Thinking Outside the Lease – Towards a Strategic View of.pdf

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7/18/2019 Thinking Outside the Lease – Towards a Strategic View of.pdf http://slidepdf.com/reader/full/thinking-outside-the-lease-towards-a-strategic-view-ofpdf 1/9 Thinking Outside the Lease – Towards a Strategic View of Regional Water Management by the Mining Industry D J Barrett 1 ABSTRACT In the last 30 years, human appropriation of global renewable resources has accelerated to the point where 35 per cent of the earth’s land surface is now in managed agro-ecosystems, consumptive water use consumes between 50 per cent and 85 per cent of freshwater supply and 60 per cent of ecosystem services are utilised in an unsustainable manner. There are virtually no landscapes in which renewable resources are not already fully allocated among different economic and environmental uses. Furthermore, it is increasingly recognised that water availability issues do not exist in isolation but are linked with the related environmental issues of biodiversity preservation, the carbon cycle, soil degradation, and energy use and supply. It is against this background that the sustainable management of water in mining is increasingly developing a strategic viewpoint where water is viewed as a resource within an interconnected landscape, having economic, environmental and social value and providing a range of environmental services in the provision of public and private goods. This paper explores the issues associated with sustainable management of water in mining from a strategic viewpoint. The cumulative impacts of multiple water users, both within and outside the mining sector, is increasingly threatening the security of supply for all users. To quantitatively assess the ‘true’ value of water it is necessary to:  Better understand the science of ecosystem functioning and how human actions impact on environmental processes.  Develop appropriate policy, finance and governance structures to support innovative programs that preserve ecosystem function and services (including market based instruments).  Apply knowledge as interventions across landscapes in ways that maximise benefits and minimise unintended consequences taking into account differences in the value of water among sectors. A strategic viewpoint of water management relies on knowledge to guide decision making that has been acquired at a range of scales from mine site to mining region. This knowledge must be based on rigorous science, sound data and syntheses of different types of information. Strategic management of water resources will better position the industry in terms of understanding the risks posed by complex, interlinked environmental issues that are increasingly impacting on future access to land and renewable resources, including water, thereby ensuring mining’s future social licence to operate. INTRODUCTION Access to land and water resources is a necessary condition for continued growth of the mining industry and generation of the economic wealth it provides. Since 2002, the mining industry in Australia has promoted the strategic management of water resources to meet increasingly rigorous environmental responsibilities regarding water acquisition, use and discharge and to ensure crucial future access to water supply for operations. Presently, the most widely used water indicators by mining companies are those of the Global Reporting Initiative (GRI, 2000 - 2006; Moran, 2006). Five GRI indicators relate to total water withdrawal by source; the amount and impact of mine consumption and discharge on aquatic habitats; and, the amount of water recycling within a mine site (GRI, 2000-2006). Congruently, the industry has also sought to align its water related sustainability efforts with the Australian Government’s National Water Initiative objectives. The aim of this strategy is to generate additional social, environmental and economic value in mining by progressing water sustainability objectives ‘beyond compliance’ that includes a long term ‘water stewardship’ role and considers the cumulative impacts of multiple mines on regional water resources. Cumulative impacts are manifest where repetitive and spatially distributed environmental changes accumulate over time or space and disrupt ecosystem function (Spaling and Smit, 1995). In this context, water stewardship considers not only the business case for water use but also community concerns, social responsibilities, technological developments, and support for research to develop more efficient uses of water resources (MCMPR, 2006). A strategic water management plan aims to enhance overall business value by maximising opportunities and minimising risks to production through consideration of all aspects of water management including the social, environmental, economic and operational aspects. While such goals are laudable and necessary for the industry to participate in public debate and policy development, achievement requires tools and methodologies to align on-ground actions and interventions on mine sites with corporate policy objectives (Moran, 2006). Evans  et al  (2009) present a generic framework that describes the interactions between company policy development and implementation, the outcomes of policy actions and the impact of these outcomes on drivers of the sustainability agenda (ie the legislative, social, environmental and economic drivers to which corporate policy development is responding). This framework aides in understanding the relationship between policy, action at site level and society’s response. Tools to monitor and assess water efficiency at the site level are currently being developed (eg Cote  et al,  2007); however, methods to achieve wider, strategic sustainability goals are still in their infancy. To fully achieve a strategic approach to water management, a hierarchical information system is required comprising information on site-level flows and stores of water, water availability in the regional context, and the cumulative impacts of water use among multiple sites and other production sectors within a region. A strategic view can only be achieved by access to and interpretation of the best available scientific and economic data on water at all of these scales. This paper discusses the environmental context within which a strategic perspective on sustainable water management by the minerals industry is to be developed. It begins with a discussion on sustainable development in the context of increasing global pressures on renewable resources. It then explores how demand for water by mining and other land use sectors intersect in landscapes where resources are already fully allocated and how this is placing increasing pressure on the delivery of water related ecosystem goods and services. The paper then examines the needs and benefits of developing a strategic water management plan and the importance of understanding the ‘true’ value of water. ‘True’ value relates not only to the role of water in business but also to its value to surrounding communities and the environment. Finally, this paper looks at links between greenhouse gas abatement and preservation of water related ecosystem services using an example from a tropical savanna woodland to explore the costs and benefits (in this case in terms of carbon/water trade-offs) encountered as part of a hypothetical reforestation initiative. While such initiatives may provide greenhouse abatement options they may also impact on water availability locally or regionally. Understanding the costs and Water in Mining Conference Perth, WA, 15 - 17 September 2009 145 1. Professorial Research Fellow, Centre for Water in the Minerals Industry and Centre for Mined Land Rehabilitation, Sustainable Minerals Institute, University of Queensland, Brisbane Qld 4072. Email: [email protected]

