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Reimbursing the future: an evaluation of motivational, voluntary, price-based, property-right, and regulatory incentives for the conservation of biodiversity

Biodiversity Series, Paper No. 9
M.D. Young, N. Gunningham, J. Elix, J. Lambert, B. Howard, P. Grabosky and E. McCrone
CSIRO Division of Wildlife and Ecology, the Australian Centre for Environmental Law, and Community Solutions
Biodiversity Unit, Department of the Environment, Sport and Territories, 1996
ISBN 0 642 24429 4

Appendix 2.2: Macquarie Marsh case study

Prepared by Bruce Howard
CSIRO Division of Wildlife and Ecology, Canberra

Introduction

This draft case study examines the potential of incentive instruments and mechanisms designed to promote the conservation of biodiversity in the Macquarie Marsh area of NSW. The aim is to encourage off-reserve conservation and sustainable resource use that will enable the ecosystem function and biodiversity value of the Marshes to be maintained. The focus is on biodiversity conservation, not economic development.

The area

The Macquarie Marshes are an extensive wetland system located on the Macquarie River in central NSW, approximately 100 km NNW of the town of Warren. The Marsh system covers an area that is over 100 km long and up to 25 km wide. The majority of the Marsh system is on private land except for the 18,150 ha Macquarie Marshes Nature Reserve. The Reserve consists of three blocks that cover part of each area known as the South Marsh and the North Marsh (NSW NPWS, 1993). The Macquarie Marshes Nature Reserve is the core of the Macquarie Marsh area. It is the area most frequently flooded and contains samples of all the habitat types found in the marshes. The privately held areas also contain significant wetland areas which make a vital contribution to the value of the Marshes (NSW NPWS, 1993).

The wet area is reduced to less than 1,000 ha during severe droughts and expands to more than 300,000 ha after major floods (Johnson, 1992). It is estimated that 1,280,000 ha flooded in 1955, whereas in 1990 about the same rainfall flooded only 131,000 ha (Kingsford, pers com.). This is indicative of the issues confronting the Macquarie Marshes and other wetlands in Australia, where competition from other water users has reduced the flow to the environment. Regulation of the river for irrigation and flood mitigation has reduced the amount of water reaching the Marshes and the variability of that streamflow. The proportion of water reaching a flow-gauging station at Oxley, near the Marshes, from Dubbo has halved in 50 years and the area inundated by large floods has reduced by 40% (Kingsford and Thomas, 1995).

The supply of water to both the private land and the Nature Reserve in the Macquarie Marshes gives rise to most of the issues under the focus of this case study. The competition for a limited supply of water that comes essentially from irrigation demands upstream, and conservation and grazier demand downstream, has led to conflict over the management of the Macquarie Marshes (Korn, 1993). The Macquarie Marshes depend on water from the Macquarie River, not from local rainfall.

The volume of water, either regulated or unregulated, available to the Marshes after allocation to other users is determined largely by the rules agreed under the 1986 Macquarie Marshes Water Management Plan (WMP) as well as conditions applying to irrigation that are set under the Water Act. Recognition of a need to at least partially compensate for flow regulation on the Macquarie River resulted in the 1986 WMP; this plan assured a 50,000 ML (ML = 106 litres) wildlife allocation each year and provided rules for assessing surplus flows which were designed to ensure that the Marshes' requirements received priority (NSW NPWS & NSW DWR, 1994). This allocation is in addition to any 'surplus' flow that reaches the Marsh after off-take upstream.

However, the flows received under the CMP are insufficient to maintain the full extent of the Marshes. The current flood regime is likely to result in a smaller marsh system and limited breeding opportunities for the waterbirds. Waterbirds only breed successfully when the area is under a flood of suitable magnitude and duration. If the Marsh system is to be maintained to provide conditions that sustain biodiversity values, within the Reserve and on private land in the Marshes, a priority is to address water supply problems. NSW government agencies are currently reviewing the 1986 WMP with that aim.

Biodiversity status

The Macquarie Marshes are among the largest semi-permanent wetlands in south-eastern Australia. The conservation significance of the Marshes was first recognised early this century when part of the area became a Bird and Animal Sanctuary. In 1955 it was gazetted as a Fauna Reserve and in 1971 the present Nature Reserve (some 14% of the Marsh area) was dedicated (Kingsford and Thomas, 1995). The Macquarie Marshes Nature Reserve is listed under the Convention on Wetlands of International Importance Especially as Waterfowl Habitat, commonly referred to as the Ramsar Convention (NSW NPWS & NSW DWR, 1994). They are also included on the Register of the National Estate, the National Trust Register (NSW NPWS, 1993) and the Directory of Important Wetlands in Australia (ANCA, 1993).

