Pie Graphs of Australia’s Groundwater Use Vs. Economic Return

A very interesting report has been released regarding the increasingly important role that groundwater is playing in Australia. The National Centre for Groundwater Research and Training (NCGRT) of Australia commissioned Deloitte Access Economics to do the study.

Because Australia is beginning to outgrow its surface water resources, and because climate change may cause more erratic rainfall, it is expected that Australia’s groundwater will be increasingly relied upon for agriculture, mineral, and energy production in the future.

Since the competition for resources usually comes down to a combination of policy and economics, the following pie graphs help to demonstrate why agriculture will be the sector that gets squeezed out as the demand for groundwater becomes more competitive.

The first graph, below, shows that agriculture (irrigation and livestock) now uses sixty percent (or more) of Australia’s groundwater.

This second graph shows that agriculture’s use of groundwater yields only fourteen percent (4.7 billion dollars) of the revenue generated by groundwater usage in Australia, whereas mining and energy yields over seventy percent of the revenue.

Though Australia is unique in its conditions, resources, and geographic location, this example might apply to other nations, as well. As long as agricultural income provides less return per unit of groundwater as compared to competing industries and uses, it is the sector which will always lose out, unless government policies prevent that from happening.

This process is unfolding here in Northern Colorado, near where I live, as a newly created demand for water has emerged from fracking. This new industry is now using water that was previously used for agricultural purposes in an already water scarce region. At the same time, snow-melt runoff dates related to a changing climate are challenging Colorado’s agricultural producers.

Even those in the energy industry here in Northern Colorado are suggesting that agricultural water needs to be protected through policy. The groundwater itself, needs to be protected by policy, too, so it isn’t depleted for unjustifiable short term gains, as has already happened in some places.

On the other hand, as long as we have overproduction of commodity crops, in the end, water might be the deciding factor in determining what is essential production and what is not. While that is quite a few years into the future, in water scarce regions it is already playing out.

Source: http://scinews.com.au/releases/856/view

2 thoughts on “Pie Graphs of Australia’s Groundwater Use Vs. Economic Return

    1. RBM

      To add some clarity to my earlier comment, consider this statement:

      As long as agricultural income provides less return per unit of groundwater as compared to competing industries and uses, it is the sector which will always lose out, unless government policies prevent that from happening.

      True as you point out. And why a mere ‘per unit’ analysis is flawed.

      The problem, if it were not for agriculture, big, little, industrial or community-based nothing else would exist. Period.

      Food is the energy humans use to perform all the other economic returns enumerated. That relationship in NOT a mere ‘per unit’ relationship. It is a per unit of ag. + percentage of per unit of all other returns around the pie chart.

      Reply

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