Dr Jeff Connor at the Landscape Science Cluster Seminar, May 2009

Optimisation as tool to explore climate change adaptation possibilitiesDr. Jeffery Connor, Stream Leader Water Policy Options Assessment

Climate Adaptation as an Opportunity

SA Premier’s Science Fund Project: Climate Change, Communities and Environment

• identify risks from climate change, • identify adaptation strategies and policy options to support

resource management agencies. • Use multi-objective optimisation to identify regional adaptation

possibilities including: • new combinations of environment, land (water) use,

• social and economic factors and policies that facilitate adaptation


Climate challenges Climate impacts on regional water supply and adaptation challenges

21

Warragamba + 3 Nepean Dams (Inflows & annual rainfall)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

1910 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Year

Inflo

w GL

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Rainfa

ll (m

m)

892 GL pa

2,027 GL pa

572 GL pa

780 mm pa 907 mm pa 681 mm pa

Sydney

Less rain means much less water!

- 25%

- 75%

Annual rainfall

Storage


Total River Murray System Inflows (including Darling River)with post 1938 sequence imposed from 2002

0

5 000

10 000

15 000

20 000

25 000

1892 1902 1912 1922 1932 1942 1952 1962 1972 1982 1992 2002 2012 2022

Ann

ual In

flow

<= 25

000 G

L (GL

)

Re-live from 1938

2014


Long Run Climate Change Adaptation Evaluatoin

Mild Moderate Severe

Temperature Change (°C)1 2 4

Rainfall Change (%)-5 -15 -25

Runoff Change (%)-13 -38 -63


Climate impacts on regional water supply and adaptation challenges

MDBC Active Storage : June 2000 to February 2008

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000J

un

/20

00

Se

p/2

00

0

De

c/2

00

0

Ma

r/2

00

1

Ju

n/2

00

1

Se

p/2

00

1

De

c/2

00

1

Ma

r/2

00

2

Ju

n/2

00

2

Se

p/2

00

2

De

c/2

00

2

Ma

r/2

00

3

Ju

n/2

00

3

Se

p/2

00

3

De

c/2

00

3

Ma

r/2

00

4

Ju

n/2

00

4

Se

p/2

00

4

De

c/2

00

4

Ma

r/2

00

5

Ju

n/2

00

5

Se

p/2

00

5

De

c/2

00

5

Ma

r/2

00

6

Ju

n/2

00

6

Se

p/2

00

6

De

c/2

00

6

Ma

r/2

00

7

Ju

n/2

00

7

Se

p/2

00

7

De

c/2

00

7

Ma

r/2

00

8

En

d o

f M

on

th S

tora

ge

(G

L)

Active Storage

Long Term Average Active Storage

Maximum Active Storage

Get data

Murray Darling Basin Commission 2008

Back to

empty

Inflows have dropped 68% but use has only dropped 12


Growing “unlicensed” water taking

0GL 1,200GL 2,400GL 3,600GL


Reforestation

0

200

400

600

800

1000

1200

1400

1600

0 500 1000 1500 2000 2500 3000

Annual Rainfall (mm)

An

nu

al E

vap

otr

ansp

irat

ion

(m

m)

Forest

Mixed veg.

Pasture

unknown

Schrieber (forest)

Schrieber (grass)


Challenges of South Australia

• Less, more saline and more variable water supply for irrigation

• Less reliable and lower quality water supply for “critical human needs”

• A suffering water dependent eco-system

Water allocation under climate changein the South Australian Lower Murray

020

4060

80100

120

0 10 40 80 90 100

years in 100

wa

ter

allo

ca

tio

n (

% o

f e

nti

tle

me

nt) baseline

mild

moderate

severe


Three adaptation challenges – four optimisation/simulation models to help

Challenges

1. How can the irrigation sector adapt to less, more variable and more saline water supply?

2. How should SA invest in additional supply and conservation to meet critical human needs?

3. How should very little water for the environment be shared across environmental assets and time for best outcomes?

Models

1. Two stage model of irrigation sector adaptation

2. Optimal land and water use reconfiguration model

3. Portfolio analysis of supply augmentation options

4. Environmental “triage” model (stochastic dynamic optimisation)


Irrigation sector adaptation model 1


Irrigation sector adaptation model 1

Adaptation possibilities modelled• Long-run

• Reduce irrigated area,

• choose new crop mix,

• switch irrigation (12 technology/management options)

