Scott Hamilton - Sold Down the River

The Murray-Darling Basin is Australias greatest environmental asset. The story of water in Australia is written into its ancient rivers, creeks and wetlands. Its home to more than forty Indigenous nations, and it covers an area bigger than France. It is the beating heart of our regions and sustains 40 per cent of our food production.

In 2012 Australia signed up to the Murray-Darling Basin Plan, a scheme designed to create a market for its water and to safeguard the environment.

But the Plan has gone horribly wrong. It has sold our farmers and rural communities down the river. It has contributed to appalling environmental damage on the planets driest inhabited continent. It has allowed a ruthless market to form, exploited by traders who buy and sell water as if it was a currency like Bitcoin.

Scott Hamilton and Stuart Kells, both experts in public policy, have interviewed irrigators, farmers, Traditional Custodians and water traders to tell this disastrous story. Their compelling expos brings to light how we have failed to protect our most precious natural resource.

You cant understand Australia without understanding water. Sold Down the River is compulsory reading for all of us.

If the misery of the poor be caused not by the laws of nature, but by our institutions, great is our sin.

CHARLES DARWIN

Whisky is for drinking and water is for fighting over.

ROBERT BUCHAN, MAYOR OF ST GEORGE, QUEENSLAND, IN TWO MEN AND A TINNIE

Lachlan Marshall, Riverina farmer: There are lots of stories youll hear and people youll talk to as you delve into this. You are about to go down a rabbit warren that will scare the living daylights out of you. The best way Ive had it explained to me is by a person I know in finance, who lives in an irrigation area. That person said the water world is so full of profiteering and white-collar crime that the mafia in Griffith wish theyd got into it in the beginning, but they missed the boat.

The more stories you hear, the more youll see how inside knowledge is usedand how rules are flexed and broken to achieve set outcomes. Honestly, youre going to embark on a journey where you will daily say, Oh my God, I cannot believe this! And youll think back to me telling you thisbecause of the effect that its had on the community.

I remember all the people whove gone. This region was created as an irrigation region. Before irrigation it was all massive sheep stations. And then, post-war, it was a nation-building thing to bring everyone here, through the Depression. Then we had settlement and it became the foodbowl to the nation.

That is being undone. Water has gone from hundreds of dollars per megalitre to thousands of dollars. The amount of irrigation that happens is probably less than half of what it was. Someone is making a killing, but not the farmers. Water trading has destroyed our community. Its gutted it. Shelled it.

How did we come to write this book? What led us to take a close look at how Australia manages its scarce water resource?

A few years ago, we began researching political bipartisanship in Australia, as part of a project at Melbournes La Trobe University. We interviewed politicians to find examples of good and bad decision-making, with a focus on how different political parties could come together and make good policy.

One example of bipartisanshipand, more recently, a counterexamplekept coming up in our interviews: the MurrayDarling Basin Plan.

The MurrayDarling Basin is a water catchment that consists of 77,000 kilometres of rivers and streams. It covers more than a million square kilometresan area larger than France. Home to more than 40 Indigenous nations, it encompasses most of inland New South Wales, plus most of inland Victoria, a sizeable part of Queensland, most of the arable areas of South Australia, and all of the Australian Capital Territory.

In 2012, the four states and the ACT signed up to the MurrayDarling Basin Plan as a way to manage scarce water across the Basin. The Plan specified how much water could be extracted from rivers, lakes and creeks for irrigation. It also allocated water for the environment, so natural ecosystems could be protected.

We looked into the Plan, and our first major article on Basin bipartisanship appeared in February 2019 in the national public policy magazine, the Mandarin. Water, we said, provides many examples of how politics can get in the way of good policy, and how Australias federal system sometimes supports and sometimes derails bipartisan solutions.

The success or otherwise of the Plan is crucially important. An area of great social and cultural significance, especially for Aboriginal people, the Basin is home to almost 3 million residents and accounts for two-fifths of Australias total food production, including fruit, milk, beef, pork, chicken, rice, wheat, olives and almonds. The total annual value of Basin agricultural production is more than $24 billion.

The Basin is also of worldwide ecological importance, and includes 16 Ramsar-listed wetlands. Australia is a signatory to the 1971 Ramsar Convention, which aims to halt the loss of wetlands around the globe, and to conserve those that remain. These 16 wetlands are deemed to have international ecological, botanical, zoological, limnological or hydrological significance. They place the Basin at the sharp end of concerns about biodiversity and climate change.

We continued to study the Plan and its central feature, the cap and trade approach to managing Basin water. We wrote further waterrelated pieces for the Mandarin and the University of Melbournes Pursuit magazine. These articles opened a lot of doors and mouths, especially when we began to think something might be wrong at the core of our water market, which happened to be Australias biggest experiment in natural resource management policy.

The water market is large and growing. The trade in Basin water rights (permanent plus temporary) is now around $1.8 billion per year. The total value of MurrayDarling Basin water rights is estimated to be $26.3 billion. Water accounts for around 40 per cent of the value of Basin farms assets.

Farmers, brokers, bankers, regulators, market operators and even some professional water traders were eager to talk to us and to tell us what was going on in the market. The insiders we spoke to felt that few outsiders were interested in understanding the reality of the market, and that most outsiders theyd previously spoken toespecially those from academia and governmentwerent really listening at all, or were asking the wrong questions.

So we made a lot of calls and followed a lot of leads. We asked different questions. We listened. And, unlike many others who had come before, we helped put the puzzle pieces together.

To understand what might happen at the junction between modern markets and ancient water, we spoke to people with direct experience of the intersection between finance and computing (aka FinTech). Most important of all, we spoke to people from Basin communities, including Indigenous and non-Indigenous people in towns and on the land. The farmers we spoke to represented a wide variety of different types and scales of farms.

To some degree, we had a head start. The water market is a multi-disciplinary phenomenon, and we brought a multi-disciplinary perspective. Between us, wed worked in banking and finance, academia, energy, engineering, public policy, environmental science, education, regulation, consulting, auditing, politics, publishing, and journalismunder our own names as well as ghost-writing for some of Australias leading financial journos.