Climate adaptation options for the 2026 Basin Plan: opportunities for managing climate risk

ABSTRACT

How water resources are defined, both conceptually and legally, is central to their efficient and equitable allocation. With climate change introducing significant uncertainties to water resources management, flexible allocation frameworks are needed that can adapt to changing conditions. This paper explores options for climate-adaptive water allocation in Australia’s Murray Darling Basin. The 2026 revision of the Basin Plan may provide significant opportunities for proactive climate risk mitigation, but this depends on rigorous evaluation of policy options. The Water Act requires that the Plan’s revisions use the best available science to inform strategies that minimise the impact of climate risks. The Act also enables the use of ratios and formulas as alternatives to using long-term averages as the basis of the Plan. However, there have been limited investigations into using these alternatives. Achieving more adaptive policies depends on rigorously assessing climate risk management options. Given the far-reaching consequences of climate change, rigorous investigations are needed into reforms to the established approaches to water resources planning and to existing water entitlements and allocation regimes. At minimum, this means reassessing the total resource pool and all subsidiary targets and investigating allocation frameworks that equitably share risks between extractive users and the environment.

KEYWORDS:

• Water planning
• water allocation regimes
• adaptive policy
• climate risks
• MDB

1. Introduction

Questions of how to best adapt the MDB to climate change remain complex and contentious (Walker 2019; Colloff and Pittock 2019). While there are growing expectations that the 2026 revision of the Basin Plan will deliver crucial adaptive reforms (MDBA 2019; Prosser, Chiew, and Stafford Smith 2021), it remains unclear how extensive or what form these reforms will take. Any such reforms are more than technical legal challenges. History demonstrates that adaptive reforms are difficult for several reasons. Firstly, Australia’s climate policies are highly politicised (Taylor 2014; Wilkinson 2020), such that developing the 2012 Basin Plan became a proxy battleground in Australia’s ‘climate wars’ (Alexandra 2020). Second, any reforms involve interacting State and Commonwealth legal instruments, such as statutory water plans and entitlement frameworks. Thirdly, changes to these instruments have far-reaching consequences including for riverine ecosystems, regional economies, water markets and the value of water entitlements (Alexandra 2021).

The situation in the MDB is not unique and the challenges of adapting water resources management to climate change are not new. Climate adaptation is becoming a new global norm in the water sector (Dupuis 2018). This norm builds on decades of work of researchers such as Gleick (1987), Frederick and Major (1997), Riebsame (1988), and Milly et al. (2008), who clearly articulated why fundamental changes are needed to water resources management. There is also an extensive literature on the adaptive governance of river basins (Pahl-Wostl et al. 2012; Chaffin, Gosnell, and Cosens 2014; Grafton et al. 2014) and why adaptive water allocation regimes are needed (Miller, Rhodes, and MacDonnell 1997; Young 2014). However, reforming allocation regimes to make them adaptive (Young and McColl 2003) or ‘future proofed’ (Young and McColl 2008) remains challenging for many countries (OECD 2015). The OECD (2015) found that only 57% of surveyed countries have allocation regimes that account for ‘climate change, in the definition of the available resource pool’.

This paper focuses on reforms in the MDB, where the increasing recognition of climate risks means that the assessments of options for adapting, mitigating or managing climate risks are likely to feature significantly in the 2026 revision of the Basin Plan (MDBA 2019; Prosser, Chiew, and Stafford Smith 2021). The available and feasible options urgently need detailed assessment because while adaptation policy is poorly defined there is the tendency to soft and symbolic policy making, the outcomes of which are erratic and ineffective (Dupuis 2018; Cosens, Gunderson, and Chaffin 2018). Previous reforms in the MDB have been contentious, with deep contestations about whether climate adaptation mechanisms were effective (see contrasting accounts in Pittock, Grafton, and Williams 2015; Neave et al. 2015). There are continued conflicts about climate risk management (Colloff and Pittock 2019; Walker 2019; Alexandra 2020; Alexandra and Rickards 2021) and ongoing debates about the politicisation of science and its roles in water policy (Colloff, Grafton, and Williams 2021; Stewardson et al. 2021). These conflicts in the MDB indicate the need to build greater trust at the science-policy interface (Lacey et al. 2018), and at the policy-society interface, to better enable robust policy development through open discursive investigations and respectful debate about policy options, including through far reaching discussions about the MDB adaptation options. This paper aims to contribute to such discussions by outlining some opportunities for more flexible allocation regimes suited to a dynamically changing climate. Hopefully, this paper will stimulate further policy debates, public consultations and technical investigations into equitable, efficient, adaptive allocation frameworks, suitable for the MDB.

Following this introduction, the paper is structured in five sections. The second section outlines the need for adaptive water governance models and policy instruments. The third section summarises the frameworks for climate risk assessments in the MDB. While the fourth examines some options for handling climate risks that are consistent with the framework provided by the Water Act (Commonwealth of Australia 2007). Before concluding, section five offers some key insights arising from this paper.

