Why the world is less ready for crises

This little story starts from an overheard conversation in a supermarket today. Warning this posts mentions toilet paper.

Customer: When will you have toilet paper back on the shelves?

Staff: Not for a week or more. We need to bring some in from overseas. You know, we adjust stock levels every 3 months normally

That brought to mind the way we do business now. It is all about just-in-time supply chains. Only stock what you need to fulfil established demand and manufacture to a forward order book.

It is a way of getting that last little bit of competitiveness in a saturated market for commodities and it has proven successful from a commercial perspective. However, the downside of such efficiency is that there is little capacity to respond to a crisis. A crisis like the threat of a viral epidemic/pandemic.

The nature of a crisis is that it is largely unpredictable. You know it will happen at some time but not when. Timing is everything for just-in-time supply chains. When you have everything locked in for 3 months ahead it can take at least half that time to change manufacturing priorities or shipping schedules – even more so for low value and high bulk items that are transported by sea.

In Australia the run on toilet paper, hand sanitiser and facial tissues is a prime example of how a crisis can disrupt a supply chain in a way that is hard to predict. Who would have thought that toilet paper would be the thing that would be in demand for a chest infection? Not the WHO. Not medical professionals. Not even social media. Yet, there was a massive buy up of toilet paper and now it is going to take a long time to get new stocks.

Meanwhile some houses will have a large pile of toilet rolls sitting around and creating a perverse demand profile for the supplier of toilet rolls. Right now there is high pent up demand and yet in the timeframe of 3-12 months the demand will be significantly less. the message to manufacturers is to hurry up and get a large stock into stores and then cut back supply by 50% or more for a year because so many people will have no need to buy it for a long time. The need for additional toilet paper due to the virus is highly unlikely to eventuate.

Hand sanitiser and tissues are a different thing. They are value added products and justify a higher price. They are less bulky and can be transported by air without too much additional cost. We will probably see these products on the shelves again quicker. Both are likely to be used more as a result of the virus so the supply chain is likely to adjust better.

This is just an example of how modern, efficient manufacturing and supply is not ready for a crisis. Put another way it is not structured well for handling risk. Let’s look at the flip side of this risk approach – fuel and oil supplies.

Most Governments mandate a minimum stockpile of oil and/or petrol, gas and inputs to electricity generation. This stockpile or reserve is needed in case of any number of “shocks” such as war, natural disasters, pandemics or similar regional or global crises. This makes sense because those commodities are clearly essentials necessary for national security. Toilet paper? probably not front of mind for strategic policy thinktanks.

The way to manage risks in a supply chain is to hold stock that lets you ride out a crisis that is mild to moderate. However, the way to make money and have your commodity manufacturing business survive in a globally competitive market is to do everything just-in-time. The two are almost mutually exclusive ways of doing business.

Piping hot water

I picked this up from a post in Facebook … the source of truth and accuracy. I have heard quite a lot about the abundance of water that we are “letting run to the sea” and similar nonsense. So I need to write something about it.

Water flowing to the sea down the Murray?

Yes, a lot of water does run into the sea. Some even from the Murray-Darling does get there. However this does not mean that the water is economically transportable and able to be managed with a “simple pipeline”. You might see a very large flow down the Murrumbidgee or Murray rivers right now and think that this is water going to the Murray Mouth. Reality is that this water is flowing from large dams in the upper catchments (Hume Weir for the Murray and Burrinjuck for the Murrumbidgee) to be pumped out or diverted for irrigation. The only efficient way to get the required water to the irrigation areas is, perversely, to almost flood the river channels. I saw this in action recently while travelling from Canberra to Melbourne.

So here are a few facts:


  • About 7.1 Gl of water is flowing into South Australia per day.
  • 1.2 Gl is delivered via the Murrumbidgee as part of the Inter Valley Trade arrangements. This comes from Burrinjuck and Blowering Dams. losses are in the order of 0.3 Gl and that means 1.5 Gl is released to achieve the required output
  • About 3.4 Gl is released from MDBA storages that flow from the Hume Weir
  • There is an amount around 1 Gl released from the Snowy Scheme
  • The Goulburn is contributing 1.6 Gl
  • other Victorian tributaries contribute about 1.4 Gl
  • The Darling is contributing 0 – in fact taking some of the water out of the Murray
  • Overall that is 8.6 – the balance is what is evaporating

Outputs in the lower river

  • Of the 7.1 Gl a day going into SA:
  • 3.3 Gl a day goes to SA consumption – essentially a large chunk of the Adelaide water supply
  • 2.9 Gl a day is lost to seepage and evaporation
  • the remaining 0.9 Gl is environmental water. This is water to maintain sufficient level in Lake Alexandrina to prevent it becoming too salty to support its natural ecosystem
  • There is no flow out of the Murray Mouth. There is an occasional release of water through the Barrages at low tide to reduce salinity. That is all.

So 7.1 Gl seems like a lot of water. So lets see what the diversions for irrigation are. Firstly lets see what the security of water entitlements are.

NSW – Murray Valley   Victorian – Murray Valley
High security 97% General security 0%   High reliability 56% Low reliability 0%
NSW – Murrumbidgee Valley   Victorian – Goulburn Valley
High security 95% General security 6%   High reliability 64% Low reliability 0%
NSW  – Lower Darling   South Australia – Murray Valley
High security 30% General security 0%   High security 100%

Major Diversions from Murray and Lower Darling (GL) *

New South Wales This Week From 1 July 2019 Victoria This Week From 1 July 2019
Murray Irrig. Ltd (Net) 1.8 98 Yarrawonga Main Channel (net) 3.5 63
Wakool Sys Allowance 2.3 24 Torrumbarry System + Nyah (net) 0 141
Western Murray Irrigation 0.6 10 Sunraysia Pumped Districts 6.2 47
Licensed Pumps 4.7 56 Licensed pumps – GMW (Nyah+u/s) 1 10
Lower Darling 0.0 0 Licensed pumps – LMW 4.6 169
TOTAL 9.4 188 TOTAL 15.3 430

The tables above are from the December 18 MDBA River Murray Weekly Report. Victoria and NSW have different regulation for entitlements however it is clear that plenty of water from the MDBA Storage is consumed for irrigation. Then we need to look at the NSW data.

Consumption expected for irrigation (annual) Gl
Conveyance 265
Losses (transmission, evaporation, operational) 278
Total Losses553
Announced High Security (95%) 348
Announced General Security (6%) 113
Total Irrigation462

So there is 1015 Gl for the year and about double the daily average is used in Summer. That gives 5.6Gl a day down the Murrumbidge for irrigation purposes. 1.2 Gl for Adelaide, the SA consumption and maintaining the health of the Coorong and Lake Alexandrina. The comparison is a little less extreme for the Victorian situation. More of the water that goes down the stream reaches SA and there is less consumption (15.3 Gl a week compared to 39 Gl for the Murrumbidgee).

Human needs

342 Gl is reserved/allocated to critical human needs across the Basin. The majority of this is used in the large cities, Adelaide, Canberra, Albury/Wodonga, Toowoomba, Shepparton, Bendigo, Wagga Wagga etc. It is not clear to me whether that number includes extractions of 70Gl to Melbourne from the Goulburn River. The fact that it is so hard to find information on community use of water and so easy to find information on what irrigator entitlement is very instructive.

Critical Human Needs are prioritised first and then other uses which are theoretically decided on economic grounds. I have written other articles on the relative value of water for different uses see: http://petaguy.info/blog/sustainability/water-use-in-the-murray-darling. In fact high security irrigation water gets prioritised over other uses that might deliver higher economic value because of the special status assigned to it in legislation. it is hard to argue that the 70Gl diverted to Melbourne or the amount allocated to Adelaide is bad economics; quite the reverse.


So, as with all things water, it is complicated. But with a lot of digging into the data, it is clear that water running in the major rivers is actually travelling to be used for high security allocation (mostly irrigation but also industrial) and critical human needs. Not to run into the sea.

A tiny fraction of the water going down the Murray and Murrumbidgee rivers is reaching the ocean. Around 40% is evaporating and nearly all the rest is being consumed. About 5 Gl a year is used to reduce salinity in the Coorong and Lake Alexandrina – less than is used for irrigation in a day on the Murrumbidgee alone. Life sustaining uses by basin communities consume around 120 Gl a year. One third of a Gl a day.

Around 60% of all available water is used for irrigation in the Murray Darling Basin. less than 10% is used for people who live in the Murray Darling Basin. Most of the unavailable cannot be stored or harnessed. The remainder can only be used for irrigation by degrading the natural environment – therefore affecting people’s lives and livelihood.

So what about pipes?

Pipes are a different thing again. Let’s see if we can find an answer to the question “Why don’t we pump water from the big rivers to the dry ones?”. The following are areas I will analyse and discuss:

  • Small municipal pipes
  • Industrial pipelines
  • Existing inter-valley pipes
  • Long pipes
  • Pipes over mountains
  • Economics

The Problem with Pipes

Pipes are a very good way of transporting water downhill and over relatively short distances. However, pipes are not that efficient for carrying a liquid over long distances. Some basics.

A typical irrigation channel in the Murray valley can move at least 100 cubic metres of water a minute or 0.1 Ml/m. gravity can move this much with a slope of a few mm per km. A pipe, is much smaller and you need to add energy to overcome friction. Rather than energy consumption, the measure used in pipes is pressure. 1 Bar is the same as atmospheric pressure. Two Bar of pressure is considered “good” pressure from a tap.

Taking a 50mm pipe that is 18 km long, and carrying 100l per minute, you need about 28 bar of pressure at the water tower. That water travels at 0.85 m/sec. You would not want to use a higher pressure than that at the tower.

Of course, you could go to a 100mm pipe and the pressure drop would only be 1 Bar. The problem is that a 100mm pipe costs about 7 times the cost of the 50 mm one when installation costs are taken into account. The pipe materials alone cost 5 times as much. In practice water networks use large main pipes (400 mm or more) to supply a suburb and a smaller one (100mm) to supply a street then 19mm or smaller to supply a house.

Small Municipal Pipes

Most pipes we come across are small municipal pipes that carry water to homes and factories. Their source water is usually quite close and high above the city or town. We rarely consider that the water needs to be pumped to local water towers and that there is a cost to that. After all, we need the water and are happy to pay for it. Even if that is $3-4,000 per mega litre. Most of that cost is for storage, pumping and treatment. Then there is a supply fee that covers some of the cost of maintaining the pipes and water towers (usually located on convenient hills nearby a suburb)

Within that substantial cost it is easy to forget that there is that inbuilt cost of transporting the water by pipe.

We know that copper pipes cost a lot. Just ask any plumber what it might cost for a 50m pipe – you are unlikely to get a quote for less than $1000 just to supply it. Steel pipe is cheaper to buy but will not last as long in the ground, especially.

Industrial Pipelines

Industrial pipelines are larger than the domestic ones because they need to carry more water. This usually means a higher fixed supply cost because the infrastructure costs typically 5-10 times that of a domestic connection to install and maintain. Cost of the pipe is roughly linear with length of the pipe and at least 7 times the cost to install each time you double it between 50mm and 400mm. Sizes above that cost about 10 times when you double the size and are of a different construction.

If you want a flow of 1 kl/sec with a 5km pipe length (from a 400mm main) and the source pressure is limited to 50 Bar you will need around 200mm pipe diameter. This means a cost equivalent to supplying a a water main for a street of 100 -200 houses. Roughly $100,000.

In reality industrial suburbs share the infrastructure costs so the individual costs are lower. However, I am focusing on costs of pipes.

Long Pipes

To get water from, say the Atherton Tablelands to the upper reaches of the Darling system you would have to pipe water about 1,600 km.

What happens when you want to put the same 1kl of water per minute through a 1600 km pipe? You will need to have a pressure of 230 Bar to push that through. However high pressure pipe costs more. Or you could go to 300mm pipe to get a pressure drop of 32 Bar. Either way the cost increases per km. So if we take the baseline of a 5km pipe of 200mm at $100,000 and factor the length and size increase in we get $100,000 x 4 x 320 = $128 million (rounding up the 3.94 factor for diameter increase – 1600/5=320)

Now 1 kl/sec is a trickle compared to the needs of irrigators. Lets see what happens when we scale up to one irrigation channel of flow. We need a 1500 mm pipe to handle that flow. The diameter is 5 times as big and just that factor would increase the cost by 25 times. However the construction of the pipes changes and the complexity of the pipe laying too for many reasons. Overall the cost is going to be something like 50 times and possibly 100 times if the terrain is difficult.

That means the cost is going to be at least $6.4 billion for the equivalent of a single irrigation channel flow of water. If we wanted to do the equivalent of 10 irrigation channels, which would be significantly increasing the capacity to irrigate in the Darling, the cost would be around $13 billion with a 3000mm pipe and much more risk involved.

Some further issues with long pipes include the fact that they will have to cross private property and impact the environment. Both these factors have potentially high costs for compensation.

Pipes over Mountains

Pipes going over mountains have additional problems. Pumping water uphill is expensive. Every kl of water pumped up a 100m rise takes about 100 million joules. If we want 100 kl per minute pumped then we have to provide 167 kW of power to do that. Every hour that happens, there is a consumption of 167 kW hours of electricity – to deliver 6 mega litres of water in that hour. The cost of that per hour is about $11,000. If it operated for a year at full capacity, 52 Gl of water would be pumped at a cost of at least $96 million dollars.

You do get some energy back again when the water flows down hill. It will be lost eventually because of friction and over a long pipe the friction losses are high. However, there are additional issues with water pressure and fluid dynamics that create significant risks in a long pipe with a large flow.

The take away is that mountains cost money when you put lots of water over them.

Case Study – North-South Pipeline

The Sugarloaf or North-South Pipeline travels 70 km and crosses the Great Dividing Range. It cost $750 million to construct. It uses about 260 MW hours of electricity to pump up to 75 GL per annum and less in wetter years. See the link below.