• Short-run• Deficit irrigate (provide less than full water requirement, accept reduced

yield) – quadratic crop water production function

• Fallow area with irrigation capital in low allocation state of nature (provide no water, or maintenance water)

• Water trade – included in some version – exogenous price varying with state of water allocation based on Brennan regression

• Future yield loss for heavy deficit irrigation of perenials


Reduced water allocation - Short-run analysis of adaptation and economic impactPercentage of potential yield as result of deficit irrigation

(without ability to buy water into region)Sunraysia irrigation region, Victoria

0%10%20%30%40%50%60%70%80%90%

100%

Allocation (%)

% of full water requirement % of potential yield

Victoria - Short Run(Without potential to buy water into region)

-800

-600

-400

-200

0

200

400

600

800

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Allocation (%)

$M

Revenue Fixed Cost Variable Cost Water Gross Margin Cost Profit

•Regional irrigation could be managed reasonably resiliently in the short-run with allocations of as little as 60-70%

•For allocations less than 30% management for economic resilience is challenging


Longer run challenge – a patchwork of abandoned and still irrigated farms, underutilised infrastructure

• Case study – Torrumbarry Irrigation Area, Victoria• Key characteristics

• Water trading – permanent and temporary

• Significant environmental assets – and threats

• Salinity contribution to Murray

• Relatively close to Melbourne – amenity and lifestyle

• Large investment is modernisation of water delivery infrastructure assets

• Water delivery is via a system of trunks, carriers and pods• Pods - Goulburn-Murray Water decision units

• spatially contiguous grouping of properties serviced by a trunk and several carriers


Adaptation as an opportunity for regional landscape & economy renewal

• Consider transformational adaptation:• Rather than, starting from where as result of historical

circumstance and considering marginal change (e.g. irrigation efficiency investments),

• How would we optimally configure irrigation, landscape, regional economies in the MDB?

• Starting from scratch, with a blank slate

• Considering modern technologies, preferences, environmental and

• Market conditions: where is the demand for private and public goods?


Environmental assets and threats

• Regional asset, the River Murray, local impact – Bar Creek, one of the largest sources of river salt load


Regional development assets in Torrumbarry

• Land suitability for irrigation

• Environmental and Potential Amenity Living:

• Major Waterbodies

• Native Vegetation

• Residential Areas

• 500m Buffer


Understanding the potential of a transformed landscape: An optimal reconfiguration

• Hierarchical sorting rules


An optimal reconfiguration


Science / engagement challenges

• The community has specialised knowledge helpful in adaptation:

• This is unevenly spread in community (while some are ahead of the curve, some are in denial)

• Not typically well understood by scientists (modelled adaptation often based on rear view mirror perspective)

• Scientists have specialised knowledge helpful for adaptation:• Often not shared with community in way that is helpful

• Need for interactive process• canvassing of community adaptation thinking, • Updating science• sharing specialised science insights, • Updated community thinking, adapting


Portfolio analysis for water supply augmentation

Min ∑ CiXi

subject to ∑ SiXi + σi ≥ αR

Xi options for Urban water supply

X1: Pumping from the Murray, X2: Mount Lofty Ranges, X3: Recycled water, X4: Desalination plants, X5: Groundwater, X6: Storm/rain water tanks, X7 household conservation, X8: Water restrictions policy

• Ci: Cost/investment required per unit Xi• Si: The expected annual level of water supply per unit investment in

option i (ML)

• σi2: The variance of annual level of water supply under option i

• σij: The covariance of annual level of water supply between options

• R: Minimum required water for the city of Adelaide; α reliability %


Portfolio analysis of water supply options

Issues to be investigated• Water supply options unlike financial assets are illiquid and not

continuously divisible • Incorporating penalties for interruptions of water supply, irreversible

environmental cost/externalities, high sunk costs, and stranded assets into cost function

• The constraint function (meeting the minimum required water for Adelaide)/biophysical constraints (incorporate additional supply into existing grid – distribution - physical equipments such as pipes and institutional constraints (regulations)

• The probability distribution function of each option’s annual water supply level

