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					            Case study 27


            Waterway protection guidelines



                                           suMMaRy

      date of evaluation: June 2005


      duration:

      Three projects supported the development of the guidelines. The first project was funded in
      1998–99 at the University of Tasmania (UTS1), followed by QEH2, then QEH3 in 2001–02.



      Nature of innovation:

      The key guidelines produced were:

      •    Ecological value guideline—a method for defining the natural (flora and fauna,
           geomorphology, hydrology and water quality) values of waterways

      •    Ecological sustainability guideline—comparison of methods for determining the
           ecological sustainability of waterways

      •    Planning guideline—an outline of planning instruments and processes, including
           guidance on setting priorities

      •    Evaluation guideline—a systematic method for evaluating impacts of planning and
           development on waterways.



      Who was involved:

      The initial framework was developed by researchers at the University of Tasmania, (UTS1) with
      the main project by the Queensland Environmental Protection Agency and Montgomery Watson
      Harza, with key support from researchers at James Cook University and Adelaide University.




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adoption and impact:

The waterway protection guidelines have been adopted, in whole or part, by a range of local
and State government agencies, particularly in NSW and Queensland, often facilitated by
consultants. In particular, widespread use is being made of the guidelines by the Queensland
Environment Protection Agency and the NSW Department of Infrastructure, Planning and
Natural Resources. Environmental benefits should accrue from the adoption of the protection
guidelines due to re-allocation of resources for waterway rehabilitation, improved development
plans of local government and improved decision making regarding water allocation.



evaluation:

A benefit–cost analysis for the investment in the guidelines was carried out through valuing
benefits from improved allocation of river rehabilitation resources and improved water
allocation planning processes and impacts.

Investment criteria

The results of the investment analysis32 were:

 Criterion                                                  discount rate 6%

                                     Benefits and all      all benefits and all    Benefits to LWa and
                                      costs to date               costs                LWa costs

 Present value of benefits ($m)              0                     4.27                    2.49

 Present value of costs ($m)               0.30                    0.30                    0.18

 Net present value ($m)                    –0.30                   3.97                    2.31

 Benefit:cost ratio                          0                  14.16 to 1              14.03 to 1

 Internal rate of return (%)             Negative                  48.36                   46.62




Current contact:

Dane Moulton, Queensland Environment Protection Agency, Brisbane, telephone 07 3006 4615




32 The values used in the tables and text of this case study are not the most up-to-date ones. Please
   check the main report for values that have been updated to 2005–06 dollars, are discounted to June
   2006, and reflect a 40-year analysis period. The case studies in future editions will incorporate the
   updated values.




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                                     FuLL Case study

      Introduction

      During the 1990s there was increasing recognition that the condition of many of Australia’s
      rivers had deteriorated, together with the ecosystems they support. For example, of the
      reaches assessed in the Land and Water Resources Audit of rivers (NLWRA 2002), it was
      found that:

      •    one third of the assessed river length have impaired aquatic biota

      •    over 85 per cent of the assessed river reaches are classified as significantly modified in
           terms of environmental features

      •    over 80 per cent of the reaches are affected by river disturbance

      •    over half of the reaches had modified habitat mainly linked to changes in sediment loads
           that also alter channel shape

      •    nutrients, mainly phosphorus, and suspended sediment loads are higher than natural
           loads in over 90 per cent of reaches, with 33 per cent classified as substantially modified.

      Investment in river rehabilitation had been recognised as an important activity for some
      time. Land and Water Australia had already funded projects to produce a manual for river
      rehabilitation (Rutherfurd et al, 2000). However, the focus on those waterways that were
      largely unmodified sharpened in the late 1990s as it was realised that strategies to protect
      such waterways may be more cost effective than focusing on restoration of degraded reaches
      as had been predominantly pursued previously. Further, it was recognised at that time that
      there was no nationally agreed method for identifying significant waterways nor consistent
      principles for waterway protection.



      Investment description

      Land & Water Australia (LWA) funded a project, ‘Identifying and protecting high ecological value
      rivers’, at the University of Tasmania (UTS1) in 1998–99. The objectives of this project were:

      •    to review the existing methods for identifying high value rivers/reaches/floodplains
           (i.e. exhibits wilderness or naturalness values) and develop and/or recommend the
           conceptual framework for a methodology that could be applied Australia wide

      •    to review methods for protecting high value rivers/reaches/floodplains, including
           among others, legislative and planning approaches and economic incentives, and make
           recommendations on the most effective suite of approaches for the Australian States,
           Territories, Federal Government and catchment management institutions




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•    to liaise with other Land and Water Resources Research and Development Corporation
     (LWRRDC) river restoration and management consultancies to minimise duplication and
     maximise synergies.

The final report for UTS1 (Dunn 2000) concluded that there was no nationally agreed method
for defining significant waterways as a basis for protection, nor were there consistent principles
for waterway protection. The UTS1 report included the results of a survey of river managers in
Australia which identified the need for ‘an overarching framework for river management goals
which acknowledges both community expectations for protection of a range of river values, and
the government’s own commitments to protection of biodiversity’. Dunn also recommended that
a set of principles be developed for the protection of biodiversity, ecosystems and processes.