Lets work out how much energy it would cost to send water from just beyond Townsville to the Darling. Here are the key factors. 100 kl per minute sent 1600 km with the water pumped 100 m up and then dropping 300 m to an open outlet. It needs to run at a discharge rate of 1.7 kl per second and with a 1.5m diameter smooth concrete pipe most of the way and a high pressure metal pipe over the mountains, the flow rate is just under 1 m/sec. in this scenario the head loss is just over 1,000 m due to friction – resulting in a nett head loss of 800. I will optimistically assume that the overall drop is 200m and that there are no pumping losses to lift the water (which are actually large).

167 kWh x 8 = 1.3 MWh per hour to pump 6 Ml of water from source to outlet. This is using the calculation for a 100m drop/rise and multiplying it to reflect a 800m head loss. If operated full time the cost would be 11.4 GWh and a cost of $1.7 million to pump 52 Gl of water if electricity costs 15 cents a kWh.

The Bottom Line

The analysis preceding shows that there is a high cost to pumping significant amounts of water over long distances. There is a business case for doing this for augmenting city water supplies, however there is hardly a case for providing irrigation water at a cost of $32,850 a Gl. Irrigators buy water for much less than that.

My calculations are conservative. Water delivered through a long pipeline will be much more expensive. A 70 km pipeline cost over $10 million a km to build. A 1,600 km pipeline scales up to $16 billion at that rate – without complications. Operating costs for pumping water on top of the high capital cost demonstrate why this is not feasible.

I do not think this is a realistic solution to the water problem. As unpalatable as it may seem, the better option is likely to be to re-allocate water from low productivity irrigation and learn to farm sustainably – like the original owners did for thousands of years.

Why I am not using Facebook now

Facebook has been a part of my life for over 10 years. It has been a useful thing for communicating with friends and acquaintances across the world. It was very important when I was running a large online gaming community with people from almost every country involved.

However, the business practices of Facebook are at best questionable and several incidents recently have led me to stop using it.

The trigger was when Facebook put a button saying “Boost this post” on the administrative page for a group I administer. I clicked this button to see what it did, expecting something similar to what most forums do to put the post to the top of the view. Instead, it commenced an advertising campaign (on a relatively trivial message to a group) attracting charges. I discovered this when I received a message offering to increase the distribution of the advertising for further fees.

Following the link to “manage your ad” I tried to find how to cancel it. The only options I could initially find were to change capped amount to spend. I did eventually find an option that appeared to allow cancellation via a “Cancel” button and that appeared to work. But it did not! resulting in a continuation of the advertisement.

So here the real fun begins. I challenged them over a charge of 22 Euro. I suspect that many or most would just pay up and put it down to experience. I challenged this because it is as near to a scam as you can get. It may be an official one as far as Facebook is concerned.

The reply to my challenge and narrative of events was the corporatoid “you agreed to the terms and conditions”. However, as I pointed out repeatedly, I had not knowingly authorised an advertisement or to pay for such an advertisement. There was no indication that I was clicking on a button that would automatically trigger a bill and advertise a private post (to the closed group) to some unidentified audience. What sane person would authorise such a thing anyway? A reasonable person would expect to see some kind of dialogue to confirm agreement to committing to an advertising campaign, most especially when such a commitment is hidden behind jargon such as “Boost”. I have searched the terms and conditions to see where I might have signed up for advertisements by clicking a random button on their website but have failed to see this in terms I understand. It smells very scammy to me. It looks scammy. Probably is one.

What all this says to me is that Facebook cannot be trusted. Not with my online data, knowledge of friendships, personal information or to not take money from me without my authorisation.

That is why.

Investing in climate change mitigation – an investment not a cost

The debate on reducing greenhouse gas emissions is hijacked by a simple trick of language

Talking about the cost of climate change mitigation misleads because it is an investment in economic terms if you simply understand it in the right context. The context of survival

The Basics

Some background and context so that the following analysis makes sense. Skip it if you already know about it.

Climate change is real and the evidence is overwhelming. There is unprecedented agreement amongst scientists that it is caused by human activity and especially from use of fossil fuels, land clearing and unsustainable agriculture

Two widely discussed targets for mitigation of climate change are to limit it to 1.5 or 2.0 degrees above the pre-industrial baseline. We have near enough to 1 degree already locked in. 4 degrees or more are locked in if we maintain current land use and fossil fuel consumption. See https://climate.nasa.gov/vital-signs/global-temperature/ for graphs and explanations.

Projected concentrations of CO2 under different emissions scenarios, extending to the year 2500.
Projected temperature increases under different emissions scenarios, extending to the year 2500.

These graphs from the Intergovernmental Panel on Climate Change show projected concentrations of CO2 [Top] and projected temperature increases [Bottom] under different emissions scenarios, extending to the year 2500. Note how it levels off over time as an equalibrium is reached. Below is another IPCC graphic showing four pathways to achieving a maximum 1.5 degree increase in temperature.

The environmental conditions in which humans evolved can exist with a CO2 level of 350 or less. We now have over 410 ppm and rising faster than at any time observed – ever.

Mitigation will therefore require reversing the increase. The graph below shows how this could play out. 1

Modelling showing how emissions targets result in medium term warming
Further and recent analyses of CO2

Biodiversity has already been severely impacted and the (usually cautious) UN has issued a clear and urgent warning that we are destroying our planet and potentially our future as a species – Humans are acting as their own comet to drive an extinction event of the order of that which killed off the dinosaurs The disruption caused by climate change is valued at 2.5 trillion USD by the London School of Economics. It found that in that with unchecked climate change, global financial assets were effectively overvalued today by $2.5tn, but that there was a 1% chance that the over valuation could be as high as $24tn 2

The biggest losers if we mitigate climate change are the fossil fuel corporations (private and Government owned). The total stock market capitalisation of fossil fuel companies today is about $5tn – they are likely to have stranded assets if we mitigate climate change. Most of the losses will be stranded assets that used to be of value but are no longer saleable and therefore valueless.

Economic and socio-historical analyses point to dire consequences arising from water and food scarcity, flooding of low lying land, disease/plague and social unrest from combined disruption

The public debate on mitigation of climate change has been heavily focused on the cost of action to mitigate. There has been little discussion on the obvious issue of the cost to do nothing, or for that matter of doing too little. Fortunately there is some good academic research out there to draw upon.


How much are we prepared to spend on warfare? Billions of dollars each year.
Why? To preserve a way of life and other reasons. Otherwise described as investing in civic security.

Perversely, mitigation of climate change reduces the likelihood of warfare and potentially saves billions off the Defence budget. Do we often think about the costs involved in military defence of borders and protection of resources? Not much. It is understood as necessary to protect our wellbeing. It may well become an additional cost of “adapting” to climate change. History tells us this is very likely.

Border control

How much are we prepared to spend on border protection? Billions of dollars, judging by what we have seen since the 1990s. Sometimes more than a million dollars per refugee is spent to keep them away. Let’s not consider how effective it is.
Why? Similar to Defence spending but specifically directed at preserving perceived lifestyle status quo.

Again perversely, climate change is a driver for immigration both formal and informal (not legal and illegal because that is a very open question in the case of asylum seekers). Simply stated, those who lose their homes form flooding and/or water and food shortage will wish to migrate to a place where there is greater opportunity. The more desperate the refugee the more extreme and urgent the attempts to migrate will be and persistent they will be.


What resources are we prepared to put into health and medicine? The complicated answer is that it depends. To look after our own health there is a strong tendency to want someone else to look after it. To look after other people’s health – that is up to them. Effectively this drives massive investment in radical medical intervention for wealthy people and very little in prevention of chronic diseases (diabetes, cardiovascular disease, obesity etc). The dollar values for treatment of chronic diseases are astronomical in Australia. The healthcare budget is around 9% of GDP and chronic disease accounts for upwards of 25% of that. 3

Why? It comes down to human nature and its preparedness to ignore non-immediate risk. A preparedness to pay a fortune for a cure but to not care about prevention.

There are some intriguing consequences here. Firstly the root causes of the chronic diseases I have used as examples (as well as many others) have at their core over consumption of highly processed, packaged and transported food. More than 30% more food than is needed being consumed by most adults and teenagers and the nutritional and environmental impact is increased through additional processing, transport, concentration on animal products (meat, dairy etc) and addition of sugar and salt. This is discussed more in the next section.

As a result the health budget (really sickness rather than health) is increasing at a higher rate than population growth. On average 1.5% more and mostly due to demand for new and expensive services. We really want to take heroic efforts to not die and restore mobility and lifestyle. We have smokers who demand the highest levels of treatment for the disease that they have essentially brought on themselves.


What are we prepared to pay for food security? Quite a lot but nowhere near enough to actually ensure security of food production in a changing climate

Why? Food security has been the cornerstone of political power since agriculture became widespread. The fundamental premise of centralised, planned economies is to feed and protect the population in return for granting “the leader” power of life and death 4 with different degrees of autocracy.

Climate change is highly disruptive for food production and there are only small regions of the planet that benefit from the warming (Iceland, Siberia, Greenland). Changes in rainfall patterns, including variability and intensity, are the most discussed factors affecting food production but there is another factor that overshadows the others as average and peak temperatures rise – the effect of evapo-transpiration.

Increasing temperature produces a corresponding increase in evaporation from soil and a greater effect on transpiration from plants in the temperature range between 20-30 degrees. Above 30, plants shut their pores to conserve moisture. Stronger winds associated with higher temperatures add to the increased loss of plant and soil moisture. This complex system is mitigated t some degree by increased CO2 concentrations. Nett effect is that with 1 degree of average temperature increase in the Canberra, part of Southern MDB, we observe an average increase of around 100mm evaporation between 1970 and 2010 using 10 year moving averages. This shortens the growing season (without irrigation) by 2 months and possibly more.

The costs for food production are the additional water required to keep plants alive and yield at viable levels. 100mm of water per hectare is 1 Ml and costs upwards of $200 as a one off purchase or upwards of $5,000 for a permanent entitlement purchase.


Water loss is only recently being considered as an important factor in climate change. In fact, it could have the biggest impact. Evaporation rates 15-20% higher than 1990 levels can reduce growing seasons by as much as 2 months in Australia’s semi-arid regions. This feeds back into food production.

Historically, competition for water resources has been a cause of warfare and long term conflict. Reduced supply and increased demand is likely to result in increasing conflict. Feeding into the Warfare scenario.


The hotter it gets, the more energy is needed to keep people alive and more comfortable. The more that energy comes from fossil fuels the harder it will be to arrest and reverse what is happening with global heating.

The viable and easily achievable alternative of renewable energy is actually cheaper and more efficient to harvest than coal and gas sources of energy. Of course storage is an issue. Only if storage is not built. Nobody has an argument against storing water for when it is needed and the same thinking should apply to energy/electricity.


In the 1950s through to the late 1980s there was a real threat that we as a species could wipe ourselves off the planet with nuclear weapons. We found ways to avoid that. When we discovered that Chlorofluorocarbons were creating holes in the ozone layer, we stopped using them rather than be subjected to cancer-generating radiation.

Now we are faced with the possibility of destroying our ecosystem through global heating and we can show the same level of commitment to overcoming this problem as well. Trouble is that the process of warming has a lag between the pollution of the atmosphere with greenhouse gasses and the consequences. When the consequences are 20-30 years in the future it is easy for it to be “someone else’s problem”. Tragedy of the Commons scenarios step in. Short term gains override potential disaster in the future.

This means is that we must see mitigation of global heating as an investment – not as a cost

Notes and Further Reading
  1. See https://www.globalcarbonproject.org/
  2. https://www.nature.com/articles/nclimate2972
  3. AIHW 2007, Productivity Commission 2005. Healthcare stats are slow to emerge
  4. military and judicial powers

Water Sharing in the Murray-Darling

… not a drop to drink

This is a third article on MDB water and the most difficult to write. It is aimed at giving a fairly comprehensive background on water terminology and the constraints faced when trying to ration water in a very dry land with vocal lobby groups speaking to the rural heartland. A few bits of cross-checking to do. The button below has all the caveats


Water as an economic good

The National Water Account

The Murray-Darling Basin Authority

and generally, ABS and ABARES data for analyses

MDB is short for Murray-Darling Basin. 

Gl means 1,000,000,000 litres of water - approximately the size of 400 Olympic swimming pools

Ml means 1,000,000 litres of water. This enough to cover a hectare to a depth of 10cm on a quarter acre block (~0.1 hectares or 1000 sq m) to 1 metre high.

Water is special

If we can manage complex things like money that is a virtual commodity these days, why is water and its use so difficult? This article is intended to give some insight to a vital issue for people and the environment we live in.

Water as a commodity

Let’s look at what makes water so unique and why it is hard to manage this limited, highly variable and valuable resource. Then we can have a detailed look at the inhibitors and enablers for management of water in a dry land.

Water is essential.

There is no life without water, no economic production, no environment. There is no human activity that does not depend on water. It is a vital resource. The same can be said about air, land, fuel and food.

No water, no life, whether this is in the rivers or for river communities. When river species die, this is a forerunner to what can happen to communities. Fish kills are a complex thing and do occur naturally. However, when they can be prevented with a little foresight and care, there is no need for endangered species that are slow to breed and live a hundred years or more to die due to lack of attention to the basics of river management.

Water is non-substitutable.

There is no alternative for water. Economic theory is based on the existence of choice. But what alternatives are there for water? There is no alternative, there is no choice. The only exception is coastal cities that could afford to produce fresh water from seawater through desalination.

Nothing else can take the place of water. If one energy source becomes scarce we can use another. Food can be substituted. Not water.

Water is finite.

The amount of fresh water available is limited by the amount of water that circulates through the atmosphere on an annual basis. All fresh water stems from the rainfall. The amount of rainfall that falls on land is finite.

You run out of water in Australia and you do not have many options.