To avoid confusion a short diversion into water policy terminology is needed. In this paper, the term ‘water allocation regime’ is used to mean the entire system of allocation of water resources and is used consistently with international definitions. The OECD (2015) defines allocation regimes as determining ‘who is able to use water resources, how, when and where’. A narrower meaning of the term ‘allocation’ in Australia refers to annual water allocations arising from a specific entitlement (see Grafton and Horne 2014). The term ‘annual water allocation’ is used when this is the meaning. To avoid any potential confusion, Young (2014) uses the term ‘abstraction management regime’ as an alternative to ‘allocation regime’; however, in this paper, I prefer to use the OECD definition.

1.1. Adaptive governance and adaptive policy instruments

This section provides a brief overview of the adaptive governance literature and why developing capabilities for adaptive reform is needed in river basins, including the MDB.

1.2. Adaptive water governance theory and practice

The adaptive water governance literature focuses on models suited to governing during periods of rapid change (Godden, Ison, and Wallis 2011; Allan, Xia, and ClaudiaPahl-Wostl 2013) and is increasingly influential in the thinking about governing river basins under climate change (Pahl-Wostl et al. 2012; Grafton et al. 2014; Chaffin, Gosnell, and Cosens 2014; Grafton, Doyen, and Béné et al. 2019). Adaptive governance’s theoretical foundations are in complex adaptive systems that are used to explain the co-evolution of social-ecological systems (Folke et al. 2002; Olsson et al. 2006; Chaffin, Gosnell, and Cosens 2014). Institutional responsiveness to new knowledge is particularly pertinent to managing water resources in a rapidly changing climate (Pahl-Wostl 2007; Olsson et al. 2006; Meijerink and Huitema 2010). Governance scholarship focuses beyond specific policies to the systems, structures and institutions of governing and how these change, including through legal and institutional reforms (Wyborn 2015; Cleaver and Whaley 2018; Cote & Nightingale 2012; Mollinga 2019; Cosens, Gunderson, and Chaffin 2018). Nonetheless, specific policy instruments play essential roles in governing. For example, instruments like land-use planning regulations can impede or enable adaptation, thereby reducing or increasing climate change’s social and economic impacts (O’Donnell 2019). Likewise, water allocation regimes can enable (or impede) managers and water users to adopt more adaptive practices (Young and McColl 2008; Young 2014; Grafton and Horne 2014).

1.3. Adaptive governance and reform capabilities

To be effective, water governance frameworks must ensure that water planning and allocation regimes can set and deliver on longer-term policy goals. Allocation regimes are one of the key instruments that enable the achievement of the broader societal objectives defined in policies and plans. Further, water planning and allocation frameworks must be robust under wide-ranging climatic conditions whether these are within expectations developed during the instrumental record or under more extreme conditions beyond these expectations. In summary, it is critically important that water policy and planning frameworks and allocation regimes, can handle non-stationarity equitably and effectively (OECD 2015). Yet reforms to entitlement and allocation regimes are demanding and difficult (OECD 2015).

To successfully deliver reforms, governments need capabilities in implementing, evaluating and refining policy goals, outcomes and instruments (Bell 2022) and in building constituencies for reform directions, including through good practice engagement and participation. The successes (or failures) of reforms can result from policy instrument design and execution, the capabilities for which depend on institutional arrangements, structures and practices (North 1990, 1991; Hassenforder, Barone, and Nordensvard 2019). Without robust governance systems, the adoption of anticipatory policies and policy instruments will remain ad hoc (Juhola, Keskitalo, and Westerhoff 2011; Boyd et al. 2015), resulting in weak or ineffective policy settings (Dupuis 2018). Numerous factors constrain adaptive governance reforms, including legal incumbency and the inertia arising from institutionalised governing models (Schmidt 2017; Hassenforder and Barone, 2019) that limit reform capabilities (Ison, Alexandra, and Wallis 2018; Bell 2022). A focus on technical, rather than relational dimensions of policy development and excessively technocratic approaches to reform can also contribute to failures to socialise reforms and mobilise communities. Noting this, there is an urgent need to engage stakeholders in extensive discussions on climate adaptation options, well ahead of the detail debates about the 2026 Basin Plan.

1.4. Adaptive governance of transboundary river basins

Institutional complexity is a critical feature of transboundary river basins, which require policy coordination across multiple jurisdictions and institutions (Dore, Lebel, and Molle 2012). Governance institutions, whether within single or multiple jurisdictions, evolve due to changes in circumstances, norms and societal values (Mollinga 2019). Recognition of the diverse cultural, political, and environmental contexts is essential with differing historical and institutional circumstances for river basin governance in Europe (Raadgever et al. 2008; Huntjens, Pahl-Wostl, and Grin 2010), Africa (Sylla et al. 2018), Asia (Tilleard and Ford 2016), and Australia (Grafton et al. 2014; Lukasiewicz, Pittock, and Finlayson 2016). Given these diverse contexts, transferring formulaic policy prescriptions and promoting simple ‘one-size-fits-all policy solutions’ should be avoided (Mollinga 2019). Similarly, Van Laerhoven and Ostrom (2007) warn against using overly simplistic theoretical models for natural resource governance.

