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Water Futures Efficiency Program (WFEP)

Water Futures Efficiency Program

How Does the Water Futures Efficiency Program Work?

An Australian-first program designed to restore critical environmental water flows to the Murray-Darling Basin, while meeting the ongoing needs of local irrigators and growers, has been proposed by Waterfind Pty Ltd as an ‘immediate, affordable and genuine’ solution to the nation’s Basin Plan – avoiding the need for buybacks as announced by the Federal Government. 

The voluntary scheme would allow irrigators and farmers to commit voluntarily, under a robust legal framework, to effectively ‘rent’ a percentage of their water entitlement to the environment when needed through a water ‘covenant’. When the water is not needed, the grower would retain their full water allocation for productive use.

While the program has been proposed by Waterfind through the Commonwealth Budget submission process, the program has not yet been funded or endorsed by Governments (either Federal or State).

Waterfind is now seeking feedback from Australian Water Right holders which it intends to use as part of our ongoing efforts to encourage the Commonwealth and/or Basin States to trial a pilot in a timeframe that enables the potential success of the pilot to be expanded to deliver the balance of our urgent water recovery targets.

Click Here to Download Full WFEP Pre-Budget SubmissionClick Here to Download WFEP Governance

Frequently Asked Questions

How does the Water Futures Efficiency Program work?

This Australian-first program is designed to restore critical environmental water flows to the Murray-Darling Basin quickly and effectively, while meeting the ongoing needs of local communities and growers.

The program is entirely voluntary to join and involves irrigators and growers partnering with the Commonwealth to effectively ‘rent’ a percentage of their private water entitlement to the environment (the CEWH) on a perpetual basis, through a legally binding covenant or option arrangement.

The water would be drawn upon when needed, under certain flow conditions, and remain with the grower / water right holder in other times for productive use.

Consider it a bit like a property title with an easement that allows someone other than the owner to access and use a section of the land, under pre-determined conditions, for example to access utilities or to park a car.

Water entitlement holders would receive an upfront payment based on their water entitlement security and the percentage of covenant offered, together with an annual payment based upon the seasonal water conditions.

There is no need for the Commonwealth to enter into the water market to activate the program and, as such, will have little or no impact on it.


Water Futures Efficiency Program

Why is the current system not working and why is a program like this urgently needed?

To date, most of the Murray-Darling Basin Plan’s water goals have been achieved through buy backs which have been now independently verified to create adverse regional socio-economic impacts and meddle with the operation and value of the national water market. 

On/off-farm water efficiency projects have contributed the second-highest volumes, which have been reported to support local communities and irrigators as they encourage more ‘crop per drop’. They also provide a range of economic benefits and jobs in the regions associated with engineering and construction.

However, progress on water efficiency projects has been slower than expected, which is being compounded by the inherent complexities associated with large-scale infrastructure projects – including long lag times, supply chain constraints and rising costs.

As the July 2024 deadline looms to finish the environmental water required under the Murray-Darling Basin Plan, it has now been conceded by Government that the existing plan to recover this shortfall through efficiency projects will not be achieved in full and on time and that the Federal Government will have no choice but to consider other ways to make up the shortfall.

This WFEP Program offers an immediate, affordable and genuine solution to make up the shortfall without any adverse impact on local growers or their communities.

What's in it for an irriator or grower to be part of the voluntary program?

Irrigators and growers who choose to be part of the program would get the benefit of both an upfront and annual income payment, while being able to make productive use of the environmental water when it’s not needed by the Commonwealth.

Additionally, the program will enable growers to vote their annual water covenant to the best local environmental watering projects within their catchment and enable them to further engage with these projects together with other local community and First Nations peoples.  

Does the Water Futures Efficiency Program affect current Buybacks?

No. The Water Futures Efficiency Program is a proposal that has been made to the Government to fund as an alternative to other measures, which will have alarmingly detrimental impacts to our regional communities.

The Government has not yet funded the WFEP and Waterfind has independently created and self-funded the WFEP solution. It is an entirely voluntary scheme for irrigators, growers and the Basin community, that is offered as an alternate option to the current buyback process to participate in. The WFEP pilot is currently with the Commonwealth and the State Governments for support consideration. 

Does a rice grower, for example, take the same option as a citrus grower or are there differing arrangements that can be entered into?

The program framework includes a range of water sharing options or covenants, which have been designed to maximise the support and involvement from different grower groups. 

As such, each of the four products create a covenant over a different section of a grower’s water entitlement (ie first, last or equal sharing) and are activated under different water flow and allocation conditions.  While it is the grower’s choice about which product to activate, it would be envisaged that a rice grower would choose a different product than say a citrus grower and the program has been designed to enable this flexibility.