Water is fugitive

Water flows under gravity. If we don’t capture it it’s gone. The availability of the water varies over time and so does the demand for water. It flows through our fingers unless we store it. Water is different from air and land, because these goods don’t need to be stored: they are stocks, whereas water is essentially a flux. There are of course also stocks of water: groundwater aquifers and natural lakes. But these lakes and aquifers only can be used sustainably if they are replenished by the flux. We can store water artificially but then the stock is small compared to the flux. Annual recharge rates determine safe and sustainable yields, not the stocks.

Many people see water running to the sea or down a river past them as wasted. Until the environmental impact of building dams was understood, building a dam was a sure-fire way to win votes. Dams and irrigation are referred to as harnessing water – controlling it for human purposes

Water is a system.

The annual water cycle from rainfall to runoff is a complex system where several processes (infiltration, surface runoff, recharge, seepage, re-infiltration, moisture recycling) are interconnected and interdependent with only one direction of flow: downstream. If the flow is interfered with upstream, downstream impacts result, and externalities and third party effects occur. Many downstream users depend on the return flows of (inefficient) upstream users; increasing the efficiency of those upstream uses will decrease return flows and impact downstream. If groundwater is abstracted from an aquifer, further down in the cycle at some later point in time less water will flow in the river. If waste is discharged at some point, damage is incurred somewhere downstream. A catchment is one single system and not the sum of a large number of subsystems that can be added-up or optimised in a regular economic model.

Not just the water cycle. The water cycle is integral to the environment we live in and yet, only part of it. The local environment we lived in once provided all we needed to become the dominant species on Earth. We still need clean air and water, food and shelter to live – regardless of how different all that looks to what it did 10,000 years ago. We are organic and the world we live in is the only place we can live for any length of time. Destroy an important part of it and we can destroy ourselves by destroying other parts of the ecosystem.

Complex adaptive systems in nature are very robust. They can withstand a wide variation in temperature and other factors that impact life. However, the capacity to adapt will at some point break down and there is an Environmental Collapse. Water seems to be one of the most critical factors in collapse scenarios studied by Jared Diamond and others.

Water is bulky.

Although water is essential for almost any economic activity, there are not many examples of water being transported over any considerable distance, particularly not against the force of gravity. Where these transfers nevertheless occur, they concern water destined for high value uses (for the domestic and industrial sectors) and, in some exceptional cases, for highly subsidised agricultural purposes. Although normal commodities are shipped and wheeled throughout the globe, we do not send super tankers with water to drought stricken areas. We transport the produce instead: grains, textiles, dried fruit, etc.; commodities that house more than 1,000 times their weight in virtual water, the water required to produce it.

Water carriage consumes large portions of the lives of people living without reticulated water. Its weight and difficulty finding suitable vessels for carrying it create significant social and economic pressures. Rivers handle the transport of water very well. That is what they are, water transport. Irrigation copies nature and builds channels to transport water in a controlled way and in large volumes needed to support industry, agriculture and domestic uses. If you have none within easy access, then you need to build the infrastructure needed to transport it in channels or pipes, frequently needing to pump it as well. Any method of transporting water up hill will be very expensive. Transport by truck is even more expensive.

Water is a problem for Economists

Until recent times, water was just part of the environment we lived in. What we did was constrained by available water and there was nothing much we could do about it. With the advent of water storage and distribution and especially irrigation, water has become a commodity that can be used for many competing purposes. Because water is so useful for so many purposes, there is competition for it. Wars have and will again be fought over it.

Water is also a problem for people. Almost everyone is aware of the need to diversify an investment portfolio. To manage economic risks – hoping for the best and planing for the worst. Money can be stored (bank accounts, investment instruments) and magically grows when stored for 98% of the time. The Great Depression and Great Recession were exceptions. Withdrawing money hardly reduces the amount, given small transaction fees charged. You have to earn money, it does not grow on trees or fall from the sky. It allows trading without the messy business of finding someone who wants to trade exactly what you have for exactly what they want to trade in return.

Dams store water but, unlike money, water disappears from storage (evaporation and seepage). Water does fall from the sky and you can collect it on your own land, even store it in dams. Water is hard to value and comes in different grades. Pure water is more valuable than polluted water and it is more valuable when scarce – its value varies due to Externalities.

Two competing economic approaches to managing water:- The free market approach focused on individuals maximising benefits to themselves has been the path of least resistance until scarcity forced alternative ways of thinking. Water as a common resource to be shared for greatest nett benefit to a whole economic unit requires a Paradigm Shift in thinking before it can succeed.


Free market or a commonly owned resource?

There is a kind of industrial water cycle of inflow, extraction and return

Opportunity Cost

Opportunity cost is another important consideration in economics. Any use of a resource produces a return (profit or similar) and there is a corresponding lost opportunity for other activities that could have used that resource. Therefore a farmer using a Ml of water to improve pasture might make a personal gain of $214 but the nursery downstream could have used the water to generate $17,0001.

Tragedy of the Commons

In the 19th century it became clear that common resources with an economic value would almost inevitably be taken over by those who could exploit them to the detriment of others. The English Common was the prime example, where an individual could consume or destroy what was supposed to be for the common good – especially for the poor. Tragedy of the Commons is the economic term to describe this and it is evident in fisheries, shared land and even air and water now. Then there is the associated economic assumption that there are no limits to natural resources.

Notable counter examples are evident with the traditional Aboriginal owners of Australia and other indigenous custodians 2


Losses are a kind of Externality in economic terms. Sources of loss include evaporation, absorption, diversion and unauthorised extraction. Keeping in mind that we are talking about a managed Basin.

Water Markets & Entitlement

The environment does not compete with economic and community beneficiaries for the use of water. The environment enables them to have water

Water in a dry land

Water is Finite. Water is essential. It opens up the dry interior to the west of the Great Dividing Range. The issue of who owns the water has been a vexed question. Federation could not solve the ownership of the Murray River and its water. When water flow slowed to a trickle in 1914, the rivers were no longer navigable and rail transport replaced riverboats for transport to the coastal cities. The following year saw the first water agreement with signing of the River Murray Waters Agreement in 1915, focused on resource sharing between the States. The response in 1918 was to build locks to ensure that the river would remain navigable. Those locks extend from below the confluence of the Darling up to Yarrawonga. Until the mid 1990s there were minor changes to the agreement, relating to the construction of dams and weirs.

Lots of detail about the basin and its characteristics here.

Prehistory 3extract


The Basin is made up of many geological units formed when Australia was part of Gondwana and long before it separated from other land masses (about 500 million years ago). Other units developed more recently (around 2 million years ago) as Gondwana split into its eastern and western halves; others developed about 140 million years ago when Australia and Antarctica split from India.

Over 400 million years, the tectonic units that form the foundation of the Basin eroded to a relatively flat land surface, however outcrops of the original rock remained in some regions. Volcanic activity, sometimes extreme, also created distinctive features on the landscape.

Basin development

Harsh sandy cliffs at Lake Mungo in New South Wales.
Lake Mungo, NSW

Over this ancient landscape the Murray Groundwater Basin formed around 60 million years ago. The southern part of the Great Artesian Basin underlies much of the northern Murray?Darling Basin, where the Darling River and its tributaries flow. The Murray Groundwater Basin underlies the riverine plains associated with the River Murray and its tributaries.

Basin facts

Ongoing erosion and weathering resulted in sedimentary rocks infilling the basins, while the ancient basement rocks continued to fold and change (metamorphose) at the perimeters and beneath the basins, forming the mountain ranges and outcrops that form the eastern and southern areas of the land surface of the Basin. The south-western rim of the Basin is basement rocks just beneath the surface, which form the Padthaway Ridge in South Australia and separates the Basin from the Southern Ocean.

The climate of 40–60 million years ago was much wetter than present. The basins contained large swamps and bogs, and thick sediments that were laid down in broad valleys. As streams and rivers ran from the eastern highlands, new valleys were eroded and sand and gravel were deposited as rivers fanned out across the plains. Great quantities of water accumulated in the Great Artesian Basin, which maintained connections to the ground surface or shallow aquifers. Up to 600 m of sediment was deposited in the Basin.

Rising and retreating sea levels

On the western side of the Murray Groundwater Basin, sea levels rose and retreated several times from 26 to 2.5 million years ago. The south-western corner of the basin became a sea, which at its peak (about 6 million years ago) reached Balranald and Kerang. Marine materials were deposited across the landscape in sand sheets until the sea retreated completely.

Compared with other continents, Australia has been remarkably free of volcanic or mountain-building activity in recent time. The Great Dividing Range in eastern Australia, the Flinders Ranges in South Australia and the extensive plains in between have been present for at least 20 million years.

Earth moving changes

Localised activity in the earth’s crust in ‘recent’ geological time had significant influences on soil characteristics, groundwater quality and the modern courses of the rivers.

Around 3 million years ago, the uplift of the Pinnaroo Block, near Swan Reach on the lower River Murray, blocked the flow of the river and over time created the massive but shallow Lake Bungunnia. The lake is thought to have covered 50,000 km², from Blanchetown in South Australia, to past Lake Mungo in the north, to Boundary Bend on the Murray in the east and arms extending southwards to near Sea Lake in the Victorian mallee. Salt lakes through the region, such as Lake Tyrrell, are believed to be remnants of the ancient Lake Bungunnia.

Lake Bungunnia existed for 2 million years during a time when the climate was much wetter or there was considerably less evaporation, conditions were humid and the landscape was heavily vegetated. About 600,000 years ago, the Pinnaroo Block was breached and the ancient and much wider River Murray cut a deep gorge through sediment to makes its way to the sea.

The main sedimentary rock deposited in Lake Bungunnia, and underlying much of the Mallee — the Blanchetown Clay — provides a barrier between surface water and underlying saline aquifers in modern times. In many areas, the layer slows down leakage of irrigation water into the river. However, as the river carved a new course, new aquifers formed that provided a direct connection between the salt store in the soil and the Murray.

In the central catchment, the course of the Murray and several other rivers changed about 25,000 years ago as a result of an uplift of land from Echuca to Deniliquin, called the Cadell Tilt — effectively a large block that stopped the Murray and Goulburn rivers and two very large lakes formed. Over time and with the melting of glaciers in the Great Dividing Range about 20,000 years ago, water headed north to create the Edward River, and the Murray created a new course to the southwest (now called the Barmah Choke), to follow its current course, created by the ancient Goulburn River, to Swan Hill. Green Gully, west of Mathoura is believed to be the former course of the Murray, as are the lower reaches of the Wakool River.

The Barmah Choke has resulted in regular flooding of a large area of the floodplain in the area, enabling the establishment of the largest stand of river red gums in Australia in the Barmah–Millewa Forest. The choke provides a challenge for water management as it limits flow to 10 ML/day, so downstream supply of irrigation or urban water needs to be scheduled to avoid unseasonal flooding of the red gum forests.

River formation

The most significant period in the formation of the rivers, dunes and alluvial plains of the Basin was during the glacial cycles of 10,000 to 100,000 years ago, when melting glaciers carried vast amounts of water and sediment from the mountains that formed the eastern highlands.

Australia’s general flatness and mostly arid climate means that the river systems are generally slow flowing, and in some cases, ephemeral. Rather than flowing directly from source to sea, the Basin’s rivers generally meander across the giant floodplains of the interior, making many twists and turns on their way to the ocean

Recent History

Aboriginal people have lived in the lower Darling and Murray river basins for at least 40,000 years. They managed to do so sustainably and had agricultural practices that were in advance of most of the rest of the world, especially Europe. Some 75,000 Aboriginal people live in the area. They have something to say, via The Murray, Lower Darling River Indigenous Nations (MLDRIN) :

Over 150 years of land clearing, water extraction, physical disruption of waterways and devaluing of Indigenous knowledge have seen the environment of the Basin severely degraded. Recent research highlights the critical condition of many Basin ecosystems and threatened species.

The Basin waterways are impacted by high levels of salinity, poor water quality, toxic blue-green algae outbreaks and infestations of invasive European carp.

Iconic native fish such as the Murray Cod and Macquarie Perch suffer from reduced river connectivity, cold water pollution from dam-releases and altered flow patterns.

In 2012, the Australian Government implemented The Murray Darling Basin Plan to address some of these issues. The Basin Plan is supposed to return the equivalent of 3200 gigalitres (GL) of water back to the river, as environmental flows.

The Murray-Darling Basin has also undergone a significant loss in the surface of land occupied by wetlands.

MLDRIN identify five key issues impacting the ecology:

  • Salinity
  • Blue-Green Algae
  • Desertification
  • Poor water quality
  • Low flows

How did it happen?

We can see a trend in favoured policy tools, from centralised regulatory directives towards reliance on market-based approaches, generally classed as quantity or price instruments. Quantity instruments, often requiring a cap, have been used as an alternative to direct regulation, commonly in the framework of a market with tradeable property rights (Rolfe and Mallawaarachchi 2007). While there has been increased use of price instruments, there seems to be a tendency to shy away from direct water pricing. For example, cost recovery for water was only ever limited to operational costs, and does not capture environmental costs of extraction. [4 So price instruments come commonly in the form of auction-style tenders, grants and rebates (Rolfe and Mallawaarachchi 2007). While subsidies have largely fallen out of favour, we appear to have come full circle, with the most recent policy, the National Plan for Water Security, embracing the use of direct subsidies to ‘modernise irrigation’.

The need for balance between environmental and extractive demands came to light as Australia’s water economy moved into its mature phase, symbolised by the signing of the Murray-Darling Basin Agreement in 1992 (Quiggin 2001). The 1994 COAG Water Reform (Water Reform) marked the initial shift in natural-resource management towards market-based solutions, and was integral to the Federal Government’s National Competition Policy for competitive neutrality in key industries. The Cap was also introduced in 1995, alongside the water reform to enable transferable property rights for water. The water-reform process was tied in with National Competition Payments to motivate its implementation, although this financial incentive had varying degrees of success in promoting the full water-reform agenda. The Payments represented the first of a string of Federal funding towards environmental management in the years to follow. It can be regarded as a precursor to the weak correlation between government spending and outcome in natural-resource policies.

