Water hits new balance

Coming water year sees a new equilibrium among users, says senior consultant

Water
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Southerm Murray-Darling Basin water use for all sectors is now in balance.

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BALANCED YEAR: RMCG senior fellow Rob Rendell says no one agricultural sector will dominate water purchases and use this year.

BALANCED YEAR: RMCG senior fellow Rob Rendell says no one agricultural sector will dominate water purchases and use this year.

There is now an equilibrium of different industries, it's not going to be all horticulture, all dairy, or all rice - there is this balance. - Rob Rendell, RMCG Consulting

The head of a prominent Bendigo engineering and irrigation consultancy firm is arguing water use in the southern Murray-Darling Basin has reached a new equilibrium.

RMCG senior fellow Rob Rendell said under the "new water equilibrium", horticulture had expanded to its limit - particularly on the Murray system, though there was still some further room for expansion in the Murrumbidgee.

That would ultimately be at the expense of cotton.

"Dairy has reduced to a stable production level which is now half what it used to be, cotton has expanded to its limit and will be stable in most years, but will drop down in a drought,' Mr Rendell said.

"Rice and winter cereals will fluctuate year-to-year and most years we have around 1200 gigalitres of carryover - but this increases in a wet season.

"There is now an equilibrium of different industries, it's not going to be all horticulture, all dairy, or all rice."

Horticultural expansion was limited by the amount of water available in a drought, while the dairy industry was aiming for more milk per megalitre with the conversion to feed pads, cut and carry and even dairy barns.

"The Cohuna dairy farmers in the Torrumbarry district within the Victorian Goulburn Murray Irrigation District have faced significant water trade pressure from downstream horticultural demand [and] the rice industry is trying to adapt to reduced and seasonally highly variable production,' Mr Rendell said.

"Cotton, as a relatively recent entrant, is still to work out its sustainable level of production in the sMDB after establishing a stronghold in the Murrumbidgee Valley over the last 10 years."

The price of water was dependent on the seasonal allocation volumes which would vary from year-to-year.

Mr Rendell said RMCG believed the 2019-20 season provided real data on water use and pricing in times of drought confirming that there is a limit to the horticulture expansion.

RMCG applied the NSW StateWater and Victorian Goulburn-Murray Water predictions of allocations which, in mid-July, suggested would be an average one in terms of availability.

"Using the price curve we can expect prices around $200/ML although the recent rains will mean that allocations may be slightly higher and thus prices have trended below $200/ML.

Seven scenarios

"We also suggest that the future will consist of seven scenarios, the last five years represent the new 'normal', plus the possibility of extreme events like repeat of millennium drought and/or 2010/11 wet summer," Mr Rendell said.

RMCG believed the last 25 years could be seen as five lots of five years.

  • 1995 - 2000: "Historical wet 90's" - extreme wetting period - with 6662GL of water available, for an average price of $35 megalitre.
  • 2000 - 2005: "Normal period after a long wet period" but still had a mix of wet and dry years - 5463GL, $125/ML.
  • 2005 - 2010: "Millennium drought" - the most extreme drought series - 3099GL, $398/ML
  • 2010 - 2015: "Wet period" with almost maximum allocations every year but some Basin recovery - 5563GL, $61/ML
  • 2015 - 2020: "Dry period" but with a mix of wet and dry years after Basin recovery - 3,42GL, $277/ML.

He said the average available water over the last five years had declined by a total of 3320GL or halved since the historical wet period pre-2000,while at the same time the price of water in real terms has increased by a factor of eight.

"Of this reduction in available water, 1146GL is due to the Basin Plan recovery, up to 500GL from policy changes and irrigator behaviour resulting in "underuse" and therefore 1674GL or more is due to drier conditions," he said.

"Of the reduction in water and increase in water prices over the last 20 years, one third is due to the Basin Plan, one sixth to underuse and a half to drier conditions."

Carryover concerns

He said while carryover - taking unused water from one year into the next - was overcoming many problems for irrigators, it needed to be viewed with caution.

"The total amount of "carryover", including reserve volumes, unused water and carryover, is much greater now, than it was 20 years ago," Mr Rendell said..

"This means the storages don't empty nearly as much as they used to.

The benefits of carryover were that individuals no longer had to have a 'use it or lose it' mentality, but got to manage their water - and risk - however they wished.

And while the available water was more reliable, there was less of it .

"Whenever we see other people's analysis, it's not just the volume of water, there's reliability," Mr Rendell said. "It's the understanding of reliability that is missing, from most analysis, I think.

"The engineers understand a dam storage is used to take water from winter, over into summer, but it's also used to create reliability.

However, carrying over too much water will eventually reach a point of ''diminishing returns

"The diminishing returns is when the increase in carryover, which is to be used in dry years or simply just to manage an individuals allocation, ends up increasing spills so that you only get to keep a smaller fraction of the carryover.

"The more carryover you have, the fuller the storage and the less inflows you get to keep."

In the southern system, irrigators currently held about 1200GL, about a third of the average amount used each year.

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