Furthering the work by Dunn, in 2000, LWA funded a project at the Queensland Environment
Protection Agency (QEH2) entitled ‘Consultancy to incorporate protection principles and tools
into the river restoration framework’. The final report of this project ‘Principles and tools for
protecting Australian rivers’ was completed in 2001 (Phillips et al. 2001).

Later in 2001, LWA funded a project which sought to build on the recommendations of UTS1 and
QEH2. It was carried out by the Queensland Environmental Protection Agency and Montgomery
Watson Harza, with key support from James Cook University and the University of Adelaide.

The objectives of the project (QEH3) were to provide:

•    a systematic and adaptable approach to protecting waterways and floodplains

•    implementation tools to support application of the approach

•    assistance with setting priorities for protection and repair

•    assistance with identifying data gaps and priorities for research and monitoring.

The project resulted in the development of a series of guidelines. These guidelines emerged
over a number of years and included input from an initial series of three workshops.
Participants at the workshops included ecologists, geomorphologists and other practitioners
from Victoria, New South Wales and Queensland.

Following the workshop, a series of scoping papers was produced and public comment was
sought through the LWA website. At the same time, further workshops were being held in all
capital cities to elicit further comments on the draft. The redrafted guidelines were posted for
comment once more on the LWA website, before the final guidelines were produced. Part of
the development of the guidelines included the review of several documented methods that
have been previously applied to assess natural significance and sustainability.

To help with the drafting of the guidelines, the team derived a set of principles from State and
Federal laws, policies and strategies, and criteria for identifying ecological value were drawn
from a practitioner survey undertaken by Dunn (2000).




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      Investment costs

      Table 1 presents the investment costs by year for projects UTS1, QEH2 and QEH3.


      table 1. Resources (nominal dollars) invested by year for LWA, researchers and funding
      partners

       year            Project          LWa          Queensland       university of       total
                                                    environmental     adelaide and
                                                      Protection      James Cook
                                                       agency          university

       1998–99          UTS1           19,988                                             19,988

       1999–00          QEH2           20,000                                             20,000

       2000–01          QEH3           60,000           69,000           20,000          149,000

       2001–02          QEH3           21,130                                             21,130

       Total                          121,118           69,000           20,000          210,118

      Source: LWA and John Bennett (pers. comm. 2005)


      Based on the contributions in Table 1, LWA was responsible for 58 per cent of the total
      funding in nominal terms.



      Principal outputs


      Project uts1

      The principal output of UTS1 was a systematic means of describing and evaluating the
      ecological and conservation values of rivers. The output contains a checklist of ecological
      values and a flexible conservation assessment. River managers or conservation planners
      can use the checklist and appropriate criteria, thresholds or decision rules according to
      the particular purpose of the ecological value assessment. A range of approaches and
      strategies for conservation are proposed that take into account levels of water use and other
      developments. Adoption has been limited by a lack of active dissemination and on-ground
      training workshops to assist river managers with application.

      Another LWA project, ‘Australia wide system protection of rivers, river reaches and estuaries
      of high conservation value’, is building on the framework to develop a discussion paper with
      broad state endorsement to proceed with such protection. This project did draw on UTS1, but
      has not been completed formally (Helen Dunn, pers. comm., March 2005).

      The recommendations for UTS1 were a key input into QEH2 and QEH3.




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Projects QeH2 and QeH3

The key outputs of QEH2 and QEH3 were:

•    conceptual framework—the concepts behind the guidelines

•    ecological value guideline—a method for defining the natural (flora and fauna,
     geomorphology, hydrology and water quality) values of waterways

•    ecological sustainability guideline—comparison of methods for determining the
     ecological sustainability of waterways

•    planning guideline—an outline of planning instruments and processes, including
     guidance on setting priorities

•    evaluation guideline—a systematic method for evaluating impacts of planning and
     development on waterways.

The goal of the guidelines is maintenance of ecological values where ‘values’ encompasses
both waterway health and integrity. Maintaining health is the minimum target for all
waterways, but maintaining the integrity of all values is the target for waterways of high
conservation priority.

ecological value guideline

The ecological value guideline produced in QEH3 draws on both UTS1 and QEH2 and includes
a summary of existing methods for determining aspects of ecological value. It identifies five
criteria for identifying ecological value, as well as indicators at both regional and local scales.
For each indicator, measures are also identified. The method is said to be flexible and allows
outputs to be produced in a variety of ways. The information from the assessments can be
used as an input to prioritisation of waterway protection actions and evaluation of proposals
(e.g. dams, residential estates).

ecological sustainability guideline

The sustainability guideline defines ecological sustainability and outlines considerations in
determining sustainability (e.g. stability, vulnerability and thresholds). It uses a pressure–
state–response model as the basis for sustainability assessments and outlines five main
steps involved in the sustainability assessment. The assessment can be altered to provide for
both a rigorous assessment and a less-rigorous qualitative appraisal. It is recognised that
approaches to determining sustainability are not well developed and that this guideline should
evolve as wider practices with respect to sustainability assessment develop.




