Lessons from the Australian Drought

 Lessons from the Australian Drought

Does the Answer to Texas’ Water Policy Problems Lie Down Under?

By James Fletcher & Robert Cunningham, Ph.D.

Texas has serious water problems.

This has become all too clear as prolonged drought has gripped most of Texas. Unfortunately, when drought conditions eventually break, Texas businesses and citizens will still be saddled with our antiquated Water Code and associated dysfunctional governance and regulations.

Recently, some business and political leaders started to realize that a bold and comprehensive new Texas water policy is needed for the 21st century. But exactly what kind of modern policy and new regulations will deliver proven results for our rapidly growing population and wide array of expanding businesses while preserving the environment?

Early in 2014, a small group started to research possible long-term water policy solutions being utilized elsewhere in the world. While it was easy to find innovative new water-related technologies, it was difficult to find the kind of visionary water management framework needed in Texas. Then one of us had the good fortune to attend an Australian professor’s presentation at the Texas A&M Law School titled “Is Texas Missing an Opportunity? Lessons from Australia”.

Professor Mike D. Young, Research Chair for Water Economics and Management at the University of Adelaide and Chair in Australian Studies at the Harvard University School of Engineering and Applied Sciences, is one of the architects of the highly successful Australian Water Initiative that has been developed and implemented over the last 15 years. This new water management model was developed in a time of dire necessity when an approximately 20-year drought gripped all of eastern Australia, the country’s agricultural breadbasket and home of over 85 percent of its population.

How Bad Did It Get During the 20-Year Australian Drought?

The Australian drought began in 1991 in Queensland and quickly engulfed all of Eastern Australia. It officially ended in 2011, but at its zenith in 2001 – 2009, the so-called “Millennium” Drought period – it was considered the worst drought since Australia was settled.

In the latter half of the drought, rivers in the Murray-Darling Basin (Australia’s version of the Mississippi River Basin) were barely flowing in multiple locations and a multi-state region had to impose draconian water use restrictions on citizens and businesses. Even more dramatic, the Australian government was preparing plans to cease all agricultural surface water use in the Basin, which would have financially devastated massive numbers of businesses, including farms and ranches that produce over $30 billion (USD) in exports as well as most of the food for Domestic Markets.

What Needed To Change In Australia’s Water Management Policy?

Australia’s previous water management system was almost totally controlled by state governments and various political subdivisions. Similar to Texas, government or pseudo-government agencies essentially picked and funded almost all water investments and effectively backstopped any losing investments. Australian leaders decided this was clearly not an effective investment and management model with the prospect of long-term droughts and the country’s fast growing 21st century economy.

The solution that emerged was a hybrid government and free market approach to water management. The government would guarantee affordable water for cities and citizens, but additional water allocations would be allowed to be traded and water transported where needed. By permitting supply and demand to determine the monetized value of water, the balance between water conservation and consumption was dramatically enhanced.

The major components of the successful Australian water management model that can work in Texas are amazingly straightforward and commonsense:

  • An appropriate and workable role for government is still significant but primarily at the base of the water management pyramid. Most importantly, government makes certain the water needs of all cities, citizens and businesses are met and that water is set at affordable rates under long-term contracts. However, city water rates systems employ progressive usage pricing models to financially encourage wise water use.
  • The connectivity between surface and groundwater resources is recognized and scientifically managed as a single resource through comprehensive hydrology involving modeling and continuous monitoring basin-wide – not in small isolated locales.
  • Government guarantees that water management policy and available usage is totally based on hydrologic and other scientific and legal analysis conducted by nominated practicing and credentialed experts. In other words, politics, conflicting interests, and cronyism are eliminated from water governance.
  • Government ensures that all existing pollution and environmental regulations are rigorously enforced.
  • Scientifically established and available water supplies exceeding the needs for cities and citizens are monetized and allowed to be traded through free open water markets that provide buyers and sellers fair market value. These markets primarily involve industry, agriculture, ranching, and forestry.
  • Embolden and assist engineers, technologists, entrepreneurs and water owners to develop innovative methods and technologies that use less water and produce new water resources and containment.
  • Open the water infrastructure system and overall water market to private capital to fund projects for the development of water resources and transportation that government cannot afford, has chosen not to undertake, or would not risk funding. This capital can either be public-private partnerships or purely private investments. But such ventures must be driven by entrepreneurs and investors risking their capital – not primarily by old-fashion government decision making.

What Were Some of the Results Australia Obtained?

First, it’s working. Additionally, the results have been better and developed faster than the architects ever expected.

Water has become a valuable marketable asset for Australian water rights and allocation owners, which financially incentivizes both acceptable resource development and conservation. Once water had “real” asset value, large and moderate water users found new and innovative ways to use far less water. Examples were widespread and include farms that have installed microprocessor control irrigation systems that allowed them to use one-third the water previously utilized for irrigation. New technologies have reduced water loss during containment and transportation, and the rapid pace of innovation has been absolutely astounding.

Texas Needs Bold Action and Leadership

In summary, a form of the truly science-based, highly successful Australian water management model is the answer to Texas water policy needs for the 21st century rather than our current policies that primarily date from the 19th and 20th centuries. Just as important, this can be done while protecting Texans’ Constitutional property rights while safeguarding our environment and assuring needed water supplies for the future of our state.

In a January 2015 presentation for the Texas CEO Magazine Speaker Series, the Chairman of the Texas Water Board noted that by 2060 the population of Texas is estimated to grow by 82 percent or to 46.3 million people, and that $231 billion will be needed for water infrastructure and development projects, including $53B for new water containment and sourcing.

With the potential of ongoing droughts and this level of needed water infrastructure investment, it is obvious the current Texas water management system – almost completely government funded and operated – is not sustainable.

Now is the time for decisive action – not after droughts and systematic water shortages do possibly irreversible harm to our citizens, environment, and economy. Or do we need to wait for businesses to start bypassing and leaving Texas because of water availability concerns to act?

Texas Water Future is a not-for-profit and nonpartisan organization dictated to bring a form of the successful Australian water management model to Texas. Professor Mike D. Young is a consultant to Texas Water Future.

James Fletcher is the Chairman and a founder of Texas Water Future. His prior business career was primarily with KPMG and Deloitte serving as a senior business strategy and technology advisor to numerous multinational corporations and government agencies around the world. He can be reached at 512-470-7769 or j.fletcher@outlook.com.

Robert Cunningham, PhD, is Vice President of Scientific Research of Texas Water Future. He holds a PhD in Geosciences (Biogeochemistry) from the University of Texas-Dallas. He retired from ExxonMobil after leading research teams and conducting exploration throughout the world, finishing with several years in Australia during the Millennium drought. He can be reached at 325-248-5392 or rcunningham.cs@gmail.com.

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