Thursday, 2 May 2013

The emergence of environmental water managers in Australia

Environmental water includes both quantity and quality: the health of aquatic ecosystems depends on having sufficient water of adequate quality. In fully-allocated water systems, quantity is usually the major concern (although of course there is often a complex interrelationship between quality and quantity), as there is often not enough left to maintain a healthy environment.

It’s worth taking a moment to consider the concept of ‘full allocation’. In Australia, it seems to mean that further allocations of water cannot be made without affecting the reliability of supply of existing water users (who are usually extractive users). The concept of ‘reliability’ is also interesting, and reflects the Australian tendency to define classes of water access entitlements, based on their reliability. In water systems that rely on the prior appropriation doctrine (‘first in time, first in right’), this concept of shared reliability may be less meaningful. To me, it can be used to identify a water system where water is a scarce resource: all of the ‘available’ water has been allocated for use (but where, perhaps for political reasons, it’s not palatable to talk about ‘over-allocation’). Any additional allocation involves a trade-off: the ‘new’ water must come from existing users. Fully-allocated systems are usually operating at an imbalance, due to the recent recognition of the environment as a legitimate user of water, so recovery of water for the environment is particularly important.

Bringing together some ideas from my previous posts, as the provision of environmental water transitions from policy commitment to implementation, the management of that water becomes increasingly important. Recovery of water in fully-allocated water systems costs money – it must be found in water ‘savings’ (by increasing water use efficiency) or by purchasing the water from other users. Demonstrating that this water is being used effectively and efficiently is important to reassure investors (usually the public, via donations or taxes) that their money is going to good use.

In Australia, where water markets are particularly active, managing a portfolio of environmental water rights effectively and efficiently requires a new approach. It needs an entity with capacity for independent decision-making, rapid response to changing circumstances and a clear focus on the environmental outcomes. We can see a plethora of new organizations emerging in this space. Perhaps the best known is the Commonwealth Environmental Water Holder, a statutory function vested in an employee of the Australian public service. The CEWH is now the largest holder of environmental water in Australia, and is well on the way to being the single largest holder of water in the Murray-Darling Basin. It combines both water recovery and management objectives, and is working with state agencies and NGOs to use its water each year.

One of the most recent environmental water holders is the Victorian Environmental Water Holder, a statutory corporation with three commissioners and staff currently seconded from the Victorian public service. It holds all the environmental water in Victoria, but is focused on management, rather than additional water recovery. However, it has recently sold water in northern Victoria to finance water recovery in southern Victoria, demonstrating its willingness to use the markets as a tool for managing a portfolio of environmental water rights.

One of the other fascinating issues here (and deserving of a post all its own!) is the role of NGO environmental water holders in Australia. They have a big role in the USA, but are more limited in Australia. However, during the recent drought, a number of NGOs obtained water for the environment. Now, many are transitioning into a management role. Water For Nature, a water trust established by Nature Foundation SA, has entered into an agreement with the CEWH to deliver 10 GL of water each year for the next five years. This is the first such agreement between the CEWH and a NGO, and I’ll be watching with interest.

There is so much to say about these new entities. But for now, let’s just try to understand what they actually do. Many organizations play a role in environmental water management. Local organizations like catchment management authorities are usually responsible for community engagement, long-term planning and on-ground activities (such as getting water to a site, and monitoring the outcomes of using it). Government retains a role in policy setting and management of the overall water allocation and trading framework. Environmental water holders are responsible for holding (‘owning’) environmental water rights, and making the critical decision on where and how to use it each year (including whether to trade it). The following diagram focuses on the role of the environmental water holders in the Australian context (and comes from my recent article in the Australian Environment Review (see issue 28(3); let me know in a comment if you can’t access Lexis). 

I think the requirement of the environmental water holders to be the decision-makers, as well as their varying capacity to do so (they can be constrained by water policies, Ministerial directions, funding, and/or limits of their operating legislation) is what makes environmental water holders so interesting. 

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