Water, including the Murray-Darling Basin (2024)

Dr Emily Gibson, Science, Technology, Environment and Resources

Australia is the world’sdriest inhabited continent and experiences high variability in rainfall. Around10% of annual rainfall reaches waterways, water storages or groundwateraquifers, while the rest evaporates, mainly through vegetation (p. 2). Much of the country is vulnerable to drought, which affects agriculture, natural ecosystems, human health,communities and our national economy.

The Millennium drought affected most of southern Australia (other than parts of central WesternAustralia) over the period 1997 to 2009, while the return of drought conditionsover much of the country during 2017–19 culminated in severe bushfires in the summer of 2019–20. Conversely, while drought conditions currentlypersist in parts of Tasmania, the Northern Territory, SouthAustralia, and Victoria, southernQueensland and NSW received a year’s worth of rainfall fromFebruary to early April2022 and were impacted by severe flooding.

The variability inAustralia’s rainfall is strongly influenced by climate drivers including El Niño, La Niña, the Indian Ocean Dipole and the Southern Annular Mode. However, the State of the climate report 2020 identifies concerning long-term trends in Australia’srainfall record (see Figure 1):

There has been ashift towards drier conditions across the southwest and southeast, with morefrequent years of below average rainfall, especially for the cool season monthsof April to October. In 17 of the last 20 years, rainfall in southern Australiain these months has been below average. This is due to a combination of naturalvariability on decadal timescales and changes in large-scale circulation causedby increased anthropogenic greenhouse gas emissions. (p. 6)

Figure 1 Rainfalldeciles over the last 20 years

(a) April toOctober

(b) the Northernwet season

Source:CSIRO and Bureau of Meteorology, State of the Climate 2020, (Canberra: Australian Government, 2020),6–7; reproduced by permission of the Bureau ofMeteorology, © 2022 Commonwealth of Australia.

According to the IntergovernmentalPanel on Climate Change’s (IPCC) Sixth assessment report, climate change projections indicate there will beless winter and spring rainfall in southern Australia, more winter rainfall inTasmania, less autumn rainfall in south-western Victoria and less summerrainfall in western Tasmania, with uncertain rainfall changes in northernAustralia (p. 11 – 4).

Management of Australia’swater resources is often viewed solely through the prism of its productionvalue. For example, 67% of water taken for consumptive use in 2019–20 wasused for agriculture (p. 5). In thatyear, the gross value of Australia’s agricultural production was$61 billion, with $16.5 billion generated from irrigated agriculture. Around 70% of agricultural production is exported, contributing 12% of Australia’s total goods andservices exports (pp. 2; 7). In 2019–20, water markets in Australia had an estimated turnover of $7 billion (p. 4), while the value of water entitlements in thesouthern Murray-Darling Basin doubled from $13.5 billion to $26.3 billion in the5 years to 2019–20 (p. 30).

However, water’s value is not limited to economic impacts. Integrated and sustainable management of Australia’swater resources underpins broader concerns about water security and ecological significance. Observing that watersecurity involves complex and interconnected challenges, UN-Water defines water security as:

the capacity of apopulation to safeguard sustainable access to adequate quantities of acceptablequality water for sustaining livelihoods, human well-being, and socio-economicdevelopment, for ensuring protection against water-borne pollution andwater-related disasters, and for preserving ecosystems in a climate of peaceand political stability. (p. 1)

The Australian Government does not have direct constitutional powers for managing water resources; these powers lie withthe states and territories. However, the Australian Government still has animportant role in water policy. The Council of Australian Governments (COAG) water reform framework was agreed in 1994, followed by the National water initiative in 2004, and the Howard Government’s $10 billion National plan for water security in 2007.

There remains, however, nonationally agreed definition of water security in Australia and, over the pastdecade, Australian Government engagement in water policy has been oriented tothe augmentation of supply (that is, developing dams) andreducing the impact of existing regulation on private sector water users (p. 33). The Productivity Commission’s report, National water reform 2020, which recommends renewal and modernisation of the Nationalwater initiative, identifies several opportunities for adopting a moreholistic approach to water security. These include (among others) (pp. 9–12):

• the adoption of best practice water planning, which takes into account all water uses (including floodplain harvesting) and provides for the rebalancing of environmental and consumptive uses as a result of climate change
• improved arrangements to make the best use of environmental water to achieved agreed (or where possible, better) environmental outcomes
• securing Aboriginal and Torres Strait Islander peoples’ interests in water, supporting the achievement of the 2020 National Agreement on Closing the Gap, including adopting management measures to achieve cultural flows and economic outcomes for Aboriginal and Torres Strait Islander communities
• the adoption of best practice urban water system planning, supported by community-driven objectives for water security, and additional support to ensure small rural water utilities provide acceptable levels of service.

