Demand for water in Lower Murray region could outstrip supply in dry years

Fundamental shifts in supply and demand, with increased plantings of permanent horticulture, will increase reliance on carry-over water and inter-valley trades.

Australian water consultancy Aither has found that water supply levels needed to meet the demands of permanent horticulture in the Lower Murray region will be challenged in dry years.

In a report produced for Victoria’s state government, Aither found that water demand from existing permanent horticulture plantings at full maturity stood at 1,356 GL. This may be approximately 200 GL less than the total water volume available for consumptive use (1,560 GL) during periods of severe drought and limited water availability. Any new horticultural development in the region could exacerbate supply risks.

In the area of Lower Murray below the Barmah Choke, where significant permanent horticulture development has occurred in recent years, a period of severe drought – such as that seen in 2007-08 – could result in the region’s water supply sitting at just 498 GL. This would be only 40 percent of the demand from existing perennial horticulture plantings at full maturity (1,247 GL), the report found.

Aither partner Chris Olszak told Agri Investor that growers in Lower Murray would then be reliant on two things to ensure their plantings had sufficient water.

“The first is carry-over, holding water in storage from one year to the next,” he said. “The second is inter-valley trade, the potential to transfer water from the Murrumbidgee, the Goulburn, and the Murray above the Choke, into that area below it where horticulture is concentrated. These will be critically important in determining if future horticultural demands can be met.”

Olszak said the analysis looked at current plantings and extrapolated their water demand at full maturity. However, he added there was likely to be some market response to continued high water prices that would see some users fall out of the system, thereby reducing demand somewhat.

“It’s a question of what types of enterprises will have to drop out – whether other types of permanent horticulture enterprises that are lower-value, or those using water coming from other regions or industries,” he said. “That will depend on a whole range of market-oriented factors, and individual business circumstances that dictate that.”

Olszak said the analysis highlighted fundamental shifts in supply and demand in the southern Murray-Darling Basin that have led to persistently high water prices.

“We’ve got a fundamental decrease in supply thanks to a significant portion of the water now being allocated to the environment,” he said. “And we’ve got a pretty significant increase in demand – [as well as horticulture], there’s also been an increase in demand from cotton in the Murrumbidgee, and irrigators are getting more efficient, so their willingness and ability to pay for water is increasing.”

The Victoria government said the report’s findings support work it is already undertaking to make sure water market settings are right for the north of the state. It added that irrigators have confidence that the water market is working for them.

“The minister for water is directly assessing any applications for new extractions from the Victorian Lower Murray to manage cumulative impacts on existing users and the environment, and the Victorian government is reviewing the arrangements for inter-valley trade from the Goulburn to the Murray,” it said.