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Canberra. Farmers would lose more than a third of irrigation water in Australia’s major food bowl, the Murray-Darling basin, under a plan released on Friday to restore ailing rivers, posing a new headache for the Labor minority government.

The move could see the value of cotton production cut by 25 percent, and farmers and irrigators have warned of farm closures, massive job losses and higher food prices if the plan by the Murray-Darling Basin Authority is adopted by the government.

Environmentalists welcome the cuts, saying they would help Australia’s major river system survive future droughts brought on by climate change in the world’s driest inhabited continent.

Prime Minister Julia Gillard’s fragile one-seat majority government is dependent on support from both rural independents and the Green Party and will have to balance both interests in deciding whether to adopt the plan by the end of 2011.

Under the new plan, irrigation rights would be cut by between 3,000 to 4,000 gigaliters a year, reducing water supplies to farmers by between 27 and 37 percent, with the government to buy back water licenses to compensate farmers.

Cutting water use “will reduce the supply of food and fiber and increase the number of farmers leaving the land, resulting in the destruction of farm and rural communities,” said Andrew Broad, president of the Victorian Farmers’ Federation.

But the authority said the cuts were needed to guarantee the long-term health of the nation’s major rivers, which have suffered a century of neglect and over-allocation for irrigation.

“The real possibility of environmental failure now threatens the long-term economic and social viability of many industries and the economic, social and cultural strength of many communities,” the 200-page report on the river system said.

The Murray-Darling basin is Australia’s agricultural heart, accounting for 40 percent of agricultural production and 93 percent of domestic food production.

The basin supports food and cotton producers and covers 1.06 million square kilometers, 14 percent of Australia’s landmass and an area the size of France and Spain combined.

The basin covers four states and contains Australia’s three biggest rivers.

But too much irrigation, lack of inflows and rising salinity are so bad that for eight years running, no fresh water has flowed into the sea at the mouth of the Murray River.

Irrigators have warned that a 27 percent cut in irrigation water would lead to 14,000 job losses and cost the economy A$1.4 billion a year.

Gillard’s government has already committed 3.1 billion Australian dollars to buy water back from irrigators over 10 years through the existing national water market, and has committed a further 5.8 billion Australian dollars to improve water efficiency in the basin.

The cuts proposed on Friday would cost the government around 4 billion Australian dollars to buy back irrigation rights.
 

Reuters