Murray-Darling Basin water saving subsidy led to huge spike in basin water use: study

Water management experts from three universities and the Environmental Defenders Office looked at the impact of taxpayer-funded irrigation infrastructure upgrades in the Murray-Darling Basin.

Lead author and University of Adelaide resource economist Sarah Wheeler said the comprehensive study surveyed almost 2500 farms in the Murray Darling Basin.

"Our analysis over the past decade found that irrigators who received infrastructure grants actually increased their water extraction volumes by 21 to 28 per cent, compared to irrigators who received no subsidies," Professor Wheeler said.

The subsidies aim to help irrigators upgrade their infrastructure technology to save water and return water to the environment, in a bid to increase stream flows and reinstate a sustainable level of extraction in the basin.

Instead, the researchers discovered the subsidies created a "rebound effect".

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University of NSW environmental scientist and study co-author Richard Kingsford said the program had the opposite effect of what was intended.

"The buyback of irrigation water has put water back into the rivers, but our research found the subsidised infrastructure program could be robbing Peter to pay Paul by enabling more water extractions than water recovered through the efficiency program," Professor Kingsford said.

The report found the subsidies encouraged irrigators to plant more perennial water-hungry crops, such as almonds.

Half of all irrigators surveyed agreed the taxpayer-funded program was "wasteful and inefficient", while there was further evidence the program favoured corporate agriculture more than family farms, in terms of subsidy amount per entity.

National Irrigators' Council chief executive Steve Whan said it was "quite wrong" to suggest any increase in individuals' water extraction converted into an increase in overall basin water use.

"The overall amount of water available has reduced by 20 per cent according to the Productivity Commission," Mr Whan said.

"The report is quite likely to be correct when it says farmers who have received infrastructure funding might have increased extraction relative to other farmers.

"That is because their properties are more efficient, and they will often increase production by buying water from another licence holder."

The researchers recommend further basin water and rural policy actions, including improved compliance, fines and regulation, and prioritising the cost-effectiveness of water recovered for the environment.

"We call upon the government to consider our findings as an opportunity," Professor Kingsford said.