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      Planning guideline

      The planning guideline includes:

      •    information on how waterway protection can be included in relevant planning processes

      •    a review of different planning instruments

      •    a generic four–step planning process (establishing a vision, developing the plan,
           implementing the plan and monitoring/reviewing the plan)

      •    a detailed seven-step process for developing the plan

      •    guidance on the level/degree of protection to be applied to a waterway

      •    guidance on prioritisation of protection activities

      The guideline recognises three different levels of protection that can apply to waterways
      including conservation, sustainable use and protection of remaining values.

      evaluation guideline

      The evaluation guideline has the objective of providing a comprehensive technical framework
      for advising proponents on the ecological information needed in environmental impact
      assessment reports. It does not consider economic, social or amenity issues.

      The guideline provides three approaches to evaluating the information assembled, including
      threshold analysis, scoring system and expert panel. The guideline recommends that a
      combination of the threshold and expert panel options is the most justifiable approach.

      The ‘Guidelines for protecting Australian waterways’ (Bennett et al. 2002) was published in
      January 2002. The Guidelines are available to download free from the internet and a hardcopy
      can be purchased from LWA. Anecdotal evidence suggests this document was LWA’s best seller
      over the past few years. The guidelines are designed complement ‘A rehabilitation manual for
      Australian streams’ (Rutherfurd et al. 2000) also published by LWA and referred to earlier.

      The four guidelines individually or together can potentially assist a wide array of applications,
      including:

      •    conservation/protection strategies/plans

      •    environmental/water quality objectives for individual waterways

      •    waterway management and rehabilitation plans

      •    water resource studies and environmental impact assessments

      •    catchment and stormwater management plans

      •    statutory planning schemes.

      The targeted users are government planners/managers, developers/consultants, and the
      community.




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Principal outcomes


uts1

One NSW Department of Land and Water Conservation region has used the UTS1 framework
in the Stressed Rivers program. Elements of the framework (notably the criteria for ecological
value) have been used in some regions of NSW. Also, the assessment approach was applied
to the Glenelg–Hopkins catchment in Victoria but the outcomes are unknown (Dunn 2004).

The framework has been a foundation for the Tasmanian Conservation of Freshwater
Ecosystem values project (see <www.dpiwe.tas.gov.au/inter.nsf/WebPages/JMUY-
5QF35H?open>). This is currently in progress and is a major exercise in assessment and
identification of all freshwater ecosystems, including rivers. However, there is limited formal
documentation as yet (Dunn 2004). A technical report is soon to be finalised. It will be hard to
untangle the LWA contribution to that report (Helen Dunn, pers. comm., March 2005).

Adoption of the complete framework has been limited, as it constituted an approach that
needed to be further applied and adapted. It needed to be followed up with some systematic
multi-site case studies of the framework’s application and testing of the framework at
different scales (State, region, individual catchment etc.) (Dunn 2004).

QeH2 and QeH3

As the impacts of the framework produced by UTS1 are likely to be rather indirect, the focus
in this evaluation is on the outcomes from the investment in QEH2 and QEH3; that is, the set
of guidelines that were produced. The intended outcome of the guidelines is an improved
rigour and effectiveness of research, planning and decision-making processes for waterway
protection planning and management.

Generally, the specific uses of the guidelines by those obtaining them from LWA are not
known. There has been to our knowledge no follow-up as to who the purchasers were.

The final report of the project mentions two case studies—one a large rural area subject to
cyclones, the other a diverse urban area in the midst of national parks. In each case, the
classification system and the ecological value assessments were carefully modified to suit the
study context.

The following are some examples of uses of the guidelines:

Queensland uses

State-wide estuarine ecological values studies (EPA)

The EPA was commissioned by Environment Australia (now the Department of Environment
and Heritage) to conduct a broad-scale review of the ecological value of estuarine waters
throughout Queensland (Dane Moulton, pers. comm., July 2005). The project team adapted




                                                                                                   629
      the ecological values framework from the guidelines and assessed the relative condition/
      naturalness, significance/rarity, diversity and representativeness of estuaries against their
      current level of protection, before providing recommendations. The project findings are
      presented in two related reports (Page 2002; Page and Hoolihan 2002).

      State-wide river basin condition assessments (Environment Protection Agency (EPA) and
      other State agencies)

      The EPA and other agencies held a two-day workshop to identify the condition/naturalness
      of all river basins in Queensland. Criteria included catchment hydrology, water quality,
      river/channel features, riparian habitat, artificial barriers, alien species (riparian, aquatic)
      and floodplain ecology. Results of the workshop were documented in the ‘Report of the
      Queensland Rivers Policy Rapid Assessment Workshop’, held on 7–8 November 2000. Results
      of the workshop and associated data were provided as an input to the development of the
      Queensland wild rivers policy and legislation (Dane Moulton, pers. comm., 2005).