Urban and rural water use

Urban uses account for 22% of Australian water consumption. Households paid an average of $3.46 per kilolitre andindustry $0.46 per kilolitre in2019–20, with the difference driven by factors including the cost of treatingwater so that it is suitable for human consumption. Most water, especially forsupply to major urban areas, is sourced from surface water sources such asrivers and lakes (75%), with the remainder sourced from groundwater (aquifers),desalination plants, recycling (including groundwater replenishment) and stormwater harvesting.

Water scarcity may becomean increasing issue for urban water supplies in the future. For example, groundwater provides two-thirds of all water used inurban Western Australia. However, winterrainfall has declined 28% since 2000, with reduced groundwater recharge, while demand is increasing due to population growth.This is prompting a focus on water-sensitive urban design and climate-resilient water sources, includingdesalination in some areas. Perth, alongwith other state capitals (Adelaide, Brisbane–Gold Coast, Melbourne and Sydney) now have large seawater desalination plants.

The quality of drinkingwater in urban areas is usually high, but can be more variable in regional andremote areas due to the presence of natural-occurring contaminants (such as nitrates and uranium) and more limited capacityto treat the water. Water service provision in regional and remotecommunities canbe more complex, and costly, due to poor water quality sources, waterdistribution and treatment challenges, and fragmented arrangements for delivery(p. 162).

Independentaudits have found that water service provision in remote Aboriginal and Torres Strait Islandercommunities often fails to meet the Australian Water QualityGuidelines. Poor standards of water and wastewater services compoundhistorical hardships and reinforce disadvantage, can worsenexisting health issues and increaserisks of disease and infection. InfrastructureAustralia states ‘there is clear evidence that services in many … remotecommunities do not meet United Nations’ Sustainable Development Goal (SDG) 6:clean water and sanitation for all’ (p. 619).

Urban waterways, and theirassociated ecosystems, also provide important habitat for native animal andplant species as well as a myriad of recreational opportunities. The AustralianLabor Party (ALP) has committed $200 million to an Urban Rivers and Catchments Program that will provide community grants supporting wetlandrestoration, naturalisation of riverbanks, and revegetation.

Water storage and irrigation schemes

With over 500 major water storages, several thousand smallstorages, and in excess of 2 million farm dams (p. 21), Australia has the highest per capitasurface water storage capacity in the world. According to the Bureau ofMeteorology, the capacity of Australia’s accessible storage capacity is about81,000 GL. At the end of May 2022, they were 69.3% full.

Water harvesting, storageand distribution schemes have been central to urban and regional development inAustralia. While dams and associated irrigation schemes have increased wateravailability, infrastructure and works interrupt natural flow regimes, waterscapeconnectivity and the operation of aquatic ecosystem processes that require therun of the river.

Water resources assessments have suggested that a combination of groundwater,large dam and farm-scale water storages have the potential to support thedevelopment of irrigable agriculture in some areas across Australia’s north.However, large-scale developments face significant hurdles, including economicviability, environment sustainability, and heritage concerns.

Over the last decade theAustralian Government has announced numerous initiatives to support regionalwater infrastructure, including the:

• $500 million National Water Infrastructure Development Fund (NWIDF)
• $2 billion National Water Infrastructure Loan Facility (abolished in 2020 )
• $5 billion Northern Australia Infrastructure Facility
• National Water Grid Fund (NWGF), established in 2020. It is administered by the National Water Grid Authority.

In May 2020, the NWGFreplaced the NWIDF, with the $2 billion in unspent funding from the Loan Facility transferredto the NWGF (p. 140). The MorrisonGovernment’s 2022–23 Budgetprovides an additional $6.9 billion over 12 years for investments through theNWGF (p. 147). This includes commitments for water infrastructure projects suchas the Hells Gateand Urannah damsin Queensland and the Dungowan Damin NSW. This brings total investment available under the NWGF to $8.9billion.

