Dam Shame: Inaccuracies in reporting about Australia’s on-farm irrigation efficiency program

The Australia Institute research paper Dam Shame: the New Dams Politicians Won’t Talk About (7 October 2019) did not present an accurate reflection of improved on-farm water efficiency nor its environmental benefits.

It is just false to claim irrigators are “using more water” by building dams. Building a dam does not give the right to take more water. Farmers can only store what they’re legally entitled to. This is based on the water licence actually held by the farmer – not the capacity of their dam.

Dams create water savings in two primary ways, by replacing a shallow water storage with a deeper dam reducing the evaporative losses from the water storage, and by capturing, storing and enabling the reuse of irrigation water.

Modern farming relies on flexibility to irrigate when needed. Farmers typically manage this through some form of on-farm storage. This enables them to operate with delivery limits during peak irrigation seasons and/or delays between ordering and receiving water from public headwater dams. It also means they can acquire water allocations when they’re actually available and store that for later use.

On-farm storages also provide environmental benefits. They help control erosion and sediments, and minimise nutrient flows back into waterways which may otherwise encourage algae blooms.

The report examined just three case study dams and extrapolated inaccurate conclusions to apply to over 1,500 successful on-farm projects. This is misleading at best and false at worse.

The department published a list of all projects funded under the On-farm Irrigation Efficiency Program. Data was released to both the Senate and on the web at https://data.gov.au/. Personal information in this data was removed consistent with our obligations under privacy laws.

Here are some facts to consider in response to the incorrect or misleading claims made by the Australia Institute:

The Australia Institute claims The facts
Just two of the new dams in the Murrumbidgee received nearly $30 million.  Over $200 million was spent on dam-related projects according to official data, although not all of this will have been specifically on dams. This is incorrect.

The On-farm Irrigation Efficiency Program at (http://www.agriculture.gov.au/water/mdb/programs/basin-wide/ofiep) funded more than 1500 on-farm projects, of which more than 95% received less than $1 million. A small number of large projects (72 in total) received over $1million. The program rules and conditions were exactly the same for small and large projects.

An estimated 15-20% of the total expenditure went to projects which included an on-farm storage component.
DAWR cannot say how much taxpayers have paid for private new dams or explain how they create water savings. This is misleading.

The department has published a list of all projects funded under the On-farm Irrigation Efficiency Program on the web at https://data.gov.au/ and also provided this information to the Senate.
The Department of Agriculture and Water Resources explains that new dams can save water where they replace shallower storages with greater evaporation, or where they are used to collect recycled irrigation water.

However, none of the three case study dams in this report save water in this way. They are new dams, not replacing smaller, shallower dams. Water stored behind their approximately eight metre high walls would otherwise be stored in public headwater dams around 100 meters deep.
This is misleading.

On-farm storages also allow for the efficient operation of farming enterprise. Modern farming relies on flexibility to irrigate when needed, which typically relies on some form of on-farm storage particularly during peak irrigation seasons when there may be system delivery limits. There are delays between ordering and receiving delivery of water from public headwater dams.

Many on-farm storages do achieve water savings by minimising evaporation. The Australia Institute has taken a limited sample of just three examples out of 1525 projects.  The three case study dams in this report save water by redevelopment of more efficient irrigation operation.
Project documents are explicit that the new dams will divert normal irrigation water and ‘supplementary water’. They are not constructed to simply recycle irrigation water. They increase both evaporation and irrigation water use. This is incorrect

It is wrong to claim that on-farm storage increases irrigation water use.

Farmers can only store in their dams what they are legally entitled to take. Building a dam does not give a right to take water to store in it. The right to fill a dam comes from the water licence held by the farmer. Diversion of supplementary water for irrigation is legal, subject to state licence conditions, as for other categories of water. Additionally, evaporative losses after the farm gate are borne by the farmer within their licenced amount. Therefore, farmers have an incentive to minimise their evaporative losses.
Supplementary flows are also important for downstream users. Supplementary flows make up almost all the water that has historically gone from the Murrumbidgee into the Murray. With major dams now targeting this water, the Murrumbidgee could be disconnected from the Murray in most years. This is misleading

Supplementary water is one of the many categories of water that can be held and used by a licence holder.

Supplementary flows only occur when high-flow events occur. The period of extraction and volume of water to be extracted is determined based on the rules as set out in the water sharing plans. Consumptive users can only take supplementary flows they are entitled to, i.e. have licences for.
Taxpayers have paid for new dams that increase water use, damage the environment and exacerbate the problems of the Murray. This is incorrect

On-farm water storages do not themselves lead to increased water use.

