Agriculture and Water Uses Challenges - Literature review Example

Agriculture and Water Uses Challenges Student’s Name: Name of Institution: Instructor’s Name: Course Code: Date of Submission: Introduction The origin of water use in agriculture through irrigation has been traced back to ancient civilizations, such as China, Egypt and Mesopotamia. These civilizations easily dealt with the demand for water. This is especially due to the fact that agriculture was their main economic activity, and thus they organized their cultures primarily around irrigation. But dealing with the demand for water, including the allocation of water for agriculture, has become a daunting task for today’s governments. Rapid growth of population today has caused the increase of urbanization. A large population has translated into increased demand for water for sanitation, drinking, etc. And industrialization, one of the key characters of urbanization, means that besides agriculture, water is also now needed in other commercial and manufacturing sectors (ACIAR, n.d.; Walker & Salt, 2006). Ivanova (2012) pens an article aptly titled Australia’s Agriculture and Energy Sectors Clash Over Water, and in which she notes the impact that rapid development of Australia’s coal seam gas industry is having on allocation of water for rural agriculture, what she refers to as ‘farming regions’. These competing demands for water, which are actually on the increase, are in-turn increasing pressure on the world’s water resources. While crop irrigation in agriculture is the key use of freshwater resources in Australia, for instance, the aforementioned population increase and urbanization are accelerating the consumption of water (ACIAR, n.d.; walker & Salt, 2006). Australia’s Murray Darling Basin is a context in which this conflict of demands of water use is evident. This paper is a report on water use in relation to agriculture in Murray Darling Basin (MDB). The assessment and evaluation of the crisis in MDB provides a key basis for understanding the economic, environmental, political and ethical issues that Australian agriculture faces today. Murray Darling Basin: Background Information Raising 41 percent of agricultural production gross value, the MDB is the most significant agricultural region in and for Australia (NSW HSC online, n.d.). The area has been termed as Australia’s ‘food basket’ and agricultural heartland. This is especially so as it is a major contributor to Australia’s food production and national economy. It is even expected to be the key to Australia’s future food exports as long as it is managed in a way that is in line with sustainable management of land. This assertion on sustainable management of land alludes to the fact that the MDB is Australia’s largest irrigated agriculture region. It is for this reason that in recent years, there has been much agricultural, environmental and political debate and news surrounding the fate of the MDB. This is especially in relation to Australia’s increasingly worsening water crisis that is impacting on agriculture, and more so in the MDB region. While the MDB agricultural activities were significant to the nation, there was also need to put in place certain strategies to ensure that those benefits were sustainable and any related potential risks could be prevented from affecting other important resources as well. A number of national and MDB-specific policies have sought to address this situation. In addition, the communities and governments around MDB formed a partnership, which remains the world’s largest integrated program for catchment management, covering an area of more than 1 million square kilometres (NSW HSC online, n.d.). Relevant Policy & Outcome The National Water Initiative was initiated in 2004 to ensure national market compatibility and address national water management, including developing planning and regulatory framework regarding the management of both surface and groundwater resources in both urban and rural areas with the main aim of optimizing social, economic and environmental results/outcomes (ABS, 2008). The implementation of this policy would ensure: the reduction of water trade barriers; the effective allocation of water between various competing users; improve the efficiency of water; and ensure that water would be allocated to the nation’s highest value use (Grafton & Peterson, 2007; Wong, 2008). The same policies are reflected in The Water Act 2007; Water for the Future, which asserts the need to ensure long-term supply of water by taking into consideration issues of climate change and healthy rivers; and other policies addressing Drought & other Exceptional Circumstances (ABS, 2008). Murray-Darling Basin Authority (MDBA), initiated in 2008, is a consequence of the Water Act 2007. It was formed for the main purpose of ensuring the integration of sustainable management of water resources in the basin. The MDBA was to: ensure long-term average sustainable