Irrigation Water: Use it or trade it because you can't save it! |
March 27, 2007 |
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Posted by Joseph Taylor at March 27, 2007 09:55 AM |
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"He who controls the past, commands the future." George Orwell
The issue
Large dams reduce water supply variability and provide access to water when we need it. Surprisingly there has been little research on when to release water and when to store it.
In most rural systems, water users accept all the water that is given to them. The old adage was “use it or lose it.” With trading, the adage has changed to “use it or trade it as the government won’t let you save it!”
Would Australia be better off if all irrigators were allowed to decide when to use water; when to trade water; and when to leave unused water on their account and carry it forward to the next season?
In the River Murray system and as a once-off drought response measure, this year Victorian irrigators are being allowed to carry forward any unused water. For many years, NSW general security irrigators have been allowed to carry forward water. For the first time ever and as an emergency response measure, NSW high security entitlement holders have been allowed to carry forward unused water.
Should any irrigator be allowed save water for the future by leaving it on their account and have it automatically carried forward and made available to them in the next season? We think the answer is “yes”.
Should carry forward accounting rules be consistent among states and among entitlements? We think that the answer is “yes.”
Allocation risk
In the past, storage management and inter-temporal decisions have been taken in the public arena. In the Murray Darling Basin, via a process that allows quite a large amount of flexibility, States first agree on how much water to keep in an unallocated reserve and how much to allocate to each State’s account. Each State then decides how much water to keep on their account and how much to allocate.
Recently several States made seasonal allocation announcements that they could not honour. One of those not honoured was water that some NSW irrigators had carried forward from the previous irrigation season. We recognise that it has now been announced that, as soon as feasible, water accounts will be re-credited with this water but this decision has significantly reduced irrigator interest in carry forward.
In this droplet, provided there is storage space in the system, we assume that policy will be changed to define any seasonal allocation carried forward to be of the highest security. Bank water and after adjustment for storage losses you can use it whenever you like. If irrigators are to be encouraged to make astute water saving decisions, they need to be confident that their storage decisions will not be undermined by government.
The economics of carry forward
The community impacts of not allowing irrigators to carry forward water are considerable. Donna Brennan has estimated that lack of carry forward in the 2002/3 drought year cost Victoria’s Goulburn Valley over $100 million. She also found that the maximum price paid for a seasonal water allocation was three times higher than it would otherwise have been if irrigators had been allowed to carry forward water in previous years.
With less price volatility, an economist might predict that the value of water entitlements would rise.
Expanded trade versus supply reliability
In another paper, Brennan points out that expansion of interstate trade into NSW where some carry forward is possible will mean that less water will remain in Victoria’s storage account. Pressing alarm bells, she observes that the expansion of interstate trade without the introduction of carry forward arrangements will make the Goulburn Valley worse off. Water previously left in the system and shared among Victorian irrigators will now be transferred to another account. This means that subsequent allocations to Goulburn Valley irrigators will be less than they otherwise would have been.
The solution, Brennan argues, is to give each individual irrigator the opportunity to choose between using, carrying forward or trading water. If irrigators are allowed to trade water across space and, with adjustment for losses, store water both irrigators and the community should be better off.
We believe that all water users in all States should be given the opportunity to optimise all water management decisions including those about how much water is carried forward from year to year.
Who owns the air space?
Just as it makes sense for irrigators to carry forward water, it also makes sense for an environmental manager to carry forward water. Given this observation, one can imagine a situation where a dam is full. In such a situation, it is critical to work out whose water gets spilled first.
One simple way of providing access to airspace is to allow carry forward or, as some states prefer to call it, carry over on a first-up, best dressed basis. This is fine while there is a lot of space in the dam but when it gets close to full, there may not be enough space to give everyone their full allocation.
When a dam is nearly full, and if one thinks that storage priority should be issued in proportion to entitlement, it is possible to have a rule that ‘carry-forward’ water is always the first to spill. This means that when storages approach full capacity irrigators have an incentive to use or trade water rather than to save it.
