Water markets, ecosystem services, corporatisation and the role of NGOs in catchment management: perspectives from the University of Dundee’s IHP-HELP Centre for Water Law, Policy and Science

Thanks to the generosity of the British Council, I'm continuing my exciting adventure around the UK.

The University of Dundee’s IHP-HELP Centre for Water Law,Policy and Science is recognised as an international centre of excellence in water law and policy. I’ve been lucky enough to spend the last two days meeting with and speaking to academics from this centre and other parts of the University. I’m beyond grateful for the time these generous people made available to me; and I’m particularly grateful to Dr Sarah Hendry, who helped to arrange my visit and encouraged her colleagues to attend my presentation.

My first meeting with with Professor Chris Spray, who shared his insights into the role of the Tweed Forum, a non-government organization acting as an intermediary between local communities and government to implement environmental projects. Tweed Forum has been around since 1991, and is now a model for participatory catchment organizations around the world. I was fascinated to learn about this organization and the role it plays in connecting government to communities, and the trust it has built through its ongoing relationship with both. It reminded me of some of the environmental water trusts in the western USA, which help bring together government and individual water users and ranchers to deliver win-win environmental outcomes. I'm very interested to see whether this is a model we could explore in Australia, in addition to our government catchment management authorities.

Next, I met with Dr Sarah Hendry, who has a deep background in the legal and organizational structures for the industry in the UK. Sarah patiently answered my questions and helped me understand the historical differences that have underpinned the different policy approaches taken by Scotland, England and Wales, and the different legal forms used to manage water in each jurisdiction. I'm particularly interested in whether there's any evidence of a statutory corporation, or a state-owned corporation, demonstrating the attributes we associate with a privately owned, for-profit corporation (a corporation limited by shares). Can we use the corporate model in a state-owned capacity to obtain a commercial operating environment without losing control of the public services it's providing? Are there essential attributes of the corporate form that are common to all it's iterations, inescapable features of using this particular legal structure? 

As is often the case, I also met up with some fellow Australians. Dr Francine Rochford and I had some fascinating discussions around the nature of property rights in Australian water, how to engage with different water user groups and the nature of the public/private divide. Dr Michelle Lim, another Australian, is here in Scotland working on a project to examine the way that ecosystem services can act to alleviate poverty in Bangladesh. 

On Tuesday afternoon, I gave a seminar to about 15 highly engaged audience members. My presentation focused on my work on examining the way that environmental water organizations are emerging to manage environmental water in the context of water markets, and to use this as a tool to explore the tension between the need to extend environmental protection into the ‘everyday’ and the potential loss of the social norms that drive the need for that protection in the first place. Using markets to manage the natural environment runs the risk of replacing social norms (which stipulate for environmental protection) with market-based norms, which can put a price on the environment and perhaps weaken or erode the social norms. This topic is central to my thesis (and definitely worth a blog post of its own) so I’ll probably leave it at that for the moment – but more to come! If anyone is interested in seeing a copy of this presentation, please leave a request in the comments and I can email you. 

I really enjoyed this opportunity to speak with this audience. They were very interested and kept me on my toes with lots of intelligent questions during the presentation, and a broad discussion of both the content and my research directions afterwards. This presentation was tremendously helpful for me, as it gave me a chance to test some of my new ideas with an international audience, and to lift the level of discussion beyond the detail of Australian environmental water management. 

Following the seminar, I had a brief but interesting discussion with Professor Colin Reid about markets in biodiversity. Market-based tools can be highly effective, but one of the big limits for natural resources like biodiversity is that they are context specific - timing, location and scale are all important factors in defining the 'product', which can make finding appropriate trade-offs challenging. 

PhD students and staff who kindly invited me to lunch

I also managed to inspire some interest in Australian water law and policy more generally. Andrew Allan and I spent the afternoon discussing Australia's legal construction of water rights, water allocation policies and how the environment is operating within Australia's water markets. 

It was a fascinating two days. I'm only sorry that it was such a short visit, and I can't possibly do justice to the fantastic conversations in this blog. Thank you to everyone who spent time with me!

Collaboration and environmental water management

This year, the National Fish and Wildlife Foundation's Western Water Program held its second annual western water transactions workshop in Bend, Oregon. This workshop brings together the organizations (NGOs and government agencies) that work with NFWF in the western USA to restore instream flows to flow-limited rivers, using a water transactions approach. Water is returned to the stream and legally protected as instream flows using a range of legal mechanisms, including short-term leases, split-season leases (where the water is left instream for a short but critical period, such as July-August), donations, permanent sales and efficiency programs, where on farm use of water is altered to improve efficiency and so that savings can be left instream.  Each organization is tackling essentially the same problem: how to improve instream flows and improve aquatic habitat in severely flow-limited rivers (in many cases, the rivers can be completely dewatered during summer). But each organization operates within a highly specific context, a web of state law, local politics and the long reach of local history.

There is almost no limit to what can be written about this program and the work of the individual organizations throughout the western USA. And indeed, I plan on writing a fair bit about it over the coming months.