Problems contributing to stagnating progress since the 1994 Water Reform related to institutional factors in water-sharing arrangements, pertaining to the specification of property rights for extractive and non-extractive uses which compromised the security of water entitlements. In 2004, the national Water Initiative was introduced to overcome these sticking points, resulting in an agreed public–private cost-sharing arrangement if environmental flows were to be increased (Freebairn 2005). It was also agreed that priority would be given to the provision of water for the environment ahead of extractive use, representing a fundamental shift from the view that water management is designed to coordinate increased water use (Connell and Grafton 2008). Discussions on missing property rights over externalities associated with return flows also took place, in particular on the impact of increased water-use efficiency on downstream users; and the implications that water trade between hydrological systems has for water quantity and quality. Following from this was the introduction of ‘exchange rates’, in part to try and capture transmission gains or losses for interregional trading. This was in spite of there being significant knowledge gaps in understanding hydrological systems, which raises concern over the prudence of using those exchange rates. Another example where a rush for action overshadowed the need for robust information and evaluation is the Landcare program. Government failure in this instance led to excessive and poorly distributed public expenditure on small on-ground works (Pannell 2008).

Other prominent programs developed during this period include the Living Murray Initiative and Basin Salinity Management Strategy. The Living Murray began in 2002, aiming to deliver environmental improvements through the Water Recovery and Environmental Works and Measures Programs. The 2001 Basin Salinity Management Strategy focused on salinity-related problems in the Basin, and is linked to the National Action Plan for Salinity and Water Quality. The relevant governments also agreed to build salt-interception schemes under the Joint Works Program to achieve salinity reduction at Morgan, South Australia (which is at the end of the Basin). These initiatives represent substantial funding to deliver environmental improvements at target sites, with increasing reliance on market mechanisms, although still conspicuously avoiding direct buy-back. This shift away from ‘command-and-control’ policies reflects greater public acceptance of economic instruments in environmental management.

Further policy development came in January 2007, when the Federal Government announced the National Plan for Water Security — since renamed ‘Water for the Future’ by the succeeding government in 2008. The strategy of this Plan was in accordance with the objectives outlined in the National Water Initiative; specifically; to address over-allocation, to modernise irrigation, and to create a transparent water-management system. By this stage, market-based instruments have become fairly mainstream, with one-third of the funds to be directed at buying back entitlements. Water information has also become a priority area, and for the first time irrigators are required to disclose water-use information to public institutions. This was done in parallel with efforts to improve basin-wide hydrological modelling.

Finally, the Murray Darling basin Plan was developed to implement over $10 billion of funding to restore the health of the MDB. So much could be written about this, however I will refrain and point you to this: MDB Plan. I offer the caveat that there are many divergent views on the effectiveness of the Plan in its iterations.

Wet years through the 1950s-70s masked the underlying problems so clearly identified by MLDRIN. Dam building was at its peak. Economic development in rural areas was a sure vote winner. Fertiliser and irrigation produced bumper crops. More land was cleared on more marginal landscapes. Imported crops and orchards spread across a fundamentally dry landscape evolved for drought and flooding rains. Dams and the water they stored could solve all problems. Until …

The Millennium drought

Water is Non Substitutable. When there is no water, you cannot grow crops. Even if you have on farm storage, that runs out. The big dams, of course hold much more water, however that water is controlled by someone else. So, when the millennium drought came along there was a crisis. Farming had become dependent on abundant water and previous droughts had only resulted been speed-bumps in progress.

What was different in the Millennium drought is that the environment had reached a tipping point. Extraction of water from the MDB exceeded the amount available. Low flows in the rivers and low dam storages combined to stop some agriculture completely. Adelaide had stinking, almost undrinkable water. Dying trees were visible signs of environmental collapse. Fish kills were prominent. Salinity problems were more evident. Blue-green algae was a widespread problem. We had an inevitable surprise that was foreshadowed in earlier droughts and low flow in 1944, ’68, and the early 1980s. Basin Communities were on the verge of collapse and it all came down to having enough water.

Damn Dams

Water is Fugitive. That is why dams are so popular in a dry land. Water will run to the sea if given the chance and people have tried a lot of methods to capture water and use it for themselves. On farm dams are the most obvious way to capture water however there is evidence to suggest that (often illegal) diversion and use of groundwater are of similar orders of magnitude in their consumption of water.

While water runs to the sea, it still contributes to economic value. You cannot water-ski or fish in a dry river. Recreational benefits (economic and social) flow 4with the water. regulated water in dams and locks benefit the local communities and those who do not receive the “natural flows” lose the benefit.

Dams are a way of managing risk. Risk that there may not be enough water the next year. Risks that there may be a flood destroying produce and infrastructure. It is assumed that the environment can look after itself and that personal economic concerns are paramount. In the early years after a dam is built choices follow along the lines predicted by economics. Water risks are managed and therefore farmers can be more confident with fewer risks to manage.

A decade down the track, and the dam is no longer considered as managing risks. It is part of the new normal. A normal that creates an expectation that consumers of the water are entitled to access for increased economic growth. It is the fault of Government if there is not as much water as your farm’s strategic plan requires.

As a result you get radical ideas such as the Tilt Australia Policy 5 to divert water from the north and inland from the Great Divide “so that XXX Gl of water does not just run to the sea”. The reason these measures do not work is …

Water is Bulky. This is why it cannot be stored conveniently. Large scale storage is expensive and requires a collective effort to build and manage. Government is the most likely owner and builder of such infrastructure and this is the case in the MDB. Water is also heavy in bulk. A cubic metre weighs a tonne – literally. Lifting a tonne of water up a 500m slope requires more than 20 kWh of electricity or around $2-3 at industrial prices. Therefore, one Gl of water pumped that way would cost $2-3 million. Plus other infrastructure costs like pipes, pumps and land for them to cross.

When someone who lives on tank water needs to import water by truck, it costs around $50-100 per 1,000 litres. You only need to see these trucks struggling to get up any decent hill to know that it is heavy. The good thing is that it is easy enough to pump the water, although time consuming if up hill.

Rivers are highly efficient water carriers by comparison with any other mechanism. The water flows under gravity and the carrying capacity of large rivers is very flexible. But, if you are any distance away form a river you are faced with an expensive pumping setup to get the water to you.

Irrigation co-operatives solve this problem by funding (usually with Government support) the construction of irrigation channels or, more recently, pipes. Branches and local channels distribute the water over the “last mile”. This mechanism separates the water used for irrigation from the water in the river channel. That has quite a few consequences for wastage and ownership.

Entitlements and how they came about

Entitlements for water came about when it was recognised that more than just a Cap on extractions was needed to regulate a complex system of rivers with vastly differing environmental concerns, usage patterns and population densities.

NSW passed legislation in 2000 effectively granting water entitlements to landholders, the link gives an idea of how complex and inconsistent are the underpinnings of regulation for these notional entitlements. This one gives an idea of how difficult it is to track and account for water.

A Cap was put in place in the mid 1990s as a temporary measure to avoid potential disaster (as nearly happened in the early 1980s). The cap is now regarded as over generous and established entitlements that could not be met in most years. To address this institutionalises overallocation, water was to be bought back. Incorrectly, this is usually referred to as returning the water to the environment. No water is actually returned it is just an accounting term. If anything it is a measure that allows transfer of water from one place of use to another.

No matter how it is analysed, the notional entitlements that landholders have for water greatly exceeds the amount available, even in a good year. Given that forecasts are for 10% or more reduction in long term water in the MDB, due to climate change, there is more pressure on available water.

Allocations against entitlements can be expected to be well below 100%. In some regions there have been 0% allocations due to no water flowing in rivers or irrigation channels. This is at a time when evaporation rates are increasing. Less water available – more water needed. Not a promising equation.

Administering Entitlements

The Water Act is the legislative mechanisms for regulating water use in the MDB. It defines the environmentally sustainable level of take (ESLT) and the Sustainable Diversion Limit (SDL). There is a Baseline Diversion Limit (supposedly as at June 2009) that subsequent ESLT and SDL work from.

The task of setting the ESLT is the key to achieving the objectives of restoring Basin water resources to environmentally sustainable levels of extraction. The Basin Plan 2012 (Cth) is the formal mechanism for achieving the objectives through the determination of an ESLT, an annual long-term average sustainable diversion limit for the entire Basin (SDL), and for every water resource area. Those SDLs must reflect the ESLT.

The setting of the SDL identifies the volume of water by which Basin-wide diversions need to be reduced in order to achieve the SDL. i.e. it identifies the volume of water aimed to be recovered Basin-wide and annually for the environment (recovery amount). That recovery amount is calculated as the difference between the June 2009 baseline and the SDL. The Basin Plan was legislated in November 2012 and set the SDL at 10 873 GL per year, producing a recovery amount of 2750 GL.

See the National Water Account 2017 for an example of these mechanisms in action. You can give it a miss …

Entitlements and Allocations


In short an Entitlement is enduring. An Allocation is what you are able to get in a given year, based on multiple factors that amount to the notional amount available after taking into account the needs of the environment, social/urban/town needs, channel flows and downstream needs. The above figure shows how variations may exist across dry and wet years.

Notionally, you could sell an excess Allocation in a wet year (for you) to another location that had a dry year or who wants to store the water in a dam for use in a subsequent year. You can also sell an Entitlement which transfers the ongoing right to water for ever. The way trading of Entitlements and Allocations plays out is complex and, due to having been in place barely 10 years, the market is not stable at all. Scenarios ranging from farm irrigation abandonment (relying on rainfall and perhaps groundwater) through to playing the water markets for gains on the margin are being realised. Generally speaking Government is not keen on either of these extremes.

The value of water Entitlements and Allocations is market driven now. There is a water trading market that determines the value of each. Allocation value is more dynamic, changing in tune with supply and demand models. More expensive in dry years and less in wet ones. In a year with water abundance the water market shows clear benefits and in low flow water years there are opportunities for trading Allocations and not growing an annual crop (i.e. rice or cotton) and growing silage pasture or agistment of cattle. However, with an immature market, Market Failures are common – farmers are not making these choices, while agribusiness is more likely to do so.

When there is talk of buying up water rights for say, Cubby Station, it is generally about buying the Entitlement – the enduring right to the water. This is where discussion of Government purchase for the environment comes in. Yes, such purchases do go into the Environmental Water Account, however that does end up as water in the rivers and facilitates release of water to be used for agriculture that might otherwise have been reserved for High Security needs such as town water. It is a complex interrelationship. I may have mentioned this once or twice.


Groundwater facts from MDBA

Ground water is a somewhat difficult matter when talking about water Entitlements and Allocations. At the time when the Basin Plan was being developed, understanding of how best to manage Sustainable Diversion Limits was not sufficient to include in the regulations. However, it is known that extraction of groundwater is an important part of the basin’s hydrology. It is also known that extractions are higher than the replenishment rate. I suggest that when it has been fully analysed, groundwater will be recognised as a critical issue to address.

Unseen, ground water has been traditionally extracted without concern for the long term or other potential users. Because it is underground and out of mind it can be quite easily over exploited unequally – possibly more than surface water.

Surface Water

NWA 2017

Surface (fresh) water is what we see in rivers, lakes, dams and wetlands. It is visible and can be measured. New techniques are being used to track water from satellites and other mechanisms aimed at identifying water theft/diversions. It is one of the most fought over resources in the world. allocation of this precious resource in the MDB is critically important. Here is how it is divided up. I have used some of the NSW Government water Allocation rules terminology, since this is most relevant for what I am discussing.

High Security Water

A High Security Entitlement is a permanent right to a Share of water. This class of right is nearly always available and Town water is one example. Intriguingly some agricultural water rights are also High Security, such as the water Entitlements that Cubby Station has. High Reliability is another term used for this

General Security Water

This is the water available after the High Security water is allocated and is a flexible amount determined through multiple mechanisms. Allocations are intended to share the resources on an equitable basis. Another term that means a similar thing is Low Reliability.

Delivery Allocation

Delivery Allocation is a variation to the notional Allocation, due to restrictions in the system. Sometimes there is not water flowing due to infrastructure issues or an inability to cope with demand. These variations are local more than centralised.

Water Usage

NWA Usage 2017. Selected regional usage highlighted

Water Allocations that are not used (extracted or sold) can be carried over to future years. Availability constraints may restrict that use and there appears to be some differences in State regulation around whether you can sell these on and the exact mechanisms can change according to where the delivery of water comes from, especially when Irrigation Infrastructure Providers are involved. These variations are sometimes due to specific local factors and sometimes just because managing a large system that is new to all the regulators means there are differences in rules and interpretation.

Environmental Water

MDB Summary 2017 extract from the NWA

2017 was a year of above average rainfall. Note that total water rights (Entitlements) are 7,000,000 Ml above the amount of actual water available. In a very good year. The outlook … a decrease in water assets in storage. It brings to mind the parable of the grasshopper and the ant.

Environmental water is approximately that water which is held in the MDB to ensure the ongoing environmental health of the system. The thinking behind this is that a healthy ecosystem provides environmental, social and economic services to the Basin. The term Commonwealth Environmental Water Recovery is more a label of convenience than an actual thing that recovers water for the environment only. As previously considered, the water is in the MDB and will be subject to the Water Allocation Rules of States and the Commonwealth. Water held for environmental purposes is usually stored in dams for release when the conditions are right for maximum benefit per Gl. The owner of this water is the Commonwealth Environmental Water Holder.

This is accounted for in the National Water Accounts. The latest is found here. This is shown as a balance sheet of assets and liabilities. The liabilities are about one quarter of the assets. Add the liabilities to the entitlements and you actually have a deficit of 17% of the assets. Most organisations would consider that a crisis in their balance sheet.