Land system

The Macquarie Marshes are geomorphologically and geologically unusual as an active network of streams and drainage patterns. They are part of the land system known as the Northern Alluvial Fans. There are four main landforms: braided swamps, ephemeral lagoons, channel country and gilgaied floodplains (NSW NPWS, 1993).

Waterbirds

The Macquarie Marshes provide habitat for more than 60 species of waterbirds, of which about 42 species breed on the Marshes (Brooker, 1992). For some species the Marshes are home to a significant proportion of the total NSW population. The area is one of only a few where the four species of inland egret and the three species of ibis breed together. The egret rookeries are amongst the largest in NSW. During the large floods of 1990 more than 60,000 pairs of Straw-necked, Sacred and Glossy Ibis were observed to be breeding (Johnson 1992). The Glossy Ibis (Plegadis falcinellus) is known to breed in only nine other sites in NSW.

The area is also important for nine species of migratory birds which are specified in the Japan-Australia and China-Australia Migratory Bird Treaties. The Marshes are used by 18 bird species which are classified as endangered in NSW, including the peregrine falcon (Falco peregrinus) and the brolga (Grus rubicundus) (NSW NPWS, 1993). Kingsford and Thomas (in press) recorded a decline in waterbird species numbers and density in the northern marshes between 1983 and 1993. Corresponding surveys in three other sites (Burrendong Dam, Coolmunda Dam and Paroo River Lakes) showed no decline.

Johnson (1994) examined the relationship between flooding and the breeding of eight species of colonially nesting waterbirds between 1986 and 1993. The minimum volume of water (as measured at the Oxley gauging station) required to support the breeding of all species is 220,000 ML over seven months. A volume of 300,000 ML was shown to cause a large increase in the size of breeding events. A minimum flood of three to four months is needed before breeding begins, and a flood of a further three to four months is needed for breeding to be successful for all species. All species nested in living, flood-dependent vegetation near main channels or lagoons.

Other fauna

As well as the waterbirds, approximately 130 other bird species inhabit the Macquarie Marshes along with 15 species of fish, 4 species of turtle, 30 species of lizard, 14 species of snake and 15 amphibian species (NSW NPWS, 1993).

Flora

The Macquarie Marshes contain red gum, reed and water couch, and the area is a prime example of this vegetation association. The red river gum requires seasonal flooding to be maintained and to regenerate. Prolonged waterlogging will, however, cause dieback and death. Lack of red river gum regeneration is a concern in parts of the Marshes (NSW NPWS, 1993). The area of river red gums has decreased by about 3,000 ha between 1949 and 1991, with most of this loss occurring in the Southern Marshes. Waterlogging has killed some of these gums but in most cases the major cause of loss is reduced flooding (Brereton, 1994). The cause of such waterlogging problems is attributed to the construction of the northern bypass channel in the Northern Marshes in 1970. This channel has recently been modified in an attempt to overcome these problems.

Changes to the water flow regime have altered the growth and distribution of some native species. Because the main channel in the North Marsh now receives a consistent but small flow in times when ordinarily it may have been dry, areas of Common reed and Cumbungi have increased, whilst in contrast, Water couch has decreased. This is a concern due to the importance of Water couch for waterbird feeding and for graziers (Brereton, 1994). The area of reed has decreased in the South Marsh, apparently because of reduced water flow as a result of flow capture into Monkeygar Creek (NSW NPWS, 1993).

Current resource use and conservation objectives

Current resource use

Land and water use

Sheep and cattle grazing are the most common enterprises undertaken on the private lands but, increasingly, larger areas are being sown as irrigated crops, particularly cotton (Kingsford and Thomas, 1995). Over the past two decades land-use within the Macquarie Valley has undergone a change, with cotton rising in prominence to become the major irrigated crop. The area of cotton grown has increased three to four fold (see Table 2.2.5).