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Thinking Outside the Lease – Towards a Strategic View of

Regional Water Management by the Mining Industry

D J Barrett1

ABSTRACT

In the last 30 years, human appropriation of global renewable resourceshas accelerated to the point where 35 per cent of the earth’s land surfaceis now in managed agro-ecosystems, consumptive water use consumesbetween 50 per cent and 85 per cent of freshwater supply and 60 per centof ecosystem services are utilised in an unsustainable manner. There arevirtually no landscapes in which renewable resources are not alreadyfully allocated among different economic and environmental uses.Furthermore, it is increasingly recognised that water availability issues donot exist in isolation but are linked with the related environmental issuesof biodiversity preservation, the carbon cycle, soil degradation, andenergy use and supply. It is against this background that the sustainablemanagement of water in mining is increasingly developing a strategicviewpoint where water is viewed as a resource within an interconnectedlandscape, having economic, environmental and social value and

providing a range of environmental services in the provision of public andprivate goods. This paper explores the issues associated with sustainablemanagement of water in mining from a strategic viewpoint. Thecumulative impacts of multiple water users, both within and outside themining sector, is increasingly threatening the security of supply for allusers. To quantitatively assess the ‘true’ value of water it is necessary to:

•   Better understand the science of ecosystem functioning and howhuman actions impact on environmental processes.

•   Develop appropriate policy, finance and governance structures tosupport innovative programs that preserve ecosystem function andservices (including market based instruments).

•   Apply knowledge as interventions across landscapes in ways thatmaximise benefits and minimise unintended consequences takinginto account differences in the value of water among sectors.

A strategic viewpoint of water management relies on knowledge to

guide decision making that has been acquired at a range of scales frommine site to mining region. This knowledge must be based on rigorousscience, sound data and syntheses of different types of information.Strategic management of water resources will better position the industryin terms of understanding the risks posed by complex, interlinkedenvironmental issues that are increasingly impacting on future access toland and renewable resources, including water, thereby ensuring mining’sfuture social licence to operate.

INTRODUCTION

Access to land and water resources is a necessary condition forcontinued growth of the mining industry and generation of theeconomic wealth it provides. Since 2002, the mining industry inAustralia has promoted the strategic management of waterresources to meet increasingly rigorous environmental

responsibilities regarding water acquisition, use and dischargeand to ensure crucial future access to water supply foroperations. Presently, the most widely used water indicators bymining companies are those of the Global Reporting Initiative(GRI, 2000 - 2006; Moran, 2006). Five GRI indicators relate tototal water withdrawal by source; the amount and impact of mineconsumption and discharge on aquatic habitats; and, the amountof water recycling within a mine site (GRI, 2000-2006).Congruently, the industry has also sought to align its waterrelated sustainability efforts with the Australian Government’sNational Water Initiative objectives. The aim of this strategy is to