It is Complex

From the MDBA page on Water Markets

The underlying basis of the water market is that it is a free market subject to all the difficulties experienced when the participants are not fully informed, there is scope for large players to dominate and it is relatively easy to circumvent the regulations. This is discussed in the next part of the article. Now look at the number of CLASSES of entitlement. History and multiple layers of Government who find it hard to agree on water have led us to this amount of complexity. Tragedy of the Commons scenarios have landed upon fertile ground.

NSW order of water Allocation

The simplified description of High Security, General Security, Surface Water, Ground Water and Sustainable Diversion Limits is much simplified. Yet even that is hard to understand. The reality of managing the MDB requires a large workforce of specialised skills and, ideally, a stable political environment to build the tools and techniques to manage the Basin. It may one day come to be.

Government and governance

This should make it all clear … Click to see a PDF about it

To make a complex system work, there needs to be clear decision making accountability and shared responsibility for implementing the key decisions around Allocations and delivery. Of course, when there is uncertainty over what the overall Plan says must be done, then there is much more scope for interpretation and ad-hocery.

Basin States and their responsibilities are outlined in the document you can view by clicking the image above. It all seems sensible, until you have a look at who fulfils some of the roles.

Count Dracula, Director of the Blood Bank

The title may be a little extreme, however the facts are that the Leader of the National Party 6 was able to make determinations and influence the way water was used. To most eyes this would be seen as a conflict of interest. It is not just one view, but shared by the farming lobby 7. Much more is contained in the Murray Darling Basin Royal Commission Report. Also Four Corners investigated illegal extractions. Overall, there seems to be significant departure from the standards one would expect from decision makers and senior officials.

The MDBA now gets to assess its own performance, since the abolition of the National Water Commission that previously performed a nationally focused review role.

A list of some of the more egregious (in)actions:

  • Excluding Basin Indigenous communities from the decision making processes for the Basin and Basin Plan
  • Placing a cap on environmental water recovery at 1,500 Gl when nearer to 3,000 Gl is required
  • State Ministers allowing (if not actually authorising) extraction outside the agreed limits and entitlements
  • Failure to recognise Climate Change as a factor to be addressed in ESLT and SDL (see below)
  • Under investment in monitoring and audit of extraction
  • Unhelpful and inaccurate use of Triple Bottom Line as an argument for preferencing economic uses of water versus the environment. 8

Water Trading

Finally, we get to water trading and some of the key things to know.


Pricing is based on a free market trading model that trades Permanent water (Entitlements) and Temporary water (Allocations). Terms such as sale of water licenses and leases approximately line up with Entitlements and Allocations but not universally. I have seen a lengthy table listing equivalent terms for Qld, NSW, Vic and SA. Federalism did not address water back in 1900 and we pay the price for that when states make up their own language and rules. Remember that 150 different classes of water right?

The MDBA is tasked with making sure that States, local authorities and those involved in training do so fairly. However, the ACCC has a role in monitoring trading too. Then the States have their own regulatory mechanisms. I choose not to describe what happened when NSW and Vic decided to block trading of water rights across state boundaries …

Pricing of water increased when COAG allowed confirmation of water rights, especially High Security. A number of the activities noted above have also distorted the “free” market. Some of the lessons are yet to be learned.

The price of water entitlement trading is interesting 9 and shows that the market is operating to classical economic theory to a large extent.

What we need to take out of this is:

1. That water pricing in the MDB is immature because it is new and patchily understood.

2. That it is unequal because there is substantially differential economic and political power between small farmers and agribusiness.

3. Valuing water at a farm gate works for individual small, however in terms of Basin economics we see economically irrational behaviours with market distortion and failures.

We can and should do better.

Notes and Further Reading
  1. See Water use in the Murray Darling.
  2. hunter-gatherer mostly but not exclusively
  3. MDBA
  4. About $5 billion per annum in recreational revenue
  5. initially a stunt by the Chaser team at the expense of Alan Jones, but later became a serious proposal to divert water from coastal rivers
  6. Article related to the Royal Commission and referring to actions by Barnaby Joyce
  7. Guardian Article
  8. Triple Bottom Line was an analysis method used when developing The Living Murray First Step Proposal. It was intended to balance the needs of the environment, economy and people. The work done found that all three bottom lines required a sustainable level of river flow and that economic and social benefits could only be realised with a healthy river
  9. http://agriculture.gov.au/water/markets/market-price-information

Water Use in the Murray-Darling

Who uses the water and on what?

This article is part two of a series on Murray Darling water and implications for sustainability. I have used information from the following:

MDB is short for Murray-Darling Basin. 

Gl means 1,000,000,000 litres of water - approximately the size of 400 Olympic swimming pools

Ml means 1,000,000 litres of water. This enough to cover a hectare to a depth of 10cm on a quarter acre block (~0.1 hectares or 1000 sq m) to 1 metre high.

In this article, I provide some analysis on who uses water for what purposes in the Basin.

Please see the following link for an interactive view of water in the Murray-Darling. I obtained most of my data from this site. http://www.bom.gov.au/water/rwi/#sf_tt/292/2018 Also a pdf of basin information from 2011-12.

Click on the thumbnail to see a full sized PDF map

How did I produce this analysis?

I have collected information from the ABS, ABARES, BoM and Agriculture to piece together land use, crop production, pricing and water usage. The figures are going to be inaccurate to some degree but they do show some clear evidence that there is something to be seen here. Why have I had to do this analysis? Mainly because the statistics provided are focused on farmers, irrigators and those with a commercial interest in agriculture or irrigation. Here, I am interested in a social good perspective on the economics of irrigation in a Basin that has mixed arid, dry land and wetland agriculture with 3 million people dependent on the MDB for water and their livelihoods.

So – the numbers may not be accurate but they will not be far wrong. To get a better set of figures would take more time than I can devote to this. Treat what is presented as arguable and good enough to have the necessary discussions around Water Policy.

Water, Uses and Value

Land use in the Basin

Figure 1. Land use by type

Pasture includes cattle sheep, pigs, chickens and other animals

We are concerned with the 2% of land that is irrigated. Productivity of irrigated land is greater than that of non-irrigated in the MDB. For rice and cotton, there is no crop without irrigation. Of additional interest is the 0.3% urban usage. These are discussed at the end of the article.

Figure 2. Rainfall zones

Across the MDB there is high variability of rainfall. Timing of rain is also vastly different. Volume of rain also varies markedly. Farm types are therefore very different and irrigation serves to provide water when there is none at the time crops and animals need it. In some cases as for rice, cotton and citrus fruit, there would be little of that agriculture without irrigations. However, only 2% of the total landmass in the MDB is irrigated.

Agricultural businesses (‘000)88.136.1
Agricultural businesses irrigating (‘000)22.19.2
Total water use (‘000 ML9 9696 663
Water applied for irrigation (‘000 ML)9 1046 377
Water applied for other agricultural purposes (‘000 ML) 865285
Change in total water use from 2015-16 (%)8.927.9
Irrigation channels or pipelines (‘000 ML)3 7142 874
On-farm dams or tanks (‘000 ML)1 324732
Rivers, creeks or lakes (‘000 ML) 2 8992 282
Groundwater (‘000 ML)1 820713
Recycled/re-used from off-farm (‘000 ML)13751
Town or country reticulated mains supply (‘000 ML)7211
Other water sources (‘000 ML)30

Note that on farm dams and tanks may be an under estimate.

Water Usage per Land Use Type

I will start with land use types

Figure 3. ABS Irrigated Area per commodity type in Ha
  • in 2016-17 FY:
  • The number of businesses applying water in 2016-17 fell 3% to 22,100, down from 22,700 in 2015-16. This reflects the increased water availability in 2016-17 due to average and above average rainfall across most of Australia.
  • Total volume of area watered increased 4% to 2.2 million hectares in 2016-17. Increases to area watered for rice, cotton and pasture fed off are driving the national increase in 2016-17. The increase in volume applied was driven by a large increase in NSW, up 46% to 3.8 ML, primarily for rice and cotton crops.
  • Pasture, cereal and other crops for grazing accounted for the largest area of crops irrigated during the 2016-17 period with 598,000 hectares, up 4% from the previous year however the total volume of water applied to pastures for grazing fell 8% , down to 1.5 million ML. Victoria, which irrigates the largest area of pasture, cereal and other crops for grazing had a 12% decrease in the volume of water applied (down to 793 thousand megalitres). This is attributed to the higher rainfall in 2016-17 compared to 2015-16.
  • Area of irrigated cotton increased 55% in 2016-17 to 328,000 ha. Increases were seen in both New South Wales and Queensland, up 50% and 65% respectively. This reflects the 59% increase in area planted for irrigated cotton in 2016-17, with a 52% increase in New South Wales and a 71% increase in Queensland. The increase in area planted in 2016-17 is due to increased water availability with higher than average rainfall seen in parts of NSW and QLD. The volume of water applied to cotton increased 79% to 2.6 million ML, with a 66% increase in New South Wales and a 108% increase in Queensland.
Figure 4. Source ABS. My simplified analysis
Figure 5. Volume of Irrigation water used per commodity

Gross Value per Ml of Irrigation Water Used

Figure 6. Gross value added of farm production by type per Ml of water.
My analysis from ABS data

This chart should say most of what needs to be said. There are some uses of water that are not very efficient users of irrigation water. High Value broadacre crops (food oil mainly), fruit, viticulture, nuts, vegetables for human consumption and market gardens are clearly the most efficient.

Compare this with the Volume applied to each commodity in Figure 5. Cotton, grazing, rice and sugar cane get the largest amounts of irrigation water. It is almost in inverse proportion to the economic value gained.

Of additional interest is the fact that the Southern Basin is where most of the high value added production occurs. Abstraction higher up in the MDB is used for lower value added uses.

The above chart Figure 6 uses five data sets to calculate the gross value of the produce for each farm type (actually a commodity type). Pricing comes from ABARES from ABS Gross Value across Australia. Total area of production per commodity comes from ABARES. Water usage per Ha for irrigated farm type form the ABS. A Yield Difference Factor, (again developed by the ABS) was used to adjust for the differences in  productivity for irrigated land growing the commodity. ABARES Yield per Ha data was used to cross check Gross Value per Ha calculations. 

GV/Ml = Gross National Value/Area under cultivation/Water Usage per Ha * Yield Difference Facto

Water for People

The previous analysis focused on water for agriculture. What about water for people? People need water for many things:

  • Drinking
  • Cooking
  • Hygiene
  • Gardens
  • Employment (industry, commerce and services all need water to operate)
  • Recreation – sporting facilities etc
  • Many other uses

Lets look at two easy to analyse factors that matter to people. Domestic water and industrial water. Domestic water costs around $3,000-$4,200 per Ml and is used for most of the needs identified above. It therefore has at least this economic value. How much is it worth if you have no domestic water? Maybe the price of bottled water at around $1 per litre or $1 million per Ml.

For industry the ABS has figures that suggest that small scale light industry adds some $108,000 of value per Ml of water. Calculations of lost GDP in Adelaide as a result of the Millennium are in line with this figure NPV adjusted.

Adelaide is at the bottom of the MDB and 40% of its water comes from the MDB. SA GDP is limited by lack of water. If there is a 2,000 fold greater value of water in Adelaide, a rational economic mind would surely say “let the water flow to the Lower Murray”.

The latest estimate form the MDBA is that as many as 3.5 million people rely on the MDB for their water. This number is increasing due to growth in the Canberra Region and Northern Basin.

Other Considerations

Nurseries, flowers and turf1.1
Vegetables for human consumption or seed1.1
Fruit and nut trees1.4
Other broadacre crops4.5
Sugar cane1.3
Other cereals for grain or seed2.3
Pasture or crops for grazing7.8

I found the Yield Difference Factor interesting. It suggests that there is a great benefit to be gained by irrigating pasture, broadacre crops and cereal grains. There is a benefit and that is why farmers irrigate to get more produce from their farms.

The YDF is just a statistical adjustment and not a measure of yield increase. It adjusts for the proportion of land devoted to irrigation of the commodity type. That is why I used it in my analysis.


Evaporation is a large pachyderm in the corner. It is easy to think that water left in a river will only be wasted, especially when you see a dry river downstream. Water evaporates in the basin at a rate higher than the rainfall. However, this is calculated across the whole surface area and evaporation from water flowing in a river channel is relatively low. It is when water is stored in shallow dams with large surface areas that evaporation rates are extremely high. Even then, the water cycle returns some 30% of inland evaporation as increased inland rainfall. Not all is lost.

Economic Value and Tradeoffs

Farmers can easily see the benefits of irrigating their farm. Increased productivity and therefore profits and sustainability matter to them. The same farmers find it harder to see the water passing their property as a common resource. This is one of the reasons that water Policy has a hard time gaining traction with rural communities.

Figure 7. Cost of water and usage by selected sectors

Figure 7 shows the usage and cost of distributed water, which is delivered through pipes of some kind. Agricultural water is usually not treated to the same level as industrial and household water. What the chart shows is that that water used for agriculture is the more than half the total used for all purposes and less than 10% of the total cost. Agricultural water is priced according to the distribution, storage and infrastructure costs to deliver it, rather than the value of water as a shared commodity. Limits on usage so that extraction is fairer are through entitlements and allocations that are administered through a complex system in the MDB.

In short, the entitlements granted to farms greatly exceed the amount of water available in all but the highest rainfall years. A Ml of water for agriculture can cost between $30 and $90 compared to $3-4,000 for domestic supply. Domestic and, to some extent industrial, water has treatment and high reliability storage costs included that agricultural water does not. Water pricing is more complex than this when taking into account water trading … use the analysis here as a starting point and an indication as to how farmers think about using water.

How do you convince a farmer that they should forego water that they could use for their own benefit to leave it in the river? When water is cheap for farmers to buy they will use it for purposes that generate relatively low value add – they still make more money by irrigating than by not doing so. If you only need to get $50 more value from using a Ml of water then it is easy to make the choice to use it to irrigate pasture and get 7 times the production for a few months as a result.

