In short:

The federal government wants to buy back water entitlements from farmers in the southern Murray-Darling Basin to keep more water in the country’s largest river network and boost the environment.

It’s the first major buyback program since changes were introduced last year to update the Murray-Darling Basin Plan.

What’s next?

It will go to tender in the week beginning July 15, seeking entitlements for up to 70 gigalitres. It is not yet clear how much will be spent on the buybacks.

The Australian government is opening its chequebook, preparing to spend potentially hundreds of millions of dollars on a plan to stop farmers using water out of the country’s largest river network, in an attempt to help the environment. 

Federal Water and Environment Minister Tanya Plibersek announced the government will go to tender in the week beginning July 15, seeking rights to up to 70 gigalitres of water from farmers willing to sell their water entitlement back to the Commonwealth.

The tender will be open to irrigators in the southern Murray-Darling Basin only. A non-disclosed figure was allocated in this year’s federal budget to purchase the water.

It is the first major buyback program since the federal parliament passed new laws late last year to update the Murray-Darling Basin Plan (MDBP).

In a nutshell, the MDBP aims to set limits on how much water can be extracted or diverted from the system’s river network. The ultimate goal is to increase the amount of water that stays in the system, to improve the environment, while balancing the needs of farmers and communities.

The new laws allow the Commonwealth to pursue entitlements to hundreds of gigalitres for this purpose through water buybacks.

Depending on how much rain has fallen over a catchment, farmers can use their entitlements to draw water from the rivers and channels. Once an entitlement is transferred to the Commonwealth, the farmer loses their right to extract that water.

Environment groups welcome buybacks as an efficient tool to boost the health of river system, but basin communities, food manufacturers and farm groups say buybacks leave the regions worse off.

That’s because when a farmer sells their entitlement to the Commonwealth, water that has typically been used to grow food or cotton can no longer be used for farming.

Farmers in the Murray Darling can use their entitlements to draw water from the rivers. But once those entitlements are transferred to the Commonwealth, they cannot be used for farming again. (ABC News: Matt Roberts)

Government modelling shows potential knock-on effects of buybacks

Since 2009, more than 2,100 gigalitres of water each year has been allocated to the environment across the basin, most of it through farming, including buybacks and irrigation upgrades.

Under the updated legislation, there is now a shortfall of around 750 gigalitres of water each year, yet to be allocated to the environment by 2027.

Some of that water could be found via state-run infrastructure projects.

Recent modelling by the government’s own agricultural economists, ABARES, showed that if 325 gigalitres of water entitlement was purchased from the southern basin, it would wipe more than $150 million in value from irrigated farm production each year.

It also found the price of water would go up for remaining irrigators, with rice growers expected to be most affected, and likely to be priced out of the water market.

In a statement on Thursday afternoon, Ms Plibersek said the government had taken “a steady, staged approach to recovering water, prioritising non-purchase options”.

“We’re soon opening tenders for the voluntary purchase of up to 70 gigalitres of water from willing sellers in parts of the southern Basin, supported by a water trading strategy released today,” her statement said.

“Our implementation plan also provides transparent, clear information on how progress towards the 450-gigalitre target is tracking – helping to restore trust in this country’s water management.”

Tanya Plibersek says the government has taken a “steady, staged approach to recovering water”.(ABC News: Luke Stephenson)

 Deputy Nationals leader Perin Davey said any further buybacks would devastate communities and industries that rely on irrigation. 

“It works for an individual, but my concern is for the whole community,” Senator Davey said. 

“There is an open water market, farmers can trade their water today, if they really want to sell and get out of the industry, no-one is stopping them. But when the government buys that water, that is what has gone not just from that farmer, but from the whole community,” she said.

The government has not said how much it will spend on the buybacks, but separately, it announced $300 million community fund last month to help people adjust. It is unclear how or where that money will be spent.

Posted , updated