Table 2.2.5: Area irrigated and water used (Macquarie, Cudegong and Bogan valleys)
Year Area Irrigated Allocated water used
(Total ML)
Cotton (%) Cereal (%) Cotton (ha) Cereal (ha) All (ha)
77/78 15 63 7600 32500 51475 436000
78/79 16 66 8200 33000 49970 371000
79/80 21 61 11600 33900 55885 392000
80/81 25 31 13100 16000 51740 288000
81/82 21 47 7800 17750 37885 228000
82/83 18 48 8100 21750 45320 297000
83/84 21 40 12000 22250 55910 192000
84/85 18 36 8100 1650 46050 348000
85/86 29 33 21800 24700 75410 376000
86/87 22 34 12300 18700 54870 357000
87/88 40 23 23400 13400 58360 448000
88/89 46 16 21400 7400 46635 344000
89/90 44 19 26880 11900 61035 435000
90/91           494000
91/92           511000
92/93           431000
93/94           543000
94/95           508000

Source: Dept. Water Resources NSW (NSW DWR) (1991) and Johnson (pers com.)

This has provided increased farm income (see Table 2.2.6) and export dollars for Australia but from a biodiversity conservation and water quality point of view, it has given rise to concern because of the high water and chemical usage on cotton relative to other crops (see Table 2.2.6).

Table 2.2.6 Selected Inputs and Gross Margins for Irrigated Crops

Table 2.2.6: Selected inputs and gross margins for irrigated crops
Inputs Winter crops Summer crops
Wheat Canola Cotton Soybeans Maize
Water ($/ha) 35 36 72 81 81
Insecticide ($/ha) 0 26 395 24 22
Herbicide ($/ha) 39 47 235 109 38
Fertiliser ($/ha) 126 90 91 34 149
Gross Margin ($/ha) 160 388 752 430 498

Note: This measure of allocated usage may not however provide the best indication of the extent of water usage because there has been considerable increase in the use of off-allocation water (Kingsford, pers com.).

Water resources

European settlement has resulted in the diversion of water resources from the Macquarie river catchment to supply urban and agricultural uses. This has increased greatly since the construction of the Burrendong and Windamere Dams, especially for the supply of water for irrigation (NSW NPWS & NSW DWR, 1994). The Macquarie River system is now regulated with nine large dams having a capacity greater than 5,000 ML and five major weirs. In a normal year the Burrendong Dam can provide a regulated flow of about 475,000 ML, this is equivalent to 40% of the average yearly run-off of the Basin (NSW DWR, 1991).

The Burrendong Dam in conjunction with downstream tributary flows are managed to service 85,577 hectares that were authorised for irrigation from regulated flow at the end of August 1990. As of that date, allocation licenses for about 61,000 were used. At that level the DWR expects irrigators of non-permanent plantings to receive their full allocations in about 65% of years (NSW DWR, 1991). It is now suggested (Johnson, pers com.) that at 1995 usage levels the reliability of supply is reduced to 40% of years.

The irrigated areas comprise the most significant component of a total demand (NSW DWR and NSW NPWS, 1986); the allocation to irrigators is some 89% of the total allocation (see Table 2.2.7). Notwithstanding the 50,000 megalitre wildlife allocation, surplus flows will remain the dominant water supply to the Marshes in almost all years (NSW DWR and NSW NPWS, 1986). The smallest flood in ten years in the northern part of the Macquarie Marshes was produced by a flow of 105,000 ML measured at Oxley, downstream of where the 50,000 is now measured (Kingsford and Thomas, 1995).

Table 2.2.7 Macquarie River Allocation Volumes (as at Sept. 1990)

Table 2.2.7: Macquarie River allocation volumes (as at Sept. 1990)
Destination Allocations
% of total ML/yr.
Recreation 0.1 552
Domestic 0.2 1 332
Industrial 0.2 1 423
Stock 0.3 2 356
Horticulture 0.5 3 188
Town water 2.7 18 465
Macquarie Marshes 7.4 50 000
Irrigation 88.6 598 758
Total 100.0 676 074

Source: DWR NSW (1991)

Management agencies and committees

The Macquarie Marshes Nature Reserve is subject to a plan of management in accordance with the provisions of the National Parks and Wildlife Act. This plan recognises that the Reserve is only a small part of the Marshes and that ensuring adequate management, particularly with respect to water allocation, for the whole area of the wetland is an important strategy (NSW NPWS, 1993).

The Macquarie Marshes are subject to a water management plan developed by NPWS and DWR in 1986 (NSW NPWS & NSW DWR, 1986). This plan is currently under review and a draft revision of that plan is due to be released for public comment at the time of writing. It is interesting to note that in 1986, 50 submissions were received on the Water Management Plan, in 1995 some 240 submissions were received on the Issues Paper for the Water Management Plan Review (Korn, pers com.).