The ALP’s Water for Australia plan includes re-establishinga National Water Commission, supporting renewal of the National waterinitiative, and broadening the National Water Grid Investment Framework (whichsets out howinvestment from the NWGF will be targeted) to allow it to fund a widerrange of water supply projects (rather than only agriculture projects). The ALP has indicated water infrastructure projectswill only proceed if they provide value for money.

Murray-Darling Basin

The Murray-Darling Basin (MDB) covers an area of 1million km², is home to morethan 40 First Nations, and hosts a wider population of 2.3 millionpeople. The MDB producesfood and fibre worth $22 billion and provides tourism services worth $11billion each year. Two-thirdsof Australia’s irrigation water is used in the MDB. However, evaporationrates in the MDB are high, with 94%of rainfall used by plants or evaporating. The demand for water hasresulted in significant pressures on freshwater ecosystems and degradationof water quality. Water storage levels across the MDB increased from 58% to 90% between May 2021 andMay 2022.

In January 2007, in the midst of the Millenniumdrought, the Howard Government announceda $10 billion National plan for water security to improve waterefficiency and address the over-allocation of water in rural Australia,including in the MDB. In August 2007, the Australian Parliament passed the Water Act 2007which establishes the legislative framework for managing water in the MDB inthe national interest and for providing information on Australia’s waterresources. The Basin states (Qld, NSW, Vic, ACTand SA) subsequently referred limited powers to the Commonwealth to allow for new arrangements in the MDB to takeeffect, including the establishment of the Murray-DarlingBasin Authority (MDBA).

The Basin Plan

The Water Act isimplemented through the Basin Plan 2012, which was legislated in November 2012 following a multi-yearnegotiation process. The Basin Plan specifies the surface water and groundwaterlong-term average sustainable diversion limits (SDL) for the entire MDB, as well as for each surfacewater and groundwater unit and water resource plan area.

The SDLs are essentiallythe maximum amount of water that can be extracted in a year. The original surface water SDL for the whole basin was set at10,873 gigalitres per year (GL/y). In July 2018, the SDL was increased by 70GL/y to 10,945 GL/y after the NorthernBasin review. The SDLs came into operationon 1 July 2019, along with a mechanism for their adjustment.

The establishment of the SDL was accompanied by thesetting of a waterrecovery target of 2,750 GL/y (also referred to as the ‘bridging the gap’target). This represented the gap between the water being used prior toimplementation of the Basin Plan and the SDL.

Under the Basin Plan, theBasin states manage water resources within their jurisdiction using their own respectivewater legislation. States were required to prepare water resource plans (WRPs) for specific areas that are consistent with the Basin Plan andrelevant SDLs by 30June 2019. WRPs set out how water will be used, how much water will be madeavailable for the environment, how water quality standards will be met, and how water resources will be managed in extreme dry periods.

The WRPs of all Basin states- otherthan NSW- have been accredited by the MDBA. The MDBA and NSW have entered into a bilateral agreement to ensure that key elements of the Basin Plan areimplemented while NSW’s WRPs are being prepared. In June 2022, theInspector-General for Water Compliance (IGWC) arguedthat the Commonwealth Water Minister should utilise ‘step-in powers’ in theWater Act to ensure that NSW’s WRPs are completed as soon as possible. InAugust 2021, the compliance and enforcement powers of the MDBA were transferredto the IGWC. This followed numerous reviews, including the Five-year assessmentof the Murray-Darling Basin Plan (see Box 12.1 at p. 301), to assess watermanagement compliance across the Basin.

The Basin Plan alsoprovides for:

• an environmental watering strategy
• a water quality and salinity management plan
• matters relating to critical human water needs
• water trading rules.

The Basin Plan will not be fully implemented until 30 June 2024, when the agreed constraints measures and ‘supply’ and ‘efficiency’ measures under the SDLAdjustment Mechanism are completed.

Figure 2 Waterrecovery under the Basin Plan

Source: Parliamentary Library adaptationfrom Sally Farrier, Simon Lewis and Merran Kelsall, First Review ofthe Water for the Environment Special Account, Report to theCommonwealth Minister for Water Resources as required under Section 86AJ of theWater Act 2007, (Canberra: Australian Government, March 2020), Figure 1,10.

