From:Jon Nevill

Principal, OnlyOnePlanet Consulting

PO Box 106, Hampton Victoria 3188

Phone 0422 926 515

Email

To:Project Manager - Green Paper

Water Sector Development Group

Department of Sustainability and Environment

PO Box 500, East Melbourne, Victoria 3002

Date:30 November 2003.

Submission on the Green Paper: Securing Our Water Future.

CONTENTS

Submission on the Green Paper: Securing Our Water Future.

Preamble:

Introduction:

Place an adequate money value on the resource:

Apply the precautionary principle when faced with uncertainty:

Apply long-term strategic frameworks to manage the cumulative effects of water infrastructure development;

Carefully plan and apply frameworks and programs to give effect to modern management thinking.

Attachment One: Urgent need for a rigorous approach to strategic catchment planning within Australia’s natural resource management framework.

Abstract

Summary

Introduction

Failure of existing strategic planning frameworks

The tragedy of the commons

The tyranny of small decisions

Current Australian natural resource management framework

The need for new directions in strategic planning

The CoAG water reform agenda and the National Water Initiative

Adaptive management applied to NRM planning

Quality assurance: auditing and enforcing implementation

Natural resource accounting:

Need for Statewide inventories of freshwater ecosystems

An example: capping water extraction

Conclusions and recommendations

References:

Attachment Two: Model legislative framework

Foundation principles for the framework

The fourteen elements of the model framework

Economic elements of the COAG agenda and the model framework

Preamble:

Unfortunately the pressure of other projects has prevented me examining the detail of the Green Paper. I have, however, been able to examine the Fact Sheets, and where appropriate glance at the Green Paper itself. The Victorian Government is to be congratulated for the development of a detailed and in some ways far-sighted document. However, I have several points I wish to make concerning the proposed strategies.

Introduction:

As the Green Paper states, "it is becoming increasingly clear that our current water use is not sustainable"..."One third of Victoria’s rivers are in poor or very poor condition and half our native species of freshwater fish are threatened. The poor health of our rivers has contributed to significant losses of fish, frogs, birds and plants. Of the 40 species of native fish in Victoria, at least one is extinct, and 18 are now threatened. This includes the iconic Murray Cod. Poor river health threatens agriculture and tourism as well as the environment. This is clearly illustrated by the negative impacts of algal blooms in the Gippsland Lakes on the local economy and on recreational users of the Lakes." (GP p.12).

It sounds as though we are in a serious predicament, and we are. What went wrong? Looking back with the benefit of hindsight, perhaps the State Government, over the years and decades, should have employed competent public servants to develop and implement policies to nurture the water resource. Perhaps these people should have sponsored, examined and employed the best available science. Perhaps parliamentarians and ministers should have sought the best legal and managerial advice when devising statutory and policy frameworks for the management of the water resource…

Wait a minute! Isn't this exactly what the government tried to do? So what did go wrong?

The point of this approach is to underline the fact that the historic failures which we inherit today were the outcome of the best intentions and the most competant resources available. We need to look ‘below the surface’ for the underlying institutional reasons for the problems which we now face.

I believe four key elements 'went wrong'. And, even though the Green Paper's recommendations are heading in the right direction, these four key mistakes still pervade the Paper and its recommendations. These four key mistakes are that government policies failed, and under the Paper's recommendations will still fail to:

  • place an adequate money value on the resource;
  • firmly apply the precautionary principle when faced with uncertainty;
  • apply long-term strategic frameworks to manage the cumulative effects of water infrastructure development; and
  • carefully plan and apply frameworks and programs to give effect to modern management thinking, especially adaptive management principles.

Lack of time prevents me examining the detail of the Green Paper and applying these four elements to every aspect of the Paper. However I would be pleased to meet with representatives of the Water Sector Development Group to discuss detailed issues, if requested to do so. The discussion below is indicative rather then comprehensive.

