Impact of Water Trade

Generally

The Economic and Social Impacts of Water Trading - Case Studies in the Victorian Murray Valley (2007) report by RIRDC concludes that the key impact of water trade is improving farmers' capacity to react to changes in circumstances; this will become more important as climate change unfolds. Water trade allows more flexible risk management and farm decision making, including the decision to leave agriculture.

• http://www.rirdc.gov.au/reports/RPLS/07-121sum.html

Locally

Water trade has facilitated irrigation development in Sunraysia. Immediately before the introduction of water trading in 1995-96, there were about 17 000 hectares of irrigation inside the public irrigation districts (Sunraysia Salinity Management Plan 1991). Outside those districts (with full uptake of sleeper and dozer licences) the potential area irrigable by private diverters was also about 17 000 hectares (Nyah to SA Border Salinity Management Plan 1992).

Since the introduction of water trading, Sunraysia has imported more than 100,000ML net of permanent water with most of this delivered to farms outside the irrigation districts through private infrastructure (private diverters). Twice as much land is now irrigated outside irrigation districts as in them.

Within the region's irrigation districts the underlying trend has been for water to move out, especially from the Merbein and First Mildura Irrigation Trust (FMIT) districts. Between them the pumped districts of Red Cliffs, Robinvale and Merbein have had almost 6000ML traded permanently out since water trade began.

FMIT began trading water in 2001 and is a net exporter of water, with approximately 1100ML of water each year permanently traded out of the district since 2002-03.

Irrigators interviewed as part of the RIRDC report identified the following benefits and costs of water trade for horticulture

• Private diverters have been able to expand business size, without buying out other properties,
• It enables farmers to decide how much money they want to invest in water, it allows for opportunistic cropping, especially in vegetables.
• Liquidity has been good so water can be sold rapidly with low advertising and transfer costs (liquidity much better than land sales)
• Temporary trade is great for cash flow management
• Debt management.

Perceived costs of water trading

• The net increase in horticulture from water trade has increased competition. The new developments are larger so have economies of scale so they are better able to compete against smaller growers.
• Stranded assets,- increased costs for existing irrigators, concern about the long term viability of the irrigation district -
• Social impacts of change, loss of hope, reduced sense of community, struggling farmers leaving district etc - these are real concern to many - and pest and disease problems, untidy view of abandoned blocks, impacts on property prices. Long grasses in abandoned blocks can increase frost risk to neighbouring blocks.
• Concern about timely irrigation supply especially in pumped districts that are downstream of the large new developments
• Cognitive dissonance in the irrigation community - conflict in people's minds about the benefits and costs associated with water trading.

The irrigation expansion has led to large capital inflow into the region and investment in secondary support industries. "It is estimated that between 1997 and 2001 capital investment in irrigated agriculture increased by $446 million and capital investment in food processing by $301 million in the Mildura and Riverland regions".

• http://www.rirdc.gov.au/reports/RPLS/07-121sum.html

Robinvale has also benefited from large-scale private diversion irrigation development facilitated by water trade. In 2006 the Swan Hill Rural City identified that "In the next two years $661 million is expected to be invested in 15 horticultural projects in the Robinvale area, which will create 1057 jobs directly and indirectly".

The RIRDC (2007) report interviewed members of the non-farming community in Sunraysia about the impacts of water trading. While respondents felt the impacts of new irrigation developments have been positive, the downturn in agricultural production due to drought was seen as having a negative impact on non-farming industries.

Social impacts

The RIRDC report included the results of a number of interviews from community members across Sunraysia, Pyramid-Boort and Rochester, Central Goulburn and Kerang-Cohuna and concluded that the social impacts of water trade can be both positive and negative.

Across northern Victoria there is strong community opposition to permanent trading out of a district.

The social impacts in the regions studied are not merely a temporary phenomenon associated with the introduction of water trading. Rather, they will probably be a permanent feature of regional economies exposed to the rapid shifts, facilitated by water trading, in investment between different types of irrigated agriculture.

The communities in the case study regions that were exporting water experienced reduced populations and less local spending. Communities in the case study regions importing water experienced increased populations but did not necessarily have the infrastructure and services to accommodate the new arrivals.

Robinvale is a particular example of this with rapid expansion of irrigation developments. The estimated regional population is less than 4000, based on Australian Bureau of Statistics 2001 Census figures. However, the 'So Great" Strategic Plan 2006-09 identified the 'population of the Robinvale catchment is more likely to be somewhere between 6000-8000', plus 2000 more over harvest. Due to this gross underestimation the community is very under serviced.

The increased number of workers on large developments, many of whom are socially disadvantaged or and/or of different nationalities has also increased demand for a variety of social services.

According to RIRDC (2007) the Mildura Rural City Council is concerned that water trade will significantly affect the council's rates income as permanent water leaves the district, more and more blocks are not irrigated or managed and urban development encroaches on agricultural land. The council is seeking to overturn legislation preventing property owners from excising their house block from the rest of the property so that they can sell off the remaining land. At present, house blocks can be separated only from properties of 10 acres or more.