These warnings are pertinent to the MDB, with its institutional complexity and polycentric governance (Wallis and Ison 2011; Marshall, Connell, and Taylor 2013; Abel et al. 2016). Williams (2017) argues that recognising the MDB as a complex and evolving socio-ecological system is a necessary prerequisite for governing it more adaptively.

2. Mitigating climate risk in the MDB

2.1. Climate change impacts

Changes to temperatures, precipitation patterns, and evapotranspiration alter runoff patterns from major watersheds (Cai and Cowan 2008; Mastrotheodoros, Pappas, and Molnar et al. 2020) with profound impacts on water, biodiversity and livelihoods (Xu et al. 2009). Drying trends in the mid-latitudes are decreasing supply and increasing competition for water resources (Palmer et al. 2008).

In the MDB, climatic changes are reducing the quantity and reliability of water resources (Whetton and Chiew 2021). Multiple factors are reducing yields from the high-rainfall catchments that generate the majority of river flows (Donohue, Roderick, and McVicar 2011). Reduced precipitation reduces runoff, while higher CO2 concentrations and higher evapotranspiration alters ecosystem processes that determine rainfall-runoff ratios (Donohue et al. 2013; Ukkola et al. 2016).

Cascading impacts of extremes already experienced include droughts of unprecedented severity, catastrophic bushfires in the Basin’s headwaters (Alexandra and Finlayson 2020), massive fish kills (Australian Academy of Science 2019), and intensifying conflicts over water policy (Jackson and Head 2020). Climate change and its impacts are not distant threats but contemporary realities. Weather observations confirm the accuracy of numerous predictions about warming and drying trends (Whetton, Grose, and Hennessy 2016; CSIRO 2008, 2010, 2012, 2020). However, many policy agencies have failed to heed these warnings (Whetton, Grose, and Hennessy 2016).

Australia’s rivers and riverine ecosystems evolved in highly variable climates, with recurrent droughts and episodic floods (Gallant and Gergis 2011; van Dijk et al. 2013; Kiem and Verdon-Kidd 2013). In the context of this variable climate, Australian jurisdictions evolved policy mechanisms for handling variability, including entitlements with different levels of reliability and variable annual allocations (Alexandra 2020; Prosser, Chiew, and Stafford Smith 2021). However, regardless of how well these mechanisms have handled variability in the past, they are unlikely to be equipped to handle the increases in extreme events that are predicted due to climate change, which will increase the severity of droughts, reduce runoff, and increase competition for available water. These changes have profound impacts on riverine and floodplain ecosystems (Pittock and Finlayson 2011), regional irrigation economies (Wheeler et al. 2020) and water security (Alexandra and Rickards 2021). Together, they bring into question the adequacy of historic approaches and techniques used water resources planning and allocation.

2.2. The Water Act’s iterative planning framework

The Water Act 2007 (Commonwealth of Australia 2007) recognises climate change risks as significant and requires the MDBA to mitigate these risks through the Basin Plan. Despite extensive research indicating the high probability of a drying climate, the risk management section (chapter 4) of the 2012 Basin Plan (Commonwealth of Australia 2012) is brief and inadequate (Alexandra 2021). This section outlines that the risks to the condition, and continued availability, of Basin water resources stem from insufficient water being available and water being of a quality unsuitable for use. Proposed risk management strategies include promoting risk-based water planning and improving climate change knowledge (Commonwealth of Australia 2012).

The 2026 review offers significant opportunities to reconsider the climate risk management dimensions of the Basin Plan. However, it is also worth noting that the Plan has many interacting parts, with changes in one influencing many others. How these parts interact at the Basin and regional water resource plan scale is worthy of serious attention in the 2026 revision of the Basin Plan (see Alexandra 2019). Section 4 discusses these interactions further. The scope of these revisions is important. Prosser, Chiew, and Stafford Smith (2021) conclude their paper on adaptation in the MDB with eight broad prescriptions or ‘necessary elements’ needed for the 2026 review of the Basin Plan. However, they do not make any recommendations that focus explicitly on water allocation and entitlement reforms, although these are critical determinants of whether water plans align with, and deliver on, broader policy goals.

There is some flexibility in how these goals are defined because while somewhat prescriptive, the Water Act established a planning framework that allows flexibility in each revision of the Basin Plan. However, the Act also reinforces particular concepts, embedding certain logics about conservation, water security and economic development that need to be critically evaluated in light of the climate adaptation challenges (Alexandra and Rickards 2021).

2.3. Australia’s approach to water resources planning

Water resource planning relies on abstracting a river (Linton 2010), representing it with numbers (usually in some kind of model) and simplifying its variability, relationships, complexity and details into a set of equations (Lane 2014). This process is critical to enabling a social (political and scientific) process of determining how water is shared between claimants and allocated to specific users and uses. The following key steps provide a simplified summary of Australia’s approach to water planning:

1. Establish the processes, goals and objectives for water resources planning

2. Define the water resource (e.g. spatial boundaries and characteristics, including typical flow patterns, estimated volumes, and long-term averages of water availability)

3. Determine water needed to achieve an Ecologically Sustainable Level of Take (ESLT), and from this, the sustainable yield (the volume available for extraction, known in the Water Act as the Sustainable Diversion Limit (SDL)

4. Formalise rights to extract water (bulk or individual entitlements) and the rules which guide annual allocation decisions (usually defined in a statutory water plans)

5. Administer annual allocations and extraction rules to adjust to variable climatic conditions and reflect the actual water available in any given season

6. Allow the water market to reallocate water (seasonally or permanently) between users within limits defined by statutory water plans.

