Water Resource Development in Northern Australia

30 November 2017 John Macfarlane, Research Analyst, Northern Australia and Land Care Research Programme Download PDF

Key Points

  • Growth and economic development in the north of Australia will require the development of water resources to support food and agribusiness and for many other industries.
  • Northern Australia’s water resources are mostly derived from climatic events that either occur in annual cycles or date back millennia in subterranean aquifers.
  • Technical challenges to water resource development in northern Australia can be overcome with detailed water resource assessments.
  • Beyond technical challenges, however, there is still a wide range of economic, environmental, political and regulatory challenges that limit or slow water resource development.


The Federal Government’s 2015 White Paper on developing northern Australia highlighted five pillars of industry that would sustain growth in the north:

  • Food and agribusiness;
  • Resources and energy;
  • Tourism and hospitality;
  • International education; and
  • Healthcare, medical research and aged care.

Of these, the food and agribusiness ‘pillar’ is likely to be the most water-intensive. The agriculture industry accounted for nearly 60 per cent of Australia’s water use in 2014-15. Accordingly, growth in the north will require the development of water resources to specifically support food and agribusiness plus a wide range of other industries. In October 2017, the Office of Northern Australia published an update on its implementation of the 2015 white paper. It included 15 water infrastructure feasibility studies across the north, in addition to the Northern Water Resources Assessment (NAWRA) being undertaken by the CSIRO and a commitment of partial funding to the Rookwood weir near Rockhampton in Queensland.

A recent Strategic Analysis Paper from FDI discussed the context of water resource management in northern Australia and concluded that accelerated development in the north seems to hold a special place in the political culture of Australia. In this Strategic Analysis Paper, a focus will be placed on issues surrounding the development of northern water resources. Three aspects of water resource development for northern Australia will be discussed: what water resources there are, what current and proposed developments there are for these water resources and how development has been managed to date and should be managed in the future.


Water Resources in Northern Australia

Northern Australia’s water resources are mostly derived, contrastingly, from either climatic events that either occur in annual cycles or from reserves dating back millennia. Northern rivers, when flowing, are large and carry around half of the continents annual stream-flow, but most only flow for a few months a year. During the dry season (from May to October), waterholes feature along dry riverbeds and the few rivers that are perennial are fed by localised groundwater discharge. Wet season rainfall is highly variable from year to year, and is influenced by cyclones (and cyclonic depressions) and weather events driven by El Niño Southern Oscillation (ENSO) activity. In contrast, there exist deep groundwater aquifers that are drawn upon for various consumptive uses of water that have not seen significant amounts of recharge in thousands of years.

The CSIRO has been engaged in several water resource assessments for northern Australia within the last decade in addition to ongoing work on the NAWRA. The NAWRA is an evaluation of water resources and the feasibility of agricultural development in three priority regions: the Fitzroy catchment in Western Australia, Darwin catchments in the Northern Territory and the Mitchell catchment in Queensland. Due for completion in June 2018, the ongoing work was announced as part of the 2015 white paper and follows on from the CSIRO’s earlier Flinders and Gilbert Agricultural Resource Assessment.

Water resource development in northern Australia

Currently, the main developments of water resources in northern Australia are in the Ord region in Western Australia and the Northern Territory, the Daly region in the Northern Territory, and the Burdekin region in Queensland. In 2015-16, the total supply from these three regions was just over 1,140 gigalitres (GL; compared with 2,474 GL for all urban regions in Australia over the same time); with 60 per cent of this being used for irrigation. Surface water stored by the Ord River and the Burdekin Falls dams made up the majority of water sourced across the regions, but in the Daly basin, most of the water came from an underlying karstic aquifer.

These three areas all need to make use of some form of water storage. The Ord River and Burdekin Falls dams provide in-stream storage for water that can feed into large down-stream areas, while the Daly basin is supplied by water stored in the natural aquifer below it. Both methods have advantages and disadvantages. Dams are expensive and, in the northern Australian climate, lose a large amount of water to evaporation but they are also capable of allowing easy access to huge volumes of water. The Ord River dam has a potential yield of over 2,000 GL in 85 per cent of years but loses about a quarter of its volume a year to the atmosphere due to evaporation. Underground storage, such as in the aquifer underlying the Daly basin, is more efficient at storing water as there is no evaporation and it also doesn’t represent the same concentration of capital as a surface dam. Its yield, however, was estimated at over 100 GL per year – nearly twenty times less that of the Ord River dam. The extent of the aquifer in the Daly basin is geologically unique in Australia as is its ability to transmit water is the result of naturally acidic rainwater causing karstic weathering that eroded the rock and, Therefore, improves flow rates.

