Transcript Slide 1
The Environment Institute Where ideas grow Running out of water What would a robust allocation system look like? Mike Young Executive Director, The Environment Institute The Environment Institute Global Water Scarcity Gap – billions m3 Life Impact The University of Adelaide After 2030 Water Resources Group The Environment Institute Change - an enduring process • Increasing demand – Population – Wealth • Changing prices and costs • New technology • Adverse climate change Life Impact The University of Adelaide The Environment Institute PERTH Rainfall for Jarrahdale 2000 14% less Rainfall (m m ) 1500 20% less - 1% 1000 500 2004 2001 1998 1995 1992 1989 1986 1983 1980 1977 1974 1971 1968 1965 1962 1959 1956 1953 1950 1947 1944 1941 1938 1935 1932 1929 1926 1923 1920 1917 1914 1911 0 1000 S tre a m in flo w fo r P e rth d a m s (P rio r to S tirlin g D a m ) 900 700 600 500 4 8 % le s s 400 66% le s s 300 200 - 3% N o te s : S tre a m flo w is fro m Ma y o f la b e lle d ye a r to th e fo llo w in g Ap ril Life Impact The University of Adelaide 2004 2001 1998 1995 1992 1989 1986 1983 1980 1977 1974 1971 1968 1965 1962 1959 1956 1953 1950 1947 1944 1941 1938 1935 1932 1929 1926 1923 1920 1917 0 1914 100 1911 S tr e a m flo w (G L ) 800 The Environment Institute With half as much water, how much can you use? Users Users Users Environment Environment Environment River Flow River Flow Life Impact The University of Adelaide River Flow The Environment Institute Robustness • Confident the regime will work, no matter what climatic, economic and technological futures arrive • Likely to withstand the test of time • Recover gracefully and autonomously from shocks • Three examples – Companies – Double entry accounting – Torrens Title Land system Life Impact The University of Adelaide The Environment Institute Three principles • Tinbergen Principle – As many policy instruments as policy objectives • Mundell’s Assignment Principle – Assign instruments for maximum leverage • Coase Theorem – Minimize transaction costs Life Impact The University of Adelaide Indicative template – regulated river systems Volume of Water in the System The Environment Institute Life Impact The University of Adelaide A fully-specified system The Environment Institute Flood water Volume of water available 9 Entitlements Environment with a Environment fully-specified share Water needed to ensure conveyanceLife Impact The University of Adelaide Shared Water The Environment Institute National Competition Policy 1993/94 Plus Cap Single Title to Land with a Water Licence Water Land Tradable Right Entitlement Shares in Perpetuity Delivery Capacity Shares Bank-like Allocations Delivery Capacity Allocations Price Use licences with limits & obligations Salinity Shares Life Impact The University of Adelaide National Water Initiative 2004 Salinity Allocations The Environment Institute Managing risk • Two entitlement pools – High security – Low security • High security pool – % of 10 year moving average of all allocations • Individuals can hold any combination of high and low security entitlements • Critical Human needs may justify a third “Very high security” pool Life Impact The University of Adelaide The Environment Institute Water system accounting 101 • Flaws have eroded River Murray Health • Dredge in Oct 2002 • A few accounting flaws in our entitlements – Forests – Dams – Groundwater – Return flow (increased efficiency) – Salinity interception • When someone takes more, some-one else must take less • Better to be approximately right rather than comprehensively wrong Life Impact The University of Adelaide The Environment Institute Environmental water • Need new language • Differentiate between maintenance of base flow and watering beyond the stem of the river • Full specification of entitlement – 100% = X + (1 – X) – Don’t need a cap nor a sustainable diversion limit Life Impact The University of Adelaide The Environment Institute A single entitlement register Southern MDB River Flow CIT Env State Users SA Vic ACT Flood Water NSW Other RIT CIT Trust 3 Trust 2 CEWH Life Impact The University of Adelaide The Environment Institute Summary • At the global level Australia is leading development of water policy • But we are way behind where we should be • Our systems need robust specification text • Is it “reasonable” for the Commonwealth to insist that this happens Life Impact The University of Adelaide The Environment Institute Where ideas grow www.adelaide.edu.au/environment www.myoung.net.au The Environment Institute Australian mistakes & innovations 1. Regime arrangements 1. 2. 3. 4. 5. 6. 7. 2. System connectivity => manage GW and SW as one Capped the wrong thing => cap entitlement potential not use Return flows => account for them Unmetered uses => include them Climate change => plan for an adverse shift The environment’s share => define it and allocate to it Storage Management => include in trading regime Individual arrangements 1. 2. 3. 4. 5. 6. Registers => validate them early Entitlements => define entitlements as shares Trading => get transaction costs and settlement times down Not enough instruments => needed to unbundle Inter-seasonal risk management => allow markets to optimize carry forward Company control => allocate entitlements to individuals Life Impact The University of Adelaide