7. Use models (e.g. Cap models) to ensure compliance with statutory water plans

In practice, the water planning process is more complex, particularly in the MDB, because of the interactions between the Commonwealth planning processes (Basin Planning) and the states’ statutory water resource plans and their instruments that define legal rights to take and use water (Alexandra 2019; Prosser, Chiew, and Stafford Smith 2021). Importantly, climate change introduces profound uncertainty into almost all the steps above and is especially significant in the foundational steps of establishing goals and determining the resource pool available (Alexandra 2021). Climate change adds complexity to step 3 – determining the ESLT – because with uncertainty about the nature of future water resources it is hard to determine how much of the available water will be required to meet environmental needs and obligations (i.e. environmental treaty obligations) and/or what water is needed to sustain riverine ecosystems (Pittock and Finlayson 2011; Bender et al. 2022). If the ESTL is defined as a fixed ratio between extractive and environmental water, it is unclear whether environmental values will be protected in the future.

The increased future uncertainty cascades into all other steps. Australia’s water policy framework – the National Water Initiative (NWI) – establishes the principle that water entitlements are shares in a water resource and that annual allocations are varied to reflect the water available under given seasonal conditions. However, entitlements have an implied volume and reliability that is a result of historical allocation patterns and this builds expectations that these will be maintained. Climate change creates several problems. The first is the problem of how the water resource (or total resource pool) is defined, in terms of volume and reliability in uncertain future climates. The second is that managers and water users cannot realistically expect that supply will be maintained at the same volume and reliability into the future. This then influences how water markets operate and who bears future risks, which is discussed further below.

2.4. Modelling climate scenarios

Recognition of the problems inherent in planning in a changing climate, led Chiew et al. (2009) to recommend testing the proposed 2012 Plan against ‘a range of possible scenarios to assess system robustness and resilience to historical droughts as well as future climate projections’ (Chiew et al. 2009). However, the MDBA did not use a range of climate scenarios, choosing instead to use the instrumental record as the basis of the Basin Plan modelling and planning (Alexandra 2020, 2021). Prosser, Chiew, and Stafford Smith (2021) make similar recommendations for the 2026 Plan revision, proposing using ‘multiple stochastic climate scenarios that consider possible climate variability and climate change for the next 50 years to provide a better test than the historical sequence of flows’. Further, they also call for an integrated system analysis that combines future climate scenarios with population, technology, and economic change. This approach is needed because ‘climate combines with hydrology, ecology, farm production, demography, markets, and communities to influence outcomes’.

Scenarios and integrated system analysis are valuable tools for water planning. However, the fundamental problems are that statutory water plans and water allocation regimes need to work under conditions of profound uncertainty about the future. Thus, they need capacities to adjust to a wide range of hydro-climatic conditions.

2.5. Equitable sharing of climate impacts

The MDB reforms can be characterised as attempts to rebalance the volumes of water allocated to extractive and environmental uses (Neave et al. 2015; Grafton and Wheeler 2018; Walker 2019; Wentworth Group of Concerned Scientists 2020). However, there remains unfinished business in terms of equitably sharing climate change impacts.

As early as 2004, MDB governments recognised the existential nature of climate risks. The Ministerial Council’s (MDBMC Ministerial Council 2004) paper, ‘Prospects for Future Deterioration in Flow in the Murray-Darling Basin’, outlined possible declines of 10–30% by 2023 and recognised the prospects of ‘a catastrophic 50% reduction in system inflows’ by 2053. The paper provided evidence that the environment would disproportionately bear the impacts of reduced inflows. Unless allocation frameworks were fundamentally altered, the environment, rather than extractive users, would take the brunt of any reduction of inflows (MDBMC Ministerial Council 2004).

The reforms needed to ensure equitable sharing of any reductions between extractive and environmental uses have not occurred. The expert review of the proposed 2012 Basin Plan (Young, Jones, and Blackmore 2011) confirmed this failure. Therefore, the 2026 revision needs to rectify this problem directly and as matter of urgency, because it is long overdue. For almost two decades, Governments have failed to act on warnings about how climate change would diminish the volume and reliability of environmental water in the MDB. Despite recognition since 2004, the necessary reforms to allocation frameworks have not occurred. Instead, governments have relied on funding infrastructure and buying back extractive entitlements to increase the stock of held environmental water (Grafton 2019). This stock of held environmental water (HEW) has similar entitlement characteristics to extractive rights (Prosser, Chiew, and Stafford Smith 2021). However, HEW does not fix an allocation system that unfairly impacts the environment. The fact that actual flows in rivers do not reflect the volumes of water recovered for environmental uses further emphasises the need for reform (Grafton and Wheeler 2018; Wentworth Group of Concerned Scientists 2020). The necessary reforms will require significant lead-time and therefore governments should begin the processes of investigation and consultation well in advance of the deadline for the 2026 Plan revision.