      Environmental values and water quality projects (three study regions—EPA)

      The EPA is currently undertaking three projects to establish environmental values and water
      quality objectives pursuant to the Environmental Protection (Water) Policy 1997 (EPP Water)
      and the ANZECC/ARMCANZ (2000) Australian and New Zealand guidelines for fresh and
      marine water quality. Project areas are:

      •    South-east Queensland/Moreton Bay

      •    Mary River basin, great Sandy Strait

      •    Douglas shire (Far North Queensland).

      As part of the process, the project team is identifying high ecological value waters
      (freshwater, estuarine, marine) using the same criteria as those identified in the QEH3
      guidelines. Ultimately, it is intended that water quality objectives will be scheduled under the
      EPP Water in order to protect these high ecological value waters (Dane Moulton, 2005).

      Burnett River catchment studies (EPA)

      The EPA is currently trialling a method for assessing the ecological/conservation values of
      waters within the Burnett River catchment. The criteria identified in the QEH3 guidelines form
      one of a number of inputs to this project.

      Water resource planning (Queensland Department of Natural Resources and Mines (QDNRM))

      The ecological values criteria have also recently been used by the Mary Basin water resource
      plan technical advisory panel as an input to the water resource plan (WRP) being prepared
      by the QDNRM (Dane Moulton, pers. comm., 2005). WRPs govern the allocation of water for
      human use (e.g. irrigation) and environmental flows; see, for example, recent reporting on the
      Mary River basin by Mary Tap at <http://www.nrm.qld.gov.au/wrp/pdf/mary/mary%5fenviro%5f
      cond%5fvol1%5f7.pdf>.




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Maroochy Council

The guidelines were used in a project carried out by 4site (consultants) to prioritise waterways
for all of the 23 major catchments in the Maroochy Shire. The project used a biophysical
assessment of ecological values, threats to those values and recovery potential in ranking
individual waterways. The study also was extended to include socio-economic factors and the
involvement of stakeholder and community members. The set of priorities has been used in
making changes to grant funding by the council, resulting in improved use of resources and
more cost-effective on-ground investment. Indirectly, there will be benefits to tourism and
fisheries with improved health of waterways and estuaries (Steve Dudgeon, pers. comm.,
June 2005). All waterways in the shire would have been affected by the prioritisation methods,
as the previous focus was on degraded streams. Currently the council spends some $0.5
million per annum on direct rehabilitation and protection in moderate to high priority areas,
but more on such items as sewage treatment plant upgrades.

Other uses

Other applications (Norrie Sanders, pers. comm., June 2005) have been for the:

•    Condamine Alliance for priority setting for management objectives

•    Windaroo Creek at the Gold Coast for value assessment and priority setting

•    Great Barrier Reef wetland prioritisation decision support system (advice only).

NSW uses

Warringah Council

The guidelines have been used by the Warringah Council in Sydney (MWH 2003). The
ecological value guidelines were used together with risk assessments to help set council
priorities in the management of its waterways. In particular, the guidelines stimulated
increased support for pristine areas of waterways and their use resulted in an improved
balance between rehabilitation and protection initiatives.

The council now has a management plan in place for all creeks in the shire and has available
waterway protection tools for the planning scheme so that it can better assess development
applications near waterways. Also, there has been a more effective use of staff resources
and the council’s geographical information system has been updated as a result of the
creek study. These changes are expected to improve the health of waterways and associated
biodiversity (Jodie Crawford, pers. comm., July 2005).

There are approximately 50 km of creek lines in Warringah and the council would spend about
$0.5 million on waterway protection and rehabilitation annually, including bush regeneration,
staff time and stormwater management.




                                                                                                   631
      Healthy Rivers Commission

      The guidelines were used by the NSW Healthy Rivers Commission (no longer in existence)
      to help with setting priorities and new directions for catchment management plans in the
      Hunter Region of NSW. The project was undertaken by 4site and used a rapid assessment
      technique and included socio-economic values and stakeholder input.

      NSW water sharing plans

      In their development of water sharing plans in NSW, the classification of water sources has
      used a method that has been developed from the LWA guidelines, via the paper prepared by
      the now defunct NSW Healthy Rivers Commission. The method now used has moved away
      to some degree from the guidelines but a considerable proportion of the benefits from the
      classification can be attributed to the guidelines (Eric Hatfield, pers. comm., June, 2005).

      The main outcomes from the revised method are expected to be (Eric Hatfield, pers. comm.,
      June 2005):

      •    a better theoretical base for determining water sharing rules

      •    more rapid plan preparation than for the previous method (say 2 years in total versus
           10 years)

      •    clearer understanding of the key issues in each location, which assists in setting water
           sharing rules and should reduce conflict and focus discussion when the draft plans go
           out for public comment

      It is expected that there will be both a cost saving and an improvement in the water sharing
      plans as a result of use of the guidelines.



      Benefits associated with the investment

      The immediate benefit from these outcomes has been the improved resource allocation of
      river health investment associated with the improved assessment processes delivered by the
      use of the guidelines. In the longer term, this should lead to improved waterway health with
      economic, environmental and social benefits associated with such improvements.

