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The virtual urban-rural water divide

(Illustration: Statue of King Midas who turned water to gold and nearly died of thirst, but later became a worshipper of Pan and nature.)

By Chris Harrison, BAppSc, GDC, October 2008

(This article was also published in Weekly Times Now. See also: Transcript of interview with Maude Barlow, Canadian water rights activist on Background Briefing) of 12 Oct 08.

Two months ago when Premier Brumby told a COAG meeting that there is very little water in the Murray Darling Basin he was stating the obvious. At the time he was justifying Victoria’s apparent reluctance to aid South Australia and provide more water for the Coorong.

This year for the first time in the state’s history the urban population of Melbourne will consume more water than is allocated to the farmlands of Goulburn irrigators. Water availability in the Goulburn Valley is at an all time record low.

The Government knows full well the acute shortage of water in the Murray Darling Basin but is still proceeding with the construction of the North South pipeline. This project has deservedly been widely condemned by grass roots populations, scientists, environmentalists, think tanks and the leaders of every non-labor political party.

The Victorian Government maintains the North South Pipeline is a vital component of Victoria’s emerging water grid. The use of the term “water grid” to describe the pipeline is a misnomer. The pipeline is a one way street. Water can flow in only one direction - from the Murray Darling Basin to Melbourne.

However, the term water grid is valid in the sense that the pipeline allows for the development of privatized water markets in the non-agricultural sector. The pipeline allows investors to purchase water in the Eildon Dam and sell it to Melbourne via the North South Pipeline, to Geelong via the Geelong interconnector and to Bendigo and Ballarat via the Goldfields Superpipe. This network of pipelines gives over 4 million people access to water from Eildon. This population base is expected to double over the next forty years.

The North South Pipeline is strategically important to the Government’s plans to allow urban populations to source their own water, in turn divesting them of a core governmental responsibility. If in the future your town needs water you will be told to go into the market and buy it. The Government will claim they have built the infrastructure to enable you to do this.

The failure to understand some basic principles of water has led the Victorian Government to drive the development of the water grid. This policy will place the state’s urban, environmental and agricultural sectors in competition and at risk.

The neo rationalist economic mantra of water must move to its highest value use has been a monumental failure. The idealism of this mantra has been replaced by the reality, water moves to the place where it can achieve the most financial and political leverage. The Goldfields Super Pipe has already shown us some of these failings, but first some definitions are in order.

When permanent water is traded, the buyer is only purchasing the right to use a specific volume of water on an annual basis. If the dams are empty the buyer has purchased air space in a dam or virtual water. When the dams are full the buyer will receive 100% of the quantity of water purchased, this is real water. The allocation percentage therefore relates directly to how full the dam is and at best it is 100% of what was purchased and at worst no water at all. High security water nearly always delivers 100% of the water purchased and conversely low security water hardly ever delivers the volume purchased. Victorian agriculture uses mainly high security water although there is real evidence that this is no longer the case with the onset of climate change. Over the last 100 years the Eildon dam has not delivered 100% allocation to irrigators on just five occasions, four of these occasions have been in the last six years. The Victorian water grid is based on water sourced from the Eildon dam. The latest connection is the Goldfields Superpipe supplying the rural cities of Bendigo and Ballarat.

The Goldfields Superpipe and associated infrastructure was built at a cost of more than $280 million but it remains essentially dry because the water purchased by water authorities has the same security as in the agricultural sector. The 9% allocation means that of the 20 billion litres of water purchased by Ballarat and Bendigo, less than 2 billion litres of water will be for use this year.

The Goldfields Superpipe experience represents a historic and fundamental change for urban authorities. For the first time urban water security is linked with rural water supply. Urban populations are suffering the same fate as irrigators and the environment.

The Victorian Government is creating water markets forcing rural and urban populations to compete for water. The outcome of this competition will be determined by the relative political and financial strength of each sector. Last year the temporary price of water hit a record high of $1,200 per ML when Adelaide entered the market. The market dramatically fell to just $400 per ML weeks after Adelaide and horticulturalists stopped buying. There was no doubt about the effect of competition.

