In Gippsland, an important decision now sits at the crossroads of river recovery, climate resilience, and how Victoria prices water for big users. The Concerned Waterways Alliance (CWA) has lodged a submission to the Minister for Water on AGL’s proposal to secure a new bulk surface-water entitlement to help rehabilitate the Loy Yang mine. While the application is local, the principles behind it are broad and far reaching. What’s decided here will impact across future mine closures and could set the benchmark for how we charge industry and other non-residential users for scarce public water.
Our starting point is simple: the Latrobe is already in deep deficit. Government’s own strategy acknowledges the Durt-Yowan (Latrobe River) and estuary need an extra 129 GL each year just to keep basic ecological functions from further decline, habitat, and drought refuges among them. Promised actions to return up to 58 GL in the Central and Gippsland Region Sustainable Water Strategy (CGRSWS) were meant to start closing that gap. Granting nearly 40 GL a year to fill a pit lake risks pushing in the opposite direction, which is why the price and the conditions attached to any new water must genuinely reflect what the river and the Gippsland Lakes would lose.
The science is sobering. If power-station-era extractions simply continue for pit filling instead of tapering off when generation ends, the Latrobe system deteriorates further: fewer high-flow events to shape the channel, shrinking habitats, poorer breeding for native fish, frogs, waterbirds and wetland plants while the damage propagates downstream into the Ramsar-listed Lakes. Large-scale flood harvesting for pits is expressly warned against because it could tip the Lakes’ ecological character, with national and international ramifications.
So our submission leans into the pivotal question: what is a fair price for water when the Latrobe River is already so far in the red? The government-commissioned pricing advice canvassed an indicative range of $200–$260/ML for entitlements from Blue Rock and Lake Narracan. We argue that range far undervalues the real, growing opportunity cost of withholding freshwater from a deficit system and fails to create incentives to use recycled or manufactured water. In a climate-constrained future, the scarcity value of water will only increase; prices that pretend otherwise risk locking in yesterday’s habits.
There are workable yardsticks. When the Moorabool River needed rescuing, desalinated water effectively underpinned environmental returns with an implicit price signal of around $3,000/ML. Using that benchmark doesn’t make everything “desal-or-nothing”; it simply keeps the public ledger honest about what we forgo when we give fresh river water to the rehabilitation of private mines. It also nudges industry toward blends and staged transitions that include higher-quality recycled supplies over time.
Pricing structures are also important. We backed adaptive, reviewable annual payments over one-off lump sums, so charges can track evolving evidence about scarcity, climate and community expectations, and early revenue can help build the recycled-water infrastructure that reduces future pressure on rivers. Efficient pricing is about using price signals to speed the shift to better options.
Equally, where the money goes is pivotal. If public water is allocated to private pit filling, a significant share of the revenue should be hypothecated, by regulation, into repairing the very systems that bear the cost: reducing the Latrobe’s 129 GL deficit, securing long-term environmental and Traditional Owner entitlements, and funding priority works identified by West Gippsland CMA. Transparent annual reporting should tie dollars to measurable ecological outcomes. That’s how “efficient pricing” stops being a theory and becomes a fair deal for waterways and communities.
We’ve also challenged claims that continuing historic volumes would somehow “free up” water for the environment. Unless unused bulk entitlements are formally converted into environmental entitlements, they’re not real gains—and with power-station return flows ceasing, the system risks a net loss unless the proposed volume is cut (at least to 31.1 GL) and backed by conditions that prevent further ecological harm.
Why does any of this reach beyond mines? Because of precedent. Once Victoria sets a modern rule-book for pricing large, non-residential takes from stressed systems, one that recognises environmental opportunity cost, uses adaptive pricing, and earmarks revenue for river repair, it will influence how we treat other big water users too. This isn’t about punishing industry; it’s about aligning prices, behaviours and investments with the public interest in a drying climate. Households appropriately live under a water utility framework that prioritises essential needs at cost-recovery. Big-ticket non-residential use should meet a higher bar that reflects opportunity cost, true scarcity and pays forward into recovery.
Our submission sets out this pathway: water for pit filling as a last resort; prices that reflect real opportunity costs, adaptive payments, strong safeguards, and a mandated shift toward recycled and manufactured sources. This is to ensure every year the river-draw shrinks, not grows. Hopefully this rehabilitation challenge can catalyse a fairer, smarter water-pricing framework for all large users in Victoria.
If you’d like the full detail, including the environmental science, pricing analysis and recommended conditions, you can read the submission in full below. And if you work in policy, industry or the broader water sector, we hope you’ll see this as an invitation: let’s build a pricing model that protects rivers, respects culture, and drives innovation because that’s the only model that will stand up to the century ahead.