Another way of allocating access to storage space in a dam is to set a limit on the maximum amount of water that may be carried forward. While it would be possible to unbundle this maximum storage right from an entitlement and make it tradeable, the benefits of doing this are likely to be minimal. In a free trading environment, irrigators can be expected to sell their water to someone who has access to unused storage in order to avoid losing an opportunity to profit from saving it.
One of Australia’s most sophisticated carry forward systems can be found in Queensland. Following trials in the Queensland’s St. George System, a continuous sharing approach has been developed. Each entitlement holder is allocated a maximum storage right and daily adjustments for evaporation losses are made to all unused allocations irrespective of the time when they were issued. To prevent carry forward causing delivery problems, the right to have water delivered within a season is capped.
Customers who ‘cap out’ within a season but who still have water available within their storage share are able to purchase seasonal delivery rights from others.
Where to from here?
Failure to optimise storage management and water supply decisions is costing Australia a lot of money. Just as it makes sense to allow water trade within a season, it also makes sense to allow trade from one season to the next.
Obviously, all would benefit from more research on the question of how to optimise the storage and release of water recognising the complexity of connected multiple storages and tributary inflow systems. To us, however, it seems obvious that the costs of not allowing individual participation in the process of deciding how to optimise the amount of water that is carried forward from year to year and how much is used are very high – too high.
Once the opportunity for private carry forward is introduced then it will be necessary to review Government storage and allocation policies. In particular, it may be necessary to ensure that the introduction of carry forward does not increase the total amount of water used. In particular, some entitlement reliabilities and some allocation rules may have to be redefined.
From a Murray Darling Basin perspective, this droplet raises an important question: “Should the proposed new Murray Darling Basin Agreement be drafted in a manner that allows permanently for carry forward of unused allocations or should this privilege remain limited to the few?”
Finally, under the current Murray Darling Basin Agreement it is possible for South Australia to request access to Victorian and NSW dams. With the new commitment to managing the Murray Darling Basin System as one, all irrigators – including those in South Australia – could be given an immediate opportunity to carry forward water.
Mike Young, The University of Adelaide, Email: Mike.Young@adelaide.edu.au
Jim McColl, CSIRO Land and Water, Email: Jim.McColl@csiro.au
Hyperlinks to further information (Click on the entry)
- Brennan, Donna (2007) Missing markets for storage and their implications for spatial water markets. Paper presented to AARES Conference, Queenstown, NZ, 14th February 2007.
- Brennan, Donna (2007) Managing Water resource reliability through water storage markets.
- Vanderbyl, Tom (2007) Implementation of continuous sharing in Queensland. SunWater, Brisbane.
Acknowledgements
This droplet benefited significantly from comments made by our ever diligent Steering Committee, Donna Brennan, Tom Vanderbyl, Al Watson, Bob Douglas, Trevor Jacobs, David Dole, and Peter Hoey.
Copyright © 2006 The University of Adelaide
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Comments
Water Storage and Water Release are critcal issues. Water Storage - is critical to the coummunity one way or another ( in dam, in a tank etc) and Water Release is vital to catchment health.
There is much hyperboly from Australian Water operators about the capacity for water infrastruture to satisfy the need for water release as well as the water demands of urban users.
It is vital that these claims are viewed with a degree of cynicism. The gates constructd at Lenthalls Dam on the Burrum River were desitned to both store and raise impoundment levels and release flow and minimise upstream flooding.
This infrastructure has succeed in raising the storage but Lenthalls Dam has failed to mitigate upstream flood or to reliably release environmental flow for the Burrum River.
The Gates at Lenthalls Dam were installed by Wide Bay Water in december 2007 and failed to operate from January 2008 to todays date. Once repairs are complete estimated to be by next year - it is likely they may fail again.