• Correlations of water supply level across options (water supply levels commonly determined by the hydrological cycle)

• Lumpy costs of investing in options.• Incentives for utilities • Behavioural, transactions costs, risks, scale costs with disperse

household conservation


Optimisation to support environmental water management

• Problem• Too little water to protect all assets (low starting storage levels), • Uncertain future inflows• Assets need inundation of certain durations, return intervals• Apply more water to more assets now, chance insufficient water to for

timely return interval? Or sacrifice some assets now, save some water to ensure capacity to return later

• In recognition that:• Infrastructure (flow control structure) investments can enhance

effectiveness of limited water• Infrastructure will need to operate in conjunction with flow management

• Infrastructure investments and management influence regional socio-economic values as well as ecological outcomes

• Conditions of very low inflow and very little water available for the environment may persist for some time


The approach

Hydrology:•Inflows•Inundation potential•given infrastructure,flow management

Ecological responses:•Multiple responses to•Timing, duration, return

Socio-economics:•Irrigation,•Recreation, Amenity•Clean water, Cultural

Integration:Test investment, management options

& technical assumptions


Model Structure


Challenges

Stochastic Dynamic Programming Problem –

Find highest utility (wieghted multiple environmental outcome score) for possible amounts, timings, locations of environmental watering

The optimisation technique required – SDP:• has dimensionality issues (can’t solve very big problems)• doesn’t offer intuitive management rules for practioners

Solutions – • simulation to find “heuristics” that give near optimal solutions,• Agent based modelling?


Assets public and private benefitsAsset Public or private benefits from change it asset use

Soils Highly suited to irrigation

Private benefit to irrigator as better land becomes more fully utilised for irrigation

Currently irrigated areas creating large River Murray salt loads

Public salinity benefit to down stream irrigators, municipal industrial water users as land becomes less utilised for irrigation

Private demand for land for dryland farming

High environmental and amenity value land along water courses, wetlands

Public benefit from enhanced environmental condition, recreation opportunities if land is retired from irrigation converted to reserves

Private benefit if residential development is allowed on contiguous land

Private demand for carbon credits if land is revegetated

Water conveyance infrastructure

Private benefit to irrigators and supply firms from less cost to supply, when land use change allows system rationalisation


Calculating Benefits

• Need to consider:• Private benefits

• Increased value of agricultural production; Water deliver cost savings;

• Public benefits:• Salinity reduction; Carbon sequestration

• For comparison sake we quantified benefits under four potential outcomes:

• Random, non-targeted purchase of water• Targeted purchase for greatest salinity benefits• Targeted purchase for reconfiguration and modernisation benefits:

• Reconfigure red and orange pods, and new irrigation development in green pods:

• New development occurs in similar proportions to current (lower bound)

• Complete overhaul with highest value agriculture on most suitable soils (upper bound)

• We calculate benefits under two water sharing rules• 100% water purchased returned to the environment• 50% environment; 50% new irrigation development



Non-targeted Tender

Salinity-targeted

Targeted Tender(Lower Bound)

Targeted Tender(Upper Bound)

50/50 New Irrigation/

Environment

100% for the Environment


Environment


(40% less water)

Value of Irrigated Ag. $-11.9 $-11.2 $7.3 $-10.5 $66.5 $56.6

Value of Dryland Ag $4.7 $3.9 $2.8 $4.1 $5.2 $6.5

Sale of Carbon Credits

$0 $0 $2.5 $2.5 $2.5 $2.5

Downstream Salinity Cost Avoided

$1.7 $3.7 $1.4 $1.6 $1.4 $1.6

Water Delivery Cost Savings

$0 $0 $3.8 $3.8 $3.8 $3.8

Total Benefits $-5.5 $-3.6 $17.8 $1.5 $79.4 $71.0

Water for Environment (GL)

120 120 60 120 60 120

ECs Avoided 11.1 24.5 9.5 10.4 9.5 10.4

Carbon Sequestered (million tones CO2-e) 0 0 8.8 8.8 8.8 8.8


Water Allocation implications


020

4060

80100

120

0 10 40 80 90 100

years in 100

wa

ter

allo

ca

tio

n (

% o

f e

nti

tle

me

nt) baseline

mild

moderate

severe

•Greater climate change brings greater water allocation variability and more years with zero water allocation