Place an adequate money value on the resource:

On page 93 of the Green Paper, we read:

"Water is a precious resource. Yet traditionally, water as a resource has been free and water users have only been required to pay for the cost of delivery. Water is an important element of our ecosystems that provide a range of valuable services to the community including water filtration, maintenance of soil fertility and cultural benefits. Taking water from the environment diminishes the ability to provide these services. Hence, not only does extraction of water create costs in terms of impacts on environmental health, it can also be said to impose cost in terms of its impact on ecosystem services."

While the recommendations of the Green Paper are moving clearly towards a pricing structure which places a money figure on the resource which reflects these 'missing' values and other externalities, this is simply not nearly enough in the circumstances. And those circumstances are that we are not facing a future where we merely need to tweak the system to pull it into line. The system is way out of line, and we must find the financial resources to pull it back. Quickly. Not over ten or twenty years, but over the life of the next State government. We need to fix the water sector in the way Jeff Kennett fixed Victorian local government - quickly and decisively. And it will not mean loosing the next election; voters are already aware that the issues are serious, and that future prosperity, and the heritage of healthy rivers, is at stake. Let that be your legacy to future generations, and to the rivers and streams of Victoria.

Certainly, money is needed to manage both internal and external water costs. However the first reality is that many of our rivers and streams are seriously degraded. We need to fix that, and it's going to cost money. Big money. A lot of that money will be needed simply to buy back water for the environment. The issue is – where to get that money from.

The second reality is that, over many decades, rural landholders have been encouraged by the Victorian State government and its employees to invest in farm infrastructure to use water. Water that we now see really isn't there. Many of the uses to which water has been put now appear uneconomic (eg: irrigated pasture for dairy produce). Clearly we need some 'readjustment'. Industry 'restructuring' is called for. OK. But who pays?

Farmers relied on State government advice, which we now believe was bad advice. The government needs to face the issue of compensation squarely and honestly. Information presented in the Green paper falls short of full disclosure. I argue that the government has a duty of care to rural landholders placed in difficult financial positions to be honest in its planning, and generous in its compensation programs.

Dr John Russell, Victorian Catchment Management Council representative, has calculated in his Green Paper submission that compensation for just one Victorian region (the Goulburn-Murray catchment region) could total $m 350, more that the entire budget of the proposed Water Trust ($m 320).

On Fact Sheet 2, we find that: "where rivers and aquifers have been over-allocated, the environmental reserve will be established recognising the rights of existing entitlement holders". This is double-speak for: "where rivers and aquifers have been over-allocated because we made mistakes in determining water allocations, we don't think we can afford to buy back the necessary water to meet a scientifically-justified environmental reserve, so we wont". The point I wish to make is that we can afford it, so let's do it. For the sake of the rivers and future generations, we have to do it.

The same point can be made about the statement that (Fact Sheet 6) "The Government is proposing to meet agreed environmental flows in 80% of sttreamflow management plans within 10 years". The doublespeak leaves out the obvious "because we can't afford to meet environmetnal requirements quicker than that". Again, my point is that we have to; delaying will only increase the environmental damage.

These two 'realities' (river degradation and farmer compensation) are urgent temporary situations which have arisen from State government mis-management of the water resource. We need a bowl of money right now, which we will not need in an on-going way into the future. But how to find it?

I recommend that a water pricing system be established to (a) charge a 'royalty'[1] for water which will cover both internal and external ongoing costs, and (b) add an additional temporary 'tax' which will generate enough income over say a five year period to pay all foreseeable compensation, as well as institute major river rehabilitation programs, including the buyback of environmental water.

Apply the precautionary principle when faced with uncertainty:

The Commonwealth and all State governments have endorsed the use of the precautionary principle[2]. It also forms a key aspect of Australia's obligations under a variety of international conventions and treaties[3].

