2007 Harry Harris Oration Urological Society of Australia and New Zealand

1. Easing the Flow:Thinking about the River Murray like an Urologist 2007 Harry Harris OrationUrological Society of Australia and New Zealand Prof. Mike Young Research Chair, Water Economics & ManagementThe University of Adelaide. Adelaide Convention Centre, 21st February 2007

2. SOME COMMON MYTHS

3. Tonight you will eat a lot of water! • 1 cup of lettuce 11 litres • 1 slice of white bread 28 litres • 1 bottle of wine 360 litres • 1 potato 500 litres • 8 oz steak 4,660 litres • Standard meal: mignon veal, red onion, basil, potatoes with 2 glasses of wine: • Approx. 5000 litres! • Plus Rasberry Tart & Walnut Brittle Icecream

4. Water withdrawals per capita Iraq Australia New Zealand United Kingdom (Australia = 135/161 countries)

5. PRICING RECYCLED WATER • Great variability – there is no transparency RECYCLED WATER PRICES • Northern Adelaide Plains - Virginia 7-15c/kL* • Sydney – Rouse Hill 28c/KL ( incr. use) • Ipswich Water – Springfield 43c/kL • Christies Beach – Southern Vales 53c/kL* • SOPA / Newington 83c/kL • DRINKING WATER - Sydney Water (bulk) 98c/kL • Ride citrus sports water (500mL) $6600/kL • * Supplied to reticulator by STP operator without charge

6. The Real Cost of Recycling • Ipswich Water Springfield (consultant) $1.45/KL • SOPA Olympic Park (operating cost only)(SOPA) $1.60/KL • Cost, integrated hydrological system (consultant) $2.50/KL • Melbourne Eastern STP (consultant) >$3.00/KL • Rouse Hill (Sydney Water) $4 to $7/KL

7. Options - If it stacks up do it Full cost pricing for infrastructure, including externalities. We can’t afford the costs of a grant-based system.

8. WATER SUPPLY AND THE DROUGHT

9. Australia has a problem • Drought and … • Evidence suggests a step change in weather patterns and … • Science is warning of further adverse change and … • The last 50 years have been wet and… • This is when we built our cities and built our thirst for water • Impose pre 1950s rainfalls on Australia and we have a very serious problem! • We may have to get by with a lot less water • Sydney, Brisbane, Melbourne, Adelaide, Perth, Toowoomba, Gosford, Goulburn, Bendigo, Ballarat

10. Less rain means much less water!

12. Sydney

13. Climate shifts occur 8yrs. 11yrs. A drought, Australia should have expected (not a 1 in 1,000 years event)

14. River Murray Inflows GL

15. River Murray Inflows 2007/8 Worst Scenario • By May 2007, all Murray System dams empty • 2007/8 inflows => 1,000 GL & • South Australia get its 1/3 => 333 GL • But SA system evap. + losses => 1,300 GL • Balance – 967 GL • Add back Wellington Weir + Lake Bonney & triage L. Alexandrina and L. Albert + 1,100 GL • Available allocation to cities, vines, etc +133 GL

16. THE RIVER

17. System Plumbing

18. Rainfall x Storage Water Yield Land use x Ground water Base flow Water Extraction Irrigation, urban & industrial use $ Surface Drainage GW Recharge Wetlands Water accounting 101 River x x x

19. Unmanaged flow reducing effect Nett effect Water use efficiency savings - 723 GL Reduced water yield (Trees and dams) - 600 GL Salinity Interception Schemes Add back 500 GL ????? -20 GL Increased groundwater use -349 GL Estimated nett reduction in mean river flow and allocations to irrigators -1,692 GL Possible reduction in mean annual River Murray flow as a result of incomplete accounting (baseline 1993/94)

20. Evapo-transpiration 45 ML Actual amount used 5 ML Drainage 50 ML Water that returns to the aquifer Recharge Credits for return flows 100 ML Extraction Gross entitlement = 100 MLReturn = 50 ML Unconfined Aquifer

21. WATER LICENCES AND TRADING

22. Robustness • Robust (adj.)     Said of a system that has demonstrated an ability to recover gracefully from the whole range of exceptional inputs and situations in a given environment. • One step below bulletproof. • Carries the additional connotation of elegance in addition to just careful attention to detail. • Compare smart, oppose brittle. • Robust systems • Endure without the need to change their foundations. • They last for centuries. • Inspire confidence. • Produce efficient and politically acceptable outcomes in an ever changing world.

