UN Division for Sustainable Development

Case Study Detail Record

Organization type:	Government

Name of Ministry/Agency:

Country:	Australia

Initiative Title:	Commitments-Related Best Practice or Lessons Learned in Water

Internet links:

Scope:	National: - Australia

Status:	Ongoing

Timeframe:	Start: 2003 End:

Stakeholders/Partners:

Relevent issues:	- Integrated Water Resource Management - Water Use Efficiency

Objectives/Challenges:

-- To improve the management of surface and ground water resources.
-- To increase water use efficiency by removing impediments such as cross-subsidisation, and recovering the full cost of water supply.
-- To sustain rural and urban communities and to ensure the health of river and groundwater systems.

Lessons Learned:

The principal challenges were:
-- negotiating agreement and cooperative action by nine governments of various political persuasions;
-- managing transition through a phase of structural and social change, such as is currently occurring in rural Australia; and
-- managing the uncertainty about how much water is needed to provide adequate water for the environment while maintaining the provision of water to meet the economic and social needs of the community.

Lessons learned
Primarily we have learned that the Council of Australian Governments has the capacity to solve national problems in situations where all jurisdictions stand to gain from the solution. We have also learned that the solution may be best achieved by a suitable mix of measures including education, awareness raising, economic measures and, as appropriate, regulation.

Policy Options:

The Council of Australian Governments’ Water Reform Framework is a case study about how to institutionalise whole of government and inter-governmental cooperation to promote sustainable development objectives in land and water management.

Australia has the most variable rainfall of any continent and much of the interior is arid. Drought is a common phenomena. Under the Australian Constitution water management is a State responsibility and entitlements to use water are a mandated under State legislation.

Water use per capita is high in Australia compared to other countries. Between 70 and 80 per cent of water used in Australian is for agriculture. In Australian cities rapid urban population growth is increasing water use and intensifying competition for water resources. The use of water by agriculture and urban communities is contributing to a reduction of flow levels in rivers and to increased salinity and impacts on natural ecosystems. Prior to the 1980s, water infrastructure was heavily subsidised. Much infrastructure was publicly funded with no charge to the ultimate users. Consequent overuse and inefficient allocation led to significant problems.

Summary:

In 1994-95, the Council of Australian Governments adopted the Water Reform Framework, whereby all jurisdictions committed to a strategic framework designed to create an economically efficient and ecologically sustainable water industry, including pricing reform, structural separation of institutional arrangements, water allocations and trading, and integrated catchment management and water quality guidelines.

Transferability of water rights, to address inefficient allocation, was introduced in 1979 in South Australia and has been progressively extended to other States. The Council of Australian Governments water reforms made the development of water markets part of the general policy framework. Water service providers now operate on a commercial basis while new investment in rural water supplies is limited to ecologically sustainable and economically viable projects. The Australian Government can suspend specific payments to the jurisdictions if commitments to water reforms aren't met. Specific provision was made to ensure adequate water for the environment. In 1997-98, the Murray Darling Basin Ministerial Council introduced an overall cap on water diversion in the Basin at the 1993-94 level of development.

Progress has been variable. Investment in new, more efficient, production systems is hampered by uncertainty over the long-term access to water in some areas, and there are significant concerns over the pace of securing adequate environmental flows and adequate management arrangements to ensure ecosystem health in river systems.

Residential consumption has been reduced by consumption-based tariffs developed in response to the 1994 reforms. Equity issues have been addressed, with assistance provided to low income households. Industrial and commercial consumption is increasingly being brought in line with residential charges. Full cost recovery for urban water including commercial and industrial use has been achieved in most jurisdictions.

In August 2003 the Council of Australian Governments (COAG) agreed that there was a pressing need to refresh its 1994 Water Reform Framework to increase the productivity and efficiency of water use, sustain rural and urban communities, and to ensure the health of river and groundwater systems.

COAG has therefore agreed to develop a National Water Initiative to:
-- improve the security of water access entitlements, including by clear assignment of risks of reductions in future water availability and by returning overallocated systems to sustainable allocation levels;
-- ensure ecosystem health by implementing regimes to protect environmental assets at a whole-of-basin, aquifer or catchment scale;
-- ensure water is put to best use by encouraging the expansion of water markets and trading across and between districts and States (where water systems are physically shared), involving clear rules for trading, robust water accounting arrangements and pricing based on full cost recovery principles; and
-- encourage water conservation in the cities, including better use of stormwater and recycled water.

The National Water Initiative will be detailed in an intergovernmental agreement for consideration at the first COAG meeting in 2004, with involvement of expert advice and in consultation with stakeholders representing industry, environment, local government and Indigenous interests.