February 10, 2017

Striking a balance

How farmers, environmentalists and investors are working together to save the Murray-Darling Basin.

The Murray-Darling Basin is a vast network of rivers and rain catchments that stretches over a million square kilometres of Australia’s south-east corner. Named after two of the largest rivers in the world, its many tributaries sprawl across five states and territories from Brisbane all the way to Adelaide.

Ask Australians what they know about the Murray-Darling Basin though, and you’re likely to get very different answers. The average Australian probably couldn’t tell you what the Basin actually is or even where it is, but they would have heard people arguing about it on the news.

A farmer will tell you it’s the vital water source for growing a third of Australia’s food, while an environmentalist will say its wetlands are home to scores of endangered Australian species.

An Indigenous park ranger will tell you the Murray-Darling Basin’s countless waterholes hold sacred traditions that stretch back thousands of years.

Ask any politician and they’ll say it’s an incredibly complex policy area to legislate between state and federal governments from every persuasion of politics.

While it’s difficult to get a consensus on why the Murray-Darling Basin is so important, everyone agrees the future of this once-boundless water supply is in peril.

After more than 100 years of engineering and over-allocation, the drying effect of climate change over the past two decades has significantly reduced runoff to the Basin’s rivers, creeks and wetlands.

Recently however, a group of investors, farmers, environmentalists and Indigenous groups have joined forces to launch a unique program to help protect the Murray-Darling Basin for future generations.

Australia’s food bowl

In one of the hottest and driest countries in the world, the availability of fresh water is what drew Indigenous communities to the rivers and wetlands of the Murray-Darling Basin many thousands of years ago.

Likewise, European settlers began establishing farms along this freshwater system in the 19th century as they sought to feed a fast-growing population along the eastern seaboard.

While the Murray River is the third longest river in the world (behind the Amazon and the Nile), it has the lowest water flow of any of the world’s major river systems.

Realising the finite nature of this slow-moving trickle, Australian governments sought to regulate irrigation and diversion from the Murray-Darling system, with the earliest known agreement established in 1914.

Since then the level of human activity in the Basin has grown unabated, with farm produce from the area now accounting for 39% of Australia’s income derived from agriculture.

With an estimated 4 million Australians also relying on the Basin for their residential water supply and numerous other projects such as hydroelectric dams springing up along the waterways, little consideration was given to the environmental and cultural impacts of this activity until relatively recently.

The Murray-Darling Basin is also home to some of Australia’s most important ecosystems where poor management of water flows has led to the extinction of many native species over the past 100 years.

Today, about 30,000 unique wetlands within the Basin are the fast-disappearing homes to 35 endangered species of native birds and 16 species of native mammals.

While the allocation of water for human activity has been carefully managed through drought and flood cycles over the years, it’s only recently that water legislation has taken into account the needs of these natural environments.

Balancing the needs of irrigators and industry against the needs of the environment is not a new issue but Rich Gilmore from The Nature Conservancy believes they’ve found a solution to the problem through what’s called impact investing.

“Long-term success can only be achieved through a collaborative approach that includes governments, farming communities, conservationists and agricultural investors which is why we set out to develop a model where each of those parties is part of the solution,” Gilmore says.

“With already stretched public funding, there isn’t the means to meet every need but by unlocking private investment capital, we can make a financial return on that investment while also generating the funding needed to restore the environment.”

Tipping the scales

With $5 million in investment funds from NAB, The Nature Conservancy in partnership with the Murray-Darling Wetlands Working Group and Kilter Rural has established the Murray-Darling Basin Balanced Water Fund which provides water security for farmers, while also protecting culturally significant wetlands that support threatened species and ecosystems.

The fund achieves its goals by investing in permanent water rights in the Southern Murray-Darling Basin and generating annual income from the lease of water entitlements and sale of water allocations.

While ensuring irrigators have the flexibility to respond to cyclical patterns in water availability, the environmental and cultural objectives of the fund are achieved by funding the restoration of threatened wetlands which are spiritually and culturally significant to Aboriginal people.

“In Australia, we’re fortunate to be home to the world’s largest and best-regulated water market that allows water to flow to its highest-value use,” says Rich Gilmore.

“Now, when water is scarce and agricultural demand is higher, we make sure enough water goes to the farmers.

“When water is plentiful and demand is lower, we distribute more to the wetlands and the result is healthy agriculture and healthy wetlands.”

No stranger to the world of high finance and investment, Rich Gilmore spent many years working in the corporate world before turning his attentions to The Nature Conservancy’s work in Australia.

“My vision is to develop large-scale projects that enrich people’s financial, physical and cultural wellbeing alongside the conservation of nature.

“The Nature Conservancy is one of the few organisations where if you have a huge vision for conservation, that vision can be realised as we have the scientific, policy, financial and community partnership capability to make it happen.”

Although still in its early stages, the fund has already begun paying dividends to investors and the environment as well as the traditional custodians of the Basin wetlands.

Earlier this year, The Nature Conservancy and its partners oversaw a billion litres being dispersed across 11 interconnected wetlands in south-west New South Wales.

While providing a much needed boost to the region’s struggling ecology, the watering event also had immense cultural significance for the Maraura Barkindji people, who are in the process of reclaiming the land from the NSW National Parks and Wildlife Service.

“The program will eventually replicate the natural wetting and drying cycles of the Basin in order to improve waterbird breeding, growth of native plants and maintenance of refuges for fish as well as habitats for native mammals,” Gilmore says.

“I’m really excited by the precedent the fund is setting as it paves the way for other impact investment projects for conservation, not just in the Murray-Darling Basin but in other environments across the country.”

With more than 80 per cent of the Murray-Darling Basin’s river valleys rated as being in poor health based on assessments of fish, invertebrates and vegetation, there is still a long way to go to return these wetlands to their former splendour.

After a century of debate over how to balance the needs of people and nature in Australia’s fragile ecosystems, impact investment appears to now be offering an economically and environmentally sound solution.