diversion limits, i.e. the limits of surface and ground water to be taken from the Basin at any one time so as to ensure sustainability; identify potential risks to the water resources in the Basin and ways to manage them; ensure adherence to the Water Act; specify environmental objectives, watering targets and priorities so as to optimize the environmental impacts of water resources for the MDB; establish water quality and salinity management plan; and govern water trading rights in the Basin (DEWHA 2008c, cited in ABS, 2008). The MDBA has since established certain MDB-specific policies for water management. One of the issues addressed in the policies include the ‘cap’ system on water diversions for irrigators. Initially, there were concerns regarding the water quantity taken from the Basin at any one time for consumption, as well as the effects that such withdrawals had on the flow and health of the rivers. In 1993, an audit of water use was initiated to address the issue. The audit showed that the increase in the volume of water diverted from the rivers caused a decline in the rivers’ health (MDBC 2007, cited in ABS, 2008). In agreement, the NSW HSC online (n.d.) argues that this problem is compounded by changes in the rivers’ natural flow. As a result, security of water to be used for irrigation and other purposes would also decline (MDBC 2007, cited in ABS, 2008). The audit further recommended the need to limit the volume of water to be diverted. This limit is what is known as ‘cap’, and it checks on water use, availability and trading, climatic overview, groundwater use and storage losses. This, according to NSW HSC online (n.d.), has helped reforms regarding the creation of water rights and would solve secure water for allocation to irrigators and ensure sustainability of water use for future generations. Under the ‘cap’ system, each territory and state has the right to a share of surface water resources (MDBC 2007, cited in ABS, 2008). Another initiative is known as The Living Murray Initiative, which was initiated in 2004. This initiative’s main aim was to recover an average of 500 GL of water annually for environmental use. This recovery would focus on six key sites: River Murray Channel; Hatta Lakes; Barmah-Millewa forest; Chowilla Floodplain (including Lindsay-Wallpolla); Lower Lakes, Coorong and Murray Mouth; and Gunbower and Koondrook-Perricoota forests. This recovery was to be carried out through certain water saving strategies, including: improving infrastructure for water delivery; buying water from willing sellers; improving the efficiency of water use on the farm. As a result, water has progressively been returned to the river and most of it has been available for environmental use (MDBC 2007). The MBDA also initiated project known as Murray-Darling Basin dry inflow contingency planning and MDB sustainable yields project (ABS, 2008). This involved the examination of a contingency plan to safeguard supplies of water to the urban centres. This was to involve checking on the amount of water available in the MDB, and recommend how to use the water in a way that would be in line with the fluctuations (i.e. decreases and increases) in the availability of water. This project also called for management practices that would ensure availability of water during crisis times, e.g. drought. Finally, the project also called for occasional assessment and evaluation of sustainable surface and ground water yields, and the how climate changes would affect these sustainable yields (ABS, 2008). Part of the effort towards sustainable water management in the MDB is the construction of dams for water conservation. Generally, dams are expected to have walls of more than 15 metres in height and 500 metres (for large dams) so as to conserve about 1,000 ML of water, andcontain flood discharge of about 2,000 cubic metres/second. There are about 105 dams of this kind in the MDB. The dams stored relatively large amounts of water between July 2000 and December 2001. There have been increases of water stored. Although the water levels do fluctuate, dams still play a key role in saving water (ABS, 2008). Cost Benefit Analysis The concept of cost benefit analysis (CBA) addresses the question of relative effectiveness, an important aspect of public policy analysis (Friedman, 2004). Relative efficiency (CBA) is measured and judged on the basis of benefits and loses. In other words, as more measures to both save the environment and manage water use are considered, it is only sensible to ask question as to what the costs will be.In this light, this report will hereby identify and quantify the economic costs and benefits, as well as the social impacts of changes in the availability of water in the MDB. These changes are not only expected to have impact on the populations and activities around the MDB. Instead, they are also expected to affect other basins and ultimately, the nation. O’Connor (2011), citing an Australian