Floodplain – lack of inundation is greatest risk to floodplain health


The Murray Darling Basin

1/7 of area of Australia

½ of value of crop production

80% of irrigation

Highly allocated – 27% of natural flow

Diversions capped in 1994

Water trade allowed since 1987

Increasing liberalised andActive temporary & Permanent markets


Talk overview

• The current MDB landscape / economy as a relic of history• New threats, new values, and new opportunities• Thinking transformation not marginal change• An illustrative example - The transformation opportunity in the

Torrumbarry irrigation area• What role for markets?, what role for government?• Recommendations to realise the opportunity for

transformational change• A few more projects

• Impacts of climate change on irrigated agriculture – with adaptation including water trade

• The economic of acquiring environmental flows

• The economics of controlling salinity


Expansionary Phase of MDB water economy 1900 – 1980 (Randall, 1981; Watson and Rose, 1980)

• Focus on regional development – irrigation as way to promote rural population and viable country towns in Murray and Murrumbidgee Valleys

• State authorities subsidised costs of water infrastructure development, delivery, O&M in government sponsored schemes

• farm sizes determined on the basis of “home maintenance area” concept

• Schemes chosen primarily based on engineering feasibility• Little input from economics in assessment of irrigation projects• Few pressing externalities, or policies to address externalities


Maturing Phase of MDB water economy 1980 – ongoing

• increasing economics in assessment of irrigation projects • Davidson, 1969 – Australia Wet or Dry? The Physical and

Economic Limits to Expansion of Irrigation

• Increasing privatisation of water infrastructure • Increasingly pressing externalities (rising water tables, land

salinisation, saline return flow, water pollution, stressed floodplain and estuarine ecosystems)

• Increasing competition among competing demands for water


Maturing Phase of MDB water economy 1980 – ongoing

• Increasing policies to address competing demands for water• MDBC salinity agreements and investments to mitigate salinity

• Cap on diversions 1994

• Movement to free water trade after 1994

• Living Murray commitment to increase environmental flow

• Current Commonwealth plans for infrastructure investment and buying water

• Victorian water delivery infrastructure investment, rationalisation program


The ongoing and unfinished agenda of policy for a maturing water economy

• Musgrave (2008) suggests two fundamental reasons that Australia is struggling with adequate policy for a maturing water economy

• The riparian doctrine basis of Australian water law• Unlike the US prior appropriations (first in time, first in right) doctrine, • no fundamental consideration of third party impacts

• Extreme variability of water of Australian rainfall• For a given level of water supply security, Australian dam capacities must

twice the world mean, and six times the European average• Allocations available for consumptive use and environment are highly

variable

• Diversions not yet effectively capped• Trade in diversion rather than consumptive use – increasing

consumptive use, reducing return flow• Reforestation, farm dams• Uncapped conjunctive groundwater use


The genesis of today’s crisis: growing diversions, and extreme variability

Extreme variability (repeated drought)

Growing diversion, even with cap


Floodplain health impacts of climate change

Area at risk from lack of inundation 1964

Area at risk from lack of inundation 2007


Floodplain health – current drainage management policy is reducing floodplain watertable risk, climate change will reduce this risk further

2050 Lindsay Point Floodplain high watertable floodplain riskHistoric drainage rates Current drainage rates Moderate Climate change


Lower Murray Futures

• 4 climate scenarios - • 1975-2000 conditions

• mild warming

• moderate warming

• severe warming

• 3 policy options – • irrigation efficiency,

• irrigation location,

• floodplain protection


Transdisciplinary and Collaborative Structure: River Corridor


Water Allocation implications


020

4060

80100

120

0 10 40 80 90 100

years in 100

wa

ter

allo

ca

tio

n (

% o

f e

nti

tle

me

nt) baseline

mild

moderate

severe

•Greater climate change brings greater water allocation variability and more years with zero water allocation


Adaptation model

Adaptation possibilities modelled• Long-run

• Reduce irrigated area,

• choose new crop mix,

• switch irrigation (12 technology/management options)

• Short-run• Deficit irrigate (provide less than full water requirement, accept reduced

yield) – quadratic crop water production function

• Fallow area with irrigation capital in low allocation state of nature (provide no water, or maintenance water)

