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The Victorian Department of Sustainability and Environment (DSE) spent the latter decades of the 20th century fully integrating the surface and sub-surface drainage systems with the water distribution network in northern Victoria, thereby enabling complete recycling of outfalls, leaks and seepage from its channels. Yet in 2007, in repudiation of this recycling capacity, DSE announced a multibillion dollar modernisation project it claims will “create” 450 GL of “new water” by reducing “inefficiencies” in the channel distribution system. Examination of the northern Victorian irrigation supply system shows it was fully integrated with more than adequate recycling capacity before the project began. In a classic case of double counting, DSE was already delivering the illusory “new water” to regional irrigators and billing them for it. Thus the project cannot deliver real water savings and the Government must effectively reduce irrigation entitlement to increase entitlements for urban consumption and environmental flows. The financial and economic impact of bogus water savings on stakeholders is discussed in terms of the opportunity cost of appropriated irrigation entitlement and of the effect of overcapitalisation of the distribution system on annual capital charges and thus the viability of irrigation and the operating water authority.


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