The climate of northern Australia presents challenges for irrigators to access water. Intermittent rainfall necessitates water storage and, in the higher temperatures, pasture needs more water than it does in the south. The Ord River water allocation plan estimates demand from irrigators at a range from 10 – 20 ML/ha; while an estimate for 2008 put actual use at 13.2 ML/ha. By comparison, the amount of water used for irrigation in the MDB in 2015-16 was around 4.1 ML/ha. Any water resource development in northern Australia for irrigation needs to consider a lower efficiency in water use, due to a combination of reduced soil water holding capacity and infiltration rates, and high rates of evapotranspiration.

Over the years, there has been much speculation over the amount of irrigated agriculture that could be supported by the natural resources of northern Australia. The 2015 White Paper contained an estimate that there are up to 17 million hectares (ha) of soil that is potentially suited to irrigated agriculture, although that there was possibly only enough water to irrigate about a tenth of that. The 2014 CSIRO report cited by the white paper found that 1.4 million ha of irrigation would be possible and would need to be supported by about 90 dams – although these figures include protected areas, existing infrastructure (the Ord River and Burdekin Falls dams) and around 200,000 ha in existing irrigated area. The report also indicated that the area of the highest existing coverage of, and future potential for irrigation is near the north-eastern Queensland coast, which is also one of the areas of northern Australia that is most prone to weather fluctuations driven by ENSO, and so would see a higher variation of annual rainfall. If agricultural development in northern Australia were to realise this 1.4 million ha figure, it would add around 50 per cent to Australia’s total irrigated area. A more recent study, however, found that a significant reduction in this figure would be required to prevent poor outcomes on biodiversity and to allow carbon farming through early-season savanna burning to prevent higher intensity wildfires.

These figures for potential irrigation in northern Australia make use of both surface and groundwater resources. It was estimated that groundwater could support around 100,000 to 150,000 ha; or 10 per cent of the total amount. In 2010, the Northern Australia Land and Water Taskforce (NALWT) delivered its final report into the sustainable development of northern Australia. It found that mosaic irrigation – as opposed to large-scale agricultural developments – may be particularly appropriate to the north since it is less capital intensive; as it relies on local groundwater as opposed to surface water storage infrastructure, and reduces risks associated with soil salinity and erosion. In 2013, further investigation into mosaic agriculture as a means of adding value to beef production operations found that it had the potential to become more commonplace over the next decade. A high proportion of northern pastoral properties are likely to have access to the soil and groundwater resources required for mosaic irrigation and, although it does require significant private investment (up to a few million dollars), it has the potential to offer at least moderate economic returns on this investment.

The CSIRO’s Flinders and Gilbert Agricultural Resource Assessment from 2013 found that there are sufficient water and land resources to support up to 50,000 ha of irrigated agriculture between the two catchment areas, out of a total of around 10 million ha of soil that might be suitable. Despite the technical suitability of irrigation, the CSIRO calculated that water storage and delivery infrastructure would require approximately a billion dollars, which would preclude commercial investment returns. The report also acknowledged that impacts on fishing in the Gulf of Carpentaria would result from irrigated agriculture, although these were not quantified in the study. Additional studies since the CSIRO assessment have also found that economic feasibility is at best marginal. There is recognition that water storage and delivery infrastructure will be required for further agricultural development, but there is uncertainty over how this infrastructure might be delivered.

Managing water resource development in northern Australia

Legislation for water resources in Australia is based on a regulatory framework that was agreed by the Council of Australian Governments (COAG) in 2004; the National Water Initiative (NWI). The NWI calls for primarily market-based policy instruments to encourage more efficient use of water resources and to prevent the over-allocation of water to consumptive users without leaving enough for environmental flows. While the reforms represented by the NWI stem from experience gained through a long history of inter-jurisdictional water resource management in the Murray Darling Basin, they are equally as applicable to water resource development in northern Australia. Part of the initial agreement over the NWI was for regular reviews, and recently the Productivity Commission released a draft report on the NWI with an intention to publish a full report by the end of the year.

As part of its draft report, the Productivity Commission assessed the adherence of each state and territory to the NWI. Victoria, New South Wales, South Australia, Canberra and Queensland – whom all share the Murray Darling Basin – were assessed as having good legislative adherence to the NWI. The Northern Territory and Western Australia, however, were noted as being yet to implement legislation around water rights and consumptive uses. In the 2013 Ord Surface Water Allocation Plan, for example, it was highlighted that existing legislation allows restricted amounts of water trading, but that there was most likely no need for the trading of water entitlements within the lifetime of the plan, as it was unlikely that entitlements would equal or exceed allocation limits. According to the draft report from the productivity commission, mining and petroleum operations in the Northern Territory are exempt from requirements for water licensing, but there is a memorandum of understanding to integrate them into existing allocation plans.