• Water trade – included in some version – exogenous price varying with state of water allocation based on Brennan regression

• Future yield loss for heavy deficit irrigation of perenials


Reduced water allocation - Short-run analysis of adaptation and economic impactPercentage of potential yield as result of deficit irrigation

(without ability to buy water into region)Sunraysia irrigation region, Victoria

0%10%20%30%40%50%60%70%80%90%

100%

Allocation (%)

% of full water requirement % of potential yield

Victoria - Short Run(Without potential to buy water into region)

-800

-600

-400

-200

0

200

400

600

800

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Allocation (%)

$M

Revenue Fixed Cost Variable Cost Water Gross Margin Cost Profit

•Regional irrigation could be managed reasonably resiliently in the short-run with allocations of as little as 60-70%

•For allocations less than 30% management for economic resilience is challenging


Long-run analysis of less water

Revenue, costs and profit in response to climate change (without ability to buy water into region), South Australian Riverland

0

100

200

300

400

500

600

700

800

$M

revenue fixed irrigation cost other fixed cost water cost

irr labor cost irr power cost other variable cost irrigation income

Baseline Mild Climate Change

Moderate Climate Change

Severe Climate Change

•Significant economic impact likely in long-run•Reduced irrigation and changed irrigation management


Long-run analysis of less water

Area irrigated and fallowed in response to different climate change scenarios in the South Australian Riverland

05000

1000015000200002500030000350004000045000

Baseline

Mild C

C

Modera

te

CC

Severe

CC

Mild C

C

Modera

te

CC

Severe

CC

Irrigated area (ha) Fallow area (ha)

Water may be bought into region Water may not be bought into region

•Less long-run impact with water imports and with less allocation variability•Long-run impacts less than in short-run after adaptation


Adaptation

• To increased water scarcity…

• Water markets can reduce impacts

• Higher commodity prices likely and offsetting irrigation sector economic impact

-6000

-5000

-4000

-3000

-2000

-1000

0

Em

plo

ym

en

t

Victoria South Australia

mild climate change

moderate climate change


(with water purchase)

-200

-150

-100

-50

0

50

100

150

200

$M


mild climate change



(with water purchase)


Implication at the regional level – a need to adapt

• At Basin Level• Less water than is allocated in total for the Basin means less diversion than

in recent past is possible on average in long-run• This is true with or without Basin policy to reduce entitlement, and• Even without climate change induced drying

• At regional irrigation area level this implies a need to adapt as regions face:

• Over capitalisation in conveyance and on-farm delivery infrastructure • Greater competition amongst regions in market for scarce water

• The theme of this talk – adaptation can represent an opportunity to: • Better integrate regional development and environmental policy goals• Address the new Commonwealth Governments objective of “due diligence”

in Murray plan investments • Better harness market demands


Path dependence, lock-in, irrigation, regional landscape & economy

• Arthur (1990) Path that is first taken depends on historical circumstances (public investment, preferences, relative production costs, marketing)

• Once a path is chosen, others a closed off (lock-in)• Infrastructure, RD are direct to the chosen path• Economies of scale exist for the chosen path• Complementary technologies, business, institutions arise

• The implications for regional irrigation, landscape & economy• Current situation a result of historical circumstance, but not optimal

for current/future• Conveyance built for past technology (gravity, not pumping) at location

of less than optimally productive soils• At property scale appropriate for the day, but not modern scale

economies and household income expectations• Without great knowledge / consideration of environmental costs

• We have been somewhat “locked-in” to the path set by this history


The adaptation challenge

• Most irrigation dependent regions are now facing a necessity to adapt

• Less water, higher water prices mean less irrigation is possible

• Less profitable activities are no longer viable, • drive to realise scale economies, • switch to more profitable crops,• Often involving private diversion (for low cost, high service level water)

• Efficiency alone not sufficient to deal with this much less water

• Some deliver capacity will inevitably be excess to capacity

• Competition among regions for comparative advantage in attracting keeping the remaining water

• Diversification of formerly irrigation dependent economies increasingly important

• Environmental assets may represent a key regional development in some cases


Adaptation as an opportunity for regional landscape & economy renewal

• Consider transformational adaptation:• Rather than, starting from where as result of historical

circumstance and considering marginal change (e.g. irrigation efficiency investments),

• How would we optimally configure irrigation, landscape, regional economies in the MDB?