      Benefits reported in the uses of the guidelines described earlier include:

      •    improved river assessment processes

      •    improved priority setting and resource allocation

      •    higher proportion of cost-effective investment

      •    reduced costs and conflict in developing water sharing plans in NSW, as well as
           improved plans

      •    improvements in waterway health in the long term




632
•       enhanced biodiversity in the long term.

Further, improved protection of waterways may result in more effective biological ‘seeding’
sources for rivers downstream that are degraded, helping to restore downstream rivers to a
healthy state (Cullen 2001).

A summary of the different benefit types that have been identified from the users of the
guidelines is provided in Table 2.


table 2. Summary of the economic, environmental and social benefits from the investment in
protection guidelines

    economic                                 environmental                  social

    Improved priority setting and resource   Enhanced water quality and     Focus for stakeholder
    allocation in river health investment    biodiversity associated with   involvement in priority
                                             waterways                      setting

    Benefits to tourism and fisheries from                                  Improved aesthetics of
    improved river health                                                   waterways

    Reduced costs of preparing water                                        Less anxiety and conflict in
    sharing plans in NSW                                                    developing water sharing
                                                                            plans

    Improved water sharing plans in NSW

    Improved local government plans
    and management of development
    application processes.




Quantification of benefits

Reports of use of the guidelines refer mainly to NSW and Queensland. There are two benefit
types that are valued in this analysis. These are:

•       improvements in allocation of investment in protecting and rehabilitation of waterways in
        a limited number of regions in NSW and Queensland

•       benefits from use of the guidelines in developing NSW water sharing plans

Improved allocation of rehabilitation and protection resources

Expenditure on Rivercare

Rivercare expenditure in NSW and Queensland has been estimated from Natural Heritage
Trust (NHT) funding from 1999–00 to 2004–05. Annual expenditure after 2004–05 is based on
2004–05 expenditure levels. While this is the best indicator readily available, it is recognised
that it is not a perfect indicator of total expenditure on river rehabilitation since:




                                                                                                           633
      •    there are crossover expenditures between Rivercare, Landcare etc., and some National
           Action Plan for Salinity and Water Quality expenditure is allocated to inland aquatic
           outcomes

      •    there are other sources of river rehabilitation resources available such as State grants
           and local government expenditure.

      The total NHT Regional, Envirofund, and National Rivercare expenditure has been adopted as
      the mainstream Rivercare funding of interest. A breakdown for NSW for two years (2002–03
      and 2003–04) showed that NSW represented 29 per cent of total NHT Rivercare funding for
      Australia. This proportion has been applied to total Rivercare expenditure (less 13.5 per cent
      for administration) for each year over the period 1999–2000 to 2004–05. The total Rivercare
      expenditure figures have been obtained from Commonwealth budgets for environmental
      expenditure for inland waters. The Murray Darling Basin 2001 funding has been excluded. The
      proportion for Queensland was not detected but was estimated at 20 per cent based on the
      NSW proportion.

      The resulting estimate of NHT funding for NSW and Queensland has then been doubled to
      account for State, local government and community funding.

      Benefits from Rivercare

      It is assumed that Rivercare expenditure results in economic and environmental benefits such
      as improved flood mitigation and water quality and enhanced biodiversity through riparian
      protection and restoration, and improved aquatic habitats.

      Different benefits will take different periods to be captured but for purposes of this analysis
      it is assumed that the benefits accrue on average five years after the expenditure is made.
      Sharon Cunial (pers. comm., 2004) provided examples:

      Some intrusive in-stream works such as bank protection are expensive and take a long time
      to show positive benefits to the riparian zone. Others such as bed control works which prevent
      upstream damage can have an immediate benefit to the stream. Installing large woody debris
      in a river for habitat purposes can give immediate impacts, however, revegetating stream
      banks to supply streams with mature woody debris can take 50+ years. Protecting existing
      riparian remnants with stock proof fencing has immediate benefits to the health function of
      the riparian zone.

      Improvements in investment performance from use of the guidelines

      The rate of return to the Rivercare expenditure is assumed to be 10 per cent per annum,
      allowing a benefit stream to be estimated over 20 years commencing five years after the
      expenditure. The ensuing combined benefit totals for individual financial years from 1999–
      2000, given the ‘without guidelines’ scenario, are then estimated.




634
It is then assumed that the use of the protection guidelines for assisting priority setting for
the Rivercare expenditure will result in a 20 per cent higher benefit stream on average, as the
expenditures are more balanced than previously towards protection where investment is likely
to be highly cost effective.

Use of the guidelines

It is assumed that only a small proportion (2 per cent) of Rivercare resource allocation in NSW
and Queensland has been affected by the use of the guidelines.

Use in development of NSW water sharing plans

Benefits where values are quantified include both cost savings in plan development as well as
an improvement in the water sharing plans.