Program funding has been given to farmers to modernise their farm irrigation systems, and in return, water entitlements have been returned to the environment.

New on-farm storages have been funded where they are part of creating more sustainable and efficient farming businesses. Infrastructure investments have been prioritised over buy-backs because irrigators can do more with their remaining water, improving productivity and helping the overall rural economy.

On-farm storages allow farmers to use their water more efficiently through capturing water for later use, and storing and recycling irrigation water, including to optimise their irrigation. On-farm storages can also benefit the environment by helping to control erosion and sediments, and minimising nutrient flows back into waterways which otherwise encourages algae blooms.

Farmers can only store in dams what they are legally entitled to take. Building a dam does not give a right to take more water. The right to fill a dam comes from the water licence held by the farmer.
Private dams contribute nothing to drought-stricken towns and they reduce water available for the environment and down-stream water users. This is incorrect.

Linking private dams to the current drought is baseless. Long-term rainfall deficiencies, record-low for some periods, are the reason behind severely limited water resources across the Murray–Darling Basin.

Under the Basin Plan, the States are each responsible for setting aside the water they need to meet critical human water needs. This is given priority over consumptive and environmental uses.
Despite a request from the Australian Senate, DAWR has not provided a comprehensive list of projects under the efficiency program, so we do not know how many dams have been built and funded under this program.  Senator Rex Patrick has asked the DAWR how much money has been spent under the efficiency program to construct private dams. DAWR does not keep these records. This is incorrect

The department has publicly released a list of all projects funded under the On-farm Irrigation Efficiency Program to both the Senate and on the web at: https://data.gov.au/. This data has been de-identified consistent with our obligations under privacy laws.

Each project listed includes a brief description of the key activities funded.
DAWR’s explanation has a basic logic. If a dam is being deepened and its surface area reduced so the volumetric capacity is unchanged, then, other things being equal, water will be saved as the water will be cooler and less will evaporate. Reuse of irrigation water is also a desirable way of saving water. However, neither justification explains how the construction of new private dams can save water. This is incorrect.

On-farm storages are typically part of a suite of works such as laser levelling and reticulation systems. To properly consider how on-farm storage will lead to water savings, examination is needed of how it fits within the farm’s overall operations.
DAWR’s second claim that dams save water by enabling the reuse of irrigation water is also problematic in the Murrumbidgee. Where information is available about the new dams, it is clear that they are built not simply to collect recycled irrigation, but mainly to divert water that would otherwise flow down the river and into the Murray. This is incorrect.

Irrigators can only use the allocation they receive on their licenced water entitlement. If an irrigator wants to use more water than their licence allows, then they have to buy more water on the open market.

The overall volume of water diverted for irrigation use has decreased as a consequence of water recovery for the environment by around 2100 GL (as at 31 March 2019).

The MDBA checks annually that the limit on water take in the Murray–Darling Basin is being adhered to at the catchment level. This shows that farmers are not taking more water than is allowed for under the Basin Plan.
The other three transfers in Table 3 from Glenmea to the CEWH were not on the list provided to the Senate. Around half of the water recovered under the NSW efficiency program, about 250 gigalitres and over $1 billion similarly does not make this list. This is incorrect.

Water rights are decoupled from land ownership in NSW. The decoupling of water rights from land ownership was part of a strategic framework for the efficient and sustainable reform of the Australian Water industry agreed by the state and Commonwealth governments at the Council of Australian Government meeting in February 1994.

It is therefore fundamentally misleading to describe water as being transferred from any property.
The basic logic of the Basin’s ‘Cap’ on water use (soon to be rebadged as Sustainable Diversion Limits (SDL)) is that an increase in water in one place will require a reduction of water elsewhere. The new dams will increase water take at those farms, so there should be a reduction of water use elsewhere in the Murrumbidgee. This is incorrect.

The premise of the statement that new dams will increase water take on these farms is incorrect. It is correct to state that if an irrigator wants to use more water than their licence allows, then they have to buy more water on the open market.
While water entitlements have been transferred to the Commonwealth to secure efficiency program funding, there is no audit of the supposed water savings. In some cases, transferred entitlements have been bought by new dam developers from other irrigators, sometimes irrigators in other valleys, making this effectively a private water buyback. This is incorrect.

Before the projects are even approved for funding, applicants have to provide evidence that each project is technically feasible, the engineering solutions are appropriate, and that the projects have been reviewed by a competent irrigation professional, including validation of water saving estimates.