Rice. It only makes economic sense to grow rice when there is an abundance of water in the system and therefore all other “normal” water demand is satisfied. In effect this is what happens in the MDB. Rice is a planned crop that can be planted in good years and the land devoted to more water efficient purposes in drier years. This is what has been observed in the Murrumbidgee Irrigation Area when validating water pricing models for water trading. In this case economics works.

The Big Tradeoff

In economic terms there is an opportunity cost when someone consumes a resource to produce a gain. This analysis shows that there are indeed opportunity costs when low value activity consumers water and thus deprives downstream users of a resource that could have made more money.

Another article will discuss water entitlements, allocation and change in rural communities.

Darling River water

Lack of rain or too much extraction?

This article is part one of a series on Murray Darling water and implications for sustainability. You may wish to view other posts related to this issue, below. I have used information from the following:

MDB is short for Murray-Darling Basin. 

Gl means 1,000,000,000 litres of water - approximately the size of 400 Olympic swimming pools

Ml means 1,000,000 litres of water. This enough to cover a hectare to a depth of 10cm on a quarter acre block (~0.1 hectares or 1000 sq m) to 1 metre high.

Given the extensive coverage of fish kills and water shortages below the upper Darling river regions, I thought it would be useful to analyse the likely cause of the non-flowing river. The first source for this analysis is the Barma Water Resources, ‘Northern Basin Historic Flow and Usage Report’ (April 2018)

The most important conclusion for this analysis is that rainfall has been lower than average over the five year period to 2017. The rainfall has not been as low as that during the millennium drought. However, mid basin flows (Bourke) have been about the same as in the millennium drought.

Map of the Murray-Darling basin. Source MDBA

See also this more detailed map from the MDBA


Water is therefore disappearing. Part of that is through evaporation and part is through extraction. One of the most vexed issues with extraction “entitlements” is that State Governments have allowed for the “entitlement” to be extracted even when flows in the rivers are low and to allow overextraction (up to 300%) under some circumstances. The details of these arrangements vary across borders as do interpretations across local authorities. What we see as a result is a mess that renders glib statements that extractions are “within the cap” fairly meaningless. The most common reason given for irrigators not using their entitlement is “that there was no flow in the river to allow extraction”

What really matters is the science. Also a bit of economics and understanding of social impacts.

Source, ABS

What does this mean? Firstly lets work out how much water goes onto a Ha for these farm uses. A Hectare is 100m squared or 10,000 sq metres. It takes 1000 litres (1 kl) to cover a square metre to a depth of 1 m. 10,000 kl or 10Ml would cover a hectare to a depth of 1m. We can see that cotton is the second most intensive use for water. Rice uses much more and vegetable production is very efficient with large yields per Ha. Viticulture is also very efficient and profitable.

Fortunately for the health of agriculture across the Basin, water to the Southern Basin comes mainly (around 86%) from the South.

Also some statistics and facts:

It is Australia’s food bowl
72% of irrigated farming is in the Basin
43% of farms are in the Basin
50% of crops are in the Basin
50% of fruit and vegetables come from the Basin
92% of cotton comes from the Basin
almost 100% of rice comes from the Basin
74% of grapes come from the Basin
50% of sheep/wool comes from the Basin
34% of dairy cattle are in the Basin
34% of wheat is grown in the Basin
Recreation in the Basin accounts for $3.6 Billion. consisting of:
Rafting, Skiing, water sports, fishing, cruising, sailing golf and much more
This is worth more than double the value of cotton and unarguably has less environmental impact
1.8 million people in SA and the lower Murray depend on river flows for their water supply

About 2.8 million people live within the Basin itself. Canberra, Toowoomba, Bendigo, Albury and Wagga Wagga are notable. 3.5 million people use water from the Basin

The basin is home to representatives of the oldest living cultures and early evidence of agriculture dating from 40,000 years ago

Without water, Basin communities cannot survive – economically nor physically

Population distribution is in line with water availability. The mid to lower Darling is sparsely populated by comparison with the North East of the Basin and the Southern Basin. The low population in the mid to lower basin means there is less political clout to counteract wealthy lobbies.
$19 Billion in agricultural production across all types.
Intensive agriculture is practiced in the northern basin and along the east and south margins adjacent to the Great Dividing Range.

Irrigated farming is seen across than 70% of the Basin, however only 2% of the basin land is in fact irrigated. For a Basin that is a million square km in size, that is still quite a lot.

Milling, wineries, tourism/recreation, commerce, agribusiness canning plus other manufacturing and service industries are dependent on water.
The Murray and Darling Rivers were once thriving inland waterways carrying agricultural produce to market. Dams and irrigation have diverted flows to the extent that the rivers are no longer navigable through substantial parts of the year, particularly Summer.

80 species of mammals, with 62 extinct and 10 endangered
55 species of frogs, with 18 endangered
46 species of snakes, with five endangered
5 species of tortoises, with none endangered
34 species of fish, with up to half either threatened or of conservation significance
23 million Ml 1 of water is held held in public storages
Cubbie Station uses over 90% of cotton irrigation water. Its dams hold up to 200,000 Ml
Total private storages could contain as much as the Public storages and is at least half 2
The major tributaries of the Darling River are the Border Rivers in NSW (35% of inflows), Namoi (25%), Condamine (20%), Gwydir (10%), Castlereagh & Macquarie (5%), and Paroo and Warrego (5%).
All tributaries except the Macquarie are summer-flowing rivers, that is, their flows are derived mainly from summer rainfall
The Darling River provides about 12 percent of the total annual flow of the Murray River.
The Paroo and Warrego rivers are highly unpredictable, and usually do not reach the Darling River.
Average flows past Menindee in the 21st Century have been 1,800,000 Ml per annum. Around 60% of that in the 20th Century.

For full details and authoritative data see: http://www.bom.gov.au/water/nwa/2017/mdb/index.shtml
The catchment of the Murray has been in a severe drought, but not the Darling catchment. BoM records show that for the five years to 2017 rainfall over the whole Darling catchment has ranged from slightly below average to very much above average. But water flows down the Darling have dropped right off, and Menindee Lakes are down to much less than 20 percent.


Lets consider the value of water for two regions. First the Northern Basin and then the combined mid and lower Darling communities.

The farming communities in the Northern Basin get first use of the water in the tributaries to the Darling. They use it for high value intensive farming and cotton. They can get their domestic and industrial water from dams located in local valleys. The rainfall is generally sufficient to provide tank water and grow most crops, horticulture and graze animals. Irrigation water is therefore to increase production of higher value produce.

In the mid and lower Basin, below Bourke, water is scarce with low and inconsistent rainfall. There are few places to build dams for towns. Communities are generally smaller and scattered because of the climate and low productivity of the land. Without water in the Darling, these communities have almost nothing. Irrigation in this part of the river is more to maintain subsistence than make larger profits – as in the Northern Basin. Basic needs like drinking, washing and cooking water are met by the river.

So where has the water disappeared to?

Average flows in the Darling – Historical

Average annual runoff into the tributary rivers in the Darling Basin is about 7,000,000 Ml. In 1960, about 50,000 Ml were extracted for irrigation. By 1991 extraction increased to 1,400,000 Ml. By 2012 the annual surface water used in the Darling Basin was about 4,200,000 Ml . Most of this increase in water extraction is due to expansion of the cotton industry. Cotton farms like Cubbie Station extract water from rivers and store it in large, shallow dams that have high evaporation rates. The water is not used until the next cotton growing season starts. Cotton fields are flooded several times to saturate the soil and promote growth for the cotton plants. That water cannot be returned to the rivers, because it contains fertiliser, pollutants and salt.

See also: State of the Darling Report 2007 – Webb, McKeown & Associates Pty Ltd and ABARES and BoM. One Gl is the same as 1,000 Ml.

A more insidious cause of water disappearance is theft. In MDBA and National Water Accounting there is an allowance for errors. Those errors should more rightly be referred to as potential illegal extraction. There will be some errors resulting from calculations around groundwater and evapotranspiration, however, any thorough investigation into water theft will undoubtedly result in discovery of more ways farmers have diverted water that they should not have been entitled to.

Tragedy of the Commons

It appears to me that we have a classic example of The Tragedy of the Commons; where a common resource can be consumed by a small number of powerful and early exploiters of the resource to the detriment of others without the means or access to use the resource themselves. This is a human failing that has been observed over millennia and it is happening in the Murray-Darling Basin. Yes, there is a drought. The low rainfall is not the actual cause of the low water flows. It is over extraction of water. That simple.

What can we say about the fish kills due to blue-green algae? Low water flows are the largest root cause for these events, high temperatures contribute and the load of phosphates in the water plays its part. The algae thrive in warm water, phosphate rich but nitrogen poor water. This is exactly what you get when there is a low flow rate in a large river running through agricultural land. More water in the river would dilute the concentration of algae and move it on and it is not the whole story. The whole story includes climate change, agricultural practices, and water resource in a complex interaction.

Bottom line: Water extraction has continued in the upper Darling basin at unsustainable levels. If extraction of High Security Water had been limited and marginal to illegal extractions been stopped, then there would have been sufficient water in the Darling to allow for the river system to survive. As it is, the extraction of water to make private economic gains has directly led the Lower Darling Basin to the brink of ecological collapse.


Now we can take a look at the economic value per Ha for each of the farm use types. I have done an analysis to update the early 2000s estimates. There will be a separate post on this analysis that considers what might be the best use of water.

Notes and Further Reading
  1. MDBA latest figures
  2. there is difficulty accounting for all farm dams because they are unregulated and depth cannot be adequately measured form aerial data

Summary of Brews

The Brews

Up to Brew 8, this was kept in a notebook. After that brew, I used Brewfather to track recipes, inventory, batches and tasting notes.

More detail on Brews 1-4 are in the post Documenting a Journey.

Batches 6-8 were small batch experiments with the resulting batch discarded.

Batches 9-13 are discussed in more detail in Journey Pt 2

Batches 14 to 18 are described in Journey Pt 3

I plan to add to the batch list here up to the point where I do the full brew of the home grown hop and barley Grandfather Strong Ale.

These summaries are intended to give an overview of the viewing but the things I think are more interesting are contained in the Journey articles. There you will see the detail of my experiments and learning. The brews/batches are the outcome of the steps on the journey … however the journey is the interesting bit

Batch 1. First Try

My objective was to learn to ferment and use the basic equipment. I expected to better understand how far I needed to go to properly brew beer. Expectation was that I would need 3 months of trial and error to work this out.

Overall: this was a good learning experience and I enjoyed it
Learning: The main aim of this exercise was to learn to ferment. I had plenty of experience preparing yeast for bread making but this is very different.
Taste: Not applicable
Process: Basic process with instant opportunities for improvement


The first batch was simply a test to practice the process. Equipment was a barrel fermenter and using a kit bundled in with the fermenter, bottles etc. I discovered that you really need good sized equipment, especially for the boil. The supplied yeast produced a very weak ferment after two days. A second packet (probably fresh). This brew went down the sink. It was never going to be drunk.

Batch 2. Aiming to drink this

My objective was to build on my experience of the first fermentation trial and learn more about what I might need for equipment and experience.

Overall: I was able to improve the fermentation process and learned to bottle beer.
Learning: Reading online articles and a book from the library. I started to understand the full scope of what I was aiming to do
Taste: Nobody died drinking this. First up it was not so great. After conditioning it was better.
Process: I was able to follow a better process and understood the benefits of different yeasts.


The second brew was an extract brew again with the same ingredients plus what was needed for bottling. I used a larger pot to boil the wort and the barrel fermenter. I was more careful with sanitising and cleaning. The bottling exercise was messy for the first try and better after that. The result tasted rather yeasty and not that great out of the fermenter. I bottled via the tube supplied and found that there was a lot of sediment going through.

I used a fresh packet of Safale 04 yeast that worked better than the “kit yeast” in the previous batch.

After three weeks of conditioning and with 5g of dextrose per bottle the result was fairly drinkable. I took a bottle to the Canberra Brewers meeting and nobody died. I did get a wealth of useful tips for improvement.

Batch 3. Improving ingredients and equipment

My objective was to improve ingredients and equipment. This was a big step up in the process and my learning. I knew enough to understand the need for consistency and the need to avoid contact with air after fermentation. Again nobody died..

Overall: A better process and improved equipment produced an acceptable result. I was happy more because I had refined a process and learned a lot
Learning: Reading online articles and a book from the library. I started to understand the full scope of what I was aiming to do
Taste: Still too yeasty to be any good. I bottled some but decided to throw most of it away. I took this to Canberra Brewers and got polite compliments that I was learning.
Process: New equipment made the process easier to follow and especially the fermenter. The Fermentasaurus allowed me to see what was happening in the ferment and to better understand the temperature changes.


This brew used new equipment for the boil. A larger pot and some measuring equipment. I changed the fermenter to a Fermentasaurus with the pressure kit. This offered the prospect of a more controlled fermentation and better protection from air/oxygen into the fermenter. It also allowed me to monitor internal temperature a bit better with an IR thermomemter.

I bought more bottles. Grolsch type this time. I used two tins of dark liquid malt extract that is a reasonably close match to what I am aiming to make – a Porter style. I chose dry malt extract with “extra body” ie unfermentable malt sugars.

The result was better and I used a Danstar Nottingham yeast that I properly hydrated and “started” with some wort added before pitching. The ferment started overnight and completed in 5 days. This was in late April and the temperature was stable and nearly ideal for fermentation. All I had to do to keep the temperature within 3 degrees between day and night was shut the laundry door and window.

Batch 4. Serious about the chemistry

My objective was to apply my knowledge of chemistry to the art of brewing. This was a brew where I was mainly aiming to learn and get the chemistry right. The result was surprisingly good. Not only did nobody die but some people liked the ale enough to have a second taste.

Overall: A very good learning experience and not a bad result overall.
Learning: A major step forward with books from Canberra Brewers and much detailed advice.
Taste: My first acceptable ale. I trialled it with new friends at the Canberra Brewers and got detailed feedback. Still plenty of improvement to go but acceptable.
Process: New equipment made the process easier to follow and especially the fermenter. The Fermentasaurus allowed me to see what was happening in the ferment and to better understand the temperature changes.