There are many aspects about the management of the water industry which are characterised by uncertainty. For example:

how do you calculate environmental externalities dependent on values far into the future? Conventional economics count these values as effectively zero. The calculation of externalities provides ample opportunity to short-change future generations in the name of assisting present-day irrigators;

how do you calculate environmental flows needed to sustain very long term geomorphological processes? Like the major floods which maintain deep pools and channels, home for many aquatic plants and animals, especially in times of drought;

how do you determine the water needs of groundwater dependant ecosystems? How do you determine the ecological effects of a one-in-twenty year drought when irrigators are permitted a pre-determined draw-down in groundwater level?

In Fact Sheet 2, we find the statement:

"Where rivers and aquifers are currently not over-allocated, the Government will set the environmental reserve using a precautionary approach base upon river health requirements."…. "A parallel approach is propose for the management of groundwater. Preliminary estimates of the sustainable yield of aquifers have been developed, called 'permissible annual volumes'. New allocations will be allowed only up to 70% of these, unless a groundwater management plan has been developed involving a more detailed assessment of the sustainable yield".

This approach is neither parallel or precautionary. The inclusion of rhetoric which makes no sense undermines the credibility of the entire Green Paper. If the streamflow environmental reserve is based on river health requirements, a parallel approach would see the groundwater 'environmental reserve' based on the health of groundwater dependent ecosystems. The fact of the matter is that information on the needs of groundwater dependent ecosystems is not readily available in many situations. A precautionary approach would see caps placed on further groundwater extraction until that information was obtained.

Apply long-term strategic frameworks to manage the cumulative effects of water infrastructure development;

Fact Sheet 2 states: "The Green Paper recognises that catchments in the north of the State have been capped since 1995. However, the Government now proposes to cap seven river basins in the south of the State." By implication, southern catchments other than the seven in question will not be capped. This is in spite of previous statements highlighting the fact that catchment water resources are limited, and continually increasing demands cannot be met. The Green Paper quotes research by the CSIRO (p.12) indicating that rainfall may be in a long-term decline.

If there will be declining surface runoff due in part to climate change, increasing extraction of both surface and groundwater will ultimately lead to a 'squeeze' between the environmental needs of river and groundwater dependent ecosystems, and extractive use. Leaving extraction caps until catchments approach a crisis situation is a recipe for disaster. And extraction caps only affects one part of the water cycle. Comprehensive catchment caps must be put in place well ahead of crisis situation.

Cumulative effects must be clearly identified and strategically addressed. Attachment One examines this issue in more detail. To summarise the arguments developed there, five key elements are needed to manage the cumulative effects of water infrastructure development:

  • the need to establish strategic development caps on a catchment basis must be formally recognised in water resource legislation, and appropriate procedures must be established to set and implement the caps in consultation with stakeholders;
  • caps must be comprehensive and inclusive, stakeholder consultation programs must establish caps covering: water extraction from both surface and groundwaters; the construction of farm dams (number and volume), agricultural drains, impediments to fish passage, and levee banks; the development of irrigated pasture; the clearance of deep-rooted vegetation, and activities (eg: stock access) capable of degrading riparian vegetation;
  • adaptive management principles must be rigorously incorporated within catchment planning processes;
  • the caps on development must be set well ahead of the point where the catchment enters a stressed or crisis situation; and
  • last but not least, the caps must be set in a precautionary way.

These issues are discussed in detail in Attachment One.

Fact Sheet 3 introduces the idea of compulsory water audits to industry as a way of increasing water use efficiency. We need to move further, faster. Natural resource accounting needs to be introduced quickly but smoothly. All those (whether in agriculture or industry) using considerable renewable resources like water and soil need to get used to the idea of annual earth accounts, prepared just as you would prepare an annual tax return. This issue is also discussed in Attachment One.

Carefully plan and apply frameworks and programs to give effect to modern management thinking.