SDLs and water buybacks

The establishment of SDLs- at an environmentally sustainable level of water use or take- hasbeen one of the most contentious elements of the Basin Plan. The 2010 Guideto the proposed Basin Plan considered that water recovery ‘needed toensure a sustainable level of take, is between 3,000 GL/y and 7,600 GL/y, on along-term average basis’ (Volume 2, p. 166). This became politicallyuntenable: South Australia argued for at least 3,200 GL/y to be recoveredas environmental water, while NSW and Victoria wanted less than 2,750 GL/y tobe recovered.

As a compromise, the Australian Governmentestablished 2 mechanisms:

• the SDL Adjustment Mechanism, permitting the raising or lowering of the SDLs by up to 5% (approximately 543 GL)
• the provision of $1.77 billion over 10 years (to 2023–24) in the Water for the Environment Special Account, to fund efficiency projects which will generate an additional 450 GL/y to achieve ‘enhanced environmental outcomes’, on the proviso that there are neutral or positive socio-economic impacts on Basin communities and industries.

Australian Government funding is supporting 3 typesof measures or projects in the MDB. Supplymeasures deliver water for the environment more efficiently so less wateris needed. Efficiencyprojects change water practices, such as improved irrigation methods, andsave water for the environment. Constraintsprojects overcome some of the physical barriers that impact water delivery.

In January 2018, the Basin Plan was amended toprovide for the implementationof supply projects to allow 605 GL/y of additional water to remainavailable in the system (altering the water recovery target to 2,075 GL/y),while still achieving the same or better environmental outcomes. This wasdependent on the recovery of a minimum of 62GL/y through efficiencyprojects by 30 June 2019. The62 GL/y is a subset of the larger 450 GL/y target.

Progress on water recovery

Substantial progress towardswater recovery targets has been made, however, as at 30 April 2022, there wasasignificant shortfall in the recovery of water for the environment. Only 2GL of the required 450 GL/y waterrecovery for enhanced environmental outcomes has been delivered, although23.9 GL/y has been contracted.

The MDBA’s annualprogress reports for the SDL Adjustment Mechanism and the First review ofthe water for the environment special account indicate that it isunlikely the full amount of 450 GL will be recovered by 30 June 2024, puttingthe overall SDL adjustment at risk. The Water Act makes provision forthe MDBA torecalculate (reconcile) an appropriate adjustment amount and prepare anamendment to the Basin Plan in these circ*mstances. The Australian Government wouldthen need to consider the best options for bridging the water recovery gap toensure the outcomes of the Basin Plan are achieved.

The Australian Government initially purchased waterentitlements directly from landholders (‘buybacks’) to support the achievementof the 2,075 GL/y water recovery target; 1,227 GL had beenpurchased by the Commonwealth at a cost of $2.7 billion by October 2017 (p.4). In September2015, the Water Act was amended to cap the volume of water thatcan be purchased at 1,500 GL (subject to exceptions). The relevant provisionswill ceaseto operate when the first 10-year review of the Basin Plan is completed (p.7). In September 2020, the Morrison Government ruledout further buybacks; however, a substantialshortfall in water recovery raises the prospect that the targets will not be metby 2024 and further action will be required.

Policy commitments

The Morrison Governmenthad committed to delivering the Basin Plan in full, including the 450GLwater for the environment. However, in July 2021, NationalParty senators attempted to move amendments to the Water Act that would have removed a requirement to deliver the450GL of water for the environment, prohibited further water buybacks,and extended the deadline for delivery of water recovery projects.

The incoming AlbaneseGovernment’s Water for Australia plan includes a ‘five-point plan to safeguard the Murray-DarlingBasin’. This includes:

• delivering on water commitments- including the 450 GL for environmental water
• increasing compliance, and improving metering and monitoring
• restoring transparency, integrity and confidence in water markets and water management
• increasing Aboriginal and Torres Strait Islander peoples' ownership and involvement in decision-making, including delivering the $40 million of cultural water
• updating the science, including data on climate change, evaporation and inflows.

Back to Parliamentary Library Briefing Book

For copyright reasons some linked items are only available to members of Parliament.

© Commonwealth of Australia

Creative Commons

With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under aCreative Commons Attribution-NonCommercial-NoDerivs 3.0 Australialicence.