The problem that we are all facing is that high security water has been very much less secure over the last twelve years. The editor of the Bendigo Weekly has suggested Bendigo purchase more water than is needed to improve the City’s water security. The futility of this approach parallels Penny Wong’s experience. The Federal Government has just spent $50 million for a cited 28 billion litres; just enough to fill several swimming pools of water was available to contribute to the Murray Darling Basin.

Ballarat and Bendigo are looking for 38 billion litres of water from the Superpipe. With water allocations from the Goulburn standing at 9% they will need to purchase 420 billion litres of water entitlement to receive their objective of 38 billion litres of water.

Of course in wetter times when less water is needed, hoarded “virtual” water materializes into “real” water. Perhaps this could be sold through the water market offsetting costs to urban water authorities and possibly government coffers. The temptation urban water authorities have to over secure supply will effectively lock away vast amounts of water from both irrigators and the environment.

The Goldfields Superpipe experience is a blue print for the North South Pipeline and Melbourne. Both the NS pipeline and the Goldfields Superpipe will be tied to irrigation water availability. With Bendigo its allocation percentage is the same as irrigators. With Melbourne, its allocation is tied to water savings generated from the irrigation areas. As Planning Minister Madden said two months ago if it is dry, the North South Pipeline may not have any water. Conditions have worsened since the Minister made that statement however, small amounts of water will only be available to North South pipeline in dry years regardless.

The coalition’s flip flop on using the North South Pipeline is somewhat academic as the Eildon Dam is predicted to take at least 7 years to recover should normal rainfall return. Sufficient water from savings generated by irrigation infrastructure modernization will not be achieved under the scenarios experienced for the past five years. Again the government is misleading the public by quoting amounts of virtual water or the amount of possible savings that can be generated when it is wet. The CSIRO predicts water availability to become scarcer in future and so Melbourne will be forced into the market and that will be to the detriment of urban communities, irrigators and the Murray Darling Basin.

The Victorian Government has failed to understand that cities along with irrigators and the environment need real water, not virtual water. The recent spat between Premier Brumby and Premier Rann, where South Australia was accused of doing little for the Murray River serves to illustrate this point well. Premier Brumby meritoriously claimed Victoria has contributed 120 billion litres to the Murray annually while South Australia has contributed nothing. When MDB CEO Wendy Craik was asked how much of this 120 billion litres was available for the Murray this year at last weeks Senate Committee hearing into the Coorong and lower lakes, she said “none”. The conditions have been so dry that the water only existed as virtual water. The reality is not a cup full of water of the annual 120 billion litres amount has ever been contributed to the Murray.

There you have it, the context is breathtaking.

Bendigo and Ballarat has 20 billion litres of virtual water for the Goldfields Superpipe, but less than 2 billion litres that they can actually drink. Bendigo is expected to harden its stage 4 water restrictions within weeks.

The Murray River has 120 billion litres of virtual water already surrendered from foodbowl irrigation districts (in the 80/20 deal) annually but not a glass full of real water has ever entered the system.

Victorian foodbowl irrigators have over 1,700 billion litres of virtual water but less than 180 billion litres that can actually be used to produce food.

Melbourne’s storages are at 34.5%, 611 billion litres of real water equivalent to nearly 1 ½ years usage, and yet Melbourne wishes to extract 75 billion litres of real water from irrigators and the environment through the North South Pipeline.

Premier Brumby’s promise of ‘NEW WATER’ for all is like the emperors new clothes, just not there.

Those who can’t see the Premiers new clothes are angry and their numbers are growing.

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It was interesting to note that Water Minister Peter Garrett approved the North South Pipeline [which permits Melbourne Water to extract 75 megalitres of Eildon Dam water a year] before the high security foodbowl irrigators were granted 4% of their allocation. It's worth remembering that 42% of Australia's food comes from the Murray Darling Basin. Irrigators pay for their water allocation irrespective of whether they get 100% of their allocation or they get nothing. Irrigators water bills can be $36,000 even when there is no water available. Melbourne Water will report on the amount of water extracted from the Murray Darling Basin after the water is taken.

Certainly is 'interesting'.
Care to expand on the reasons for this?

Sheila Newman, population sociologist
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Bendigo Weekly newpaper "Weekly Poll" is

Do you support the north-south pipeline?

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Total Votes: 111