The department engaged independent engineering firms to review the applications and provide independent advice to the assessment panel on the validity of the estimated water savings.

On-ground works and water savings are verified at project level by on-farm delivery partners. This includes on-farm works progress inspections and a final review of completed works to verify the estimated water savings set out in each project application submitted by the farmer.

Around 10 per cent of completed projects receive additional review conducted by the department with an independent qualified engineer.
Floodplain structures in the Condamine-Balonne were not decommissioned as planned under an $80 million Commonwealth water purchase. This is incorrect.

Decommissioning works were required to be completed prior to the transfer of water to the Commonwealth. The decommissioning works undertaken on the properties were verified by a registered Professional Engineer of Queensland as having met the contractual requirements.
An irrigator allegedly defrauded the Commonwealth of $20 million by using money from the efficiency program to construct different storages to those approved. This is incorrect.

The department is advised that allegations of fraud in relation to the Healthy HeadWaters project are related to the submission of falsified invoices. However, it would be inappropriate to comment further on this matter while it is before the court. The government takes any allegations of illegal behaviour extremely seriously.

Queensland DNRME investigations found that the levee bank structures that were the subject of these allegations were not constructed under the Healthy HeadWaters project – either as approved or unapproved works. The structures were in place well before the commencement of the project
The new dam on Glenmea will utilise far more than recycled irrigation water, negating DAWR’s claim that this dam was built solely to reuse water. As a new dam, it is not creating savings by making the dam deeper to reduce evaporation, which also negates DAWR’s claim. This is misleading.

The department has not commented on specific projects for privacy and commercial-in-confidence reasons. The department’s response to the Senate was a general commentary around on-farm storages and not specific to any structures on Glenmea.
The water was transferred to CEWH (2016 and 2017) before the project was approved by local and State government authorities in late 2018 and early 2019, and therefore, before the water ‘savings’ that the projects would supposedly bring could be realised or verified. This is incorrect.

Under the Australian Government’s on-farm projects, water entitlements are transferred to the Commonwealth Environmental Water Holder as one of the first milestones.

Water savings are realised and verified by a competent irrigation professional, including validation of water saving estimates at the application stage. All on-farm works are inspected by a delivery partner and a final review of completed works is done to verify the estimated water savings set out in each project application submitted by the farmer.
This adds to widespread scepticism around water efficiency projects and whether they really deliver the volumes of savings that have been transferred to the Commonwealth’s environmental account. This is incorrect.

Water efficiency projects generate real, tradable water entitlements for the Commonwealth Environmental Water Holder. They come from a capped pool of water entitlements. The overall volume of water available for irrigation use has decreased by around 20% as a consequence of water recovery for the environment.

The MDBA checks annually that the limit on water take in the Murray–Darling Basin is being adhered to at the catchment level. This shows that farmers are not taking more water than is allowed for under the Basin Plan.
Secondly, the “price paid” in Table 3 refers only to the water component of the transaction, which is estimated at market value. The payment for the efficiency component is higher than this, 1.75 times the market value.  This means that an additional $12.8 million is likely to have been paid to Webster, if they received the full uplift of 1.75 times the market price. The amount paid for the project was significantly more than the estimated $4,950,000 cost of the project estimated in the application development. This is misleading.

Project funding is provided for the cost of undertaking the infrastructure upgrades on the property. An agreed volume of water is transferred to the Commonwealth in return for the project funding.
When water is transferred to the Commonwealth as a result of an infrastructure project, the current water market is recorded on the water register (not the project cost). This practice reflects the correct accounting procedure for the water and helps to minimise the impact of government program funding on the water market.

The program was delivered consistent with published guidelines which were approved in accordance with the Commonwealth Grant Rules and Guidelines. Applications are assessed against these guidelines by an evaluation panel, and for any project to be funded, it must be found eligible under the guidelines and present value for money.
There was no water transferred to CEWH from the Bringagee or Kooba properties, but there are several other transfers for efficiency projects from Webster Ltd in the Murrumbidgee (from Glenmea). This is incorrect

Water rights are decoupled from land ownership in NSW. The decoupling of water rights from land ownership was part of a strategic framework for the efficient and sustainable reform of the Australian Water industry agreed by the state and Commonwealth governments at the Council of Australian Government meeting in February 1994.  It is therefore fundamentally misleading to describe water as being transferred from any property.

Every on-farm project is subject to the transfer of an agreed volume of legal, tradable water entitlements to the Commonwealth Environmental Water Holder.