generate additional social, environmental and economic value inmining by progressing water sustainability objectives ‘beyondcompliance’ that includes a long term ‘water stewardship’ roleand considers the cumulative impacts of multiple mines onregional water resources. Cumulative impacts are manifest whererepetitive and spatially distributed environmental changesaccumulate over time or space and disrupt ecosystem function(Spaling and Smit, 1995). In this context, water stewardshipconsiders not only the business case for water use but alsocommunity concerns, social responsibilities, technologicaldevelopments, and support for research to develop more efficientuses of water resources (MCMPR, 2006). A strategic watermanagement plan aims to enhance overall business value bymaximising opportunities and minimising risks to production

through consideration of all aspects of water managementincluding the social, environmental, economic and operationalaspects. While such goals are laudable and necessary for theindustry to participate in public debate and policy development,achievement requires tools and methodologies to alignon-ground actions and interventions on mine sites with corporatepolicy objectives (Moran, 2006). Evans  et al  (2009) present ageneric framework that describes the interactions betweencompany policy development and implementation, the outcomesof policy actions and the impact of these outcomes on drivers of the sustainability agenda (ie the legislative, social, environmentaland economic drivers to which corporate policy development isresponding). This framework aides in understanding therelationship between policy, action at site level and society’sresponse. Tools to monitor and assess water efficiency at the site

level are currently being developed (eg Cote   et al,   2007);however, methods to achieve wider, strategic sustainability goalsare still in their infancy. To fully achieve a strategic approach towater management, a hierarchical information system is requiredcomprising information on site-level flows and stores of water,water availability in the regional context, and the cumulativeimpacts of water use among multiple sites and other productionsectors within a region. A strategic view can only be achieved byaccess to and interpretation of the best available scientific andeconomic data on water at all of these scales.

This paper discusses the environmental context within which astrategic perspective on sustainable water management by theminerals industry is to be developed. It begins with a discussionon sustainable development in the context of increasing globalpressures on renewable resources. It then explores how demand

for water by mining and other land use sectors intersect inlandscapes where resources are already fully allocated and howthis is placing increasing pressure on the delivery of waterrelated ecosystem goods and services. The paper then examinesthe needs and benefits of developing a strategic watermanagement plan and the importance of understanding the ‘true’value of water. ‘True’ value relates not only to the role of waterin business but also to its value to surrounding communities andthe environment. Finally, this paper looks at links betweengreenhouse gas abatement and preservation of water relatedecosystem services using an example from a tropical savannawoodland to explore the costs and benefits (in this case in termsof carbon/water trade-offs) encountered as part of a hypotheticalreforestation initiative. While such initiatives may providegreenhouse abatement options they may also impact on water

availability locally or regionally. Understanding the costs and

Water in Mining Conference Perth, WA, 15 - 17 September 2009 145

1. Professorial Research Fellow, Centre for Water in the MineralsIndustry and Centre for Mined Land Rehabilitation, SustainableMinerals Institute, University of Queensland, Brisbane Qld 4072.Email: [email protected]

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benefits of carbon and water ecosystem services will be arequirement for businesses already investing in carbon abatementschemes and who are seeking to further justify their businesscase in terms of greenhouse gas bio-sequestration or renewableenergy production. New approaches and methods in biophysicalassessment, observation and optimisation methods are providingthe requisite tools for achieving optimal outcomes in terms of water and carbon benefits in landscapes. These methods can

diagnose landscape function, establish baseline environmentalconditions and optimise benefits of management interventions inregions where pressures on water resources are increasing.

