Brian Richter, president of a global water education group Sustainable Waters, has been a global leader in water science and conservation for more than 30 years. His latest book is Chasing Water: A Guide for Moving from Scarcity to Sustainability. Sharlene recently caught up with him to talk about water trading and management problems in Australia’s Murray-Darling Basin, which is experiencing an extreme drought, and key takeaways for Texas water planners and users.

The water trading system in the Murray-Darling Basin, an arid region in southern Australia, is getting lots of negative attention these days. Water is being hoarded[1] by a handful of major farmers and investors, water prices are skyrocketing, and the Darling River is bone dry. What went wrong?

Brian Richter: As I discussed in my Chasing Water book, the two biggest challenges in designing a well-functioning water market are (1) proper allocation; and (2) enforcement.

Proper allocation means not giving away rights to more water than can be reliably satisfied (even during droughts), and ensuring that essential uses of water are always protected, i.e., drinking water and other basic human needs, water for fighting fires and providing medical services, and keeping freshwater ecosystems healthy. By the mid-1990s, Australians realized they had issued far too many rights (aka entitlements) in the Murray-Darling Basin because its streams were drying and dying.

The Basin Plan written in 2010, along with funding (over $10 billion) for environmental water “buy-backs” intended to reduce agricultural use and restore river flows, were remarkable reforms designed to re-balance water allocations and enable a sustainable water future.  However, due to severe political pressure, the target goals for environmental water acquisitions set in the Basin Plan were too low, and the government was unable to reach even this target due to concerns in the farming community that too much water was being taken from agriculture. The result: far too much water continues to be consumed overall, and far too little water is being allocated for river health.  Neither farmers nor fish have enough.

 Here in Texas, water markets have been highlighted by our Legislature, water rights holders and even environmental interests as a tool for rebalancing water allocations in an era of extraordinary growth and extreme climate change events. In fact, the Murray-Darling Basin is routinely cited as an example of what we should be doing here in Texas to ensure sufficient water for people and nature. Yet what has been happening in Murray-Darling in the past year seems now to be a cautionary tale of the hidden perils of water markets. Are there key differences between the Murray-Darling Basin and Texas that will help us avoid the tragic outcomes we’re seeing in Australia? And are there similarities between the two systems that raise red flags?  

Brian Richter: It is important to understand that what has failed in the Murray-Darling is not because of bad market design or water planning; instead, it is a failure of implementation and enforcement.  Emphasis in Texas needs to be given to understanding how much water will be reliably available for trading, especially under climate change; ensuring that enough water is allocated to the rivers themselves; and investing heavily in monitoring and enforcing allocations and trades. But is also important to understand that most water trading anywhere in the world is from farmer to farmer, or from farmers to cities or the environment.  In many parts of Texas much of the available water has already moved out of agriculture, and cities and industries aren’t willing to sell what they’ve got, so trading potential may be limited.

This region of Australia is relatively unpopulated, yet local populations, small farmers and the river itself now have no water. How could this happen and does Texas have sufficient regulations to make sure populations needs and natural resource needs are being met? 

Brian Richter: It’s simple supply and demand.  No matter how big or small the population is, if water consumption (demand) is always nearing the limit of water availability (supply), you can expect serious trouble when water supplies are lessened during dry times.

One water planning expert recently told a Wall Street Journal reporter that the water in Australia was being treated like money, which can lead to cheating, hoarding and other shenanigans. How do we ensure that water trading in Texas doesn’t turn out the same way? 

Brian Richter:  The Australian system is well-designed to prevent hoarding because you have to use all of your annual water allocation within two years. The problem isn’t that the structure and rules of the Australian market are wrong; instead, they haven’t been adequately monitoring water use and enforcing against improper use. We have to make sufficient investment in monitoring and enforcement to ensure this doesn’t happen in Texas!

The Murray-Darling water plan system was supposed to incentivize best uses of water, yet in some cases, large farmers were buying water rights and then hoarding the water in storage tanks and catchment basins, thus preventing precipitation from flowing into streams and rivers. It seems like a breakdown in regulatory enforcement is at play here. Can you help us to understand that and how we avoid a similar failure here in Texas?

Brian Richter: Hoarding can be averted simply by disallowing water users from storing large volumes of water on their lands, but, yes, if rules pertaining to allowable storage are violated it can lead to problems. The size of individual farms isn’t necessarily a problem when it comes to water; rather, if you have too much farmland (or too many cities or industries) using too much water, collectively you are vulnerable to running out of water.

[1] Claiming that ‘hoarding’ is a problem in the MDB is a false bogeyman; none of the farmers can store enough water in stock ponds and ditches to make a dent in the overall water use! Only the major reservoirs can store enough to affect water availability, and because water-rights holders must consume their annual allocations within two years, hoarding simply isn’t physically possible.