2.6. PEW and extractive rights

In the Basin, all water not attached to extractive or environmental entitlements is (somewhat ironically) defined as Planned Environmental Water (PEW), even when some of this is unplanned floodwater. Without further reforms to allocation frameworks, PEW is being eroded by reduced inflows. Furthermore, current methods for defining and evaluating PEW are complicated, unclear and confusing. The legal definitions and protections of PEW are imprecise and uncertain, such that the volume of PEW protected is impossible to define or enforce (Chipperfield and Alexandra forthcoming). A recent analysis by the Environment Defenders Office (EDO) identified that PEW is defined by its relationship to consumptive caps, consisting of water that is not committed to various extractive and environmental rights in varying ways within the cascading series of applicable legal instruments (Chipperfield and Alexandra forthcoming). Further, the EDO found significant incongruences between the State and Commonwealth compliance frameworks, which threaten PEW.

In contrast with PEW, reforms since the 1990s have strengthened the legal right to trade entitlements and allocations, with the redefinition of entitlements as tradable rights central to Australia’s water reforms (Grafton and Horne 2014; Grafton 2019). These markets are important allocation instruments, providing flexibility to variable climatic conditions, including droughts. However, there are increasing pressures for regulations that ensure greater probity, equity and efficiency of these markets (Grafton and Williams 2019). Tradable water entitlements’ legal definitions as securitised financial rights may constrain reforms, because governments lack experience in assigning climate change risks in a relatively new market (Alexandra 2020).

2.7. Learning from CSIRO sustainable yields

CSIRO’s Sustainable Yields Project (CSIRO 2008) – the largest single research project in the organisation’s eighty-year history – combined climate and river models to quantify likely changes to water availability in the MDB (Hatton and Young 2011). This intensive modelling found that the most likely median projected reductions in surface water by 2030 would be 13% for the Southern Basin and 11% for the Northern Basin (CSIRO 2008). The MDBA did not use these models (and their projections), relying instead on historical records for preparing the Plan (Alexandra 2021). As a result, the 2012 Basin Plan does not apply any reductions to definitions of the total resource pool available.

Nonetheless there are other significant insights available from examining the Sustainable Yields Project. Of particular importance is the finding that the Gwydir Valley is unique in the water sharing patterns between environmental and consumptive users. CSIRO (2008) predicts that the amount of extractive and environmental water adjusts evenly to variable climatic conditions (and resultant changes to inflows) because the ratios allocated to each are defined as proportions of the water available in any given seasons. This self-adjusting approach provides a practical example of the potential for allocation regimes that adjust using defined ratios or shares of the available resources.

The Gwydir Valley provides an example of a self-adjusting allocation model similar to that outlined by Young and McColl (2008) in their ‘future-proofed basin’ proposal. Considering the need for adaptive allocation regimes, the following section explores this proposal and some other potential mechanisms for more equitably sharing water between extractive and environmental users. These and other adjustment models urgently require investigation before the Basin Plan’s scheduled revision.

3. Options for handling climate risks in the 2026 plan

3.1. Allocation regimes which adjust to changing conditions

In the ‘future-proofed Basin’ proposal, Young and McColl (2008) argued that the ‘causes of the Murray-Darling Basin’s problems stem from a flawed allocation regime. To fix the Basin’s problems, it is necessary to put a new system in place that is designed to cope with whatever climatic conditions the future brings … one that will work – work no matter what climatic future arrives’.

In a similar vein, the OECD outlines that ‘a well-designed allocation regime should have two key characteristics: it should be robust by performing well under both average and extreme conditions and have the capacity to adjust to changing conditions’ (OECD 2015). The OECD (2015) also argues that ‘managing the transition from an existing regime to an improved one is often very contentious and can be costly, but brings multiple benefits’. However, Young (2014) warns that there is often an unwillingness to consider fundamental reforms to water allocation regimes, with the focus generally on marginal improvements to extant models.

In the sections following, I explore some options available, starting with a description of the framework provided by the Water Act.

3.2. The Basin plan as a staged or staggered adjustment model

The Water Act provides a staggered (staged) and iterative planning framework that requires use of the best available science. Therefore, each revision is an opportunity to incorporate improved knowledge of climate change, updated climate risk assessments and rigorous evaluations of risk management responses (Alexandra and Donaldson 2012; Neave et al. 2015). However, the scheduled revisions only provide opportunities to adjust the Plan infrequently (approximately once every 15 years). Any adjustments rely on alignments between the basin-scale and regional water resources plans – statutory instruments, typically also fixed for up to 15 years (Alexandra 2019). Prosser, Chiew, and Stafford Smith (2021) recommend using longer-term planning methods that can extend time frames beyond the current iteration of the Basin Plan. Therefore, each iterative revisions of the Basin Plan can provide staggered opportunities for the evolution of policies within a longer-term planning framework (Alexandra and Donaldson 2012; Prosser, Chiew, and Stafford Smith 2021). However, regardless of improvements in the accuracy of the scientific projections, the MDBA will still need to revise the Plan under conditions of uncertainty.