The authority responsible for native fish is NSW Fisheries. Their policies presented in Freshwater Habitat Management Guidelines and Conservation Strategy for Inland Rivers and Streams provide guidelines for management.

A Macquarie Marshes Catchment Management Committee was formed to provide a coordinated approach to land and water management. This committee is chaired by an independent member of the public and includes representatives of the local community, local government and State government departments (NSW DWR, 1991). This committee was instrumental in bringing about the current review of the Water Management Plan.

Existing Water Management Plan

The Macquarie Marshes Water Management Plan was instigated in 1986. Some of the rules and definitions applied under that plan are outlined below. However, despite this plan there is much evidence to suggest that the Marshes are still degrading as a result of the regulation of flow into the Marshes.

The Water Management Plan provides a 50,000 ML allocation to the Marshes and sets conditions of land-use that apply to irrigated land in the Marshes. The wildlife allocation will not be available in certain circumstances, such as when available water only permits 25% or less of the irrigation allowance to be supplied, unless the wildlife allocation has not been released for the preceding 3 years.

Surplus flows are those in excess of targeted supply, surplus flow may also be termed off-allocation. Water described as such can be either extracted for irrigation as off-allocation supplies, diverted into various effluent creeks to satisfy domestic and stock requirements and to mitigate downstream flooding, or passed downstream to the Marshes.

The Prohibited Area is an area nominated within the Water Management Plan within which irrigation is not permitted. The area is delineated to include the area covered by the 1970 flood with an additional margin of 300 metres. Applications to irrigate within the prescribed Prohibited Area will be refused. Within this area it was decided that applications for irrigation activities would be refused and existing licences reviewed (NSW DWR and NSW NPWS, 1994). Research since 1986 and observable changes to the Marshes vegetation has highlighted the need to expand the prohibited area.

The On-Allocation period is when the water used is debited against the irrigator's allocation for that year. The Off-Allocation period is when the water used is not debited against the irrigator's allocation for that year. This generally occurs when storage overflows or inflows downstream of storage significantly exceed immediate consumptive demands. Carry-over is the right to use an unused portion of one year's allocation in a subsequent year. At present, irrigators and NPWS are not permitted to do this.

The DWR is committed annually to supplying a portion of available water to irrigators as on-allocation. This proportion depends on the level of stored water and the minimum expected inflows. In addition, irrigators can access off-allocation flows if they are declared subject to the rules of the Water Management Plan. This water is in addition to the 50,000 ML available to the Marshes under a high-security commitment (NSW NPWS & NSW DWR, 1994).

A volumetric allocation scheme was introduced for regulated streams in the Macquarie Valley in 1981. Under this scheme irrigators are given an annual allocation related to their licensed area. The conversion rate was eight ML/ha for non-permanent plantings, plus an allocation for domestic and stock water. Irrigators can increase the amount of water available to them by acquiring allocations from other irrigators. Transfers can be temporary or permanent (NSW DWR, 1991).

Current conservation objectives

The Macquarie Marshes Nature Reserve Plan of Management and the Water Management Plan for the Macquarie Marshes provide a major component of conservation objectives for the Marshes that are within the Nature Reserve and on private lands. Objectives of the Nature Reserve Plan of Management that may affect off-reserve management include:

The objectives of the Water Management Plan for the Macquarie Marshes include:

Threats to biodiversity values

For the purposes of this report we found it useful to group the threats to biodiversity values into the following classifications:

They were chosen because they are useful indicators of activities which alter ecological processes and which may lead ultimately to an irreversible decline in biodiversity values. They are also useful in that they compare neatly against definitions of biodiversity. It is appropriate to discriminate between the types of threatening processes because this facilitates understanding of the physical processes and the targeting of policies to address them.

Ecosystem and habitat loss

Clearing

Clearing in the Marsh area outside the Prohibited Area has been encouraged by a perverse regulation that only allows irrigation to occur on improved pasture or cropped areas. Flooding of native pastures is at present not permitted. In order for farmers to utilise their water allocation they are required to clear the land. It is suggested that many do not wish to do so and that flooded Marsh county is very productive for cattle grazing.

Ecosystem and habitat decline

The changes to the timing and duration of flooding and channel construction has resulted in both a lack of water and, in some areas, waterlogging. These changes are possibly the greatest threat to the Marshes' vegetation communities and breeding waterbird species. Other actions associated with altered land use and external effects may also pose significant threats but unless the water supply issues are successfully addressed these other effects may be considered of secondary importance.