Conservation Foundation analysis and based on a 2010 MDBA report, notes that it would cost Australians about $9.8 billion to restore the rivers in MDB. Indeed, this figure- in isolation- seems exorbitant. However, before passing judgment, one should view this cost in relation to the costs that would be incurred if nothing is done or the value of the benefits. Indeed, reductions in the availability of water in the MDB will have major impacts on national production, especially in terms of job losses. A report by Stubbs et al (2010) noted that: a 50 percent reduction in the availability of water would cost every household about $380 at the national level, $4,500 at the MDB level, $8,800 in Bourke LGA and $16,000 in Mildura LGA. This case should be noted considering that capitalized cost for every household in the nation is $5,400, in MDB is $65,000, in Bourke LGA is $125,000 and in Mildura LGA is $230,000 (Stubbs et al 2010, 19) (See Appendix 1, 2 & 3). Water availability reductions that have resulted from increased environmental flows may lead certain benefits, especially in terms of the maintenance of biodiversity and ecosystems. These benefits are determined in the relation to the value that the community places on the outcome, and are measured relative to the opportunity cost that has resulted from lost employment. It can be generally concluded that achieving results either by dilution or increasing costs do not seem to be cost effective as compared to managed interventions. Such notions, argue Stubbs et al (2010), are not in line- infact are in tension- with the natural notions of environmental paradigms. It is important to note that, as is characteristic of matters related to the provision of infrastructure and public policy, these impacts are felt differentially (Stubbs et al 2010), i.e. most of the negative impacts will be felt at the MDB level (especially in the local and regional areas that depend on irrigated agriculture), while the positive outcomes will be felt at the national level. Agriculture is MDB’s primary industry. This thrives on the available natural resources on top of labor and capital. Therefore, job losses may cause major losses of production and wealth for the nation. In cases where reductions in the availability of water have resulted from diverting water from irrigation to environmental flows, then such increase d environmental flows may lead to various benefits (Stubbs et al, 2010; O’Connor, 2011). Again, these are experienced differentially. These benefits include: maintenance of biodiversity and ecosystem, certainty for water users, reduction in the costs of infrastructure as a result of rising water tables, recreation and tourism, and improved quality of water. But these benefits can also be achieved by other methods, such as increasing environmental flows or increased flows that may lead to dilution. Equally, one may consider other options of lower costs to the community, e.g. managed interventions. Stubbs et al (2008) posit, approaches related to dilution and increased flows may cost 10-1,000 times higher than the managed interventions even though for the same outcomes. But then again, managed interventions are normally in conflict with the ‘natural’ notions. Calculating the Value of Water In calculating the value of water, several aspects are involved as indicated in the formulae below. The following are total annual figures for the 2009-2010 period Total Hectares = 88.6 Total Output*Price = $4.4 billion Cost of seeds, fertilizers = approximately $1.2 billion Water used =3.6 million ML What is the value of water (in $/ML)? Total value of output= price*total quantity produced, $4.4 billion Cost of all inputs except water =$1.2 million Remaining value of output= $4.4 billion – $1.2 billion= $3.2 billion Then the Value of water/ML= $3.2 billion/3.6 million ML= $888.9/ML Recommendations Against the backdrop that the discussion above creates, this paper seeks to present certain considerations that should be taken into account in the formulation of new water use policies, as well the adjustment of the provision of current policies. Essentially, this paper argues for caution in the future water policies. This caution is expressed in a variety of ways: Inter-sectoral Considerations According to Crase (2008), the current water allocations are not accommodative of the relative economic strength of the sectors that compete for water. For instance, while the significance of agriculture has declined, owing to climate change, it still accounts for about two-thirds of national water use. This is especially unfair considering the costs that people living in the urban centers have to incur for water. Moreover, the reliance on rainfall as the key source of water in the urban areas is not fair enough considering that the capacity of rainfall to sufficiently supply the urban centers has declined over the recent years (Crase, 2008), which has led to rationing of water in towns. Indeed, as