3.3. Adjusting the total resource pool

Any change in estimates of the total resource pool results in a corresponding need to adjust the Basin Plan’s numeric targets (e.g. ESLT and SDL). In the case of the 2012 Plan, these were determined using long-term averages of the 114-year instrumental record (Alexandra 2020). However, if the CSIRO (2008) Sustainable Yields projections had been used to adjust the total resources pool (Hatton and Young 2011; Alexandra 2021), there would be less pressure for adjustment in 2026. However, this did not occur. Therefore, there is likely to be increased pressure for a ‘catch up’ adjustment in the 2026 Plan revision. If it is accepted that the changing climate is reducing the water resources available in the Basin, the total resource pool deemed to be available over the next planning period will need to be reduced. If the 2012 Plan metrics are adopted, this reduction will be expressed as lower long-term averages.

Instead of long-term averages as the unit for determining the water resource pool, adjustments could use ratios or formulas, as permitted by the Water Act (2007). This approach could draw on scenarios, integrated systems and climate models to revise assessments of the Basin’s total water resources (Prosser, Chiew, and Stafford Smith 2021). If the total resource pool is reduced, then all numeric targets derived from this must also be reduced. Adjustments to actual water use will need to occur through subsidiary regional water plans and any regime of allocation rules stemming from these.

3.4. Risk assignment

If the estimates of total resources pool were reduced to account for climate change, by, for example, of between 10% and 20%, this would unleash a cascade of adjustments with profound implications. It would impact the regional water resources plans (as subsidiary instruments), and the annual allocation decisions that determine volumes attached to entitlements, including those used for held environmental water.

The NWI and the Water Act (2007) assign climate risks to water access entitlement holders. They state that they “bear the risks of any reduction or less reliable water allocation, under their water access entitlements, arising from reductions to the consumptive pool as a result of: (i) seasonal or long-term changes in climate; and (ii) periodic natural events such as bushfires and drought’. However, these risk assignment provisions have not been tested by the courts. Therefore, amendments may be needed to strengthen this risk assignment, enabling adjustments to entitlements in response to drying trends, as assessed every time the Basin Plan and the Water Resource Plans are revised.

If a government was willing to, it could reduce the volume of all entitlements, by decree, to reflect what are deemed to be appropriate levels over the next Plan period. This approach would attract strong opposition and test the government’s willingness to use the risk assignment provisions in the Water Act. Predictably, any reductions would trigger vigorous debate about whether these changes were caused by climate change or policy change. This contest would occur because the NWI and the Water Act (Schedule 3A) assign climate risks to entitlement holders, while governments bear the costs of adjustment arising from changes in policies. Clause 50 of the NWI states that ‘Governments are to bear the risks of any reduction or less reliable water allocation that is not previously provided for, arising from changes in government policy’. However, it is crucial to recognise that there are inherent challenges in clearly defining whether any reductions in volumes or reliability are caused by climate change or government policy.

In addition any legal questions, the actual politics involved in entitlement adjustment are challenging (Alexandra 2020). In the Guide to the Plan, the MDBA proposed a three per cent reduction in entitlements due to climate change (Pittock, Grafton, and Williams 2015). However, the MDBA subsequently withdrew this proposal. While acknowledging the significance of climate change risks, it argued that any quantified allowance for climate change in water planning decisions required more certain knowledge (Commonwealth of Australia 2012). This decision is perplexing because we know that knowledge about the future of the MDB will never be certain. Therefore, we need to apply the precautionary principle. Planning approaches predicated on needing near perfect knowledge will never cope with the realities of uncertainty. The point is we need planning methods that actively incorporate complex uncertainties. Governments were unwilling to apply the risk assignment principles because reducing entitlements without compensation would have increased the already strident opposition to the Basin Plan (Alexandra 2021). However, not reducing the estimates of the total resource pool, the SDL, and entitlement volumes, impacted the environment disproportionately by eroding the volume and reliability of planned environmental water (PEW) (Young, Jones, and Blackmore 2011; Prosser, Chiew, and Stafford Smith 2021).

3.5. The future-proofed Basin-proposal

Young and McColl’s (2008) proposed an allocation model that uses flexible, adjusting shares, with the proportion of shares allocated to the environment and extractive users adjusting to the water actually available in any seasonal conditions. They outlined an ‘extraction management regime’ that flexibly shares water between the environment and consumptive users (Young 2014). In their future-proofed Basin, all environmental and extractive entitlements convert to variable shares of a water resource, as per the Gwydir Valley example outlined above. Their envisioned ratio-based water-sharing regimes (e.g. 50/50, 60/40 or 70/30) exclude maintenance water (sometimes defined as conveyance water – or the flows needed for running the rivers within acceptable standards, e.g. for salinity) and floodwaters, which cannot be harvested and managed.