But for today, I’m focusing on one of the big lessons I gleaned from this week of insightful, inspiring conversation: the importance of collaboration.

The environmental water organizations in the US focus on finding ‘win-win’ outcomes with other water users. Although there are many organizations out there litigating and using whatever tools they can find (or create) to protect and improve instream flows, by and large, the organizations who seek to pay farmers to put water back instream do not operate this way. These organizations find solutions that all participants are happy with. So they don’t buy water if it’s not the right kind – the right place, the right seniority (so that they can depend on having the flows when they need them), delivering real environmental outcomes. But they also focus on solutions that help keep the agricultural community thriving and keep the farmers on their land (for just one example, have a look at The Freshwater Trust in Oregon).

As an Australian, this was a fascinating insight. I'm not saying we don’t seek collaboration with other water users, far from it, as most government policy on water is produced in a heavily consultative fashion. But because most water policy and water resource management is run by government, I think there’s a sense that collaboration is less necessary. In Australia, if you’re in the southern Murray-Darling Basin, you can just go to the water market and buy the water you need. This is a ‘win-win’ in a narrow economic sense – but conversation is completely different. It’s not about finding a way for agriculture and the environment to co-exist. It’s a conversation about price: the person who can afford to pay the highest price gets the water. Sure, the seller gets the money, but I wonder how often they use it to get more water for their own needs, or whether selling their water is a way to exit from their agricultural activities?

This is not a bad thing. In many ways, it’s great that environmental water managers in Australia don’t have to inquire into the operation of farms in order to free up water for the environment: the market does all that for them (which is nice and efficient). But I think we’re missing an opportunity. Collaboration, whilst it may be slower, builds understanding. It forges relationships between people with completely different interests, and this makes it harder to see those people as your enemies. It makes it harder to see the environment as your enemy.

Ultimately, collaboration can build consensus on deeply divisive issues like how to use water in a fully-allocated catchment, where using it for environmental benefit means taking it away from someone else. 

Collaboration and consensus may be something that government is unsuited for: although government can be inclusive during the creation of a policy, once a decision is made, it must be enforced. This is where non-government organizations really come into their own. They can operate inclusively and collaboratively during both the development and the implementation of environmental programs. They exist because they can build these relationships within the local community, at a local level. Australia has only very recently seen much movement in the NGO space when it comes to environmental water management (and I’m not talking about advocacy here – there’s been lots of great work on that front over many years from many organizations, like Environment Victoria, the Environment Defender's Office and Australian Conservation Foundation, just to name a few). 

As I wrote in May, one of the interesting developments is the agreement between the Commonwealth Environmental Water Holder and Water For Nature, which sees the CEWH give 10GL each year to WFN for the next 5 years. This agreement seems to explicitly recognise the capacity of the NGO to operate at a local level to both deliver environmental water effectively, but also to generate community support for these activities. I’ll be watching this with a great deal of interest to see how it evolves. This could be a real opportunity for Australia to benefit from the NGO approach to managing environmental water – and we should definitely be reaching out to our colleagues in the western USA, who’ve been doing this for the last couple of decades. 

Hattah Lakes environmental water regulator

The incredibly talented Dr Tamara Boyd shared this yesterday, and it's absolutely amazing. This video shows some of the new environmental water infrastructure up in the Mallee in Victoria, to help get water into wetlands and keep it there longer. This sort of infrastructure can dramatically enhance the efficiency of environmental watering in terms of extent and duration of watering (although we're still waiting to see how it stacks up ecologically, but time will tell, and it's a pretty safe bet it's better than nothing in the current climate!). 

This is also a fantastic introduction to the different agencies involved in environmental water management, and the beautiful landscape of north-western Victoria.

Check it out: 

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. 

Transitions: policy to implementation to management

Environmental flows are recognised (and, increasingly, provided) by an ever-growing list of jurisdictions around the globe. As the number of countries with basic environmental flows commitments grows, I think it’s helpful to examine the way environmental flows is transitioning from policy, to implementation, to management. In particular, in locations where water recovery has been substantial, there has been a real shift in focus from the ‘more is better’ mantra of water recovery, to using existing environmental water effectively.

How do jurisdictions go from paying lip service in policy documents and legislation, to actually putting more water back in rivers and wetlands? In 2010, the WWF and Nature Conservancy released this report, The Implementation Challenge, on the challenge of transitioning from environmental flows policy to implementation. It draws on case studies from around the world, including Europe, the Americas, Africa, Australia and south-east Asia, and generates some helpful guidelines for enthusiastic environmental flows policy makers, helping them navigate the difficult transition from policy to implementation.

The first step is recognising the need for environmental flows, and doing the science and community engagement in local catchments to identify what the environmental flows should be, in order to protect the ecosystems and assets valued by that community. This is not a trivial step, but there are a number of well-documented processes that can be used in different water management regimes to get this done.

