As the debate continues on the size of proposed water cuts for the Murray-Darling under the new basin plan, there is also a lot of work being done behind the scenes modelling the social and economic impacts of new diversion limits.
The early indications out of the Murray-Darling Basin Authority — which is drawing up the river reform plans — suggests only a modest impact on overall economic growth on a basin wide scale after cuts are imposed.
The private briefing by the Murray-Darling Basin Authority — attached here MDBA35 -Economic Modelling Presentation (2) — says back of the envelope calculations shows the reduction in overall growth in the basin’s economy could be less than two per cent to 2019 if cuts are made to ensure more water for the environment. After 2019 normal gross regional product growth continues, the briefing suggests.
The Authority’s economic modelling is also looking at the social and economic impact on individual communities, not just the basin wide impact. The briefing warns some areas will face bigger impacts than others from water cuts, especially smaller towns with a heavy reliance on irrigation.
The briefing was given by the Authority’s general manager of social economic analysis Tony Webster — formerly of Treasury — earlier this month. It states ‘‘given time to adjust, businesses and farmers will be able to reorganise their production processes and use of resources to maximise their returns for a future where less water is available.’’
‘‘Overall, aggregate costs will be small —much smaller, proportionally, than the corresponding reductions in water diversions.’’
The Authority’s modelling on the economic and social impacts of proposed cuts to farmer’s water rights follows anger from rural and industry groups that similar detailed work wasn’t done alongside the basin plan guide last year. Some of the results from the new modelling is expected to be included in the draft basin plan to be released in November.
Leaked details of the new basin plan earlier this month showed the Authority ‘‘current thinking’’ for the proposed cuts are 2,800 billion litres of water a year, lower than what was proposed in last year’s ‘‘guide’’ document on river reform.
The Authority is working with the Centre for Policy Studies at Monash University and researchers at Queensland University on the overall economic impact on the basin.
The briefing points to work by Australian Bureau of Agricultural and Resource Economics last year which found water cuts of 3,500 litres a year — well above what the Authority will now recommend — would reduce growth in the basin’s gross regional product by $1 billion until 2018.
But ABARE found there would still be overall growth of almost $16 billion over the same period even with cuts.
The Authority — along with researchers from CSIRO and Charles Sturt University — is also toying with the idea of a survey of 1200 people across the Basin to gather views on the value placed on the ecological health of key environment sites (though this isn’t confirmed to go ahead).
This is part of a wider work to value ecosystems services, along with economic benefits to industries like tourism and fishing from increased environmental water.
Irrigator and farming groups were given an early briefing of this social and economic work on Wednesday and Thursday and are said to be sceptical of the early direction. Environment groups will get a similar briefing next week, along with some of modelling implications of the 2,800 gig cut for the health of key environment sites.
