Irrigators are seeking around $2200/ML to reflect the real cost to their businesses and surrounding communities of taking the water out of production.

John Lolicato, chairman of the Wakool Landholders Association, which developed the water sale package on which the current offer is based, said the price comprised the market price, a sum to cover the cost of retiring the infrastructure including the $383/ML termination fee to disconnect from the system and a component for structural adjustment to adapt to using less water.

Mr Baxter said the package had been developed in response to the fears environmental buybacks were sucking water out in an indiscriminate, ad hoc manner, from the weakest sellers, leaving stranded assets and threatening to decimate communities.

“There’s the Federal Government buybacks, there’s the NSW Government seeking another 100GL for the Living Murray and there’s Water for Rivers,” he said. “This is about Murray Irrigation’s future. It is targeted, and strategic, creating a good modern infrastructure that puts water on demand, but is not as demanding on the river system.”

He said there was a larger focus on on-farm works than the food bowl project as unlike Victoria, where infrastructure had been allowed to run down making it easy to identify investment opportunities, the company had spent millions upgrading the system in recent years.

“The might want to do a smart irrigation project on farm that would reduce water use by 1ML/ha and the infrastructure costs become the cost of that megalitre,” he said.

On the north western corner of the system, one group of farmers was prepared to decommission an irrigation sub system and revert to dry land farming.

“But not at market prices,” he said.

Mr Baxter said they had had several meetings with Government to discuss the package and were preparing to present more detail.

The mix of measures is in line with the original intent of Living Murray environmental water sourcing ambitions which have given way to widescale water purchasing as deadlines for water delivery loom nearer and the cheaper infrastructure options are picked off.

If accepted the package has the potential to deliver the Government 10 times the water secured by its inaugural buyback.

But as general security entitlement currently on zero allocation, it will only deliver environmental benefits when it rains.

Prime Minister Kevin Rudd last Thursday announced an acceleration of environmental buybacks, the $80m purchase for South Australia agreed at last month’s COAG meeting, a ‘basin-wide initiative’ for 2008/09 and an additional $50m to bring total spending under the 10-year plan in QLD to $400m.

But there was no detail on dates or the amounts of the buybacks.

At the time of going to press Federal Water Minister Penny Wong’s department had not responded to questions on the timing and volumes of the flagged buybacks or whether spending this year would remain at the $171m announced in the budget.