Lessons From Down Under

11:34PM Nov 06, 2009
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Locked in its worst drought on record for six years now, Australia has changed nearly everything about how it handles its water supplies. "We've embraced water reform as a nation," says Mike Young, University of Adelaide professor of water economics and management.

The situation is perhaps most dire in the Murray-Darling Basin in southeast Australia. That region produces about 40% of the country's agricultural output. Water use by farmers has been reduced year after year. "We have to tell irrigators that they are in a risky business," Young says. To keep crops alive, they need 20% of their allocation. "This year, they have 2%."

Trading System.
Australia set up a water trading system as well as metering. Use more water than allocated, and a farmer can go to jail.

"We split the water rights into shares and make allocations to the shareholders. The water accounts look like bank accounts, with credits and debits," Young explains.

"Trading water has kept the irrigation system from collapsing totally," he reports. "It has fueled tremendous investment in [high-value] grapes and almonds. The value of water has risen faster than any of the commodities grown."

The country also is investing $10 billion, partly to improve infrastructure to reduce water loss before it reaches crops. "We aim to achieve efficiency gains of around 25% of total irrigation water use," says former Prime Minister John Howard.

The government also is providing exit grants of up to $150,000 each for farmers who quit farming due to the drought.

It's a permanent problem, Young says. "We still call what's happening a drought, not a climate shift, but that's not true. Why keep thinking drought policy will deal with it?"

Time for U.S. to Act. Young believes the U.S. should rethink its water policy now, anticipating serious problems to come. "It's about a 40-year journey," he says.

It may take more than a little convincing to get Americans on board. "Whether we like it or not, we've created a system in which the water right creates wealth," says Peter Binney, director of sustainable planning for Black & Veatch, an engineering and construction company in Overland Park, Kan. "Unbundling it will cause unrest."

Steps in Place in Australia
> Transfer ownership of water to individuals.
> Set up a share system designed for long-term adverse climate change.
> Connect ground and surface water in a single system.
> Recognize the need to trade water on a daily basis.
> Meter use and encourage efficiency.

Top Producer, November 2009