Environmental Flows Through Markets and Water Allocation Plans in Australia

In 1981, when the River Murray ceased flowing to the Southern Ocean for the first time in recorded history, Australians knew they had a serious water management problem.  Australians live on the driest inhabited continent in the world and are no strangers to water scarcity.  But when one of the single most important rivers in the country went dry, the question was not if Australia needed to rethink how it managed water, the question was how.  In the ensuing decades Australia designed and implemented far-reaching water management reforms at the local, state, and federal level. From fundamental changes in the nature of water rights, to comprehensive water allocation planning in every Australian state and territory, Australia’s reforms are bold and innovative.  While still too early to celebrate success, the level of commitment to wholesale change is unprecedented.  The United States can learn much from Australia’s experience.  Compared to Australia, the U.S. is rich in water resources.  However, climate change, natural climate variation, and a booming population are already stressing U.S. water supplies.  Many regions of the U.S., including places not traditionally associated with water scarcity, are proving vulnerable to new and increasing stress on their water supplies.  Like Australia, the question for the U.S. will soon become not if, but how to best begin wholesale water policy reform.  Examining reform in Australia, with particular attention to the role of water allocation planning and markets, provides valuable insight about key first steps the U.S. might take in approaching this necessary reform.