Mining projects in Western Australia tend to have a much higher reliance on the use of state agreements – contracts between the state and companies that can overrule existing legislation – than other jurisdictions in Australia. As of 2013, approximately 85 per cent of the state’s petroleum and mineral production was under a state agreement rather than general law. Some of these state agreements can mean that water licensing for mining operations occurs outside of existing legislation, which means that cumulative impacts of water extraction may not be considered by licensing regimes, and there is also the chance that incorporation into NWI-compatible legislation may be complex.

One of the recommendations in the Productivity Commission draft review of the NWI was for better integration of extractive industries into the NWI. Part of this should consider how excess water is “disposed” of by mining operations. For example, in the Pilbara region of Western Australia, mining operations that extract minerals from below the water table need to constantly pump water – a lot of which is excess to requirements. There are guidelines on how to prioritise the use of any excess water that is extracted by mine-sites:

  • Mitigation of environmental impacts (most preferred);
  • Fit-for-purpose activities (such as dust suppression);
  • Transfer to a third party;
  • Re-injection to the aquifer; and
  • Controlled release to the environment.

Of these priorities, a controlled release to the environment is the least preferred. The transfer of water to a third party, such as the use of extracted water for irrigated agriculture  or a town water supply, opens up opportunities for alternative forms of economic development. Such practices, however, while encouraged currently lack a regulatory or legislative structure and are largely based on published guidelines.

In Queensland, operators of Coal Seam Gas (CSG) wells do not require extraction licenses or to pay for the extraction of water, but they are required to financially compensate any landholders that have water bore levels reduced by five metres or more. The flow of water produced from CSG wells into supply networks around gas fields can distort existing water markets, since the price of this water to consumers is based on treatment and transport only, and doesn’t include a license cost to the CSG operator. Since this water had been extracted without licensing, there is a good argument that it be returned to groundwater sources through Managed Aquifer Recharge (MAR) rather than being on-sold to consumers.


As state, the government outlines its approach to northern development in its 2015 White Paper – in which it iterated that it is not its role to be the principal financier of development but to facilitate private investment. Part of this facilitation role was to establish the Northern Australian Infrastructure Facility (NAIF) to encourage investment with loans of finance at concessional rates. The White Paper also stipulated that the government should provide ‘the right infrastructure to get things moving’ – but just how much infrastructure might this entail? A former government was criticised for releasing a white paper on food security (the National Food Plan) that focused on food production and export markets more than food insecurity as a social issue. Similarly, it is likely that any public funding for water resource infrastructure will come under fire unless it is focused on broad positive social outcomes.

In two examples given; for natural resource operations in the Pilbara and the CSG fields of Queensland, there is potential for a more robust regulatory framework to ensure that water extracted that is incidental to operations is more likely to be used efficiently. The framework proposed by the NWI seeks to separate titles to water and land. While this distinction is justifiable on a practical level, it is in contradiction to the conceptually unified notions of land and water – particularly so in the north. As opposed to in the MDB, where rivers flow year-round, water in the north is more frequently associated with more static sources like groundwater in aquifers that moves at rates of millimetres per year, rich but delicate Groundwater Dependent Ecosystems (GDE’s) or in-stream storage for capturing flow from a few months a year. While there is no compelling practical reason that the NWI should not be a basis for regulatory regimes in Western Australia and the Northern Territory, its origins in the MDB have perhaps made it appear less conceptually appropriate to the north. The appeal of the NWI could be enhanced through the incorporation of characteristics and economic drivers of northern Australia – like broader community engagement, better suitability for mining operations, and improving environmental outcomes to support tourism and cultural activities.

In the south west of Australia, inflows to Perth dams have dropped consistently since 1975, and the average inflow in the years 2010-16 is just over twelve per cent of the 1911-75 average. As a result, substantial changes have been made to how natural water resources are managed: a higher proportion of drinking water comes from alternative sources like desalination or the re-injection of treated wastewater through MAR into the city’s groundwater supply . The amounts of rainfall and streamflow are also predicted to change in northern Australia; and although the scope of these predicted changes is still broad, any development of water resources needs to consider extremes of climate like those already seen in the south-west.

Water resource development in northern Australia to drive the accelerated growth outlined by the White Paper faces a range of economic, technical, environmental, political and regulatory challenges. Overcoming these challenges will not require an exclusively ‘either/or’ approach to development and conservation – it will only be through scientifically informed, pragmatic policy that considers the needs of all stakeholders.

Any opinions or views expressed in this paper are those of the individual author, unless stated to be those of Future Directions International.

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