Trying to articulate water issues, provide discussion fodder, seek other ideas, broaden and educate a bit, and, and... well, solve the world's water problems.
Wednesday, July 7, 2010
Value of Water - Murray-Darling v. Ogallala
Just read a recent article in the Australian that was reporting on the reduction of irrigation water use in the dwindling Murray-Darling system. The article reports that: “The federal government has so far bought back 803 billion litres of water entitlements, which has cost $1.28 billion.” I have always thought that the Murray-Darling basin of SE Australia is much like the Ogallala Aquifer of the central US in that the overdraft levels, the irrigation footprint, and perhaps most importantly, the rhetoric about the importance of water is very similar between the two areas. It got me thinking - If my sense of the similarities are true, shouldn't the offered price to retire water rights look similar as well?
The AU calculations are roughly: 803 billion liters equals 615,000 AF. A cost of $1.28 billion AUD = $2,075 AUD per AF. The current exchange is: 1 US $ = 1.217 AUD. In US dollars, the cost to the AU government of buying these 615,000 AF is roughly equal to $1,700 US per AF. At $1,700 US per AF, and 1.22 AF being applied to each acre in our Ogallala HPA’s, each acre of land would need to be paid $2,078 US to match the Australia situation.
Based on 100 or so bid proposals to permanently retire water rights in our GMD, the going rate was hovering right at $2,000 per acre of irrigated land needed to retire the full consumptive water use on each acre.
Unless my calculations (or logic) are wrong, seems like the value of irrigated water in our two areas is far more similar than dissimilar, and we're very much in the ballpark with the Australian government's assessment of the value of water rights. Jeesch, I hope Zetland doesn't get a hold of this evaluation!