Reduction in costs in developing water sharing plans

A rough estimate of the saved costs due to the new method used for the water sharing plans
has been made by Eric Hatfield of the NSW Department of Infrastructure, Planning and
Natural Resources (pers. comm., June 2005):

It took 2–3 years to complete the first round of plans. Many of these were regulated river
plans, which were the biggest in terms of usage, but they were nearly all inland and didn’t
really slow down the unregulated plans on the coast. Most people accept that doing the
rest of the plans (the majority of water sources, the majority of licences but a minority
of the extraction) would take at least 10 years, could be 20. This was because they used
water committee processes, with committees comprising government, irrigators, greens,
Aboriginals etc. etc. and that all took considerable time. But it is still a bit of a guess
whether we could have speeded things up in a second round. Perhaps just as importantly,
the outcomes of the plans were as much dependent on the make-up or balance of the
committees and the willingness of local communities to compromise as they were on the
actual extractive and instream values, which mean the outcomes were potentially less robust
and logical.

We have a much shorter process this time, and potentially more robust. The method, based
on the guidelines but considerably developed, allows better definition of extractive and
instream values, and hence more balanced definition of required rules. We hope this will
make its outcomes more acceptable and defensible. Having dispensed with the committee
process, and going with public exhibition and comment and short targeted discussions with
interest groups, we are open to criticism, but hope that the transparency of the classification
process will reduce the criticism. But the process is 2 stage: (1) classification, and (2) rule
setting, and the guidelines assist 1 but 2 is still open to criticism.

An estimate is that the current process would have taken about 4 people × 2 years full time
and about 40 people in various departments and regions about 6 months each, so about 30
person years if you add in some management overheads, plus community input. The other




                                                                                                  635
      process might have taken 5 or more times this for the government, but the committee costs
      would have been quite high. All of this is independent of the massive effort in getting the
      existing licences onto an accurate database, which is required under either process.

      If a person-year is valued at $100,000, the cost would equal about $3 million over the next two
      years using the current method. Using the older method (without the guidelines) is assumed
      to cost $15 million so that the saving would be in the order of $12 million. In addition, the
      plans would be completed more rapidly.

      Not all of this cost saving can be attributed to the guidelines as indicated by Hatfield. For
      purposes of this analysis it is assumed that 20 per cent of the cost reduction can be attributed
      to the guidelines.

      Improved plans

      Water sharing plans are a compromise but, in theory, they should increase total utility to
      NSW, although there will be winners and losers. While water can be valued more easily for
      an extractive use, its in-stream value is more difficult to quantify. Planning can move the
      allocation mix closer to the point where total utility is maximised.

      Hatfield’s view is:

         What we can say is that due to the guidelines there is less risk of the plans being
         inappropriate to the needs. Where there are important instream values, there is more
         chance they will be identified and taken into account, ditto for extractive values. Put it
         another way, where instream values are greater than extractive values, they are being
         protected, and vice versa—in each case, the gains hopefully outweigh the losses. But this
         of course depends on being willing and able to say that environment value is greater than
         extractive value in some cases, and vice versa, and these are value judgements which
         many people would dispute. Putting $ or percentages on it just tends to obscure the
         subjective nature of it. But I have no doubt this process is better, because it has a better
         policy basis, and avoids the ‘one size fits all’ approach and the committee negotiation
         which lacks a basis and is open to abuse.

      The challenge is actually to value the enhancement of the plans due to their use of the
      guidelines. A willingness to pay (WTP) study involving the environmental aspects of water
      resource plans (Rolfe and Bennett 2004) was used as the basis for this valuation. That study
      reported that Brisbane households would be prepared to pay an average of $74.28 (one-
      off payment) for improved equity for water resource allocation in central Queensland. The
      different equity groups specified in the study were small farmers and landowners, small
      townships, environmental groups and Aboriginal groups, with the respondents giving first
      priority to each group of 59 per cent, 22 per cent, 18 per cent and 1 per cent, respectively.




636
As the guidelines would have influenced only allocations about the environment, only a
part of this WTP estimate can be attributed to the guidelines. A dilution factor of 18 per
cent, equivalent to the proportion of respondents giving first priority to the environment,
has therefore been applied to the $74.28, resulting in a WTP of $13.40 for increased equity
associated with the environment. Further dilution factors have been applied to this figure:

•       30 per cent due to factors other than the guidelines also influencing the improved equity

•       50 per cent due to the plans actually delivering an improved outcome in terms of total
        utility.