Flow regulation

Lack of water is the greatest threat to the vegetation communities of the Marshes (Johnson, 1992). Water extraction and flow regulation of the Macquarie River for irrigation have substantially changed and reduced the natural flow regime and inundation patterns of the Macquarie Marshes. An 18 km bypass channel also diverts water from the Macquarie River around the northern part of the Marshes, again further reducing the water flow to this area (Kingsford and Thomas, 1995).

The maintenance of permanent flows and changes to drainage has resulted in some areas being permanently flooded. This has caused the death of some trees through waterlogging. The problem in these areas is not that they receive too much water but rather an inappropriate water regime (Johnson, 1992).

An important issue is what flows are received, compared to what are required to maintain the Marshes to a determined size and quality. One of the problems in addressing this question is determining the actual volume of water that passes through the Marshes under the existing rules. The extent of off-allocation usage is a major factor.

Salinity

Irrigation, run-off from cropped areas upstream and raised water tables may result in increased levels of salts in the water that flows through the Marshes. Saline discharges are a major concern and there are extensive areas of saline seeps in the upper sectors of the Macquarie River catchment. Saline scalds are most common in the drier downstream parts of the catchment.

Pollution

Irrigated drainage can contain a range of contaminants including fertilisers, salts and residues of pesticides and herbicides (NSW DWR, 1991). Of primary concern are the pesticides used in the cotton growing areas (NSW NPWS, 1993) and the effects that these chemicals may have on breeding waterbirds. The DWR's licence conditions are designed to prohibit the discharge of polluted waters into any river or lake. Generally the discharge of any tail-water is prohibited (NSW DWR, 1991).

Erosion and sediment deposition

Changes to the river flows, caused by altered water regimes and interference with the river have resulted in large channels developing through areas where once only small channels occurred. These processes pose a threat to the existence of a number of core wetlands (Johnson, 1992). The NSW DWR (1991) indicates that water quality tends to decline as water moves downstream; the Marshes, however, provide a filtering effect and water quality downstream of the Marshes is better than above.

Grazing

Loss of ground cover and soil compaction caused by grazing stock are suggested as possible causes of a decline in species and numbers (NSW NPWS, 1993). Grazing is, however, not considered to be a major threat and in fact grazing of privately held Marsh land in combination with a suitable flooding regime may provide sustainable resource use and conservation value.

Burning

It is suggested that altered burning regimes are especially responsible for a decline in reptiles and amphibians. Fire is a natural part of the Australian environment but can cause significant damage to wetland communities, especially when they are dry. Frequent burning is suggested to have altered the composition of plant communities and may contribute to the lack of red gum regeneration (NSW NPWS, 1993).

Visitation

At present visitation to the Nature Reserve section of the Marshes does not pose a major threat since it is closely controlled by NSW NPWS. Visitation by the general public is not generally encouraged outside open days that are held twice annually, and special education visits for students. Access to the Reserve is via private property over unsealed roads. This would also serve to restrict the number of visitors. Tourism potential certainly exists and the possibility of increased visitor numbers is a factor yet to be fully taken advantage of. Tourism may have potential on private lands as well as the Nature Reserve.

Direct species loss

The existence of kangaroos and especially feral pigs provides some attraction for recreational shooters. Pig shooters have been a problem on occasions in the Reserve and on private property. They possibly pose more of a problem to those responsible for reserve management and community liaison than to biodiversity.

Predation

Introduced fauna in the Marshes include feral pigs, foxes, rabbits, feral cats, black rats and house mice. Predation by cats and foxes appears to be responsible for a decline in species and numbers and wild pigs are blamed for some habitat destruction and disturbance of birds (NSW NPWS, 1993).

Introduced plants

Introduced plants include Noogoora and Bathurst Burr and a number of thistle species. Control is an ongoing need as floods disperse seed (NSW NPWS, 1993). Control measures include manual removal and spraying with herbicide outside the reserve. The altered water regime has allowed weed species some competitive advantage in a disturbed environment. Returning to a more normal flood regime may favour native plant species and reduce the weed plant populations.

Gene loss

The number and diversity of native fish in the Marshes have greatly declined in recent years. Surveys by State Fisheries have shown that the introduced European carp (Cyprinus carpio) and redfin have increased (Swales, 1994). Flow regulation and agricultural development have modified aquatic habits in favour of introduced species such as redfin and European carp to the detriment of native species (NSW DWR, 1991).