GLOBAL RESOURCE USE ANDENVIRONMENTAL SUSTAINABILITY

The latter half of the twentieth century has seen anunprecedented increase in demand for arable land and theappropriation of surface- and ground-water resources therein.Deforestation and land clearing for agricultural production hasresulted in 35 per cent of the earth’s land surface being convertedto human managed agro-ecosystems (Foley et al, 2005; Foley et al, 2007). Food and fibre now consume over 20 per cent of globalnet primary production (Haberl  et al, 2007); irrigation, grazing

and other human uses appropriate between 50 per cent and 85 percent of terrestrial freshwater supplies each year (Jackson  et al,2001; Foley et al, 2005); between five and 25 per cent of globalfreshwater use exceeds long term accessible supply; and, 60 percent of ecosystem services are used in an unsustainable manner(MEA, 2005). This increase in the appropriation of renewableresources by society is generating increased competition foraccess to these resources by an expanding mining industry. Forexample, the mining industry in Queensland, Australia, usedmore than 83 GL of water in 2004 - 2005 which constituted2.8 per cent of the state’s consumptive water use. Locally, thisdemand for water by mining was up to 12 per cent and 25 percent of consumptive water in the Fitzroy and Southern Gulf surface water management areas (ABS, 2006). This demand forwater will expand over coming years as exports of Australian

ores and coal increase. For example, energy derived from coalcurrently contributes ~25 per cent of world primary energysupply with world consumption expected to increase by 36 percent in 2030 (IEA, 2008). This demand for raw materials, thelong term decline in ore grade and greater throughput andprocessing of more refractory ore is leading to more extensivemine areas, increasing waste rock production and greater demandfor water resources by mining both in Australia and worldwide(Mudd, 2008). The ensuing competition for limited renewableresources as global demand for energy, food and fibre increasesunderscores the imperative for development of a strategicapproach to water use in mining.

Environmental sustainability requires that the basic diversityand functioning of ecosystems remains intact and continues toprovide important ecosystem services for current and future

generations. The integrity of ecosystem functioning must persistin spite of the interventions and disturbance created by humanswhen land is converted to production systems. With increasingscrutiny of company environmental performance, it is no longersufficient to simply assume that ecosystem services like watersupply, water purification, habitat provision, and culturalfunctions are automatically preserved as a by-product of conservation. To properly demonstrate that ecosystem servicesremain intact increasingly requires interpreting the highestquality, complex scientific information on landscape functioning.This is placing new demands on companies and governmentagencies to collect and interpret scientific and observational datato inform on the impacts of mining on water availability, waterquality and other fundamental ecosystem functions and services(eg Sophocleous, 2007). Gathering this information is

challenging due to the large spatial and temporal scale over

which these data are required (100 - 103 km2), the time-lagsassociated with environmental processes and the differentpriorities placed on the various types of water by different sectorsof the economy and community groups (Mudd, 2008). Todevelop a long term water stewardship role for the miningindustry, therefore, requires investment in research anddevelopment of sector specific tools. These tools are required toimplement conservation actions at a range of scales from mine

site to regions and to ensure that the integrity of ecosystemservices is maintained across these scales.

WATER AND OTHER ENVIRONMENTAL ISSUES

Water is a critical component of every process in mining andminerals production. It is used in the acquisition, transport,separation, and processing of ores, coal and tailings, and forsuppressing dust, maintaining vehicles, and for residentialpurposes. On-site water management aims to regulate quantitiesin pits and processing plants to avoid too much or too little waterfrom slowing production. Water is also an importantsustainability indicator; no other operational component on amine site more completely integrates the level of sustainableproduction than the efficiency, quantities and quality of water

used (Younger, 2006; Cote et al, 2007).Risks to long-term water supply for the mining sector arise

from population increase and urban development, climate changeimpacts on water availability and ongoing unsustainableproduction and development particularly in the agriculturalsector. However, solutions to improved water management arenot easily forthcoming due to the interlinked nature of water andother environmental problems. Water related environmentalproblems do not exist in isolation of other issues such asbiodiversity preservation, degradation of soil condition, sedimenttransport, vegetation clearing and habitat loss. There is a stronginterconnectedness among major environmental problems and, asa result, solutions to these issues will not be found through asimple piecemeal approach that addresses problems individually(Ostrom, Janssen and Anderies, 2007). Solutions will require a

