The challenges and opportunities of implementing general purpose groundwater accounting in Australia

ABSTRACT

Groundwater is a critical resource both worldwide and in Australia and, although groundwater information is central to its effective management, it is generally poor. General Purpose Water Accounting (GPWA), an innovative Australian system developed to account for water resources based on financial accounting principles, has been identified as a possible improvement to groundwater information. As previous studies have mainly considered the application of GPWA to surface water, we investigate groundwater accounting under GPWA. We adopt a theoretical framework of transparency, which is a critical component of accountability. Interviews were conducted within two Australian government departments responsible for groundwater management and reporting. Findings indicate that while GPWA could improve the transparency of groundwater reporting, methodological challenges remain unresolved. These challenges were grouped under two key themes, namely pre-existing data limitations (such as data availability) and translating financial accounting into groundwater (such as the difficulty of determining groundwater assets). Additionally, accountability was not seen as a likely outcome (or even a key objective) of GPWA. Key implications of our study are that further refinement of the standard is required to address the methodological issues identified and more major revisions may be required to achieve the stated objective of enhanced accountability.

KEYWORDS:

• Water accounting
• groundwater
• general purpose water accounting
• groundwater management
• transparency
• Australia

Acknowledgements

The authors would also like to acknowledge the support of the New South Wales (NSW) Office of Water and the Department of Environment, Water and Natural Resources (DEWNR) of South Australia as well as valuable comments from Professor Graeme Harrison and Dr Madeleine Hartley.

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Edward Tello http://orcid.org/0000-0002-9630-2454

James Hazelton http://orcid.org/0000-0003-3291-8206

Notes

1 AWAS 1 was issued by the Water Accounting Standards Board in 2012. The first iteration of the standard was called Preliminary Australian Water Accounting Standards and was followed by the Exposure Draft of Australian Water Accounting Standard 1 (ED AWAS 1) in 2010. AWAS 1 was released following a review of public submissions on ED AWAS 1. Deliberations carried out by the Water Accounting Standards Board in reaching AWAS 1 are disclosed in the Basis for Conclusions (see WASB 2012). While some changes occurred between the Exposure Draft and the AWAS 1, the paragraphs discussed above specifically related to groundwater remained unchanged.

2 There are cases in which market pressures are ineffective; for example, Bakker (2002) states that multiple market failures exist with respect to water including natural monopoly and externalities.

3 The interviews were conducted after ED AWAS 1 was released, but before the current AWAS 1 was released. Although there were many changes from ED AWAS 1 to AWAS 1, all relevant aspects for groundwater remain unchanged. Hence, to avoid confusion, all references to the standard are made to AWAS 1.

4 In developing AWAS 1, the Water Accounting Standards Board addressed three methodological challenges mentioned by participants during the interviews; namely, watering down the Accountability Statement by removing the disclosure of compliance with plans and rules, not considering the Assurance Statement as a main component of GPWA reports, and combining the Statement of Changes of Water Assets and Water Liabilities with the Statement of Water Flows into one statement to show total usage. These issues were not included in our analysis.

5 Australian jurisdictions have struggled to identify the extractable portion. The portion of the groundwater that is extractable ‘provides future benefits because it can be accessed and taken or delivered’ (ED AWAS 1, para. 71 and AWAS 1, para. 77).

6 Groundwater managers need this information to conduct trade assessments, whereas users would like to know about water movements within their accounts.

Additional information

Funding

The authors would like to acknowledge the support provided by CPA Australia and the International Governance and Performance Research (IGAP) Centre (Macquarie University) who partially funded this project.