Murray-Darling basin water buybacks costly for government and communities

Water market experts say prices have risen significantly since the early days of the Murray-Darling Basin Plan and warned using further buybacks to make up the shortfall would cost billions.

Environment Minister Tanya Plibersek will negotiate with the states to extend Murray-Darling Basin Plan deadlines. Picture: Nikki Davis-Jones

Water market experts say prices have risen by up to five times since the early days of the ­Murray-Darling Basin Plan and using buybacks to make up the shortfall will cost billions.

The warning comes after the Murray-Darling Basin Authority confirmed the mid-2024 deadline to deliver the $13bn plan was not achievable, forcing the federal government to negotiate extended deadlines with the states.

Water Minister Tanya Plibersek has not ruled out using buybacks to recover the extra 450GL of water promised for the environment under the plan.

The Greens and environmental organisations have urged her to pursue further buybacks, despite opposition from the states.

The 450GL was the sweetener to get South Australia to sign up to the plan but was supposed to be delivered through water efficiency projects and under the condition it did not cause detriment to the economies of basin communities.

Only 3 per cent of the 450GL has been recovered.

Water expert and lawyer Matthew Donovan said if Ms Plibersek chose to recover the 450GL through buybacks, the government would have a hard time finding farmers willing to sell water entitlements.

He said the price of water in some basin districts had gone from $1800 to $2000 per ML in 2018 to $10,000 now.

“If a client came to me looking for 2000ML, I’d need at least two years to find it and there will be no negotiating on price if you want to get it,” Mr Donovan said.

Another water market expert, who asked not to be named, said the market had tightened considerably since previous buybacks. “Remaining entitlements will be much harder to shake out,” the expert said.

“I wouldn’t say they can’t do it, there’s always a price, but it would be very difficult and costly.”

Victoria has categorically said it would not support further water buybacks.

NSW Water Minister Rose Jackson said any further water recovery by the federal government should “prioritise investment in infrastructure and projects that deliver environmental outcomes in a way that avoids negative impacts on communities”.

This includes ensuring contributions towards the 450GL of extra environmental water is done through efficiency measure projects, Ms Rose said.

Former Coalition water minister Keith Pitt said investing in water-saving infrastructure was a better way to spend money than buybacks.

“The difference between Labor and the Coalition on the Murray-Darling Basin is always the same: Labor does damage to local economies by devastating buybacks while the Coalition looks to deliver critical infrastructure that will last for decades and provide water use efficiency and savings and still deliver environmental outcomes,” Mr Pitt said.