Water resource sharing becomes most complex and sometimes adversarial during times of water scarcity. This tension usually exists between the various water users and the system operators responsible for making allocation decisions.
To avoid conflicts of interest and to ensure impartiality in allocation decisions, it is preferable for the system operator to be independent of the water entitlement holders and to use an agreed-upon set of rules in the decision-making process.
This arrangement is consistent with the principles of robust entitlement frameworks described by Young, who provides a point of reference for how water allocation regimes should be designed, emphasising the use of market-based instruments and economic principles for the equitable sharing of water.
In Victoria, Australia, legacy arrangements for how water resource systems have been owned and operated means that true independence in allocation decision making is difficult. System operator roles (also called storage managers in the Victorian context) are usually embedded within water corporations that also hold entitlements to water and an array of other competing interests such as rate-paying customers, pricing considerations, and a number of industry regulators.
In this article, I detail the experience of the Wimmera-Glenelg water resource system in addressing stakeholder concerns by strengthening the independence of its water allocation decision-making.
Case Study: The Wimmera-Glenelg system, Victoria, Australia
The Wimmera-Glenelg system is based in and around Grampians National Park in western Victoria, Australia. The water supply system consists of eight primary reservoirs and has historically been overallocated.The system is very interconnected, with multiple types of water users, a range of water qualities, is partially located within the larger Murray-Darling basin, and experiences a highly variable climate. As such, the Wimmera-Glenelg system exhibits many contemporary water resource management issues seen around the world.
Figure 1 shows the current arrangement of entitlement holders in the overall water sharing framework. In this example, GWMWater is also the appointed storage manager and plays a central role in making allocation decisions.
In 2010, the USD 688 million Wimmera-Mallee pipeline project was completed, which prompted a restructuring of the water sharing arrangements in the region. The region was also in the grip of the severe Millennium Drought, which led to an unprecedented focus on water sharing and instigated an ideological battle between proponents of water for consumptive, environmental, and recreational purposes.
The protracted nature of the drought can be seen in Figure 2, where an observed 75 percent reduction in inflows occurred from 1997 to 2009, with total system storage dropping to as low as 3 percent.
Figure 2: Total inflows to headworks storages (from www.storagemanager.com.au).
GWMWater’s role during this period was complex, with clear and demonstrable vested interests in both the broader system storage management as well as its own consumptive water entitlements.
This prima facie conflict of interest between GWMWater’s role as storage manager and entitlement holder was the focus of many difficult water sharing negotiations with other entitlement holders and so was an undesirable position for GWMWater in the long term. The growing complexity of the storage manager role, with emerging water markets, other policy developments, and ongoing severe drought and water shortages provided additional impetus for increased independence of allocation decision making.
While GWMWater could not separate itself entirely from its responsibilities as storage manager and entitlement holder, all stakeholders agreed to oversee the entitlement framework and water allocation decision-making arrangements cooperatively and collaboratively through a memorandum of understanding.6 This more participatory arrangement created a forum for more transparent and evidence-based allocation decision making and was deemed an essential element of any solution moving forward. The oversight arrangements entailed three tiers of governance that are typical of decision making in any business:
Council – a body consisting of a Board Directors from member agencies that represent organisational interests (including reputation and government relations) and is focused on strategic planning.
Executive – a body consisting of Managing Directors, Executive Officers, and other senior staff of member agencies that focuses on tactical planning and procedural aspects.
Reference Group – An operational body consisting of technical and subject matter experts responsible for water resource and entitlement planning.
In practice, the third tier met most frequently and dealt with the majority of day-to-day matters, particularly relating to consistency of decision making with agreed upon rules. The Executive and Council tiers of governance met less frequently and mostly when the formal organisational agreement was required, such as during water sharing negotiations, entitlement reviews, or when legally mandated by the government.
These oversight arrangements soon became routine with the Council and Executive tiers collapsing into combined meetings, effectively creating a two-tier governing arrangement. This more routine nature of oversight was facilitated by wet conditions during 2010 and 2011, which led to less competition for water and was accompanied by a general easing of agency and stakeholder relations.
This is perhaps a reminder that with a warming climate and predicted reductions in rainfall for many parts of the world, good water governance will be important as contests over water become more frequent and potentially more severe.
With time, the focus of entitlement holders shifted almost exclusively towards the role of the storage manager and its operational and allocation decisions. Further efforts were made to strengthen the independence of the storage manager through the deliberate creation of a dedicated water resources division within GWMWater.
An additional measure was the establishment of a storage manager website (www.storagemanager.com.au) to better distinguish storage manager decisions from those of GWMWater. Along with this came unique branding and a new logo. Internally within GWMWater, some staff members gained greater organisational independence through delegations of authority, direct reports to the GWMWater senior leadership and Board, and direct communication with media about allocation and operational decisions.
The latest step taken by GWMWater has been the establishment of a separate sub-committee of its Board to specifically deal with matters of water resources. The intent of this committee is to further make its water resource and allocation decisions transparent and separate from its other business activities.
Since the described initiatives have been implemented, water-sharing arrangements have continued with increased rigour and greater transparency amongst entitlement holders. However, the water policy landscape continues to change in Victoria.8
An expanding water grid, maturing water markets, continued competition for water, and emerging expectations around cross-institutional responsibilities mean that system management and oversight will need to evolve further. Current policy developments in Victoria suggest that a centralised oversight role for the water grid will be established at the State level as water more frequently moves across jurisdictional boundaries.
Due to water management being fragmented across agencies in Victoria, independent storage managers with clear legal instruments and transparent operating strategies and rules will become essential for providing certainty around water entitlements and markets. Fortunately for Australia, the cycles of flood and drought will provide excellent opportunities for change and improvement as lessons continue to be learned.
Andrew Barton is an associate professor at the Federation University Australia, Australia. This article first appeared on the Global Water Forum on 1 May 2017.