• Starting from scratch, with a blank slate

• Considering modern technologies, preferences, environmental and

• Market conditions: where is the demand for private and public goods?


Identifying regional adaptation strategies with an asset based approach

• An “asset based approach” to choosing NRM strategies (Ridley and Pannell, 2007)

• Identify key environmental assets

• Ask whether benefits of managing them are primarily public or private

• Where large public benefits can result, consider public investment

• Where primarily private benefits can result, remove impediments to markets

• Same principles can be generalised to also consider regional development assets


Applying an asset based approach to regional adaptation strategy development

• Approach• Consider the assets of a region under pressure to adapt

• Consider what the regions landscape and regional economy could look like, if it could capitalise on private and public demands for the services that regional assets can generate

• Consider how policy could be changed to:• Better facilitate private investments in ways that can expedite

adaptation• Better realise public good benefits from existing government investment

commitments


Applying an asset based approach to regional adaptation strategy development

• Case study – Torrumbarry Irrigation Area, Victoria• Key characteristics

• Water trading – permanent and temporary

• Significant environmental assets – and threats

• Salinity contribution to Murray

• Relatively close to Melbourne – amenity and lifestyle

• Large investment is modernisation of water delivery infrastructure assets

• Water delivery is via a system of trunks, carriers and pods• Pods - Goulburn-Murray Water decision units

• spatially contiguous grouping of properties serviced by a trunk and several carriers


Environmental assets and threats

• Regional asset, the River Murray, local impact – Bar Creek, one of the largest sources of river salt load


Regional development assets in Torrumbarry

• Land suitability for irrigation

• Environmental and Potential Amenity Living:

• Major Waterbodies

• Native Vegetation

• Residential Areas

• 500m Buffer


Understanding the potential of a transformed landscape: An optimal reconfiguration

• Hierarchical sorting rules


Calculating Benefits

• Need to consider:• Private benefits

• Increased value of agricultural production; Water deliver cost savings;

• Public benefits:• Salinity reduction; Carbon sequestration

• For comparison sake we quantified benefits under four potential outcomes:

• Random, non-targeted purchase of water• Targeted purchase for greatest salinity benefits• Targeted purchase for reconfiguration and modernisation benefits:

• Reconfigure red and orange pods, and new irrigation development in green pods:

• New development occurs in similar proportions to current (lower bound)

• Complete overhaul with highest value agriculture on most suitable soils (upper bound)

• We calculate benefits under two water sharing rules• 100% water purchased returned to the environment• 50% environment; 50% new irrigation development



Non-targeted Tender

Salinity-targeted

Targeted Tender(Lower Bound)

Targeted Tender(Upper Bound)


Environment



Environment


(40% less water)

Value of Irrigated Ag. $-11.9 $-11.2 $7.3 $-10.5 $66.5 $56.6

Value of Dryland Ag $4.7 $3.9 $2.8 $4.1 $5.2 $6.5

Sale of Carbon Credits

$0 $0 $2.5 $2.5 $2.5 $2.5

Downstream Salinity Cost Avoided

$1.7 $3.7 $1.4 $1.6 $1.4 $1.6

Water Delivery Cost Savings

$0 $0 $3.8 $3.8 $3.8 $3.8

Total Benefits $-5.5 $-3.6 $17.8 $1.5 $79.4 $71.0

Water for Environment (GL)

120 120 60 120 60 120

ECs Avoided 11.1 24.5 9.5 10.4 9.5 10.4

Carbon Sequestered (million tones CO2-e) 0 0 8.8 8.8 8.8 8.8


Realising the potential: what role for market, what role for policy?