3.6. Contingent planning using quintiles with variable rules

An alternative to using fixed ratios is a contingent-planning model ((Jarman and Alexander Kouzmin 1994) that uses variable formulas. These could be based on using different formulae for each quintile of the prevailing conditions that define the contingent ‘states’ - e.g. very wet, wet, neutral, dry, and very dry. The change from one state to another would trigger predetermined, variable rules that adjust allocations to the seasonal conditions being experienced, enabling the conservative use of water under dry conditions and more liberal use when wet. This quintile model finds legitimacy from Clause 23 of the Water act (2007), which states that the MDBA must set a long term SDL that reflects an Environmentally Sustainable Level of Take (ESLT). This may be specified as ‘(a) as a particular quantity of water per year; or (b) as a formula or other method that may be used to calculate a quantity of water per year; or (c) in any other way that the Authority determines to be appropriate’.

A contingent quintile method of water planning would adopt formula-based approaches responsive to actual conditions. It would involve developing formulas for defining the five stages and allocating rules appropriate to these differing conditions. Under this approach, rules governing extractions vary depending on water abundance. This contingent planning (Jarman and Alexander Kouzmin 1994) approach is a planning framework responsive to conditions without attempting to define the probabilities of these conditions occurring in any given planning period. This type of planning framework can adjust to wide-ranging conditions without depending on accurate predictions about what will occur or what is likely to occur. For example, annual water allocations in the neutral, dry and very dry stages would be progressively more conservative to preserve water stocks in advance of long-term droughts.

On the other hand, allocation rules under the wet or very wet conditions would encourage water to be taken and used (e.g. into private off-river storage or for flooding of wetlands). This approach enables the refilling of dams from saturated catchments. The quintile-based approach would enable in-stream and floodplain flow targets to be established, and evaluated that are appropriate to the actual conditions. Further, this approach would enable responsiveness to seasonal streamflow forecasts, the utility and accuracy of which are improving in supporting allocation decisions (Kaune et al. 2020). The allocation of rights to extract specific amounts of water attached to any entitlement would need to be based on transparent rules and gauged volumes or flow rates assessed at critical locations, such as dams, the confluences of streams or other well-defined measurement points in the stream network.

3.7. Compulsory acquisitions

There are alternative options to entitlement reductions undertaken by government decrees that rely on climate science projections, the accuracy of which is always debatable (Alexandra 2021). For example, a compulsory rolling buy-back of 10% of all entitlements every five years could create an adjustment pool, with the resale of any surplus (e.g. 5%) by public tender. The sale process would help determine the market value of entitlements in any given regional water system or over a specific period. The remaining 5% could be retired from the consumptive pool to adjust for the impacts of climate change. Young and McColl (2003) proposed compulsory tender mechanisms as one option for reducing water use in the MDB. Their four options included:

1. A pro-rata reduction in the volume stated on all entitlements;

2. The acquisition of entitlements using open-market, voluntary-tender and compulsory-tender mechanisms;

3. The compulsory acquisition of a proportion of each entitlement;

4. Government investment in infrastructure upgrades in exchange for surrendering shares of entitlements.

To date, the main mechanisms governments adopted have been b) voluntary-tender mechanism and d) infrastructure upgrades. However, there are doubts about the efficiency and effectiveness of both mechanisms (Grafton and Wheeler 2018). Therefore, investigating their feasibility, effectiveness and equity dimensions of the other options should be assessed as part of the 2026 revision and any accompanying reforms.

4. Insights into adaptive policy

4.1. Possible options for revising the 2026 Basin plan

The Water Act establishes a policy and planning framework that can enable more flexible and adaptive governance of the Basin within constraints of laws and legal conventions, noting that these can also be amended or rescinded by parliament. Nonetheless, at the time of writing, the 2026 revision of the Basin Plan provides a crucial opportunity to investigate and develop more adaptive models of water resources management. This paper outlines some options including:

1. Adjusting the water resources pool (and all subsidiary targets) to reflect the contemporary understanding of the impacts of climate change

2. Reducing water entitlements by applying the agreed NWI risk assignment principles, even if this incites opposition or requires amendments to the Water Act.

3. Adopting ratio-based water allocation frameworks that self-adjust to future conditions

4. Investigating contingent planning models that define allocation rules based on the variable states of water availability.

5. Strengthening the legal protections for planned environmental water because the lack of mechanisms for protecting environmental water from a drying climate jeopardises realisation of the Water Act’s objectives (Young, Jones, and Blackmore 2011).

4.2. A rationale for revising the Basin plan

In 2021, Australia’s Productivity Commission (PC Productivity Commission 2021) called for further reform, recommending that processes of water planning be upgraded to best practice to deal with climate change. This recommendation echoes the Water Act’s requirements to use the best available science for climate risk management (Commonwealth of Australia 2007). Achieving these aspirations depends on governments developing the capabilities, techniques and procedures for dealing with climate change. Commitments to this are urgent given the lead times involved. Some possible structural reforms include establishing an independent Climate Change Adaptation Authority to formulate policy guidance (Walker 2019) and reinstating independent statutory authorities for funding water research (Marlow 2020).

