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Blog Post · September 16, 2015

Reducing the Costs of Drought: Lessons from Australia

What do droughts in California and Australia have in common, and what lessons from Down Under are best-suited to managing mega-droughts here? At a recent conference of agricultural economists, Americans and Australians shared their experiences and research on the topic.
The meeting covered what worked well—and what did not—in managing Australia’s Millennium Drought, which lasted from 1997-2009. The “worked well” list included: water conservation in urban areas, water pricing, and cooperative governance among water managers. The Australians also depended heavily on water markets to reduce the costs of their mega-drought. The flexibility and autonomy offered by water trading helped communities allocate water quickly and efficiently to competing uses, and also provided an effective way to recover it for the environment.
Several researchers noted that water trading is an important drought response that deserves much wider use in California. Speakers noted that although trading has helped some here, California’s water market still lacks transparency—with only limited information available about trading rules, volumes, and prices.
Australians also benefited from a strong water policy foundation going into their mega-drought, including a national water initiative. This national agreement (which state and territorial governments agreed to abide by) focused on ensuring reliable water use information that is publicly shared, and also mandated the separation of land ownership and water access. These two factors have helped facilitate water management, sharing, and marketing. While separating land and water ownership may not be in the cards for California, there are other ways to improve water marketing here by strengthening water-use information. As elaborated in a 2015 PPIC report on managing our drought, several other policy priorities that were at play in Australia are also within our reach: setting clearer priorities for public health and the environment, managing demand and supply more stringently, and implementing progressive environmental drought management practices.
Australians were able to create a more resilient water system, but some researchers at the conference noted that their drought management was not without fault. One cautionary tale was that much of the costly new infrastructure put into place in response to the drought—mainly desalination and inter-basin pipelines—brought increased water supply benefits only after the drought ended, due to the time it took to plan and build desalination plants, in particular. While desalination is currently providing drinking water in Western Australia, where dry conditions have continued, plants built to serve communities in other regions have not been used because cheaper alternatives are once again available.
A key recommendation made by a number of panelists was to ensure that all other options are exhausted before moving forward with costly infrastructure projects like desalination. In addition, it’s important to take other steps to develop sound policy in areas like water information before the next drought. Because droughts are unpredictable but cyclical, long-term vision and preparedness are critical.
The takeaway from the meeting was that while the challenges and debates in California are similar to those during Australia’s Millennium Drought, the comparison is not perfect. As we continue to adapt and develop our own drought policies, it will be important to take lessons from both the successes and ongoing challenges experienced during Australia’s “big dry.”
Adam Soliman is a graduate student in agricultural, food, and resource economics at Michigan State University. He served as an intern at the PPIC Water Policy Center this summer.


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