Basin Plan shortfall looms: Is it more buyouts or a backdown?

Failures at government level have allowed the Murray Darling Basin Plan to fall short on its recovery targets, potentially impacting basin communities.

Lose-lose: Irrigation communities face being drained of another 650GL of water in the wake of a 2024 reconciliation. Picture Yuri Kouzmin

What happens when the Murray Darling Basin Plan falls short on its water recovery targets?

Every Basin irrigator needs an answer to that question in the lead up to the Federal Election, as whoever wins government will oversee the reconciliation of the 605 gigalitre sustainable diversion limit adjustment mechanism in June 2024.

MDB Authority reports show seven key SDLAM projects are at “high or extreme risk” of failing to be delivered.

The NSW Government has already ruled out reconfiguring the Menindee Lakes to salvage 106GL towards that SDLAM 605GL target.

200 GL of water have gone nowhere.

Just what the shortfall will be on the day of reconciliation in June 2024 is unknown, but it’s expected at least 200GL of projects will have gone nowhere.

That means basin communities will be at least 200GL short of the 2750 Basin Plan target in 2024.

Add to that the 450GL “upwater” commitment to South Australia that former Labor Water Minister Tony Burke wrote into the plan back in 2012, of which less than 2GL has been delivered, and you soon realise what a whopping great hole we are facing.

Neither side of politics has made it clear how they will handle the reconciliation.

Many irrigators believe the best outcome would be to dump further water recovery, given 2106GL has already been recovered, and focus instead curbing cold water pollution, building fishways and removing redundant weirs to boost ecological outcomes.

NSW Irrigators Council chief executive Claire Miller said “ideally, the 2024 reconciliation will recognise SDLAM progress and measure success by actual environmental outcomes, rather than just whether or not water recovery targets and modelled flows are met”.

But shifting the focus from delivering big volumes of environmental water to ecological outcomes is a tough ask, given the Greens and South Australian politicians simply want to count gigalitres.

The worst case scenario is the government simply walks back into water markets.

The Coalition has set a 1500GL cap on buyouts, which means with 1228GL already purchased it still has room to buy another 272GL.

Federal Labor could go even further abandoning the 1500GL cap and plunging into the market to buy the SDLAM shortfall and even the 450GL upwater.

But the cost or would be high in an entitlement market that brokers say is already thin.

H2OX broker Lex Batters said irrigated agriculture was booming and the Commonwealth would have to offer a big premium to get high reliability water entitlements, which are currently averaging $7500 a megalitre in the southern basin.

“If there’s a sniff of government coming in the price is going to go up,” Mr Batters said. “They way they act in the market is so blunt they will push prices up 50 per cent or more.”

Even if prices peaked at $10,000/ML, the next Federal Government would face a bill of at least $4.5 billion just to buy the 450GL of upwater.

Such a buyout would be take more water out of the consumptive pool than the 328GL held by irrigators in Sunraysia’s Lower Murray Water, plus the 109GL held by South Australia’s Central Irrigation Trust.

National Irrigators Council chairman Jeremy Morton said buyouts were a “lose-lose” for everyone, not just in terms of economic impact, but simply based on the fact the extra water could not be used due to constraints on delivery.