As discussed in Section 3 above, the need to adapt to change can arise from different sources, including economic drivers. In the context of sMDB water reform, historic economic water reallocation drivers have included: conflicts over river uses for irrigation farming versus navigation for freight transport (Musgrave, 2008); the imposition of caps on further water extraction from MDB river systems (MDBC, 1998); calls for water to shift over time toward higher value and/or economically efficient uses (Mainuddin et al., 2007); and requirements to assist irrigators cope with severe drought impacts in the sMDB between 1997/98 and 2009/10 (Kuehne et al., 2010, Loch et al., 2012).
More recently, the emphasis for economic change has shifted again (Kiem and Austin, 2012) toward reallocating scarce water resources—both now and under future climate change impacts—between consumptive users for adjustment purposes and
from consumptive to environmental users in order to meet broader ecosystem sustainability objectives (MDBA, 2011a, DSEWPC, 2012).
It is expected that communities with low adaptive capacities (for example, Category One or two communities as discussed previously) will be least able to cope with external stresses. Adaptive capacity is also known as social resilience. Resilience can be classified as stability, which offers a buffer capacity against change; as an ability to bounce back, and as having the ability to make a transformation. Communities’
adaptive capacity may be needed as a result of changes in the amount of irrigated agriculture due to water being traded in or out of the area. Figure 17 shows the variation in adaptive capacity across the sMDB.
Figure 17 sMDB adaptive capacity index map, 2006/07
Source: (NWC, 2012a)
The basis for this index was ‘collector districts’ (CDs) each comprised of a population of 200 people or less within the sMDB (NWC, 2012a). From this index it is clearly evident that CDs with low adaptive capacities are spread throughout the rural areas of the basin and do not appear to be associated with a particular region or industry. However, higher levels of adaptive capacity are generally found closer to major towns and in the upper reaches of the catchment along major transportation routes and closer to the capital cities of Melbourne, Adelaide and Sydney.
Importantly, of the CDs with low adaptive capacities, many may not be highly vulnerable to changes facilitated by water trading because they have very little employment in irrigated agriculture or related industries. Rather, CDs with an adaptive capacity index in the lowest range and with more than 50% of the population employed in agriculture or manufacturing are most likely to experience a broader impact from any increases or decreases in the availability of water for irrigation. This analysis shows that in 2006 there were only 10 districts that stood out as having particularly low values of the adaptive capacity index. Looking at those CDs in greater detail, it is evident that there is considerable demographic diversity in the factors that contributed to their low adaptive capacity index scores. They include relatively high unemployment, the relatively low level of educational qualifications in the population and a high proportion of either low-income families, population in rented dwellings, labourers or people with English as a second language. Eight of the 10 CDs had some irrigation, ranging from just a few farms to most farms in the district (NWC, 2012b). Therefore, the NWC report broadly concludes that:
Local and regional socioeconomic impacts depend on the adaptive capacity of rural communities. Some individuals and communities are better equipped than others to deal with, or take advantage of, changes due to water trading and climate change. Their adaptive capacity is influenced by their human, social and institutional capacity and economic diversity.
Economic and social outcomes may influence internal motivations to trade water. For example, if community services are in decline due to factors unrelated to water trading, that may affect the desirability of continuing to farm in a particular region, which may influence water trading decisions.
Other factors also drive agricultural production and local/regional socioeconomic outcomes directly.
The NWC thus suggested a need to encourage planned adaptation to future water variability, focussing on how adaptation to water scarcity can increase profitability and strengthen the viability of the farm. Invoking climate change predictions and consequences may be counter-productive. Policy-makers will also need to consider how to develop effective strategies to communicate water use and adaptation strategies, along with developing policies to address farm succession issues, water market inefficiency issues, and continual structural adjustment packages to help the transition out of farming for many farmers.
ABARE-BRS (2010b) categorised communities’ adaptive capacity according to the following important variables: % graduates; % in public sector; % over 15 with no qualifications; median weekly rent as a fraction of Australian median; median household income as a fraction of Australian median; income/mortgage differential; % one parent; % couple families; % single parent with family less than age 15; total unemployment; % 65 over; average number of persons per household; % lone person dwellings; % dwellings rented; % different address to 1 year ago; women in non- routine occupations; % voluntary work; economic diversity index.
5.4. Key points
The major points from this section include:
Many rural communities have faced ongoing structural change (declining terms of trade, loss of people to urban areas – in particular young people, agglomeration of farms over time, and an aging farmer workforce) over the past fifty years; hence much change predates the introduction of water markets.
Concerns about water trade include: community vulnerability and effects from water sales; impacts on community spending and reinvestment; population losses as farmers elected to move out of regional areas once water sales had been finalised; Impacts on current and future local employment prospects, especially for younger people; changes to the nature of production in regional areas (e.g. shifts to dry-land agricultural practices); legacy issues for remaining farmers such as higher variable farm operating costs, stranded asset problems, increased emphasis on the rationalisation of remaining ‘outer’ arm units etc..
MDB communities that are small and/or dependent on irrigation are most at risk to water entitlement sales. Less dependence on irrigated agriculture makes towns more adaptable and reduces their vulnerability. It is expected that communities with low adaptive capacities will be least able to cope with external stresses such as climate change and water scarcity over time. Up to 10 districts in the MDB have been identified as having a particularly low adaptive capacity index.