Batch 4 was started straight after I attended my first Canberra Brewers meeting. I still used extract but also added steeped crystal malt and dark malt grains. I also used some Fuggles and Goldings hop pellets in sealed but not chilled packets. The Liquid extract I used was unhopped dark coloured and I used a dry malt extract with 20% unfermentable malts.

I setup a home made spunding valve and temperature monitoring for the Fermentasaurus because it was now getting colder and the temperature fluctuations large.

I did some research and found that the style I should be looking for was something similar to the Fullers ESB and towards a London Porter for the 1850s. I used the Safale 04 yeast again intending to standardise on it. The result was quite good and samples I took to Canberra Brewers were considered much better than previous. Again nobody died. Not even needing medical treatment.

Batch 5. All Grain and science

My objective was to further develop from Batch #4 and attempt to do an all grain mash. That is to do proper brewing rather than just fermenting well. I also wanted to do filtering to remove yeastiness. I learned a lot

Overall: A total learning experience.
Learning: A major step forward with books from Canberra Brewers and much detailed advice.
Taste: My first acceptable ale. I trialled it with new friends at the Canberra Brewers and got detailed feedback. Still plenty of improvement to go but acceptable.
Process: New equipment made the process easier to follow and especially the fermenter. The Fermentasaurus allowed me to see what was happening in the ferment and to better understand the temperature changes.

Batch 5 was started 2 weeks after Batch 4.


I setup a home made spunding valve and temperature monitoring for the Fermentasaurus because it was now getting colder and the temperature fluctuations large.

I did some research and found that the style I should be looking for was something similar to the Fullers ESB and towards a London Porter for the 1850s. I used the Safale 04 yeast again intending to standardise on it. The result was quite good and samples I took to Canberra Brewers were considered much better than previous. Again nobody died. Not even needing medical treatment.

Batches 6 and 7. Experiments with yeast and measurements

I used half sized batches to avoid wastage of ingredients to see the differences in yeast performance and practice with the temperature control on my new fermenter. Quality of the finished product was not the priority. The experiments are documented in the Journey Part 2

Batch 8. First Kolsch

The objective was to trial a new style so that I could learn more techniques and do so with a style sensitive to mistakes in the process. Therefore German Ale or Kolsch.



I used a recipe obtained from the BYO website and substituted Nottingham yeast for the proper Koln yeast style. It was an experiment more than anything. I therefore used a Pilsner extract can and additional Munich malt. Hops were Hallertau and Perle. It did not taste like a proper Kolsch – lacking complex flavours – but was clean and worked ok. I did this as a half batch to not waste as much ingredient.



AS an experiment this was a very good one. I kept 4 bottles of this to condition/mature but the real value was in learning how to best use the new fermenter – a Grainfather Conical. Temperature control is the key feature of the fermenter and it worked well.

Batch 9. A good Kolsch

The aim of this batch was to prepare a German Ale for the Oktoberfest dinner at Zeirholz brewery. I was encouraged by the results of Batch 8 and wanted to brew an authentic ale with the right yeast.



This was a good ale.


Batch 10. Strong Ale/ESB

The objective was simple. Make the signature style, using everything I had learned to date and all the new techniques with the updated equipment.



No taste testing yet. I am giving it 6 months of conditioning before tasting.


Batch 11 was a test of the new Grainfather mashing.

Batch 12. Strong/Old English Ale

This batch was a variation to the signature ale with a very long conditioning session of 9 months in a secondary (Fermentasaurus under pressure).



Tasting is due in May 2019. The long term fermentation under pressure will be the key learning from this batch. The process itself was a lot messy but can be improved with a pressure transfer kit that I have on order. I made my one pressure transfer attached to the outlet valve of the conical fermenter and it worked but made a mess and required lying on the floor to attach and detach the tubing. Also too much wastage in the tubing. The mashing in the new Grainfather worked very well with stepped mash automated. Integrated with the Brewfather app this was a highlight.


Batch 13. American Pale Ale

This batch was intended to be a new style and a test of new brewing technique. The newest thing I wanted to add was to do a primary, secondary and in key conditioning ferment.



Outcome was bad. Tasteless and bland. Most of the reason seems to be a leaking keg. It was a secondhand keg and after the primary and secondary ferments, I transferred to the keg under pressure. I topped the keg up from the CO2 cylinder and then set it aside for conditioning for three weeks. I found that there was no pressure in the keg. I then changed the seal on the lid of the keg and that seemed to do the job. Repressurised and took it to Canberra Brewers. Response- underwhelming. All hop aroma and most of the flavour was gone. Experience!


Batch 14 was not brewed

Batch 14. German Brown ale

The aim of this exercise was to do an Altbier style and broaden my experience of styles.



This was a good ale. I liked it and have it in a keg conditioning for 9 months. The process was the same as for Batch 9 and variations in ingredients. No secondary fermentation in the Fermentasaurus because I was using both of them.


Batch 16. Galaxy Pale Ale

After Batch 13, I wanted to revisit the style and see if I could do better. This time using a simplified process and a new keg. Simplified ingredients by using only Galaxy hops.



I was very happy with this one. I did no dry hopping and no secondary in the Fermentasaurus so I did not learn as much as I could have. However, the simpler process and ingredients list seemed to work. The taste test was reasonably well received. Bitterness and malt were good. Hop flavour and aroma were lacking. This was in line with my objective. One packet of BRY-97 and one of Safale 05 yeast this time to make sure there was plenty of yeast activity.
I may look to some hop additives to adjust this batch … stay tuned


New information and tracking

From Batch 17 on I am tracking the fermentation in detail. I now have two Tilts a black and a red. The red works better in the stainless conical fermenter and the black one works well in the Fermentasaurus. Red = Primary ferment and Black = secondary. I also have a Plaato device that measures gas production in the primary. When it integrates with Brewfather I will add those graphs too.

Batch 17. Kolschy APA

The objective of this batch was to correct for the lack of hop flavour and aroma. It was a January brew in near 40 degree heat. I decided to use the German Ale hops, Hallertau and Perle with Cascade to finish off as a dry hop. Unusual but worth a try.



Very happy with this. Taste test at Canberra Brewers in April was very well received. The somewhat unusual hop combination created interest. I used two packets of BRY-97 and did all the fermentation stages in the temperature controlled conical fermenter. The glycol cooler worked overtime and kept temperatures within a degree of the target.


Batch 18. Cascade APA with Citra

The aim here was to do a more authentic APA and be thorough in my preparation and brew process.



First taste on 6 April was not too bad aroma and flavour are there. A few esters to clean up with more conditioning – I tasted at 12 degrees so cooling it will help. A bit cloudy from the first pour but that should settle down. The ferment was over 13 days and then transferred direct to a keg. Dry hopping was done on the 10th day in the conical fermenter and with that I added some additional malt extract to restart fermentation and thus clean up any oxygen. We will see how that worked.


Brewfather measurements

I have been brewing beer…
Tilt, Plaato and MyBrewbot are discussed

Updated with new things

Odd title, if you know nothing about brewing. The way I have been brewing – is likea glorified science experiment. Being scientific about brewing means planning, measuring, monitoring and adjusting to get the right biochemical reactions to take place and avoiding unwanted side effects.

Brewing is both art and science. The art is in the design and making of wort and the science is mostly in the fermentation and conditioning

Click image to visit the Brewing Page

The art is akin to cooking. Easy to cook a meal that is edible but to make something that excites people takes training and dedication to learning the art. I think the art applies up to the point of fermentation. From then on it is largely a matter of processing. If you do not get the basics wrong then the yeast does its work and you do not spoil the result. Again it is like cooking where the preparation is finished off in a well prepared oven.

It is hardly surprising that brewing and cooking are similar because beer is really just food that you drink. Enough of that.

This article is about my experiences with Brewfather software and measurement tools for temperature, pH, Specific Gravity and general fermentation progress.

Does measurement matter

This is more a matter of opinion than fact but I do think that measuring matters. For me the key is to be able to have a repeatable process that I know works the way I want it to. There is a lot of received wisdom in brewing that is rooted in circumstances that may not apply to me. Therefore, developing a process that works for me is a matter of trial and assessment of the results. Measurements help me to understand what is happening in the brewing and most importantly the fermentation stage.

Reviews – sort of

These are my personal reviews of the usefulness and effectiveness of the tools. There is a rough order of importance to me. I have not tried to review all the features available but have focused on what matters to me.


This is quite an outstanding piece of software. I looked hard at BrewSmith and other software and found Brewfather to be much more usable and greatly flexible. The monitoring tool for fermentation is very sophisticated. Support when I needed it. It works on all browsers I have tried.

Fermentables and additions
Hops and yeast
Mash and ferment profiles

The software helps tracking inventory of malt, yeast, additives and hops. I offers alarms to guide you through multi step mashes, boils, ferment and conditioning. These are convenience features that work for me. There are profiles for different mash and fermentation styles that can be heavily customised. Here is the link to the site if you want to try it yourself. https://brewfather.app/

Style characteristics in Brewfather

Recipe design is a highlight for me. The ability to adjust ingredients and the process and see the effect of any change on the characteristics of the brew has helped me to better understand what I am doing and to make better choices. Adjustments to water are difficult and time consuming to calculate manually, however Brewfather has a very neat tool for helping decide what adjustments to make to achieve a specified target profile per type. You can select your desired BJCP style and the software shows a graphical representation of they key parameters for that style. The final gravity in the image above could be increased to the recommended 1.010 by shortening the beta amylase step in the mash by 5 minutes.

Fermentation tracking

Fermentation tracking is what attracted me to Brewfather in the first place. The graph above shows a recent brew tracked by a Tilt device. The wort was at around 22 degrees when I pitched the yeast and started tracking. The main ferment had finished in 5 days at a fairly constant 17 degrees. It is very useful to see the progress of the fermentation.


  • The recipe designer and water analysis are a highlight
  • Graphing of fermentation progress from Tilt devices
  • Alerts for mash and boil tasks
  • Frequently improved with updates
  • Support via facebook
  • It is in the cloud and therefore easily accessible out of home
  • Free version is highly functional


  • Still being developed so you may find some inconsistencies
  • Subscription service required for the advanced features
  • You need to integrate monitoring devices to track fermentation (not too hard)


This is a really good product that has a few small things to iron out. It does what it says it can do and is quite easy to setup. Probably the best available measuring tool for fermentation.

The Tilt is a small cylinder that does what the name suggests. It tilts in wort and the angle of that tilt plus the temperature gives a good indication of the SG of the wort. A good estimate – not accurate. But then who really needs accurate because the SG is a given not something you can control. The final measurement with a refractometer is the true final SG.

Using a Fermentasaurus and an IR thermometer to check the Tilt accuracy for temperature measurements, I found the Tilt to be very accurate. It still needs calibration to adjust for around 0.2-0.3 degrees C.

I found the Tilt easy to setup and use. I also found that I needed to get an automatic logger to take readings otherwise I would have to be constantly moving to the fermenter to take readings.

Two technical issues mean that readings can be highly variable. Firstly, bubbles and krausen can stick to the side of the Tilt and alter readings for SG.

Cleaning and sanitising the Tilt has been simple and this is important for a device that sits in the wort/beer the whole ferment. Battery life seems ok for at least half a dozen ferments but changing the battery requires re-calibration.

Calibration is a little bit tricky. Instructions try to simplify the calibration process but I found that I needed to pick several temperatures and SG points to get decent accuracy. I used sugar solutions of SG 1.010, 1.021, 1.032 and 1.045 to calibrate the Tilt. With just the suggested 2 – tap water and one other (1.019) I found that the higher gravities were showing odd readings, out by 0.005 or so.

A new Tilt App is available that is slightly better at calibration, however it is in advanced beta and changing rapidly so I cannot be sure of its performance yet. It does nave a local logging feature that could be useful, however requiring that you dedicate a device to the task.

This is the most useful measuring tool I have yet seen. It saves all that mess and fuss of taking samples of the wort and measuring then cleaning everything. It also means less chance of allowing air and contaminants into the fermenter. I use two Tilt devices. One for the primary ferment and one for the secondary ferment. Each is a different colour and can be tracked independently. If you wish you can track up to eight fermenters with different coloured devices. See also: https://tilthydrometer.com/ 


  • It gives a direct measurement of SG and temperature from within the wort
  • Operates via a phone or tablet
  • Has the ability to log to cloud services
  • Quite well designed by brewers
  • Supported by Brewfather and several data logging platforms


  • You have to manually approach the Tilt with your phone to log readings or get add on loggers like Tilt Pi or MyBrewbot to log for you
  • Bluetooth range is poor through stainless steel fermenters
  • SG readings can be out quite a bit during vigorous fermentation
  • Battery replacement is a PITA
  • Current logging devices are immature and buggy


Plaato is a very nice looking piece of equipment and attractively designed. It does, however have some serious issues, some of which have been addressed and others are part of the design and will not be fixable. Software is in beta still so has a few issues – none too serious. however, the concept is quite good and the ability to track when fermentation starts and changes pace.

From my experience, it seems that the Plaato device was designed within the paradigm of fermentation in carboys that are placed in refrigerators. I use a Grainfather Conical fermenter with internal heating and external glycol chiller that keeps the ferment within 0.5 degrees of target (once the temperature stabilises).

In an Australian Summer, I had the Plaato showing 34 degrees at the time a Tilt was showing 17.3. The fermenter was set to 17 +- 0.5. The temperature on the Plaato cannot be relied upon except when using a refrigerator to control fermenter temperature. The Plaato website does not mention this at all, as far as I could see.

This is the opportunity to mention that the Plaato was a kickstarter funded product. The website reflects that marketing approach, emphasising uniqueness and features and a bit of science mumbo jumbo. A silly thing that they have on checkout is a statement Free International Shipping ($20) – whatever that means.

