Water Management In The

2.1 A Brief History of Water Rights

A water right is a legal authorization to take water from a water source. However, the terminology used for defining water rights varies significantly in all the jurisdictions in the MDB; they may be locally referred to as rights, licenses, permits, allocations or entitlements. Water rights are granted for specific users (e.g., irrigators), for specific purposes (e.g., stock and household consumption, environmental flows), for an individual (e.g., diversion licences), or for a group of users (e.g., bulk licenses). Australia inherited its water laws from English common law in the early days of colony. Landowners have an unrestricted right of access to the surface and groundwater for all ordinary and domestic purposes (Tan 2002). The common law property right in surface water is framed in terms of a right of access and use, not a right of ownership of the water resource. Over time, common law rights to access water have been progressively restricted or replaced by statute. As a legacy of Alfred Deakin's Victorian Irrigation Act of 1886, the right to own or to control and use water is vested in the Crown or State (Fisher 2000). The right to access and use water is granted to users, most of them have to be registered and licensed, and they should pay for this right. This is mainly because the states or the public (e.g., irrigation district) built and maintained the large

At the COAG meeting of 25 June 2004, the Commonwealth, the Australian Capital Territory, Queensland, New South Wales, Victoria, South Australia and the Northern Territory agreed to participate in an intergovernmental agreement on water allocation and management.

infrastructures (e.g., dams and channels) that enable the reliable supply of water resources. Gradually, water rights systems in Australia have been moving from a customary system to accommodate the common use rights (not necessarily transferable) of multiple parties toward nominally simpler systems that accord full (and transferable) ownership rights to individuals.

Originally, when water was relatively abundant, water licenses were defined to permit irrigation on the basis of an authorized land area, and generally free of extraction limits. These access entitlements to use water were permanently attached to land and thus could not be traded or freely exchanged. This prevented farmers from responding to new market opportunities, impeded productivity, and prevented water moving from low-value to high-value uses (e.g., from irrigated pasture to vineyards). In addition, the growth in the volume of access entitlements was not capped. The recognition of increasing scarcity in water resource has led to changes in irrigation license conditions by putting a cap 4 on the exploitation of water by existing users. The cap did not solve the problem of new demands for water, of which the answer lies in setting embargoes on issuing new irrigation licenses. As the cap on the volume of water extracted for consumptive use being put in place and no new licences being issued, new development can only take place by reallocating water from existing entitlement holders to new water users.

2.2 A Paradigm Shift in Water Management

Water supply in the MDB has been complex because it embraces many different types of water use, consumption and delivery. These factors have been compounded by highly episodic climatic variability and a general mismatch between seasonal water availability and demand. The need to allocate, manage and use water, in a way that balances consumptive and non-consumptive requirements, has only been recognized since the late 1980s. Water scarcity is the bottleneck restricting economic growth when existing supplies are institutionally tied to historical uses, with little possibility of reallocation (where institutions have been slow to adapt to changing water supply and demand conditions). Such conditions preclude the development of active water markets.

In general, water scarcity originates more from use inefficiency and poor management than from the physical constraints of its supply (Young & McColl 2003). The paradigmatic shift from water development to water allocation requires a radical reorientation of water institutions. Institutional change is not a one-time event but rather a continuum that moves in line with changing resource realities, socio-economic needs, and political power structure. On contrast to the development era, characterized by a bureaucratic and closed-loop decision structure where political and engineering considerations predominate, the allocation era demands an open and participatory decision process where economic issues take priority and a premium is set for consensual procedures and outcomes (Saleth & Dinar 2004).

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