The resulting value of $2.01 per household has been applied to the population of Sydney
households to provide an aggregate WTP for the enhanced NSW plans that can be expected
from the guidelines.

summary of assumptions

A summary of all assumptions made is given in Table 3.


table 3. Assumptions for the valuation of benefits from protection guidelines

    Variable                               Value                   source
    Improved resource allocation

    Rivercare expenditure (Commonwealth)   2003–04: $41.7m         Source: NHT (2005)
                                           2004–05: $83.7m
                                           2005–06 $83.7m
                                           2006–07 $81.0m
                                           Thereafter assumed to
                                           be $81m per annum

    Proportion of Commonwealth Rivercare   29% for NSW             Estimated from regional
    expenditure made in NSW and                                    expenditure for NSW and
                                           20% for Queensland
    Queensland                                                     Australia made in 2002–03 and
                                                                   2003–04 (Webb, pers. comm.
                                                                   2004); estimate for Queensland
                                                                   made by Agtrans

    Funding from State government, local   Matches                 Agtrans assumption
    government and communities             Commonwealth
                                           Government Rivercare
                                           expenditure

    Assumed rate of return investment in   10 per cent per annum   Agtrans assumption
    Rivercare without the guidelines

    Average number of years between        5 years                 Agtrans assumption
    Rivercare expenditure and benefits
    accruing




                                                                                                    637
      table 3. (continued)

       Variable                                     Value                     source

       Annual benefit stream from Rivercare         0.171972 × Rivercare      Annuity value of expenditure
       investment in a particular year              investment per            yielding 10% per annum with
                                                    annum for 20 years        lag of 5 years
                                                    commencing 5 years
                                                    after the Rivercare
                                                    investment

       Increase in theoretical benefit stream       20%                       Agtrans assumption
       due to improved priority setting

       Proportion of actual increase in benefit     40% as other factors      Agtrans assumption
       stream assumed                               will influence the
                                                    on-ground resource
                                                    allocation

       Proportion of Rivercare expenditure in       2%                        Agtrans assumption
       NSW and Queensland benefiting from
       guidelines

       Cost reduction for NSW water planning

       Effort to develop the water sharing          15 persons per year for   Eric Hatfield, pers. comm., June
       plans for NSW with the older method          10 years                  2005
       (without the guidelines)

       Effort to develop the water sharing          15 persons per year for   Eric Hatfield, pers. comm., June
       plans for NSW with the current method        2 years                   2005

       Value of a person year of work on the        $100,000 per person       Agtrans assumption
       water sharing plans                          per year

       Proportion of this cost reduction directly   20%                       Agtrans assumption
       attributable to the guidelines

       Improved water plans in NSW

       Willingness to pay for improved equity       $74.28 per household      Rolfe and Bennett (2004)
       in water sharing plans

       Proportion of respondents giving first       18%                       Rolfe and Bennett (2004)
       priority to the environment

       Willingness to pay for improved equity       $13.40                    $74.28 times 18%
       in water sharing plans taking into
       account the guidelines probably assist
       improved environmental allocation

       Number of households in Sydney               1.5 million in 2001       Australia Bureau of Statistics
                                                                              Census data (3236.0 Household
                                                                              and Family Projections
                                                                              Australia 2004).

       Attribution of benefits to the guidelines    30%                       Agtrans assumption
       (factors other than the guidelines also
       influence the improved equity)

       Probability that the plans derived from      25%                       Agtrans assumption
       the current method will actually be
       more effective than those from the
       older method when implemented




638
Results

The investment criteria are presented in Table 4. ‘Benefits to date’ captures the benefits that
have accrued up to 2004–05. All values are expressed in 2004–05 dollar terms and discounted
to the year 2004–05.


table 4. Investment criteria by type of benefits and costs included

    Criterion                                             discount rate 6%

                                      Benefits to date    all benefits and all     Benefits to LWa and
                                     only and all costs          costs                 LWa costs

    Present value of benefits ($m)           0                   4.27                     2.49

    Present value of costs ($m)            0.30                  0.30                     0.18

    Net present value ($m)                 –0.30                 3.97                     2.31

    Benefit:cost ratio                       0                 14.16 to 1               14.03 to 1

    Internal rate of return (%)          Negative                48.36                    46.62



The proportion of benefits from each source was:

•       improved resource allocation                                             25 per cent
•       expected reduction in costs for water sharing plans in NSW               44 per cent
•       value of improved water sharing plans in NSW                             31 per cent



sensitivity analysis

Table 5 shows that even when only 10 per cent of the benefits of each type accrue, the
investment still provides a positive return at a 6 per cent discount rate.


table 5. Sensitivity of investment criteria to level of benefits assumed (LWA benefits and costs)

    Criterion                                              discount rate 6%

                                       Only 10% of all        Base values           all three benefits
                                       three benefits                                    doubled
                                          assumed

    Present value of benefits ($m)          0.25                  2.49                     4.97

    Present value of costs ($m)             0.18                  0.18                     0.18

    Net present value ($m)                  0.07                  2.31                     4.79

    Benefit:cost ratio                    1.40 to 1            14.03 to 1               28.06 to 1

    Internal rate of return (%)             9.71                 46.62                    61.54




                                                                                                         639
      summary of adoption information

      The target audiences for the use of the guidelines would include:

      •       environmental protection agencies

      •       local government

      •       natural resource and water management authorities

      •       government agencies involved in water resource planning

      •       non-government organisations and community groups

      •       catchment management authorities and regional NRM groups

      •       consultancy organisations.

