With the twist of a valve, the large black siphon pipe hissed, gurgled, and then finally spewed a fountain of precious fresh water from the end of the pipe, eliciting an excited roar from the throng of conservationists gathered along the banks of the Murray River in Australia earlier this month.
The freshly-released water was headed for a wetland that hadn’t – as the Aussies say — had a drink in decades.
Across the pancake-flat floodplain of the Murray-Darling Basin (the river basin is named for two rivers that merge near Wentworth) can be found tens of thousands of pocket depressions large and small, sinuously-snaking creeks, and “billabongs” (historic traces of old river channels). Those low spots have for thousands of years been regularly inundated by the Murray and Darling rivers, particularly in years when heavier-than-average rains fall in the Great Dividing Range and Snowy Mountains to the east. After weeks of heavy rain, floodwaters rush downstream, filling the river channels and spilling out of their banks onto the floodplain. Once freed of the channels, the fugitive water can travel overland for many kilometers, gathering in low-lying areas and quickly turning them into wetlands.
When that happens, a cacophony of frog and bird song fills the air.
Those natural cycles of springtime renewal were broken when large water-storage reservoirs were built during the last century to support a burgeoning agricultural industry. Beginning in the 1930s, a series of large dams was built to capture floodwaters so they could be used to irrigate the basin’s rapidly expanding farmlands. With irrigation, the basin quickly became the food bowl of Australia, producing rice, cereals, alfalfa, fruits and nuts, wine grapes, beef and dairy cattle, and cotton. By the time when the last of the basin’s big reservoirs was completed in the 1980s, more than three full years of runoff could be captured and stored, depriving the rivers of their annual floods.
With floodwaters no longer reaching floodplain wetlands, conservation interests within state and federal governments and non-governmental organizations have sought ways to get some water back into the wetlands, primarily through acquisition of water-use rights. The wetland watering event earlier this month was focused on the “Carrs, Capitts and Bunberoo Creeks” (CCB) wetland system that lies on Aboriginal lands along the Murray River near Wentworth, in New South Wales.
As with many previous efforts, the release of water into CCB enjoined many actors from government and the private sector. But this event was notable in that it marked the first time that crucially important funding support came from a new financing strategy that utilizes funds from impact investors. Last year, The Nature Conservancy (TNC) and the Murray Darling Wetlands Working Group (WWG) jointly assumed ownership of an Environmental Water Trust, and a new “Australian Balanced Water Fund” was created to fund the Trust’s operations and supply water for wetland restoration. Under this new model, the Balanced Water Fund will solicit investment that can be used to purchase water rights from willing sellers in the basin. The Fund’s manager then uses a portion of the water rights portfolio to generate revenue (returns) for investors, but also donates a portion of the annual water volume to the Environmental Water Trust, along with an annual operating budget.
The Trust will work closely with private landholders and Aboriginal communities to identify wetlands needing a good drink. At many wetland sites, Aboriginal community members will also assist the Trust in monitoring the ecological and cultural benefits resulting from wetland restoration.
The Nature Conservancy and its impact investing unit, NatureVest, views this financing strategy as a potentially revolutionary way to fund conservation activities in a manner that also supports local agricultural communities and provides returns for investors that want to see their money produce environmental and social benefits in addition to financial returns (i.e., “impact investors”). The carefully-scripted rules guiding the new Fund dictate how much water much goes to the wetlands, how much is made available to farmers, and how much is used to generate financial returns each year.
Very importantly, during dry years when water for farming is in short supply, 90 percent of the water held by the Fund is leased to farmers, providing them with an important supplement to their own water rights. Additionally, farmers can implement water-saving measures on their farms and then sell any water rights no longer needed to the Fund, providing the farmers with a capital infusion or a new revenue source.
In years when water is more abundant, more water is donated from the Fund for wetland restoration, consistent with the natural rhythms of flood inundation during wetter years.
The Nature Conservancy is now searching around the globe to identify additional places that could benefit from a similar impact-investment approach, including the Western United States, Mexico, and Chile. The organization is optimistic that the strategy’s balanced approach to reallocating water for depleted freshwater ecosystems and helping farmers can be widely transferrable, and enable conservation interests to realize exponentially-greater impact than could be achieved using philanthropic contributions alone.
Just prior to the release of water into the CCB wetlands, Uncle Rex Smith, an Aboriginal elder from the Maraura community, offered his blessing for the gathering of people working in unison to bring water back to his country, restoring the cycles of life that have sustained his people for more than 10,000 years.
If The Nature Conservancy’s new finance strategy works as hoped, those blessings could spread far and wide, like the floodwaters that once flowed from the Murray and Darling rivers.