The Murray-Darling Basin (Figure 8) represents an iconic area for agricultural economic production, ecological importance, recreational significance and cultural values.
Figure 8 The Murray-Darling Basin with major irrigation districts
Source: (MDBA, 2012c)
Agriculture is an important economic function of the MDB, where over one-third of Australia’s food supply is produced (Figure 9). This pattern would have changed dramatically after 2000/01 during the Millennium Drought, particularly in the case of broadacre, annual cropping and dairy cattle uses. However, following return to wetter conditions these patterns may be re-emerging in the landscape. Typically, where 0.6% of land in Australia is allotted to irrigation production, in the MDB irrigated land accounts for 2% of total use. Overall, 65% of all irrigated land in Australia is located in the MDB (MDBA, 2010a). The Basin therefore produces 53% of all cereals (including
100% of the rice crop and 93% of the cotton crop), 95% of all oranges, and 54% of the national apple crop. In livestock terms, the MDB accounts for 28% of the national cattle herd, 45% of sheep and 62% of pigs (MDBA, 2009, DAFF, 2011). Much of that production is dependent on the reliable and economically efficient supplies of irrigation water.
Figure 9 General land use patterns in the MDB, 1996/97 - 2000/01
Source: (Bryan and Marvanek, 2004)
There is considerable variability in rainfall and runoff across the MDB (Figure 10). For example, the Murrumbidgee, Goulburn, upper Murray, Mitta, Ovens, Broken and Loddon river catchments account for a significant 35% of total runoff, but comprise only 12% of total surface area. The Darling system in contrast, contributes up to 32% of runoff from 60.4% of the MDB area. During very wet years (e.g. 2010/11), some
86% of the MDB is expected to contribute virtually no runoff into the extended river systems (MDBC, 2005b). Australia experiences higher runoff variability than any other continental area, save Southern Africa (Rowan et al., 2011), and the MDB is no exception to this (Figure 11). Much of the surface runoff also flows into wetlands, floodplains and floodplain lake systems where it evaporates. Under pre-water resource development conditions, up to 11,000 GL per annum evaporates or percolates into groundwater systems, while only an estimated 12,890 GL of runoff reaches the sea (MDBC, 2005b).
As such, the MDB is characterised by significant variability in regard to the flows and volumes of water made available in each season—which does not lend itself well to ‘average’ or ‘mean/median’ assessments of river, water usage and/or environmental conditions.
Figure 10 Average MDB annual rainfall distribution patterns
Source: (MDBC, 2005b) Source: (CSIRO Land & Water, 1999) The Basin is also home to over 2 million people requiring access to reliable water supplies. The Basin also supplies approximately half of Adelaide’s water needs via pipeline connections to the Murray River. Agricultural and community access to water in the MDB is subject to naturally high variation within years, between years and across lengthy periods. To smooth the supply of water to MDB users, major infrastructure (e.g. dams and weirs) has been constructed. The total storage volume available from MDB water infrastructure is just under 35,000 gigalitres (GL).
Figure 11 MDB water inflows, 1890 to 2011 (ML)
Source: (MDBA, 2012f).
A breakdown of how MDB water resources (including groundwater) are allocated across users is provided in Table 6. The share of water entitlements created in each water product category is also shown as a percentage of the total resource. As indicated, a total of 75% of total surface water resources have been assigned to consumptive (e.g. irrigation) users in the MDB (Black and King, 2009). Groundwater users have been assigned an estimated 58% of the total resource to use for consumptive purposes.
Table 6 Total water resources in the MDB—2010
Total Resource (GL)
Entitlements (GL) Percentage*
Groundwater 2,450ǂ 1,424 58%
Surface water inflows 31,599 2,733a 8%
10,890b 33%
13,788c 42%
Outflows from Basin 5,142 16%
Inter-Basin transfers 954
Total surface water 32,553 32,553 100%
* Expressed as a percentage of the total available water resource
ǂ Sustainable annual yield for groundwater from the Basin (Goesch and Hafi, 2006)
a
Interceptions
b
Watercourse diversions
c
Water used by environment and losses. Sources: (MDBA, 2012e)
Table 6 highlights the significant role that MDB surface and groundwater resources play in the Basin’s economy. However, the MDB is also home to critical ecosystems and natural habitats, all of which require water resources to maintain ecological health and sustainable refugia during times of reduced water supply (MDBA, 2010a).
Reducing the volume of water currently extracted by consumptive users and returning it to important hydrologic and key ecosystem functions will assist Basin managers to achieve an environmentally sustainable level of take (ESLT). Stemming from higher order Basin-wide environmental objectives and the need to protect key environmental systems, assets or productive bases the ESLT allows local environmental targets to be determined along with a range of management options to achieve those outcomes (MDBA, 2012c).
Finally, how much individuals (consumptive, social and environmental alike) rely on access to natural resources such as water can be an important influence on their decision-making and ability to adapt to change (Shorten, 2012). Water markets assist users to reallocate water when needed to suit their strategic decision-making, and we can examine evidence of this activity in broad MDB trade statistics.
Water trade has expanded rapidly during periods of drought, particularly in the sMDB. Over 90% of national trade is located in the sMDB hydrologically-connected zones, where water transfers are possible across large distances and over state borders. By 2009/10 a decade of drought had seen the annual turnover from water trade reach $3 billion—accounting for 11% by volume of water entitlements issued in the MDB and approximately 20-30% of water allocation in major NSW systems alone (NWC, 2011f). Importantly, without access to water trade sMDB drought impacts would have been significant—totalling between $2-3 billion each year in 2007/08 and 2008/09. However, with access to water trade arrangements sMDB production was estimated to be $4.3 billion higher between 2006/06 and 2010/11. Regionally, water trade in that period is estimated to have helped avoid state gross production reductions in NSW (- $760 million), Victoria (-$2,256 million) and SA (-$419 million) respectively (NWC, 2012a).
The development of water trade in Australia is examined briefly in the following section in order to establish some important drivers and influences of market development; most typically periods of extended drought.