Australia adds $2.9 billion to climate tab

updated 8:49 a.m. ET May 7, 2008

CANBERRA, Australia - Australia's government plans to spend about $2.9 billion to buy river water from farmers in a bid to address the country's worst drought in a century.

The spending is the most expensive component of a $12.1 billion, 10-year plan to reduce water waste and improve water efficiency on Australian farms and in cities.

"Climate change means most Australian cities and towns have less water and we can no longer rely on local rainfall to supply all our drinking water," Minister for Climate Change and Water Penny Wong said in a statement Tuesday.

But a mayor in the farming district targeted by the water purchasing plan cautioned that it would reduce Australia's agricultural exports at a time of global food shortages and inflation.

"The cost of food will certainly rise. The nation's exports will drop," Brian Sharp told Australian Broadcasting Corp. radio.

The water purchasing plan would target the Murray-Darling river system in southeast Australia, where most of the country's irrigated farms are based.

Rainwater washing into the country's most important river system has been 49 percent below average for the past decade.

Under the plan, the government would buy back water allocated to farmers along the river that they use for irrigation.

The National Farmers' Federation, a farming advocacy group, agreed that too much water was being drained from the river system for farms. But NFF chief executive officer Ben Fargher said the government must not compel farmers to give up their allocated water.

"We know there have been over-allocation problems, and therefore we're happy to talk to the government about buying back water as long as it's from willing sellers," Fargher told Sky television.

Wong did not say whether farmers could be forced to give up water.

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