Guiding principles:Pannell (Public benefits, private benefits and choice of policy tool for land-use change)

• Rely on markets where primarily private benefits result, remove impediments to markets in such cases

• Where large public benefits can result, consider public investment

McColl and Young (Australian structural adjustment lessons for water)• Structural change is inevitable, often required in response to market, technology, or in this case

environment change• Allowing change typically leads to increased productivity,• Avoid policy that can impede change (concessional finance and exceptional circumstance

payments)• Policy intervention to facilitate, expedite dynamic response to change can be effective

• grants for industry adjustment with clear objectives, • regional development grants improving hard and “soft’’ infrastructure can create positive environment for

change, • grants for obtaining professional advice on advice on change

Ward, Connor, and Hatton-MacDonald• the right policy mix can be chosen through careful consideration how social, environmental,

economic, and technology factors influence potential policy effectiveness


Assets public and private benefitsAsset Public or private benefits from change it asset use

Soils Highly suited to irrigation

Private benefit to irrigator as better land becomes more fully utilised for irrigation

Currently irrigated areas creating large River Murray salt loads

Public salinity benefit to down stream irrigators, municipal industrial water users as land becomes less utilised for irrigation

Private demand for land for dryland farming

High environmental and amenity value land along water courses, wetlands

Public benefit from enhanced environmental condition, recreation opportunities if land is retired from irrigation converted to reserves

Private benefit if residential development is allowed on contiguous land

Private demand for carbon credits if land is revegetated

Water conveyance infrastructure

Private benefit to irrigators and supply firms from less cost to supply, when land use change allows system rationalisation


Water trade in diversion not evapotranspiration

100 ML

Unconfined Aquifer

50 M

LWater that returns to the aquifer

45 ML

Actual amount used

5 ML

Evapo-transpiration

Drainage


Implications of diversion property rights

-10

-5

0

5

10

15

20

25di

vers

ions

purc

hase

d fo

ren

viro

nmen

tal

flow

new

ret

urn

flow

orig

inal

ret

urn

flow

net

retu

rn f

low

net

envi

ronm

enta

lflo

wim

prov

emen

t

scenario a: buyefficiency savings& give half backto farmers

scenario b: buyefficiency savingsand retain all forenvironment

scenario c: buywater on themarket

scenario d:irrigator improvesefficiency anduses savings toexpand irrigation


The inefficiency of irrigation efficiency investment as environmental flow sourcing policy

0

50

100

150

200

250

300

0 50 100 150 200 250 300 350 400 450 500 550

Volume of w ater sourced (GL)

Pric

e or

cos

t of s

uppl

ying

wat

er (

$/M

L)

Scenario C - water acquired through market Scenario B - 100% of the saved water for environment

Scenario A - 50% of the saved water for environment


Salinity externality


The Lower Murray Salinity Issue

Lag time ~ 100 years

Growing, time delayed, saline groundwater flow into river


Salinity loading and concentration effects of climate change

0

200

400

600

800

1000

1200

1400

3 (n

o m

anag

emen

t pla

n/no

irrig

atio

n)

Nya

h/V

inife

ra

Woo

d W

ood/

Pai

mgi

l

Pia

mbi

Ken

ley

Nur

rung

/ Bou

ndar

y B

end

Lake

Pow

ell/T

olT

ol

Rob

inva

le

Wem

en/h

Hpp

y V

alle

y/Li

paro

o

Nan

gilo

c/C

olin

gnan

Kar

rado

c Ir

aak

Red

Clif

f

Thu

rla/Y

atpo

ol

Mild

ura

Mer

bein

Cul

lera

ine

Lind

say

Poi

nt

Mur

tho

Mer

riti

Ral

Ral

Pik

e R

iver

Boo

kpur

nong

Loxt

on

Ber

ri-B

arm

era

Mon

ash

Pya

p-K

ings

ton

Woo

lpun

da

Wal

kerie

Tay

lorv

ille N

orth

Qua

lco/

Sun

land

s

Cad

ell

Riv

erla

nd N

orth

Land and Water Management Plan

EC

Baseline

Mild

Moderate

Severe

800 EC


0

100

200

300

400

500

600

2017 2027 2037 2047 2057

Sal

init

y G

row

th (

EC

at

Mo

rgan

, S

A)

baseline climate withoutconcentration impacts

moderate climate changewithout concentration impact

baseline climate


moderate climate change withwater trade


Fixing the salinity problem engineering - “salt interception”

What is salt interception?