The Green Paper recommends certain amendments to the Water Act (see for example Fact Sheet 8). While the Water Act was cutting edge legislation at the time it was enacted, attempts to bring it up to scratch to meet CoAG requirements have, in my view, been unsuccessful. While Victoria is blessed with a statutory catchment management framework, it is held back by a now archaic Water Act.

Victoria's water and catchment legislation should be subjected to an independent review, chaired by a water management expert and assisted by expert lawyers. This review should be guided by key concepts in ecological thinking, good governance, and management systems:

Ecological systems thinking for economic success:

  • economic progress must occur within ecological and socio-cultural limits;
  • economic, social and ecological impacts must be viewed within the long term;
  • economic progress works in a climate of ecological uncertainty, where there are no guarantees and the harvesting regime must work with natural cycles of plenty and paucity of natural resources;
  • the best insurance against the uncertainty in natural systems it to develop understanding and conceptual frameworks about how they actually work;
  • economic progress works with the constancy of ecological and social change, and makes innovation integral to its modus operandi;
  • economic progress works on the basis of no net loss of ecological assets – of give and take, and where there is taking there is also the need to give back;
  • impactors, and beneficiaries of the actions causing those impacts, must pay the full cost including estimates of costs to ecosystem services
  • economic progress goes to those who compete best on improving productivity while providing for ecological protection and sustainable management;
  • short-term gains must be weighed up from a long-term perspective - sustainability must not be prejudiced by short-term gains achieved at the expense of declining ecological and social services; and
  • ecological thinking is about protection of economic interests in the long term in light of the limitations of market forces in protecting future values. The 'blindness' of the market can be seen in two examples - oil prices are set by the availability of oil now and not its scarcity in future; the price paid for fish does not include breeding stocks or habitat to ensure future supplies of fish. In the recent past, the price of irrigation water has been so low (virtually zero) as to encourage waste and inappropriate use of water on unsuitable soils.

Good governance principles:

  • Participation: the process should include adequate opportunity for participation of all stakeholders.
  • Transparency: assessment and approvals should be conducted through an established process. All elements of the process should be clearly understood by all participants.
  • Certainty: the process should have clear objectives, be consistent, and be conducted within agreed time-frames.
  • Accountability: decision makers within government need to be able to provide clear and detailed reasons for their decisions to all stakeholders. Appeal provisions to an independent authority should exist. The infrastructure assessment process should cover the life of the proposal, through project design, construction, operation and finally decommissioning: project operators must be accountable for commitments made during project approval.
  • Integrity: decisions need to be based on the best available information, and all relevant factors need to be taken into account by decision-makers. Where impacts are uncertain, outcomes should rely on sound risk assessment and management.
  • Cost-effectiveness: the process should meet its objectives while imposing the least cost to participants.
  • Flexibility: the process should be able to accommodate proposals varying in type, scope of impact, and complexity. Flexibility is desirable in terms of the form of assessment and management processes, issues to be addressed, process time-frames, and degree of public participation. Also processes for evaluating options for achieving an end are to be available.
  • Practicality: the process should recognise community concerns, commercial realities, best practice technology, and scientific uncertainties.

Management systems thinking:

  • Commitment to the steps of adaptive management systems - plan, do, monitor, report, review, revise;
  • the use of the adaptive management process to achieve continuous improvement;
  • producer responsibility: responsibilities remain, although attenuated, for indirect and long-term effects;
  • clear delegation of powers and responsibilities;
  • a constant process of assessing new opportunities and threats external to the operation, and strengths and weaknesses internal to the operation;
  • working within a time frame, against targets, and reporting on their achievement;
  • strategic assessment of major directions; strategic planning over complex issues;
  • coordination of all the critical players, and clear definition of their roles and responsibilities for the overall outcomes;
  • must have viable systems of monitoring and review to guide management decisions for example state of environment reporting in the case of environment.

These three system approaches together with the more traditional contents of legislation (prohibitions, permits, management structures, infringements and penalties) underpin the logic of the model framework.