As such the program will deliver water under a range of climatic conditions, also providing the Commonwealth Environmental Water Holder with an ability to support diverse deliveries and outcomes under drought, normal or wet catchment conditions.  

You say a grower gets to keep the water in the pool until it's needed, but isn't the water desperately needed now?

Environmental Water demand varies from season to season and catchment by catchment, which can experience drought, normal or wet conditions. During wet conditions (eg, excess water flows), under the WEFP program, it would be most likely that the CEWH would not call upon the water delivery, as such they would have no need to access/or disrupt the market, and water can be used by the grower and/or be carried through to a future season for use by the grower.

Does this program require legislative change?

The program utilises existing state water titling and common/contract law provisions to create and register the covenant and, as such, does not require any legislative change to create the product.   A determination or definition needs to be established, however, if the WFEP will meet the requirements of the long-term water adjustments required by legislation under the Basin Plan, Waterfind proposes that this could be a simple policy determination rather than a legislative change, but ultimately this would be a decision of the government.

Why should irrigators/growers and the broader nation be opposed to water buy-backs?

A blunt, rapid approach to buybacks would have potentially devastating socio-economic consequences across our regions.  An escalated recovery through buybacks of up to 1 million ML of raw entitlement may be required to achieve the long-term cap equivalent shortfall of the water recovery targets.  

A water recovery target of this magnitude is far greater than the normal market liquidity (quantity of trade in the permanent market per annum) and, as such, would either require the government to conduct this purchase over a long run timeframe (10 or 20 years) or dramatically increase the price to, in essence, ‘bring forward’ future years market liquidity to today.

While dramatic inflationary shocks would be welcomed by retiring farmers, it would leave unknown substantial consequences to those farmers who remain as well as new farmers entering the sector. This is because the value of water would quickly reach an amount which would make farming unviable, exhausting this most important industry from our regional communities and national food security.

How much will it cost and how does this cost compare to current measures? 

A lot less! A recent Federal Government report (Water for the Environment Special Account (WESA) report, tabled in August last year) found the ‘estimated cost to recover the full 450 GL through efficiency measures is between $3.4 billion and $10.8 billion.’

Waterfind has estimated that upfront costs alone could be as much as $6.5 billion (for buy-backs) and as much as $21.8 billion (for off-farm water efficiency measures).

By contrast, this Program would be just a fraction of that cost at an estimated $220 million for a pilot or $1.2billion if water was recovered through this measure for 100% of the potential water shortfall – this represents significant savings for taxpayers.

How long would the pilot run ?

It is estimated the Pilot would run for approximately 6 months and deliver approximately 112 GL of water, with the program proposed to be managed by accredited and vetted Commonwealth delivery partners.

If successful, it’s anticipated a broader program would then be rolled-out for a further 12 months to achieve the full Basin Plan’s recovery target.  

Is there a benefit to First Nations People from this program?

Yes. The program promotes environmental projects led by regional communities and employment and leadership opportunities for First Nations peoples.  First nations cultural water projects would be encouraged to be part of the CEWH mix of projects on offer for local water right holders to set as a preference for watering delivery.  

Does Waterfind have a commercial interest in the program? 

The core premise of this Program is to find an immediate, affordable and genuine solution to the Murray-Darling Basin Plan’s water recovery targets that strikes the right balance between the environmental and the ongoing economic needs of Basin communities.

We are a proud Australian-owned and operated family business. As the nation’s leading water market specialist, we have a long history of delivering environmental water and have a client base representing two thirds of all water entitlements in Australia.

We stand shoulder-to-shoulder with growers because, like them and thousands of other businesses right across Basin communities, we rely on a sustainable Murray-Darling Basin for our future.

By designing, developing and self-funding this Program, we are not only contributing to what we see as the future prosperity of the environment, but to the Murray Darling Basin and all the growers who rely on it. 

We would, of course, be delighted to be considered as a Delivery Partner to administer the pilot and broader program just as we have done successfully with other Commonwealth projects or programs in the past. 

What are the next steps?

We respectfully encourage the Government to consider this Program as an affordable, immediate and genuine solution to achieving the Murray-Darling Basin Plan’s water shortfalls.  The pilot can get underway very quickly. We suggest a pilot region be used to test the uptake of the various water options and to refine pricing of these options.

Following the conclusion of this pilot, and potentially other pilots, the broader Program can be implemented in a timely manner which we believe can achieve the Basin Plan Water requirements on time and in full.   

 

Please Provide your Feedback

 

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