23. Casting the Net Critical Concepts • 1862 – Companies Act Limited Liability • 1857 – The Torrens Title System • ?000 - The Banking System • Jan Tinbergen – 1st Nobel Lauriat in Economics

24. Whereas the inhabitantsof South Australia are subjected to loses, heavy costs, and much perplexity, by reason that the laws relating to the transfer and encumbrance of freehold and other interests in land are complex, cumbrous and unsuited to the requirements of the said inhabitants, it is therefore expedient to amend the said Act

25. Periodic Allocations & Trading

26. Water Date ____________ Pay ____________________________________________ ________ML The sum of ________________________________ ML of 2000/01 Water Water Trading Australia Signature______________________ 807512 085 249:0223 7851 Allocation Trading WPay BPay

27. Single Title to Land & Water Water Land Tradeable Rights Price Entitlement Sharesin perpetuity Use licences with limits & obligations Bank-like Allocations Channel Capacity Shares Channel Capacity Allocations SalinityShares SalinityAllocations A Robust System Solution for C21?

28. Water as an investment

29. OVER ALLOCATION

30. Source: Goode 2006

31. Annual diversions No plan to cope with climate shifts

32. Over allocation • Exists because • Entitlements are defined in volumes and not as shares of available water in a pool • Plans assume that constant technology and land use change • Introduction of trading that activated previously unused water • Solutions • Buy back • Pro-rata reduction

33. Type of Licence South Australian River Murray Licence Offer conditional upon lease back of water until ….. Offer 1 …………….. ML @ not less than $2,300.00 per ML Offer 2 …………….. ML @ not less than $2,100.00 per ML Offer 3 …………….. ML @ not less than $2,000.00 per ML Offer 4 …………….. ML @ not less than $1,950.00 per ML Offer 5 …………….. ML @ not less than $1,900.00 per ML Signatures Licence holder ………………………………………… Registered interest (if any) ………………………….. Illustrative buy back offer form

34. GOVERNANCE

35. Six Governments in action NSW ACT Snowy Hydro Victoria

36. A way forward • Concepts on the table • Commonwealth takeover via referral of powers • Run the system as one ground and surface water • Independent management with strong accountability to community and parliaments • Skill-based members • Minister can direct but only in writing and the gazette • A solution? • Independent Authority under Commonwealth • Environment Trust to hold water • Infrastructure manager to keep the system running

37. MDB Authority functions and powers • s. 9 The Authority, in the performance of its functions, must • Ensure over-allocation does not recur • Efficient and cost effective management • Maximise economic efficiency in use of MDB water • Ensure accountability • Achieve cost-recovery targets • s.10 The Commission must do all things that are necessary or convenient to be done for, or in connection with, the performance of its functions.

38. Thinking like a Urologist • A simple way forward • A system that adjusts allocations in harmony with the available supply • A 200GL minimum flow through Mouth • A little for the Coorong every year • SA’s high security entitlements combined with NSW and Victoria’s and Adelaide’s urban water tradeable • Carry over for all water in all States • Binding power referral only when over-allocation solved • A governance arrangement that guarantees that over-allocation does not recur!

39. The future depends upon us Contact: Prof Mike Young Water Economics and Management Email: Mike.Young@adelaide.edu.au Phone: +61-8-8303.5279Mobile: +61-408-488.538 www.myoung.net.au