Victoria’s approach has always been to meet Basin Plan commitments while minimising socio-economic impacts by reducing the impact to the consumptive pool available to water users. Victoria also aims to maximise the environmental outcomes that are achieved with the water available to environmental water holders.
Victoria has been monitoring the socio-economic impacts of the Basin Plan and is continuing to build an understanding of the nature and extent of these impacts, particularly in the southern Basin.
Victoria’s report: Social and Economic Impacts of the Basin Plan (2022)
The Victorian Government has released an update to the 2017 analysis on the social and economic impacts of the Basin Plan. The 2022 analysis confirms many of the findings of the initial report, namely that water recovery for the Basin Plan has had significant social and economic impacts on irrigators and communities in northern Victoria.
The updated analysis shows that:
- Previous water recovery has resulted in less irrigation (50% less water use in the GMID), putting the viability of major irrigation districts and the industries and communities they support under pressure
- Water prices have risen significantly (by an average of $72 per ML) due to water recovery from the consumptive pool, particularly in dry years
- Irrigation businesses are more reliant on the allocation market and have greater exposure to high water market prices – up to 50% of GMID irrigators rely on the allocation market to meet their water needs
- Further water recovery from irrigators (buybacks and on-farm projects) will add to the impacts already being felt and undermine the ability of irrigation communities’ to plan for the future.
Read the 2022 Report
- Social and economic impacts of the Murray Darling Basin Plan Water Recovery in Victoria (PDF, 2.2 MB). Accessible version (DOCX, 7.5 MB)
- Fact sheet (PDF, 153.8 KB). Accessible version (DOCX, 249.2 KB)
In 2017, the Victorian Government commissioned an independent social and economic analysis to understand how irrigators and communities across the southern connected basin have been impacted by the Murray Darling Basin Plan.
Read the report
- Social and Economic Impacts of the Murray Darling Basin Plan (PDF, 8.8 MB). Accessible version. (DOCX, 5.7 MB)
- Fact sheet (PDF, 384.7 KB). Accessible version (DOCX, 170.6 KB)
The report found:
- The dairy industry in Victoria was more exposed to the water market and heavily reliant on the allocation market. The dairy sector will be the first group to be exposed to the risk of rising allocation prices.
- The horticulture sector in Victoria has purchased large amounts of Victorian High Reliability Water Shares, now laying claim to more than 40%. If allocations drop below 40% there will not be enough water to supply industries across Victoria, New South Wales and South Australia.
- Victorian High Reliability Water Shares have been disproportionately targeted by the Commonwealth in the past. This has increased Victoria's risk in dry years, as the entitlement market helps to lessen the impact of drought in Victoria.
- Reduced water availability may impact future tariffs and system infrastructure requirements.
- Irrigators who participated in Commonwealth buybacks previously are now much more reliant on allocation purchases: from 0% to 12% on the allocation market prior to participation, to 26% to 52% after participation.
Socio-economic criteria for additional water recovery
The Victorian Government, after consultation with key Victorian stakeholders and communities, developed and published a position (October 2018) on socio-economic criteria to ensure that projects for additional water recovery above the 2,750 GL target do not create adverse socio-economic impacts. This is in line with the requirements of the Basin Plan
At the Murray-Darling Basin Ministerial Council meeting in December 2018, Victoria secured agreement on socio-economic criteria to ensure that any additional water recovery above the Basin Plan’s 2,750 GL target must only occur with neutral or positive socioeconomic outcomes for communities.
There are several studies about the socio-economic impacts of the Basin Plan:
Page last updated: 05/10/22