      Table 6 summarises existing knowledge of which organisations have used the rehabilitation
      and protection guidelines since they have been produced.


      table 6. Australian groups associated with the use of the guidelines

          associated Group                               Category of user/use

          Environment Protection Agency, Queensland      Environment protection agency (State), condition
                                                         assessment, establishing environmental values

          4Site, Brisbane                                Consulting group, various uses

          Warringah Council, Sydney                      Local government, priority setting

          Department of Natural Resources and Mines,     State Government agency, water resource
          Queensland                                     planning

          Department of Infrastructure, Planning and     State Government agency, developing water
          Natural Resources, NSW                         sharing plans

          Healthy Rivers Commission, NSW                 Environmental protection agency, priority setting

          Maroochy Council, Queensland                   Local government, priority setting

          Condamine Alliance, Queensland                 Community group, priority setting for
                                                         management objectives

          Windaroo Creek at the Gold Coast, Queensland   Value assessment and priority setting



      However, it is difficult to build a time series for the adoption of the guidelines, as in some
      cases its use may have been one-off. The best that can be done in the future will probably be
      to add to the current list of users and uses.

      An improved method for identifying those who obtain the guidelines should be developed.
      This would then allow a targeted survey of potential users to take place to better assess
      adoption and the eventual replacement of the guidelines with other information and
      decision making aids.




640
Conclusions

This relatively small investment has resulted in improved waterway assessment processes
with implications for more efficient and effective resource allocation of river health
expenditure across a range of organisations. Although the use of the guidelines is not
widespread across Australia, their use has been identified across at least 10 organisations
in NSW and Queensland. In particular, widespread use is being made of the guidelines by
two State agencies (Queensland Environment Protection Agency and the NSW Department of
Infrastructure, Planning and Natural Resources).

Users of the guidelines see them as having greatly assisted them in restoring balance in
resource allocation between degraded and less degraded or pristine waterways with balance
being restored towards the pristine. In the longer term, all these applications should lead to
improved waterway health with economic, environmental and social benefits associated with
such improvements.

The economic analysis contains a number of assumptions that are uncertain but, given the
assumptions made, the investment criteria suggest that a significant return has been (or will
be) associated with this investment.



acknowledgments

•    John Bennett, Environment Protection Agency, Queensland

•    Jodie Crawford, Warringah Council, Sydney

•    Sharon Cunial, NSW Department of Planning Infrastructure and Natural Resources,
     Kempsey

•    Steve Dudgeon, Maroochy Shire Council

•    Helen Dunn, University of Tasmania

•    Eric Hatfield, NSW Department of Planning Infrastructure and Natural Resources,
     Sydney

•    Dane Moulton, Environment Protection Agency, Queensland

•    Norrie Sanders, 4site, Brisbane



References

ANZECC/ARMCANZ (2000) Australian and New Zealand Guidelines for Fresh and Marine Water Quality
   <www.ea.gov.au/water/quality/nwqms/#quality>.

Bennett, J., Sanders, N., Moulton, D., Phillips, N., Lukacs, G., Walker, K. and Redfern, F. (2002).
    Guidelines for protecting Australian waterways. Land & Water Australia, Canberra.




                                                                                                      641
      Cullen, P. (2001). A national system of heritage rivers. Cooperative Research Centre for Freshwater
           Ecology website at <http://freshwater.canberra.edu.au>, select ‘Publications’, then Watershed,
           July 2001.

      Dunn, H. (2000). Identifying and protecting rivers of high ecological value. Land and Water
          Resources Research and Development Corporation, Canberra, Occasional Paper No. 01/00.

      Dunn, H. (2004). Defining the ecological value of rivers: the views of Australian river scientists and
          managers. Aquatic Conservation: Marine and Freshwater Ecosystems, 14, 413–433. [Reports
          on an element of the LWA project]

      MWH (Montgomery Watson Harza) Australia (2003). Creek management study summary document.
         Report to Warringah Shire Council, Manly, NSW.

      NHT (Natural Heritage Trust) (2005). Annual report 2003–04. NHT, Canberra.

      NLWRA (National Land and Water Resources Audit) (2002). Australian catchment, river and
         estuary assessment 2002: assessing the aggregate impact of resource use on key natural
         ecosystems, volume 1. NLWRA, Canberra.

      Page, A. (2002). Conservation values and levels of protection of shorelines and estuaries in
          Queensland coastal bioregions. Technical Report to Environment Australia, Environmental
          Protection Agency, Brisbane.

      Page, A. and Hoolihan, D. (2002). Ecological values and levels of protection of Queensland
          estuaries. Report to Environment Australia, Environmental Protection Agency, Brisbane.

      Phillips, N., Bennett, J. and Moulton, D. (2000). Principles and tools for protecting Australian
           rivers. Report to Land & Water Australia, Canberra.

      Rolfe, J. and Bennett, J. (2004). Assessing social values of water allocation with the contingent
           valuation method. Paper presented at the 48th Annual Conference of the Australian
           Agricultural and Resource Economics Society, Melbourne.

      Rutherfurd, I., Jerie, K. and Marsh, N. (2000). A rehabilitation manual for Australian streams,
          volumes 1 and 2. Land and Water Australia, Canberra.




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