Farmers will resist selling their water licences to the Federal Government because trading their water is one of the few ways they can make money during dry years, a new report has found, raising concern over whether the water buyback scheme will work.
The Government has allocated $3 billion from its $12.9 billion water budget to buy water from irrigators in the Murray-Darling Basin to return it to the collapsing river system.
The report, commissioned by one of Australia's largest suppliers of irrigation pipes, Crane Group, argues that the buybacks will not be enough in the short term, and that speeding up the rebuilding of irrigation systems will recover almost 20 times more water.
"If farmers perceive that a drought is likely to occur, they are more likely to hold on to their current water entitlements, as they foresee an increase in the price of their asset," the report says.
Crane Group's chief executive, Greg Sedgwick, is lobbying the Government to quickly release money for irrigation upgrades.
"There is much greater certainty that infrastructure projects can deliver, on the national priority of security, healthy rivers while the necessary market mechanisms are developed to support effective water buybacks," Mr Sedgwick said.
The office of the Climate Change Minister, Penny Wong, said there would be considerable delays in beginning irrigation upgrades while they were being designed and assessed.
An independent member of the Murray-Darling Basin Commission, Ian Kowalich, said the report raised important questions about how soon water for environmental flows could get into the river system.
"If we don't get sustainable flows into the system, we will do long-term damage that will take decades to fix," Mr Kowalich said.
"The real issue is whether going into the market to buy water will do it quickly enough."