(CFD.net.au – Contract for Difference, Share, Forex, ETFs, Commodities Traders) – Good rain has prompted the South Australian Government to announce an immediate boost in irrigators’ entitlements from the drought-affected Murray.From today, irrigators will be allowed to take 25 per cent of their usual water entitlement, up from 16 per cent.

Acting River Murray Minister Patrick Conlon says it will give irrigators some certainty as they head into summer.

“This is great news for irrigators and the Riverland economy, which is so important to the state,” he said.

“Water resource availability throughout the southern Murray-Darling Basin remain at historically-low levels and licence holders are reminded that access to additional water in the future is not guaranteed.”

CEO of the Central Irrigation Trust Jeff Parish says the latest boost is great news for growers.

“Absolutely delighted that we’ve got 25 per cent. It’s not too often lately that we’ve had news that makes you feel pretty good but today I think even I dare to hope that we might yet get to quite a reasonable allocation in the next month,” he said.

The 25 per cent allowance is an improvement on last year when water allocations peaked at 18 per cent of entitlements.

Source: Murray irrigators win healthy boost

Angela Logomasini.

TonyfromOz prefaces …..

This will be the next big thing after the Climate Change debate has gained enough traction to be set in stone.

Cheers to Bill Nemitz for his very insightful piece “Enough Water: Let’s Figure it Out” in the Portland Press Herald. He showed that the amount of water that Poland Spring would have purchased for $900,000 from the Kennebunk, Kennebunkport and Wells Water Districts represents 0.14 percent of the water that falls in the region each year. He rightly criticizes the activist group that prevented that sale for their claims that operation would threaten such resources in the future.

Nemitz’s point applies to a much larger debate. Activist groups are around the nation offer silly arguments about water resources being “finite” and in danger of depletion. But properly constructed bottling operations do not deplete community water supplies. Aquifers, springs and other natural sources replenish via precipitation, a process called “recharging.” Many have been operating sustainably for hundreds of years. A study produced by Keith N. Eshleman, Ph.D. at the University of Maryland’s Center for Environmental Science reports that “withdrawals for bottled water production represent only 0.019% of the total fresh ground water withdrawals in the U.S.,” which is far less than what Mother Nature recharges. The fact that communities and consumers can “profit” by enjoying these renewable resources is a good thing!

Water shortages can be a problem in certain areas. But problems usually result from government ownership and mismanagement, including from subsidies mostly to large, politically organized users-particularly agriculture. We need market-based systems to these manage resources. There is no reason to stop using them altogether, particularly where they are plentiful.

Angela Logomasini contributes at OpenMarket.org and she is Director of Risk and Environmental Policy at the Competitive Enterprise Institute.

Read more Great Articles at cei.org

A previous blog on “Future of Birds in the Coorong” generated some interesting discussion between scientists, someone living upstream, and a resident of the Lower Lakes. It got me thinking about the fundamental problem of the management of the River Murray.

Imagine that Kevin Rudd announced that rather than report his budget in terms of how much income he receives and how much he spends, and rather than setting a target for surpluses, he is going to change the way he manages the budget. Instead of reporting how much is left and whether the budget balanced, he is simply going to report how much each of his departments is going to receive and report on how well they spent their money. He wasn’t going to be all that fussed about measuring how much each department spends, but is going to give rough estimates instead. He is going to disband the Reserve Bank, and the states and the Commonwealth governments will get together regularly to set monetary policy.

Now imagine that times get tough. The economy slows down and there is much less money available in the Australian economy. Kevin’s response will be to start borrowing heavily from overseas to keep cash flowing into his departments. After all, they are doing a good job, and people expect to continue to receive their services and handouts. Pretty soon, credit starts drying up, so departments don’t have the cashflow they need to maintain their spending, so they have to start cutting back. There is no Reserve Bank to dry up the supply of credit, but because of the angst and political heat for the governments of Australia, they continue to borrow wherever they can. Eventually, there is almost no credit available anywhere in the world. Cash reserves are drying up, so Kevin announces that South Australia will receive no further funding. Any money that is generated in the economy will be spent in Queensland, NSW and Victoria first, and South Australia will have to wait until the economy improves much more before it receives Commonwealth funding again.

Of course, if this was the economy, Kevin Rudd would have been removed from office through a popular revolt, an election or a dismissal well before the final horrible scenario. And if it really did get as bad as I described, the IMF and World Bank would declare a failed state and jump in with offers of financial assistance, as long as we changed our wicked ways.

In the Murray Darling System, there is no balanced budget. We are not measuring how much water is being taken out along the river. We do not measure how much water flows into South Australia. We have been borrowing heavily from our storages to maintain our current activities despite the current drought, and despite the fact that we were not leaving enough water in the system to maintain the health of wetlands and the Coorong BEOFRE the drought started. We have run the storages down to nearly empty. When there are flows upstream, the current Murray Darling Agreement says that upstream states can use it all up to a point where they have sufficient and only then is South Australia able to share in the flows. This despite the fact that the Coorong is on its last legs, the Lower Lakes are below sea level and at risk of developing acid sulphate soils, and Adelaide being 18 months away from being unable to drink water from the River Murray if there are no further flows.

If this were the economy, we would be a failed state. In fact, the states of Australia have failed, and badly. The Murray Darling Basin Agreement doesn’t work effectively and needs to be replaced with a new system that does four things:

1. Budget flows from the mouth backwards. That is, just like Kevin Rudd is setting a target for budget surpluses of 1.5% of GDP, flows of water out of the Mouth of the River should be budgeted for first, before any other use from the River.

2. Water inflows and water use should be measured along the length of the Murray Darling system, including tributaries, groundwater flows and farm dams. Measuring only some of the budget is the same as not having a budget

3. There must be an independent arbiter that sets the amount of water that can be taken from the River every year, just like we have a Reserve Bank. Like the Reserve Bank, the independent authority should be truly independent, and not have its decisions modified by a frightened government that doesn’t like the consequences of the decision. This is unlike Penny Wong’s current proposal, which gives the Commonwealth Government the ability to change the decision of the new “independent” Murray Darling Basin Authority if it disagrees with the decision.

4. Establishes real consequences for over-extracting water from the Basin. Currently, there is no punishment for any state over-extracting water from their system. This sets a perverse incentive to do the wrong thing. There must be painful financial disincentives for individual states to “steal” water from their counterparts. National Competition Policy sets such measures for economic matters, and the principles should be extended to managing a shared water resource.

These ideas were informed and stimulated by Peter Cullen and Mike Young. Some of their talks can be downloaded from:

• Peter Cullen at the Schultz Oration
• Mike Young and Jim McColl: Speeding up the Water Reform Process
• Mike Young: Pricing your Water
• Mike Young: A Water-Proofed Basin

Written by Paul Dalby, 2 May 2008