Potential incentive instruments and mechanisms

The following policy opportunities are suggested in addition to those changes proposed as part of the Water Management Plan Review. They consist largely of water and land-use regulations. The approach of the existing WMP essentially provides a set allocation to the environment, plus any remaining flows after irrigation (and other) allocations and off-allocation allowances have been taken. The allocations to irrigators are in effect the only components that are tradeable. The following set of policy opportunities suggest an adaptation of the existing management plan to provide a greater base flow to the environment, and increase the extent of trading to include flows to the environment and unimproved pastures.

Addressing habitat loss and decline

Policy opportunity 1
Water price to reflect supply cost

Water prices could be adjusted to reflect the full cost of supply. Under-pricing of the resource could be encouraging overuse. Full cost of supply may include; the management of supply operations, the maintenance and replacement of regulatory structures, and the external costs associated with water quality and land degradation.

Policy opportunity 2
Precautionary standard

Determine a precautionary standard flow to the environment. At this stage some uncertainty exists as to the extent and variability of flows required by the Marshes. There is also some uncertainty as to the size of Marsh that should be maintained. Adopting a precautionary approach would suggest a minimum requirement should at least allow the successful breeding of the water birds. Once a precautionary standard level of flow is provided for the environment, the remainder should then be available as tradeable water rights. As knowledge is improved this standard could be adjusted from the tradeable rights.

Policy opportunity 3
Restrict access to off-allocation flows

To gain increased flows to the environment and allow a safe minimum standard to be achieved, restriction of irrigators' water use to allocated volumes may be necessary in the short term. This approach would also serve to restore some of the variability to the flow regimes of the rivers which have been progressively lost. Off-allocation usage should be curtailed until the Marshes' water requirements are better understood.

Policy opportunity 4
Tradeable water allocation to Marshes

Allow water allocations to be purchased by environmental groups or other interested persons from existing irrigator allocations, for the maintenance of the Marshes. It is interesting to note that this idea was rejected by environmental groups that participated in the Inland Rivers Network (Arthrington, et al., 1992) because it suggests that the Government wants to avoid its responsibility under the Water Administration Act for determining and meeting environmental requirements (Boyd, 1992). However if this option was available in conjunction with policy opportunities 2 and 3, it would allow for flows to the Marshes at a level above the safe minimum standard.

Policy opportunity 5
Trade nature reserve water allocation across time

Allow the water allocation to the Nature Reserve to be traded between years. This trade may occur by storing the water for future use or by selling to irrigators in one year for purchase in another. This may enable the Marshes to receive a more irregular set of flows that better represents those that would have occurred without flow regulation.

Policy opportunity 6
Trade Nature Reserve water allocation as a revolving fund

Allow part of the Marshes' water allocation to be sold to irrigators in years when unallocated flows through the Marshes are sufficient to meet the Marshes' planned requirements. Revenue from these sales may then be used to increase the flows in other years by purchasing water allocations.

Policy opportunity 7
Regular review of allocation volumes

A volumetric allocation scheme was introduced for regulated streams in the Macquarie Valley in 1981. Under this scheme, irrigators were given an annual allocation related to their licensed area. This allocation was fixed and tradeable. Conflict is now arising as a result of possible over-allocation. The DWR could operate a five year review period to reassess the size of the allocations. At each review period a maximum retraction or expansion of allocations (plus or minus 10%, for example) could be made as improved information becomes available as to allocation levels that provide for reliable supply for all water users. This provides flexibility to government and a planning horizon for users to adjust their enterprises to marginal changes in allocation volumes. This option would need to be considered in conjunction with policies to control off-allocation supply.

Policy opportunity 8
Donate allocation to Marshes

Farmers with unused portions of an allocation, and those holding sleeper licences (unused licenses), should be able to donate their allocation to the Marshes temporarily or permanently as they may wish. Incentives to donate could be provided as tax deductions.

Policy opportunity 9
Irrigate unimproved pasture in the Marshes

Flooding of unimproved native pastures with allocated irrigation water is at present not permitted. Farmers cannot utilise their water allocation without developing the land to improve pasture or to allow cropping. It is suggested that regulations be changed to allow flooding of unimproved pastures within the Marshes. This may reduce incentives to clear Marsh outside the Prohibited Area and would complement the flooding that occurs with surplus flows and the Nature Reserve allocation. This would also allow trade of allocations between irrigation and conservation purposes.

