“A potential future large-scale buyback of water entitlements would have large socio-economic impacts across the southern basin — likely focused on northern Victoria,” the report by Frontier Economics said.
“The ultimate impact would depend heavily on the characteristics of the water entitlements that are bought back,” it said.
“Such a buyback would provide additional water to the environment to generate environmental benefits.
“However, it is unclear whether large additional volumes can be effectively used for environmental watering given the existing constraints to environmental water delivery.”
The VFF has urged state and federal water ministers to avoid causing further pain to northern Victorian farming communities when they meet this week to discuss the Murray-Darling Basin Plan.
VFF Water Council chair Andrew Leahy said the report showed reduced water use in the Goulburn Murray Irrigation District had already cost the community millions of dollars in lost economic production and jobs.
“The evidence is in. The basin plan has clearly cost farmers, our rural communities and food production,” Mr Leahy said.
“If there was no basin plan the analysis clearly shows that water use in the GMID could be 50 per cent higher.
“Since 2005, there has been a 500 gigalitre reduction in irrigation across the GMID.
“Buybacks and on-farm water recovery projects have pushed water prices up by $72 per megalitre and a greater number of irrigators are now dependent on the temporary market.”
The report, a regular update delivered to the Victorian Government, found while most of the 10-year-old water savings target could be met, it was unlikely to achieve the full amount by 2024.
“If various identified risks cannot be managed, the shortfall in the 2750 Gl requirement at 30 June 2024 may be significantly larger — up to 372.3 Gl,” it said.
“The socio-economic impacts of the basin plan in Victoria are apparent in the Goulburn Murray Irrigation District — reducing water use and milk production in the order of 50 per cent in recent years.
“In a repeat of the millennium drought, the socio-economic impacts of the basin plan will also affect the horticultural industries of the Victorian Mallee and surrounding areas — requiring an extra 25,000 hectares of high value horticulture to be dried off due to the reduced consumptive pool.”
Environment Victoria’s Healthy Rivers campaigner Tyler Rotche was scathing of the report, describing it as fundamentally flawed because it only considered the costs of reducing water consumption without considering the cost of inaction.
“This is deliberately biased analysis, that we might expect from an irrigation lobby group, but it's reprehensible that it's being commissioned by a government department, paid for by everyday Victorians,’’ Mr Rotche said.
“The Victorian Government has consistently worked to delay and undermine water recovery in the basin — this latest report is just their latest salvo.
“According to peer-reviewed research from ANU’s Centre for Water Economics, Environment and Policy, purchasing entitlements from the many irrigators willing to sell is the most reliable, cost-effective way to keep inland river ecosystems alive.”
State Member for Shepparton Suzanna Sheed said the report showed that previous recovery from the region resulted in 50 per cent less water use in the GMID, which puts pressure on the viability of irrigation in the district and the industries and communities it supports.
“It also showed that water recovery from the consumptive pool caused a price rise of about $72 per megalitre,” she said.
Ms Sheed said the report echoed similar concerns raised by the first Frontier Economics report and a report by consultants RMCG in 2016.
“The figures we see from recovery already carried out is stark, but we know further buybacks and on-farm efficiency programs are on the agenda as the Murray-Darling Basin Plan comes to an end and will not meet the water recovery targets required.
“Further buybacks will add even more economic harm to the GMID and will leave farmers uncertain about their futures.”
Ms Sheed said she will be watching this week’s MinCo meeting of state ministers and Federal Water Minister Tanya Plibersek.