Future Salt Interception cost estimated with optimisation

• Objective – find least cost options to satisfy salinity target• Constraints – sequencing, exclusivity, capacity, floodplain protection

ChowillaChowilla(19 895)(19 895)

Rufus River Rufus River

MurthMurtho Stage o Stage

22(882)(882)

MurthMurtho Stage o Stage

11(630)(630)

BookpurnongBookpurnong(3960)(3960)

Pike Pike Stage 2Stage 2(2884)(2884)

Pike Pike Stage 1 Stage 1 (7249)(7249)

LoxtonLoxton(7972)(7972)

PyapPyap(470)(470)

Kingston Kingston EastEast(658)(658)

Kingston Kingston WestWest(658)(658)

Woolpunda Woolpunda ExtensionExtension

(630)(630)

Woolpunda Woolpunda (5 253)(5 253)

Wakerie Wakerie (4 344)(4 344)

Wakerie 2LWakerie 2L(3 630)(3 630)

Woolpunda Woolpunda South South

(Proposed)(Proposed)

Stockyard Stockyard PlainPlain

Noora Noora

Qualco sunlands Qualco sunlands InterceptionInterception

(2 400)(2 400)

Berri and Renmark Berri and Renmark Irrigation Area Irrigation Area

drainagedrainage(1 000)(1 000)

Rufus River Rufus River Interception Interception

(827)(827)

Present capacity: 14 700Option 1: 13 000 (scale back for env. reasons)Option 2: 16 400Option 3: 20 200

Present capacity: n/a Option 1: 10 000 Option 2: 14 600 Option3: 12 900

Present capacity: 1 000* Option 1: 5 046 Option 2: 10 700 Option 3: 13 000 Option 4: 25230

*Disposal of 9 000 possible but potential for adverse env. impacts

Present capacity: 4 500 Option 1: 19 940 Option 2: 20 970

PurplePurple - proposed salt interception schemesBlack Black - existing schemesBlue Blue - proposed and/or existing disposal basins

All volumes in Megalitres per year, at 2x current inflow rate. Existing schemes are at current inflow.Flow volume data from SKM ‘Regional Saline Disposal strategy,’ 2005; existing scheme flow data from Phil Pfeiffer, SA Water (personal comm., 2005); disposal data from ‘Victoria and South Australian Interception Schemes Review’, 2004.


Salt interception Economics

Solution for lower bound 2050 salinity growth prediction (67EC)=$129 x 106 ($175 x 106)

Solution for upper bound 2050 salinity growth prediction (157EC)=$381 x 106 ($527 x 106)


Salt interception economicsMarginal cost and benefits

0

1

2

3

4

5

6

7

8

9

0 20 40 60 80 100 120 140 160 180

EC units

marg

ina

l c

os

t o

r b

en

efi

t ($

(m

illio

ns)/

EC

un

it)

marginal benefit curve

current marginal capital,O&M cost

current marginal capital,O&M, water and long-runbasin cost

119105 (marginal benefit = marginal cost)

Conclusions – steeply increasing cost of marginal salinity offset

Lower bound 2050 salinityestimate

Upper bound 2050 salinityestimate

Conclusions – cost could exceed benefits of additional investment for plausible salinity growth


“The country that takes top prize in water management is Australia”

The next prize dependsupon industry & community willingnessto support pursuit ofrobust permanent solutions


Looking Forward - The Big Challenges

• Establish property rights for “unlicensed water taking activities”• ET rather than diversion as basis for trade

• Water licences for conjunctive groundwater use, farm dams, afforestation

• Provide policy to better facilitate risk management• Remove impediments to water trade

• Allow carry-over “net of evaporation”

• Implement “counter cyclical” water management strategies• Store flow in groundwater in high flow years, drawdown in drought• Counter cyclical “Market” environmental water management

• Structural adjustment policy to “facilitate”, not “impede” change• Understanding environmental consumptive use trade-offs and

environmental management “best bets” given thresholds and irreversibility

• Developing new water sharing rules

Thank you

Better Basin Futures, Water Policy Options Analysis StreamDr Jeffery ConnorEnvironmental Economist and Stream Leader

Phone: +61 8 8303 8784Email: [email protected]: www.csiro.com.au/science/WaterPolicyOptions.html

Contact UsPhone: 1300 363 400 or +61 3 9545 2176Email: [email protected] Web: www.csiro.au

Dr Jeff Connor at the Landscape Science Cluster Seminar, May 2009

Technology

Transcript of Dr Jeff Connor at the Landscape Science Cluster Seminar, May 2009