Saleth and Dinar (2004, cited in Crase, 2008) put it, policy change is only valid when costs of transaction involved in the change are less than the costs incurred in maintaining the status quo. That should be the guiding mantra here. Considering Broader Trends in formulating Water Policies It is not possible to accurately predict the future, which has been the underlying assumption guiding most policy formulations. Instead, dilemmas presented by changes can be addressed by considering emerging trends. For instance, more attention should be turned to the urban centers facing restriction regimes in the process of balkanizing both urban and rural water users (Freebarin, 2002). Also, water legislations have largely failed to recognize or acknowledge the conjunctive character of water as well as the inability of the state to limit the extraction of groundwater. Another trend concerns attempts to reconcile competing demands for water. It is important for these trends to be taken into consideration. The Need to Redefine High-Value Use of Water This involves redefining what is the most important and prioritizing the allocation of water to various economic sectors. There has been the traditional perception on the ‘high value’ of agriculture. While agriculture is still a major contributor to the national income, questions need to be asked regarding whether it is of ‘high value’ enough to deserve the water allocated to it at present, especially in relation to its sectoral economic colleagues, such as manufacturing, amongst others (Crase, 2008). Challenges and Shortcomings According to MacDonald and Young (2000), the cap system represents what the parties involved could negotiate at the time, i.e. it seems to be losing a sense of relevance outside the initial context that informed it. For instance, it is not as clear how recent developments, such as the enlarged Lake Mokan development and Pindari Dam, will fit under the cap system. It is important for both Queensland and Australian Commonwealth Territory to agree to abide by diversion requirements under the cap system. To exempt either of them would undermine the perception of the public that the limits governed all parties, and water users would question the insistence that they obey the set limits. Also, trade-off is difficult when setting the cap system under the cooperative federalism context. The contentious issues, such as farm diversions and ground water were, for instance, not included while obtaining agreement on the cap system. Since the cap system was put in place, more farm dams have been constructed, adding pressure on groundwater stocks. In other words, the system is inadequate for protecting ground water. Another difficulty involves setting water aside for the environment. Infact, MacDonald and Young (2000) argue that it may be the hardest part in setting water use priorities. In the end, there are “‘loopholes in the comprehensiveness of a cap on diversions’ (MacDonald & Young 2000, 31) could undermine water users’ confidence in the system. Other challenges and shortcomings regard: water trading, especially in relation to refining water rights; facilitating trading in greater variety of water products and developing effective framework for monitoring and accounting for water use; the reconciliation of water reform agendas in the rural and urban regions, e.g. moving water from rural to urban centers as a result of increasing demand and higher pay capacity: and answering the need for an institutional framework, e.g. aligning objectives, facilitating flexibility and compatibility. Conclusion This paper has discussed the question of agriculture and water use, using the Murray-Darling Basin as the context of focus. In this effort, the paper has pointed out issues of policy and how they influence water use for agriculture and other uses. While the paper has recognized the high costs of managing water use for the sake of the environment, it has also implied that such costs are minor considering the benefits that would come with such efforts. But most importantly, the paper has recommended the need to start considering the possibility that other sectors of the economy could also be of high value to deserve a share of the water allocated to agriculture, considering that the traditional status of agriculture has declined with urbanization. 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Judith Stubbs & Associates. http://www.cottoncrc.org.au/files/1f637441-2626-4c4d-9e59-9f7c00ffa846/rpt_4_social_economic_impacts_100804.pdf (accessed 23rd May, 2012) Walker, B & Salt, D 2006, Resilience thinking:  sustaining ecosystems and people in a changing world. Island Press, Washington Wong, P 2008, Water for the Future, Senator the Hon Penny Wong speech to the 4th Annual Australian Water Summit, Sydney, 29 April 2008. APPENDIX APPENDIX Appendix 1 Source: Stubbs et al (2010) Appendix 2 Source: Stubbs et al (2010) Appendix 3 Source: Stubbs et al (2010) Read More