Final Report of the Independent Panel’s Review of the Sustainable Diversion Limit (SDL) Water Accounting Framework

Accounting of water use and diversions and monitoring of compliance against the requirements of the Basin Plan is critical to the delivery and success of the Plan. In this context the Murray-Darling Basin Authority (MDBA), in conjunction with the Basin States, has been undertaking trial accounting and compliance reporting from the 2012/13 water year. This is an extension of the Cap reporting arrangements that applied prior to 2012 and is designed to ensure a smooth transition of compliance assessment when the sustainable diversion limits (SDLs) take effect from 1 July 2019.

To ensure that best practice is applied to the SDL water accounts, the MDBA asked the Independent Panel to review the proposed accounting framework, undertake a health check (by applying the Organisation for Economic Co-operation and Development’s (OECD) water resources health criteria to SDL water accounting) and develop refined health check criteria directly applicable to SDL accounting.

The Panel found that, on the whole, the SDL accounting frameworks that are being trialled by MDBA are conceptually sound. However, the Panel note that there remain a number of areas in which MDBA and the states are currently working to improve existing water accounting methods (including, for example, the approaches for assessing permitted take and measuring usage) to align with best practice.

The Panel also found that from an initial analysis of previous reviews, published stakeholder views, reviewing the OECD’s Health Check criteria combined with existing and future SDL accounting related issues jointly identified between the Panel and the MDBA, there are a range of risks to the SDL accounting framework. The Panel separated the identified issues in to two categories. The first being those directly related to the SDL Accounting Framework which will impact on the quantification of SDL’s and other matters which will affect stakeholders' perceptions of compliance with the SDL Accounting Framework. The Panel has compiled a list of all identified issues to be used for continuous improvement of the framework.

The Panel notes that there are widely divergent and strong views amongst stakeholders from public reports about the inadequacy of long-term assessments, management of environmental water, measurement accuracy and compliance. The Panel believes transparent communication of assumptions and uncertainties is necessary to increase awareness and to undertake/demonstrate continuous improvement. To ensure the SDL accounting process is credible and transparent for stakeholders, and is cost effective, the Panel believes the MDBA should consider establishing a quality assurance process involving published Statements of Assurance for all aspects of the accounts, including models and period independent audits.

The panel also notes that although the ‘reasonable excuse’ and ‘make good’ provisions associated with any future breach of SDL’s have not been tested, future growth in use responses will be a key area to monitor to ensure enhanced transparency and support for the framework.

The Panel believes that it is imperative for the MDBA to develop a program of investigation, engagement and communication to address the risks identified in this report on a priority basis according to their materiality/risk profile and that this will be important going forward to enable the improvement in public confidence in the SDL accounting framework.