Australian water allocation reform insight from international jurisdictions

Posted 21 June 2016

Colorado RiverThe success of the Murray-Darling Basin reforms is almost unprecedented globally, but a recent study has found Australia could still learn from temporary river reform processes employed in other jurisdictions.

In Water Allocation in Rivers Under Pressure, Oxford University Lecturer in Environmental Management Dustin Garrick compares the evolution and performance of water allocation reform across three major river basins: the Colorado (USA, Mexico), the Columbia (USA, Canada) and the Murray Darling.

Garrick said there were lessons for Australia, and the Murray-Darling specifically.

“The Colorado River, for example, has charted its own path for dealing with similar challenges to those faced by the Murray-Darling,” he said.

“The key in the recent series of reforms in the Colorado Basin has been a series of interim measures – coordinated reservoir operations, carry-over of water, and a basin-wide supply and demand study – to allow learning and adaptation, with the Federal Government playing a key role in facilitating cooperation and innovation among the states.

“The Columbia Basin has pioneered public-private partnerships, such as its Columbia Basin Water Transactions Program, that bolster capacity and legitimacy by involving NGOs centrally in the recovery of water for the environment.”

Nonetheless, Garrick said the reforms achieved in Australia are very impressive.

“By international standards, the outcomes achieved in the Murray-Darling are nearly unprecedented – water trading, sustainable diversion limits and environmental water recovery, even if far from perfect, are the envy of many water-stressed basins,” he said.

Garrick's publication focuses on how important it is to understand transaction costs – and the political, cultural and technological forces that drive them – when setting up more flexible and sustainable approaches to water allocation. 

“Transaction costs have been described as the ‘economic equivalent of friction’ – limiting flexibility to move water around even when there is broad agreement about the need to reallocate water supplies,” Garrick said.

“The Murray-Darling invested in key reforms in the ‘80s and ‘90s – unbundling water rights, creating transparent registers and crafting interstate agreements to cap diversions – that reduced transaction costs and paid off when the Millennium Drought deepened.

“Despite their importance, however, transaction costs are often neglected – or underestimated – because they are hard to quantify, and the boundaries around what counts as transaction costs are not always clear.”