Water shambles

Did you notice recent reports that one Richard Lourey is abroad hawking Australian water? Yes, he's a water marketeer. Yes, he's selling Australian farm water to investors in Asia, Europe and North America. Yes, he's trying to flog water rights along the Murray Darling Basin! Surely you remember the Murray Darling Basin? Yes, that's the one: the major river system for the eastern half of our continent that doesn't have enough consistently running water to survive, let alone to satisfy the already rapacious demands of its human exploiters. Yet he's trying to get overseas speculators in on a bit of wheeling and dealing in its precious flow? It shouldn't come as a surprise if you look at recent history.

The World Bank

Dr Vandana Shiva , the recipient of the 2010 Sydney Peace Prize, pointed out in 2001 that “... The water privatisation policy of the World Bank was articulated in a 1992 paper entitled ‘Improving Water Resources Management’. The Bank believes that water availability at low or no cost is uneconomic and inefficient. Even the poor should pay ...”

In 2003 the International Consortium of Investigative Journalists discovered that despite the World Bank's contentions that it does not force privatisation on the poor, research by ICIJ and the bank itself showed that privatisation is playing an ever-increasing role in bank lending policies. Using data available from the World Bank Web site, ICIJ analysed 276 loans labelled "water supply" awarded by the bank between 1990 and November 2002. In about one third of the projects, the World Bank required the country to privatise its water operations in some way before it received funds.

Here in good old New South Wales the free marketeers didn't need the helping hand of external "persuasion": water privatisation here seems to have been kicked off at the COAG meeting in February 1994 with the decision to establish an open water market as part of national push towards a uniform system of tradeable water rights. The decision making occurred in blinkered ignorance - the National Land & Water Resources Audit 2002-08 Achievements and Challenges Report highlights that Australia still does not have the necessary information to deal effectively with the pressing environmental and natural resource management issues it faces - but that didn't slow the push of the marketeers to open the trading!

This local philosophy was consistent with the World Bank's approach. An article “Tradable Property Rights to Water How to improve water use and resolve water conflicts” (PDF 159KB) that appeared in the World Bank’s Public Policy for the Private Sector February 1995 edition took the now familiar line that:

... Tradable water rights can help shift water to high value uses in a way that is cheaper and fairer than some of the present alternatives ... Under a tradable water rights system, the public sector’s role in the construction, operation and maintenance of hydraulic infrastructure can be reduced to financing selected high-return activities with strong positive externalities or public goods characteristics. The market - not the government - will determine the allocation and pattern of water use and the prices charged for water rights ...

A great idea if they're creating a true market instead of a casino, and if the players and the regulators can be trusted with our most precious resource of all. But they weren't, and they can’t.

Commoditisation of water in NSW

The Carr government introduced the Water Management Act in 2000. Its most significant change was that one did not have to own or occupy land to hold a water access licence. It permitted them to be held by anyone, including a passive investor, allegedly facilitated objectives such as maximising the social and economic benefits of water to the community while being consistent with the maintenance of long-term productivity of land. Unfortunately this kind of government propaganda, dubious economics and high fallutin' "public benefit" claptrap prevailed in the absence of any objective public benefit analysis or organised community opposition.

Important questions were posed but not answered: Who is the community? Who really benefits? Is a transfer of water rights to financial institutions and speculators something that is going to maximise the social and economic benefits to the rural community? Does gambling in water prices by water traders achieve this? Do the regulators care about the social or environmental effects of allowing water values to increase?

Ongoing concerns that have been raised about privatisation here include:

• that it basically gifts massive amounts of water to irrigators who did not pay for this previously publicly owned "investment" in the first place;
• that the whole plan lacks focus towards an end goal, with no distinction between water sold to supply overseas markets and water sold for domestic purposes, and no guarantee that water will go where it is most needed;
• environmental risks associated with water markets(e.g. salinisation);
• comments from Maude Barlow, Senior Advisor on Water to the President of the UN General Assembly, who last year said (PDF 73KB) “... While trading is still supposed to be limited to rural communities, it is only a matter of time before it is going to be opened up both to cities and to private foreign investors anxious to find new sources of water in countries that still permit the foreign sale http://www.brisbanetimes.com.au/environment/water-issues/thirsty-foreigners-soak-up-scarce-water-rights-20100903-14uev.html of this precious commodity. And who is to stop large water owners from deciding that their water is worth more on the open market than being used to grow food - the reason they were given these free allocations in the first place?” She gave the example of Chile, where all water is a private commodity and local farmers have been put off the land by big agribusiness and mining interests. Her concerns apply equally here in Australia; and
• the “sleeper” water entitlements will awaken.

The ultimate question is whether or not the putative intention of the legislation has played out? You can bet it hasn't, and it won't.