Management of irrigation water storages: carryover rights and capacity sharing

Summary

Traditionally in Australia state governments have centrally managed major irrigation water storages (dams) by determining water allocations (water released for consumption today) each season, given prevailing storage levels. This research will investigate two decentralised approaches to storage management - carryover rights and capacity sharing.

This project will examine and compare carry over and capacity sharing rights and consider their potential to generate superior outcomes to central control of storages. This will include the development of a model to quantify the potential benefits from adopting decentralised storage management policies. The project will also involve a detailed examination of existing capacity sharing schemes in Queensland.

Aims

• ­Identify and describe the main water storage management options (centralised management, carryover and capacity sharing)
• Explain why centralised management may lead to a less efficient allocation of water over time compared to decentralised management options
• Outline the differences between carry over rights and capacity sharing systems and consider the potential advantages of capacity sharing
• Develop a quantitative economic model to illustrate the potential benefits to irrigators (higher and less variable incomes) from adopting more decentralised storage management options
• Conduct a detailed examination of capacity sharing schemes in Queensland (otherwise known as ‘continuous sharing’ schemes) particularly in the St George region
• Contribute to and influence the debate on options available to governments to help irrigators adapt to lower and more variable water supplies under climate change
   

Outcomes

• ­Improved understanding of water storage management issues by industry and policy makers
• Improved understanding of alternative water storage management options including carry over rights and capacity sharing
• Improved understanding of the capacity sharing schemes operating in Queensland
• Potential change in storage management policy by governments, away from centralised management and toward more decentralised approaches such as capacity sharing

Background

The intertemporal management of irrigation water storages involves a consumption-storage decision, where the benefits of consuming water today need to be evaluated against the uncertain benefits of storing water for future use. Traditionally in Australia state governments have centrally managed this decision: making decisions on water allocations (water released for consumption today) based on current storage levels and expected inflows. Storage release policies can be thought to vary along a yield-reliability spectrum: ranging from conservative (low yield-high reliability) to aggressive (high yield-low reliability).

Yield refers to long run average allocations associated with a particular release policy, whereas reliability refers to the variability in allocations associated with this release policy. For example, a conservative release rule would release a smaller percentage of available water for immediate consumption on average, holding more water over in storage for use in future periods, resulting in lower but more reliable allocations. Traditionally the Victorian government have tended to adopt more conservative release polices than the NSW government.

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