The next step, which is when I think it gets interesting, from a legal and policy perspective, is when the recommended flows are identified, and the responsible organization has to figure out how to deliver them. This can happen in three types of situation: (1) full allocation of water rights in the catchment, and existing rights or historical use patterns are being respected; (2) full allocation, but all rights to water are being renegotiated as part of setting the environmental flows; or (3) something less than full allocation, so that more water can be set aside for the environment without affecting existing users (if any).

Clearly, it’s easiest to implement environmental flows under scenario 3, and they become a constraint on future uses of water in the catchment. This can also represent the best outcome for the ecological health of the river, as it’s more likely to be maintained from the outset (rather than being clawed back from a state of degradation later).

Scenario 2 is possibly the most challenging, as everything is up for grabs. I think one of the best examples of scenario 2 is the water reform still underway in South Africa. Following constitutional reform in 1994, South Africa committed to major water reform. The 1998 National Water Act legally set aside water for basic human needs and an ecological reserve (flows to protect the ecological health of the water systems), which must be met before economic uses of water. Whilst this legal reform was a world first, and created a model for defining environmental water that has inspired other jurisdictions (including Australia), implementation has lagged well behind the law. There are many reasons for this, and I suspect one important reason might be that negotiating everything takes a long time, especially when there are historical uses of water for economic purposes. Even if these historical uses are legally downgraded, the former owners won’t want to give them up for nothing.

Scenario 1 is happening now, in many developed and developing countries. Scenario 1 happens after many years of water extraction, when communities and governments recognise the need for environmental flows to protect the health of rivers and wetlands. Enabling the environment to legally use water is the first step – but when all the water has been allocated to others, how do you give any to the environment? There are some great examples from the western USA and in the Murray-Darling Basin of Australia, where water has been recovered using a combination of purchase of water entitlements from existing users, and investment in water savings (through efficiency measures, or alternative water uses). In Australia, the environment is now one of the largest single holders of water entitlements, and the Commonwealth Environmental Water Holder has large volumes in many catchments throughout the Murray-Darling Basin.

The final step in this transition is to management, and this step is the most recent. Where environmental flows policy programs have been successful, environmental water managers are now facing the task of managing this additional water. In some places, this water is only held as instream flows or rules-based water, requiring little to no management. But where environmental water entitlements are held in storage, and can be called out to extend or top-up natural flooding events, or keep wetlands alive during severe drought, management is essential. Environmental water managers now need to demonstrate that they are using this water effectively to deliver real, measurable, on-ground improvements in river health.

This transition from ‘more is better’ to effective management of the environmental water available is enabled by large volumes of environmental water. In most cases, there is still not enough water to restore complete health to the river in question, but the water hasn’t come for free, and there is often ongoing competition between private uses (such as urban water supply, irrigation and mining) and environmental uses of that water. In the Murray-Darling Basin in Australia, we are coming to the end of the current water recovery phase, with the release of the new Murray-Darling Basin Plan. The challenge of taking a management approach to this new, massive portfolio of water entitlements is driving a raft of changes in the environmental water management industry, and the organisations responsible for managing the water. 

Welcome to the blog!

Environmental water management is changing. Driven by factors like climate change, drought, flood and increasing awareness of the plight of threatened species that depend on healthy rivers and wetlands, around the world, policy programs to restore environmental flows have proliferated. In some places, we are investing huge sums of money in recovering water for the environment. For example, in the Murray-Darling Basin in Australia, the Commonwealth Government is investing AUD3.1 billion in water purchase, as well as another AUD5.8 billion in efficiency projects, which will also increase water availability. Under the newly released Murray-Darling Basin Plan, this will deliver 2750GL of environmental water (with another 450GL to follow).  Whilst this is the biggest program of its kind in Australia, state governments have also been investing large sums in environmental water recovery. This sort of investment is also taking place in the western states of the USA, where a range of government and not-for-profit environmental water organizations work with irrigators to restore instream flows.

In some ways, we've got more environmental water than we've ever had, since extractions reached their modern levels. Whilst recovery is still important, in many places, the emphasis is switching to the importance of managing the recovered water. Environmental water managers have to show their investors (taxpayers, or donors to private organizations) that they can get 'bang for buck' with their water. In some places, this is as simple as protecting the improved instream flows (not actually all that simple in practice!). In others, it can include making use of the opportunities and increased flexibility offered by active water markets, to move water around geographically, and convert water into money that can be invested in alternative methods to improve the health of aquatic habitat.

With more water, and more active management required, the role of environmental water managers, and the process of environmental water governance, has never been more important. How can environmental water be managed effectively, and efficiently? How can environmental water managers ensure they have sufficient flexibility to manage changing water needs, especially in a climate change future when extreme weather events might be more frequent? How should environmental water managers retain some independence from the politics of the government of the day, yet remain responsible to the public for managing a public resource?

It's never been a more exciting time to be an environmental water manager, or to be researching those who are. This blog will consider all these questions, and more, and will hopefully also include some guest authors who know far more about the activities of their own organizations than I do.