Should water be priced to reflect the true cost of supply then it may not be economic for graziers to apply water to unimproved pastures. If this pricing policy is adopted then there may be justification for government to reimburse graziers for any incremental costs associated with a form of land-use that is socially preferable but privately sub-optimal.

Policy opportunity 10
Cross-compliance

Grazing on the Marsh is not considered to be a major threat if satisfactorily managed. There may be potential to negotiate conservation agreements for the right to irrigate unimproved pastures. Most farmers are already sympathetic to conservation requirements for breeding birds on privately held land, but to ensure satisfactory long term management, conservation management agreements and easements for the management of breeding sites on private land could be introduced in exchange for the right to irrigate unimproved Marsh pasture.

Policy opportunity 11
Community involvement in water management

Involve the local community in water management decisions. Local members of the community may best understand the implications of timing, extent and duration of water releases through their channels. These people may have much to offer and their involvement would enhance a sense of ownership and participation.

Policy opportunity 12
Encourage/research alternative agriculture

Research is currently being undertaken to reduce the requirement of cotton for herbicide and pesticide. Policy should ensure this type of funding and funding for alternative agricultural and other enterprises is maintained. Hemp is suggested as an alternative source of fibre with minimal requirement for chemical applications and reduced water demand. This crop for example may in the future prove to be a viable alternative under appropriate control.

Policy opportunity 13
Easements and management agreements

Retention and revegetation of native vegetation should be encouraged especially along riparian systems as a counter measure against pollution and sediment entering streams, and dryland salinity. A mix of measures that incorporate a combination of management agreements and conservation easements could be developed, like those applied in WA to remnant vegetation (see Wheatbelt Case Study). Funding may be provided to assist with fencing, and revegetation and rate rebates applied to areas excluded. In return, a management agreement may be entered into and an easement protecting the area attached to the land title.

Policy opportunity 14
Positive payments

Incentive could be provided to encourage graziers to maintain flooding in waterbird breeding colonies to allow breeding to be completed. Similarly, incentive could be provided for successful breeding on private land. This could operate in conjunction with Policy Opportunity 9.

Policy opportunity 15
Rate rebates

Rates could be calculated to discriminate between land having a value for biodiversity maintenance and otherwise. The Rate Notice could indicate required payments on such a basis to highlight the level of rebate. Landholders feel that where local governments provide rate rebates on areas of native vegetation, the loss to local government revenue will be recaptured by increases applied to agricultural lands. The potential for rate rebates to be viewed cynically could be overcome by Commonwealth or State governments providing grants to councils equivalent to the loss of revenue as a result of rate rebates. Rate rebates may then be viewed less cynically and seen as a rewarding incentive.

Addressing utilisation of species

Policy opportunity 16
Commercial kangaroo or pig shooting licenses

Commercial shooters could be employed to control feral pests and kangaroos should their numbers require regulation. The shooters may be employed to operate on private and public lands in the Marsh area.

Addressing general issues

Policy opportunity 17
Ramsar Convention as leverage

The recognition of the Marshes under the Ramsar listing, and the responsibility for Australia in holding the next Ramsar Convention in Brisbane in 1996, may provide agencies responsible for the management of the Marshes and other affected wetlands with a mechanism to add weight to their voice for action.

Policy opportunity 18
Change the terminology

Much of the language that is associated with water resource use aligns non agricultural use with negative terms such as; surplus flows, nuisance flooding, flooding disasters, water loss and transmission losses. Water required for the environment should be defined by more neutral definitions.

Policy opportunity 19
Tax incentives

Income tax deductions could be offered for expenditure incurred on activities that assist biodiversity conservation, for example, fencing of critical areas. Tax deductions are not always considered appropriate given the income tax position of many primary producers so it is suggested that a tax deduction be allowed for Landcare for an amount of up to 150% of qualifying expenditure in the year it is incurred (Esperance Land Conservation District Committee, pers com.)

Policy opportunity 20
Tax credits

Tax credits, more than tax deductions, for expenditure on work to conserve biodiversity, may provide some incentive to landholders, especially if credits could be available for expenditure on actions not deemed to increase farm income.

Policy opportunity 21
Information/education

Farmers often maintain remnants and undertake management practices with good intentions in regard to biodiversity conservation, but they may lack information on the biodiversity values that may exist on their properties and how best to protect them. Providing information could act as an incentive for biodiversity conservation and help landholders carry out their good intentions more effectively. Landholders should have access to, or be provided with, reference material to help land managers identify flora and fauna.

