plan includes a ‘five-point plan to safeguard the Murray-Darling
Basin’. This includes:
- delivering on water
commitments- including the 450 GL for environmental water
- increasing compliance,
and improving metering and monitoring
integrity and confidence in water markets and water management
- increasing Aboriginal and Torres Strait Islander peoples' ownership and involvement in decision-making, including delivering the $40 million of cultural water
updating the science,
including data on climate change, evaporation and inflows.
Infrastructure Australia, An Assessment of Australia’s Future Infrastructure Needs- The Australian Infrastructure Audit, (Infrastructure Australia, 2019).
Productivity Commission, Murray-Darling Basin Plan: Five-Year Assessment, Inquiry Report no. 90, (Canberra: Productivity Commission, 19 December 2018).
Productivity Commission, National Water Reform 2020, Inquiry Report no. 96, (Canberra: Productivity Commission, 28 May 2021).
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