Another serious problem is that the airlock allows the water and and air to suck back to the fermenter as the wort cools from pitching temperature to stable ferment temperature (ie from 21 degrees to 17 or so). Fermenting a lager would exacerbate this issue. The same things happens when cold crashing. Plaato have now come up with an add on valve to help (but not completely) solve the problem. IMHO it needs to be included.

Despite the faults I found, I do like the app and its ability to show me what is happening with the bubbles. Instead of the logging problems I experienced with the Tilt (ie having to be at the fementer to manually initiate a measurement) the data is right there in the cloud. Once the app improves a bit this should be a very useful feature.


  • It is easy to setup
  • The app works quite well for beta software
  • Monitoring of fermentation once the ferment is at a steady temperature and bubbling is good
  • It is external to the fermenter and uses a bung thus avoiding issues with wifi signals


  • Temperature measured is only ambient temperature. Nothing like the temperature of the wort unless you have the fermenter in a refrigerator or similar
  • The water reservoir sucks into the wort if you cool it even a couple of degrees
  • The app shows bubbles per minute on a scale that means you cannot see much for most of the ferment. It should be auto scaled to show meaningful graph curves
  • Measurements are not good enough to use for accurate tracking and comparisons between batches – temperature needs to be measured by another device
  • You need to have the device tethered to a USB cable for it to operate. not quite a convenience feature


This is a promising device for logging Tilt devices. The product is still under development but seems to be heading in the right direction. The device is simple (especially compared to the Tilt Pi mess) and easy enough to setup. I have marked it down because I could not get the cloud logging for Brewfather working. Regardless, the app allows monitoring remotely and that works well enough. I expect improvements over time.

The app has quite good analytics, albeit a little confusing until you get used to the interface and colour scheme. I expect to use this device regularly.


  • Easy to setup and add Tilt devices
  • Small and efficient device
  • Promising software


  • I could not get logging to the cloud for Brewfather to work
  • A few details need to be ironed out in the software and app
  • it needs to be close to the fermenter because of poor Bluetooth range through stainless steel and needs to be connected to a USB power cable

pH, SG and water in general



Consulting Now!

You must see the big picture so that the small things go in the right direction.

From Alvin Tofler – Future Shock

Where is Consulting now?

Consulting used to be a fairly straightforward thing. A client had a problem and a consultant provided them with a solution that has worked before. Most of these simple problems are still around and there is still some consulting in that space. The challenges we are dealing with today are huge and “wicked” problems that require more than cookie cutter approaches to deliver results. Some of these challenges are:

  • Existential crises – Climate Change, water security, food etc
  • Population health – Diabetes, ageing diseases etc
  • Inequality – First World poverty, Indigenous people, Equal Opportunity

The common theme for all of these challenges is that they are complex and anything you do changes what you are observing. They are Complex Adaptive Systems.

Meeting the challenge

Complex adaptive systems challenge simplistic cause and effect analyses, instead being interactions between dynamic processes. Interactions between individual parts both affect and shape the system as a whole. A change to one part of the system can have disproportionate impacts on the system as a whole. Positive interventions produce a Virtuous Cycle and negative interventions produce a Vicious Cycle. Finding the right levers to move, and why they are the best ones, is the primary challenge.

Focusing on just the most complex and challenging end of consulting, where we are dealing with Complex Adaptive Systems ie diabetes or entrenched poverty. Here are the key principles:

  • What we know is usually dwarfed by what we do not know
  • Cause and effect analysis will not usually give reliable results
  • Generalised approaches (aka one size fits all) often fail when transported to a different community and/or context
  • Most of the time the slowest way to make lasting progress is to take shortcuts
  • Declaring success without objective evidence to support any subjective evidence perpetuates the problem
  • Providing a technical solution to a human problem does not solve the problem – but can help solve it

Remembering that we are talking about large scale and complex problems, the most effective way to deliver results (outcomes if you like) is to take a structured approach that allows for a high degree of flexibility and builds in a comprehensive capability for learning and adapting. Because the way to learn is by intervening in some way and assessing the impact of that intervention, the shorter the cycle for such interventions the quicker the learning process.

The Toolbox

If the only tool you have is a hammer then all problems will look like a nail

Big initiatives require a toolbox rather than a single tool. Agile, Project Management and the vast majority of methodologies are focused on a single tool. Here are some of the tools we will need in the box.

Project management practice is embedded in the world of mechanistic cause and effect. You are aiming to plan to deliver something predictable and tightly focused (scope, timeline and budget). This is not the world of Complex Adaptive Systems.

Program Management sits in the world where we know what we want to achieve and need to get started while we work out how to best to get where we want. It is better suited to working within complex adaptive systems.

Portfolio Management is an overlooked but key part of any large scale initiative. It looks at where the value lies and makes the call as to which parts of the initiative (projects and programs) should be scales back, kept as is or enhanced, according to the results they have delivered and what new knowledge has been discovered.

Business Agility is a concept that Evan Leybourn has been promoting. Its focus is on building an organisational capability that enables quick changes in direction to address external challenges and emergent strategic problems. Even temporary (most Government programs exist longer than 80% of small to medium businesses) initiatives need to organise themselves to be able to adapt to change and new knowledge. See https://businessagility.institute/


Let’s start with what I mean by Agile. I mean using proven methods for getting a task done quickly while not skipping much that could be important. This is an embodiment of the 80-20 rule that suggests that 20% of the result comes from 20% of the work, following many similar effects observed in business (ie 80% of business comes from 20% or fewer customers).

Key agile approaches that have been useful:

  • Daily Standup meetings to clarify and progress
  • Kanban
  • Theory of Constraints
  • Future orientation for executives responsible for strategy
  • Dynamically updated business processes in response to stakeholder needs
  • Business and information architecture
  • Continually improved services

Some of the above would not be recognised as Agile by self declared Agile Practitioners. Those are taking a narrow view of what Agile means and may miss the opportunity to help an organisation to be agile (or nimble). The important thing here is that the Purpose of the organisation needs to respond to changes from within and outside. The Operations of the organisation need to respond to changing customer/client needs as well as the organisation’s needs. Emergent strategy is probably more important than any 5 year plan, given the rapid changes in business conditions.

A word on architecture. For a business, architecture is important and especially information and business architectures. Information drives almost every aspect of an organisation’s performance so it makes sense to have a very clear picture of what your information is, in terms of master data, custodianship and access (right to know as against need to know). Similarly, knowing how your business is structured, beyond just an organisation chart, makes it easier to make better decisions and build robust services.


The hierarchy of Data, Information, Knowledge and Wisdom has a critically important role. Data must be collected on all meaningful activity. That data must be organised so that the underlying meaning becomes clear. Knowledge gained through analysis and engagement is then used to make wise choices as to where resources will deliver best value and what no longer should be done in order to free resources up for the higher value work.

Wisdom and, to some extent, knowledge are scarce. Sharing them produces flow on benefits for any organisation. Good practices, lived by staff, produce better outcomes than policies and procedures, which tend towards centralised control and limiting of sharing.

Design Thinking

When there is a clear articulation of what the problem might be, Some of the most useful tools for Design Thinking are:

  • Deep consultation with the people that matter
  • Client Journeys and scenarios
  • Deep Thinking
  • Management of cognitive biases

Design Thinking is a concept that came into being because of Wicked Problems. It crosses into other areas discussed here but the valuable part of Design Thinking is to “progress iteratively” from framing the problem too identifying needs and then taking both wide and narrow views of potential solutions so that leading candidates can be trialled for feasibility.

An example Client Journey

This is where the tools of Design Thinking come into play. There will always be some group or individuals who are more invested in achievement of an outcome than others. These are the ones who need to be heard and heard the most, because they will often know what should be done and how to make it work. They may not have the full picture but they will provide critical clues at a minimum. Consult deeply with them.

At the point where there appears to be one (or a small number) of opportunities to achieve your desired outcome you then have to decide which to chose and how to go about it. There are usually a large number of options available and it can be hard to choose between them. As with much of this article, the fastest and best way to do this is deliberately and to take enough time to plan properly. In the later section Show me the Value! the reason for this will be clear. Getting the Design right is extremely important.

Transformational Change

Transformational Change is another banner that crosses into the space of wicked problems that cannot be addressed by incremental change ie by improving what exists. Transformation happens when it is a matter of survival, in response to disruption or as a strategic initiative. I describe it as a journey to business as unusual. You do not want to be where you are or are heading towards. You want to be somewhere else and probably quickly rather than slowly.

The Consultants Toolbox

Consultants do a lot of things that can be applied to solving wicked problems and delivering high value in short timeframes. This collection of knowledge, skills and experience provides ready access to scarce capabilities that speed things up. Often considerably.

  • Facilitation of workshops, Agile activities etc
  • Analysis, especially multidimensional analyses
  • Presentation/persuasion skills
  • Written and verbal communication skills
  • Extensive knowledge of similar organisations and issues
  • Organisational change
  • and much more

Consulting Now! A journey more than a methodology

Show me the Value!

OK, so there is a process diagram that looks like methodology. Seen one – seen them all.

Still, a methodology is definitely a way of consistently delivering outcomes and provides a way to illustrate what needs to be done up front at a high level. So what is the value?

Methods guide what you do when. How you do it drives value

This and many other methodologies articulate a pattern that works in certain circumstances and require that there is an underlying capability to deliver to the methods described. Essentially, this means that the methodology has minimal value without the understanding, knowledge, experience and skills required to deliver.

In the end, value is what gets delivered so how do you know before hand whether you will get value from an initiative? Part of the answer is knowing that the approach to delivery has worked in similar circumstances and with similar clients is the best indicator that there will be value delivered. The next factor is to make sure you start out the right way; being rigorous in your early stage work and avoiding biases in any assessment. Finally, keep a team together with key people involved from beginning.

Once again, we should keep in mind that we are talking about complex, wicked problems. Value in these cases is less simple to define than with your traditional project with a defined scope, timing and budget. To get to grips with how value accrues for a transformation initiative you need a correspondingly complex approach to identifying value. A Value Chain/Stream.

Example Value Chain

A Value Chain like the one to the right works backwards from the end objective towards the objectives, initiatives and tasks that are required to deliver the outcome. This is done by asking what is necessary to do so that the outcome, objective or initiative can be completed. You then validate that the inputs are sufficient to deliver what is desired.

None of this is easy. The work may take weeks or more to develop such a Value Chain (sometimes called a roadmap) and it does take extensive consultation and analysis to get right.

When do you realise value?

Not as easy as you might think.

The takeaway is fairly straightforward. The 5% of your budget spent on working out what you MUST do, who needs to be part of the journey and laying out the roadmap for others influences 65% or more of the outcome. You need to plan things to work in your favour.

Dividing an initiative into three parts: Shaping, Design and Delivery, we can see that the early stage work has a disproportionate impact on results as measured principally by budget. Essential projects and programs will end up costing more than the original budget because the outcome is still required. This results in a high proportion of multi million dollar Government initiatives costing 2 or more times the original budget. Not only are there cost blow-outs but there are even worse things that happen. Scope gets cut to deliver on a deadline and/or budget. Quality is compromised for the same reasons. The Standish Group has documented this well in its Chaos Report and other work. The following is data from a 1986 report to the Australian Parliament and this aligns well with current observations.

Design10% 25%20%
Source: Federal Parliamentary Review of Project Performance 1986

What is behind this very asymmetric pattern that flies in the face of conventional wisdom that efficient project delivery is what matters most?

Efficient delivery of a project is great. Providing that the project is delivering what is genuinely needed. A project delivers to its agreed scope and hands over its deliverables to someone else. That is how it is supposed to work. It is someone else’s problem to make sure that the scope and purpose are correct. That usually means a program that sets an overall vision and commissions work via a project. Program management is more about shaping a vision and making sure that the vision is achieved than it is delivering detail work. So how does it go wrong?

The best analogy is to think of a highly efficient project to get a bus load of people to Melbourne. Everything is well organised with no wasted time or effort and the bus is about to arrive when the message comes through “we just discovered that you all need to be in Sydney. Please hurry there.” This is where the costs build up, by having to change direction and rework to backtrack and start again.

The critical Design stage is often compromised by shortening it and even dropping it. The rationale? No time. We know what we need to do so get on with it. Design people are hard to manage so lets sideline them. Yet, Design stage settles critical matters that affect the outcome. Co-design brings those who know what probably should be done together to agree and refine their ideas so that there is ownership and better likelihood of successful later implementation. Design stage allows for broader consultation and communication that again draws out important information that would otherwise be discovered late (remember the bus to Melbourne).

Ready, Aim, Fire. That is a much more effective way than other orders of action. An ounce of prevention … etc. You will usually get to an outcome faster and more efficiently by making sure that you do your Shaping stage thoroughly (noting that proportionately, the time should be longer for Shaping and Design than the proportion of budget suggests. In the table, I suggest a metric for timing – once again looking at complex initiatives. A three year program therefore might take a year to properly plan out before delivering the resulting work.

However that misrepresents what Consulting Now! can achieve. The Shaping and Design stages can and should be undertaking small scale trials and proofs of concept to help decide which directions to take. My former colleague Evan Leybourn would even say that you have probably failed if you are running a project. Shifting form a project methodology to the agile approaches described here allows you to deliver value early, to learn quickly so that you head off wasted effort and make sure that those who are informed and interested get to contribute early.

Last comment. Think of how many Government Programs have been shut down after not achieving their outcomes after several years. They started with such promise and a huge launch outlining what great things would be achieved, yet ended unhappily. Not long after a new Program is started with refined objectives and purpose and this one achieves a degree of success, learning form past experience. Often this too is rebooted and third time’s a charm. The reason that it worked third time is that everyone learned from the previous work. Hard lessons that could have been learned in a less expensive way. And real outcomes that could have been delivered faster.

Really the last comment. A fringe benefit of doing all this hard work is that you get a free Agile Organisation. One that is able to respond to change quickly and decisively, consistently doing the right things the right way – because it becomes culture rather than the exception.