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Facilitating and Expediting Adaptation: Learning from Australia
Adaptation to climate change in the desert Southwest, Tucson Arizona, January 2009
Prof Mike Young, Executive Director Research Chair, Water Economics and Management The Environment Institute The University of Adelaide
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Ra
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ll (
mm
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14% less 20% less
Rainfall for Jarrahdale
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Str
ea
mfl
ow
(G
L)
N o te s : S tre a m flo w is fro m Ma y o f la b e lle d ye a r to th e fo l lo w in g Ap ri l
48% less
66% less
S tre a m in flo w fo r P e rth d a m s (P rio r to S tirlin g D a m )
PERTH
Big step changes occur!
- 1%
- 3%
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1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Year (financial year ending)
Inflo
w t
o La
l Lal
Res
ervo
ir (M
L)
Lal Lal, Victoria
Average post 1997 11,600 ML
Average pre 1997 27,400 ML
Long drys – River Murray
DRY WET
Total River Murray System Inflows (including Darling River)
8 yrs 12 yrs 52 yrs
Reduced flow means much, much less use!
Users
Over bank flows
River Flow
Overbank flows
River Flow
Users
“X% less flow” misleads resource users and resource managers
Two speed policy
• Need separate instruments for– Climate shifts
• Moving average of allocations?
– Drought• Annual Variability
• One signal should not mask the other
• All should receive both including those who hold senior water rights
Robust institutional arrangements
• Governance– Expertise-based
• Property Rights– Designed to withstand the test of time– Designed to evolve– Designed to facilitate change as fast as system
shifts occur
• Not integrated but designed to work in an ever-changing world by – Identifying limits and exposing missing signals– Autonomously adjusting
State of the Art
• Shares in “Senior” and “Junior” pools
• Size of senior pool a function of moving average of allocations
• Unbundling of rights so that equity, allocation use, downstream impacts local environmental impacts and can be managed independently
• Appeals only to system-wide rules about change not individual transactions
Structural adjustment
Structural adjustment• Activity and resources among firms, industries and regions• A process without beginning and without end
Much autonomous – outside control of govt• Exposure to competition is a necessary to maintain and
increase wealth• Involves opportunity coupled with risk• Smart systems assign responsibility for managing risk to
businesses and households
Climate change and climate shifts simply increase the need for structural adjustment
A simple 3 point adaptation policy evaluation
• Impede– Loans and assistance to those who did not plan
adequately for the shift– Rewards for lack of preparedness
• Facilitate– Low cost, rapid water markets that operate
without administrative of legal interference
• Expedite– Exit payments– Retraining programs– Welfare payments not linked to production
Australian Reviews – a two-edged sword
• Assistance to some, erodes the competitive position of non-recipients
• Failure to understand how measures in one market have adverse affects in other markets
• Farm businesses compete with one another in three markets:– The market for their products;– The market for the land they use; and– The market for production inputs,
including water
Australian self criticism
Impeding change– Increases resource degradation and
ultimately makes communities poorer– Encourages innovative people move to
places where there is opportunity– Encourages investment elsewhere
Australian self criticismToo easy for governments to impede
adaptation in response to local pressures & failure to manage social and environmental externalities– Hinders those adjustments of greatest value to the
community and even to an entire region Better to improve institutional arrangements
– Clear definition of interests, rights and obligations– Charge full costs of resource use
Better to enable dynamic market responses to changing conditions– Improve understanding of issues involved– Provide increased access to information and training– Invest in specific and targeted development and
adjustment packages that expedite change
Concluding remarksAustralian history is rich with
stories of •the adverse effects of attempting to
shore up existing businesses •rather than allowing others
opportunity to adapt•Where unacceptably adverse
impacts might occur, •the first best option is to address
underlying policy and institutional arrangements
Contact:
Prof Mike YoungWater Economics and ManagementEmail: [email protected]: +61-8-8303.5279Mobile: +61-408-488.538 www.myoung.net.au
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