A review of socio-economic neutrality in the context of Murray-Darling Basin Plan implementation

Under the water recovery targets established by the Murray-Darling Basin Plan (‘the Basin Plan’) in 2012, the Commonwealth Government committed to recovering 2750 gigalitres (GL) of water across the Basin by 2019, to meet Basin environmental needs. The Water Act 2007 (‘the Act’) and the Basin Plan also allow for the return of a further 450 GL of water through the implementation of efficiency measures – this portion of the recovery target is known as ‘upwater’ – potentially bringing the total water recovery target to 3200 GL by 2024.

Under the Basin Plan, recovery of ‘upwater’ may only occur if the socio-economic impacts from this recovery are positive or neutral; a threshold test that does not apply to initial recovery of the 2750 GL. This principle, which has come to be termed ‘socio-economic neutrality’, has prompted significant debate in recent times, due in part to the way it is characterised. In particular, under the Basin Plan, efficiency measures are considered to have positive or neutral impacts where water users voluntarily participate in a program or where Basin States assess that neutrality can be achieved through alternative arrangements.

The New South Wales Department of Primary Industries – Water (DPI Water) commissioned Aither to review the concept of socio-economic neutrality as it is defined in the Basin Plan in the context of ‘upwater’. This report has been prepared in response to the following three objectives set by DPI Water:

• Review the provisions of existing Commonwealth legislation and policy documents relating to socio-economic neutrality requirements for further water recovery under the Basin Plan.
• Consider the potential qualitative socio-economic impacts of water recovery in the Murray-Darling Basin under the Commonwealth On-Farm Further Irrigation Efficiency (COFFIE) program.
• Develop a working definition of socio-economic neutrality that is applicable to the impacts of water recovery under the Basin Plan.
• Meeting these objectives is expected to support the New South Wales Government in its engagement with the Commonwealth Government and other Murray-Darling Basin State Governments on enhanced implementation of the Basin Plan.

This report is based on primary and secondary source material. It draws from consultations with relevant stakeholders, a review of policy documents and legislation, and a review of the broader academic literature on the socio-economic impacts of water resource management.