You would imagine that Dam infrastructure in Australia is safe - however our experience on the Burrum River in QLD shows just how easy it is to become a fatality when Dam Infrastructure fails.
Gates constructed in December 2007 at Lenthalls Dam on the heavily impounded Burrum River failed to lower to release flood water as designed in Febuary 2008.
Wide Bay Water was the constructing authority and responsible for the design and operation of the dam gate infrastructure.
Our upstream farm house, where the tributaries join the dam proper was cut of when flood water continued to back up much higher than the constructing authority Wide Bay Water had predicted the water levels would ever go.
Three family members were stuck at our farm house. The emergency evacuation plan found in the Lenthalls Dam Emergency Action Plan called for evacuation after water levels reached RL26.91 - water levels reached 27.4 at the dam wall flowing over the blocked gates and backed up to RL28.5 at our house. No one evacuated the famuily members stranded in rising water.
No one from the constructing authority Wide Bay Water contacted us to undertake evacuation or explain the risk we faced due to Crest Gate Failure.
We believe the CEO Tim Waldron was overseas at conference when the event happed. The Operations manuals for the dam place responsibilty with the CEO as does the action plan. He has not been called to account for his failure to take responsible action to ensure an evacuation would occur in his abscence if required.
If the rain event had not stopped the three people cut off at our flood impacted farm house would have been inundated by metres of water.
We heard about the dam failure from other locals close to the dam wall who had heard the gates have failed - we now have full evidence to verify the dam gate failure.
What our situation highlights is that while most fatalities from failed dams and failed dam infrastructure have occurred in the countries of the south ie third world the west is not imune from dam infrastructure failure.
The capacity of first world dam operators to manage infrastructure/ risk and operational and human failure is not consistent.
We were very lucky the rain event that caused the flooding to back up over the failed dam gate, stopped.
It is however only a matter of time before a dam infrastructure failure in the first world causes fatalities.
We feel that maybe operational and human failures that have occured without fatality have been coverd up and are not generally reported or researched.
It is likely constructing authorities keep these instances quiet.
Please see the small news article that did report the event ( not comprehensively).
See the article:
Resident fears dam gates risk flooding
Posted Wed May 21, 2008 8:26am AEST
Updated Wed May 21, 2008 8:25am AEST
? Map: Hervey Bay 4655
A land-holder upstream of a major dam south-west of Hervey Bay says multi-million dollar barriers on the storage are broken, putting her family at risk of flooding.
Queensland Deputy Premier Paul Lucas will officially open the $16 million project at Lenthalls Dam, which is designed to more than double the storage?s capacity.
In what is claimed to be an Australian first, the two metre high crest gates sink when the dam reaches capacity to prevent flooding upstream and provide for environmental flows.
But Esther Allan says in February the gates jammed, causing water to back up onto her property.
?This is an extremely expensive piece of infrastructure. Ratepayers paid for this and their expectation would be that it would be operable,? she said.
?If it wasn?t, we need to know why - not only because our family?s safety was put at risk, but because ratepayers expect to get a result from the infrastructure they pay for.?
The local government corporation that runs Lenthalls Dam says the gates do not work, but it was monitoring the rising water.
Wide Bay Water general manager David Wiskar says adjustments were needed during the dam?s commissioning and are continuing.
?The gates were all needing some fine-tuning. At the moment we were able to complete that tuning on three of the gates,? he said.
?There?s two that remain to be done, but we?re waiting until the level in the dam falls to an adequate level to [do] those final two.?
The Lenthalls Dam Gates are still not fully operational today September 2008 and heading into the QLD summer flood season.
We can evidence what we are saying.
We dont have too much faith that any government authority will maintain our saftey, and our economy is currently healthy and well economically resourced.
Infrastructure once built needs to be operable ongoing through good economic times and bad.
The risks remain for all of those who live on dammed river systems.
Esther Allan
Posted by: Esther Allan at September 6, 2008 12:04 AM
