The way dams funded slammed in national water reform report

National Water Initiative report way dams funded slammed in water reform report by Productivity Commission


Many dams are funded without a business case, while others are funded despite a cost-benefit ratio of less than one.


THE country will be left high and dry if sweeping changes aren't made to the national blueprint for water reform, a new report says.

The Productivity Commission draft report into the National Water Initiative said the 17-year-old policy had "reached its used-by date", with the country facing the dual-pronged challenge of a growing population and reduced water inflows due to climate change.

The report made more than a dozen recommendations, many of which would have implications for the agriculture industry should they be adopted.

The way water infrastructure is funded was savaged, with dams such as Queensland's Rockwood Weir and Haughton Pipeline stage 2 given the green light despite having a cost-benefit ratio of less than one and were "likely to impose net costs on the community".

The $480m Dungowan Dam upgrade, near Tamworth NSW, was deemed unviable and the "prospect of new water is illusory".

The 22.5-gigalitre dam will provide an extra 6GL of water a year on average, which has a market value of just $11m and could be directly purchased for just two per cent of the dam's construction cost.

If irrigators bought the Dungowan water at full cost, it would be valued at more than $60,000 a megalitre, compared to the current market price of about $1341.

"Irrigators are unlikely to be willing to pay for the additional water, highlighting the poor viability of the project," the report states.

The report found seven projects received federal funding without a business case or environmental approvals.

The $3.5-billion National Water Grid, set up to fund water infrastructure across the nation, should not just focus on providing water for farmers, the report found, and also support projects that provide essential town water supplies.

"Government investment in major water infrastructure should neither prioritise a particular sector or class of water user, nor be limited to providing water for primary industry," the report states.

"Funding major water infrastructure for the benefit of primary industries would amount to subsidising a commercial operation."

The report recommended mines and gas projects be forced to follow the same rules as farmers.

Currently, the mineral and petroleum industries are exempt from water access entitlement and planning arrangements, which has been a concern within the agriculture industry for some time.

In a submission to the report, the National Farmers' Federation said at the moment, there were "two sets of rules, one for farmers and the other for the resources industry".

Commissioner Jane Doolan said climate change was likely to mean a significant reduction in water availability and an increase in the frequency and severity of droughts and floods.

"Farmers and irrigators will have to adapt to a drier future in most of the country," Dr Doolan said.

"They will have to really focus on efficiency, getting greater production per megalitre of water used. The water market will be a really critical tool for them, helping to manage their supply in times of drought and dry."

The report found the Murray-Darling Basin demonstrated that in highly developed systems, water trade monitoring should be integrated into the system-level resource management.

"By taking a broader and longer-term system-level view of water trade and operational risk within the water resource management context, jurisdictions can more proactively anticipate and identify emerging issues and be advised on regulatory responses where warranted," he report stated.

The commission wants to see governments commit, by way of a new National Water Initiative, to plans and policies for responding to the effects of climate change. It also wants governments to agree to climate change triggers that would prompt a review of water agreements and policies.

A final report will be handed to the government in June.

The story The way dams funded slammed in national water reform report first appeared on Farm Online.


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