Murray-Sunset National Park. Image: Arron Hage

The need for sustainable investment solutions in the Murray Darling Basin

5 min readDec 20, 2021


Bradley Dollin and Mariana Wheatley

The Murray Darling Basin (MDB) is home to over two million people and is larger than France and Germany combined. The Basin’s water market turned over AU$7 billion in 2019–2020 making the MDB a pillar of the Australian economy and essential to its surrounding communities.

The poor management of the MDB has led to many negative externalities that are affecting the local society, environment and economy. The creation of water markets has exacerbated problems due to issues of water misallocation resulting in environmental degradation, such as the Barmah forest, where water was pushed through the Barmah Choke in order to fulfill a water order made by large scale almond farmers downstream. The choke was not able to carry the water being pushed through, resulting in an estimate of 536 megalitres into the Barmah Forest causing significant damage.

Murray-Darling Basin. Image: Murray-Darling Basin Authority

Water markets are a system where water users can buy and sell their water rights on a temporary or permanent basis. Theoretically, this encourages the efficient use of scarce water resources. However, these markets are not performing to the social and environmental standards as outlined in the Murray Darling Basin Plan, due to multiple factors including corruption, lack of transparency and accountability, and over allocation of water rights. The MDB policies have created negative externalities including:

  • Environmental degradation
  • Social dislocation and despair
  • Negative impacts on Australian businesses such as bankruptcy, decline in local businesses and shrinking agricultural sectors
  • Unfair representation and treatment of First Nation communities

Social issues in Basin communities

Communities surrounding the MDB are dependent on the river system as the local economy thrives or slumps depending on varied water availability. When droughts occur alongside water misallocation it creates a perfect storm of socioeconomic issues. Maryanne Slattery, an expert in the MDB who previously worked with the Murray Darling Basin Authority (MDBA), puts forward the correlation between Indigenous wellbeing and its negative relationship with water availability, “there is a direct relationship between no water in the river; crime, suicide, domestic violence, drug use”.

Basin communities are doing it tough, the Sefton report (2020), surveyed 600 locals “People told us they considered themselves and their communities to be in crisis”. The below graph shows the level of psychological stress between indigenous and non-indigenous persons in Murrumbidgee, highlighting the mental health disadvantage faced by Aboriginal people.

Environmental issues

Fish kills occur when large amounts of fish suffer from a sudden and unexpected death, often resulting from prolonged periods of drought and excessive algae. Three mass fish kill events have occurred within the Menindee lakes in recent years. The Murray Darling Basin Authority found that “the exact number of fish deaths is unknown, but an independent panel chaired by Professor Rob Vertessy concluded that over a million fish may have died”. These events coincided with the formation of blue green algae, a toxic bacterial substance that is harmful to both wildlife and humans. Blue green algae occurs due to the lack of flow from river systems including through the overextraction of water, as said by Barkandji Elder “and if you got something dead, that’s where you get blue green algae because it’s not moving”. When flow is taken from a river system alongside drought periods it gives the opportunity for these toxic substances to thrive.

Economic issues

Communities rely on the wellbeing of the Basin for their livelihoods. When the Basin thrives individuals, community and the economy benefits. Dairy, rice and other farmers require water to maintain their farms and provide jobs to the local population. However, when water availability is scarce, the agricultural sector shrinks causing economic stress.

The decline of 15% in agricultural employment in the MDB between 2006 and 2016 was about twice of the Australia-wide decline in employment in agriculture of 7.4%”, stated Dr. Hang To.

As Maryanne Slattery reports, “the Lower Darling/Baaka river had a fantastic irrigation industry that has been wiped out because of upstream extractions. You have whole sectors in the Murray and Murrumbidgee that are on their way out, rice and dairy in particular”.

Potential for Private Investment

There has been criticism of the role of speculation by private investors in Australian water markets, however, private investment can also play a positive role both in water markets and investing in the regions of the MDB. One example is Kilter Rural, an Australian hedge fund focussing on agricultural assets such as water. Kilter Rural Balanced Water Fund (BWF) donates water back to satisfy environmental needs. Since its creation in 2015 the fund has delivered eight watering events across twenty-one wetlands. A watering event generally consists of the following aims:

  • Provide flow to river reach
  • Support habitat health
  • Improve fringing vegetation
  • Support aquatic food web to feed native fish

However, this is only one example of how private investment is supporting the economy, environment and communities of the MDB. More work needs to be done across the whole market. Alternative thinking and approaches are needed to reinvigorate the MDB and sustainable private investment can play an important role in this process.

Disclaimer: this is not financial advice or a recommendation of Kilter Rural. People should seek financial advice that considers their individual circumstances.

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