Comprehensive and fundamental revisions to the Basin Plan are needed because traditional water resource planning methods evolved under conditions of hydro-climatic stationarity (Milly et al. 2008; Prosser, Chiew, and Stafford Smith 2021). It is now necessary to develop theoretical frameworks and technical models of Basin Planning, suited to the non-stationarity of hydro-climate regimes and the dynamic biogeochemical and ecological processes of the Anthropocene. These cascading changes are undermining the conceptual foundations of water, catchment and ecosystem management, generating ‘wicked’ environmental problems (Schoeman, Allan, and Finlayson 2014; Ross et al. 2015; Kønig, Børsen, and Emmeche 2017). These problems involve irreducible complexities, and deep uncertainties leading to increased interest in post-normal science (Dankel, Vaage, and van der Sluijs 2017).

Options for solving the MDB’s wicked problems (Ison, Alexandra, and Wallis 2018), are limited because they are ‘typically conceived of in legalistic terms’ including through the specifications of powers, obligations and bundles of property rights. These rule-structured arrangements are ‘nested within other sets of rules that stipulate how rules … can be changed’ (Whaley 2022, 224). This nesting of rules can make fundamental reforms extremely difficult. Rarely is there a willingness to explore deep reforms, with greater attention given to marginal changes (Young 2014) because of a deep unwillingness to tackle the political dimensions of resource access arrangements. There is therefore, a need to reduce the political risks involved in reform.

Most discussion about water resources planning attempts to render the topic technical and apolitical when it is profoundly and intrinsically political (Allouche, Middleton, and Gyawali 2019; Swyngedouw and Boelens 2018). Furthermore, water planning under climate change is explicitly political because preparing for more dynamic, changing, and extreme climatic conditions involves policy choices with profound consequences. Adaptation policy decisions change peoples’ lives and livelihoods, affect property rights, impact irrigation industries and expose communities to differential risks (e.g. droughts, fires and floods). The Anthropocene’s rivers of risks involve difficult policy decisions with uncertain outcomes (Alexandra 2021). Investigating options for climate adaptation raises questions about legitimacy, deep-seated power relationships and resource access arrangements (Nightingale 2017). In the MDB, questions about who bears climate risks remain unresolved. Climate impacts and adaptation science will remain contentious (Sarewitz 2004), particularly if policy decisions impact entitlement values. Legal reforms could help reduce potential conflicts by prescribing more transparent procedures for using the best available science to inform policy decisions (Walker 2019; O’Donnell and Nelson 2020).

5. Conclusions

Governing river basins under changing climatic futures remains a significant challenge for governments. This paper explores ways of adjusting the MDB to a changing climate, arguing that the 2026 review of the Basin Plan is a significant opportunity to enhance climate risk management. Critical dimensions of this opportunity involve reforms to water entitlements and allocation frameworks because these are vital instruments determining water extraction and use.

Climate change alters the volumes and reliability of water resources and increases extreme conditions, such as droughts. Therefore, the capacity to adjust to uncertain and changing conditions should be a vital feature of any redesigned water allocation framework. In short, there is a pressing need for adaptive allocation regimes that can equitably and efficiently share water resources between different users, including the environment, under changing conditions.

This paper outlines the need for flexible, adaptive, and responsive policy settings. The adaptive governance of water resources offers fertile possibilities for researchers and policymakers who could cooperatively investigate how specific instruments, and arrangements of interacting instruments, enable or constrain adaptive outcomes. We need more research into policy instruments, such as water allocation regimes, suited to specific institutional, hydrological and legal contexts. These require context-specific assessments, design, execution and evaluation in the MDB. Options for equitable and efficient reform deserve serious attention in the revision of the Basin Plan.

More generally, understanding the institutional arrangements and policy frameworks which deliver adaptive capacities is also worthy of further research. This research should examine the systems, structures and practices of governing, including how specific arrangements and instruments contribute to or impede equitable and efficient adaptation. Such research needs to pay attention to the art of governing and how institutional capabilities and arrangements interact with specific policies and policy instruments. During periods of rapid change, these relationships will continue to evolve. They are, therefore, important subjects for further research and provide ongoing challenges for robust policy development.

Well designed, self-adjusting allocation regimes could use more flexible, contingent planning models that accommodate future uncertainties while assigning and reassigning respective water shares to different users and uses. However, these are more than technical or legal issues. Governing the MDB involves institutional relationships that span the local to the national scale. Adaptively governing the Basin’s rivers under climate change requires clear-minded appraisals of the MDB’s challenges and options for handling them equitably and efficiently. This means investigating, designing and evaluating laws, policies and institutional arrangements suited to rapidly changing conditions. Meaningful and open debates about policy options and their implications are essential to coherent policy reforms. Good practice planning processes must include sufficient time to socialise the more technical findings and their consequences. Getting the more technical dimensions done is urgent to allow sufficient time for the necessary consultations and social negotiations before 2026. Overall, further reform in the MDB is a bespoke institutional design challenge for the nation rather than a technical water planning challenge to be undertaken mainly within the episodic revisions of the Basin Plan.

Disclosure statement

No potential conflict of interest was reported by the author(s).