Policy opportunity 22
Encourage staff transfers between government agencies

Staff transfers between government agencies may improve the communication and understanding between professionals working in related but different disciplines. Encouragement of multidisciplinary approaches to address a problem which requires an integration of sustainable agriculture and biodiversity conservation could be facilitated with staff secondments or transfers.

Best mix of incentive instruments and mechanisms

This study provides an interesting example of the way in which a natural resource (water) has resulted in downstream costs (externalities) to other consumers and the environment. The primary social cost is the loss of biodiversity values as a result of reduced water flows to the environment, but other costs such as those caused by reduced water quality are also incurred. A number of strategies are suggested to address what is essentially an issue involving the allocation of property rights. These strategies are likely to operate primarily through State government agencies as they are charged with direct responsibly for most of the issues that arise in this study. However, there is still a role for encouraging community response and desirable agricultural practices. A suggested mix of incentives and mechanisms that target factors such as institutional change, regulation, education, specific threats and community empowerment follows:

Cost implications

The cost of licence buyback by either government or community environmental groups is indicated to be an expensive option. Given that water licences for permanent allocations have traded in the range of $150 to $340 per ML an increase in allocation to the Marshes from 50,000 ML to 200,000 ML may cost between $22.5m and $51.0m. However, an alternative option may be to reduce the provision of off-allocation flows. This should not require compensation as there is no loss of water right as such. Off-allocation usage is permitted under certain rules of the Water Management Plan.

Ecotourism

The increasing awareness and interest in the special attractions provided by the Macquarie Marshes, as well as the growing demand generally from urban Australians and overseas tourists for rural and nature based holiday experiences, may provide an opportunity for nature based tourist operations on the Marshes. A broad awareness has been created by efforts to gain recognition of the Marshes' value as a wetland and to ensure its survival as a major waterbird breeding site.

At present the Nature Reserve is closed to general admission except for special open days twice a year. It is suggested that there may be an opportunity for access provisions to the Nature Reserve to be made for accredited operators. As well as the Nature Reserve there are many wetland sites of interest that occur on private land around the reserve and these could form the basis of a local tourism operation. A major disadvantage, at present, is access to the reserve and other sites that are off sealed or all weather roads. The reserve is some 20 km off all weather roads and this makes access impossible after only minimal rainfall.

References

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Australian Nature Conservation Agency; (1993) A directory of important wetlands in Australia. Australian Nature Conservation Agency, Canberra.

Boyd, K.; (1992) 'Inland rivers need restoration (not more irrigation).' National Parks Journal 36 June: 11-15.

Brereton, G.; (1994) Macquarie Marshes management strategy. Stage 1 – biophysical investigations. Summary Report, Natural Resources Management Strategy.

Brooker, M. G.; (1992) Waterbirds of the Macquarie Marshes. Unpublished Report.

Johnson, W. J.; (1992) 'The Macquarie Marshes: Overdue for environmental restoration.' National Parks Journal 36 August: 9-12.

Johnson, W. J.; (1994) Breeding of colonially nesting waterbirds in the Macquarie Marshes. Draft paper prepared by New South Wales National Parks and Wildlife Service.

Jones, R.; (1995) Personal comment. Kingsford, R.T. and Thomas, R.F.; (1995) The Macquarie Marshes in arid Australia and its waterbirds: A 50 year history of decline. Environmental Management. In press.

Korn, T.; (1993) Water management in the Macquarie Marshes – A sociological perspective. NSW Agriculture. Unpublished paper.

New South Wales Department of Water Resources; (1991) Water resources of the Castlereagh, Macquarie and Bogan Valleys. Department of Water Resources, New South Wales.

New South Wales Department of Water Resources and New South Wales National Parks and Wildlife Service; (1986) Water management plan for the Macquarie Marshes. Department of Water Resources, New South Wales.

New South Wales National Parks and Wildlife Service; (1993) Macquarie Marshes Nature Reserve: Plan of management. New South Wales National Parks and Wildlife Service.

New South Wales National Parks and Wildlife Service and New South Wales Department of Water Resources; (1994) Macquarie Marshes water management plan review: Issues paper. New South Wales National Parks and Wildlife Service and Department of Water Resources, Sydney.

Swales, S.; (1994) Fish communities within the Macquarie River. NSW Fisheries. Pyrmont, Sydney.