more complete and thorough understanding of the benefits andtrade-offs that occur when water issues are considered in thewider environmental sustainability context (Smith, Maarse andVan Hooydonck, 2008). Although different sectors of societyregard them as separate issues, it is helpful to think of access toenergy, land and water as different sides of the same issue(IUCN, 2008). Any change in land use that impacts on hydrologymay invariably limit water availability (eg establishment of reforestation projects). Furthermore, changes to water supply (egthrough climate change or altered abstractions) will impact onthe types and intensity of land use in many regions of Australia.All of these drivers impact on the feasibility of miningoperations. Figure 1 shows the relationship between carbon,energy and water components of a fully allocated and coupledproduction – environment system. Carbon, energy and water areinterlinked through the water use efficiency of production, thewater-carbon trade-off of land use, and the carbon intensity of energy supply (whether that is derived from coal, oil orrenewable sources, eg biofuels). In such a coupled system,changes in biodiversity potentially impacts on the carbon contentof landscapes through vegetation clearing and changes in cover.Change in any one of these components inevitably impacts onother components. For example, an increase in energy demand,or an increase in the harvesting of vegetation for fuel indeveloping countries (IUCN, 2008), inevitably leads to anincrease in carbon emissions from greenhouse gases; increases inwater supply requires greater energy consumption throughpumping, processing, and construction; and, extensive restorationof degraded landscapes potentially limits water availabilitythrough decreased run-off.

To illustrate the interlinked nature of these issues, consider a

central Queensland coal mine undergoing expansion and the

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associated need for increased water supply. With capped waterentitlements, processing of on-site worked water may better meetthis demand. Desalination by electrodialysis of worked water at2500 ppm salinity could yield up to 568 ML yr-1 of freshwaterper mine generating an additional $324 M revenue in this region(Evans, Moran and Brereton, 2006; Moran et al, 2006), but doing

so would generate 1400 t-CO2 yr-1 greenhouse gas emissions2. Ata carbon bio-sequestration potential of productive savannawoodlands of 35 t-C ha-1 (128 t-CO2   ha-1) in above-groundbiomass, this would require a reforested area of nearly 220 ha inperpetuity to completely sequester emissions for the 20 yearlifetime of a single desalination plant along with the associatedestablishment and management costs. On the other hand,extensive reforestation is limited in catchments where watersupplies are fully allocated due to impacts on run-off. Jackson  et al   (2005) showed using a global analysis that 13 per cent of streams located in catchments undergoing extensive reforestationdried completely for at least one year after planting. Thisreduction in run-off will impact water supply whether thisreforestation project is conducted locally (eg on a mining lease)or elsewhere   via   a carbon credit scheme. Alternatively, the

increased demand for water could be met by entering a market tobuy third party water. Such a demand for water is a strong driverfor establishing ‘regional synergies’ among companies to betterutilise water resources and improve regional sustainability (vanBeers et al, 2007). However, significant barriers can still hinderdevelopments of these synergies due to inadequate informationexchange, high financial costs, obstructive organisational culture,uninformed social attitudes, restrictive local environmentalregulations and technical limitations (van Beers   et al,   2007).When viewed from this perspective, achieving water relatedsustainability goals requires the simultaneous consideration of the three components in Figure 1, that is:

1. implementing linked programs that uncouple carbonemissions from energy supply through energy efficiency,sequestration and renewable energy approaches;

2. improving water efficiencies of production throughstrategic management of water resources; and

3. planning appropriate locations for revegetation andbiodiversity conservation programs to achieve wider

environmental benefits while maintaining water relatedecosystem services.

STRATEGIC WATER MANAGEMENT IN MINING

Strategic water management takes into account theenvironmental value of water while recognising the economicimpacts of reduced water availability on other users, and the rolewater plays in delivering vital ecosystem services. Strategicwater management recognises the feedback between poor watermanagement, the impact of this on company and industryreputation, and the threat this poses to future access to land (iethe social, formal and business ‘licences’ to operate). Thestrategic link between performance and reputation is widelyrecognised by the mining industry through initiatives such as The

 Mining, Minerals and Sustainable Development Project  (MMSD,2002) and the International Council on Mining and Metals(ICMM) framework of ten Sustainable Development Framework Principles   (ICMM, 2003). These principles advocate thatcompany and site performance should seek to ‘go beyondcompliance’ and to generate additional value from water assetswithin the regional context that a mine (or group of mines)operates (MCMPR, 2006). However, as noted above, suchconsiderations are not without their tradeoffs. The MillenniumEcosystem Assessment (MEA, 2005) stated, in relation to thedevelopment and implementation of solutions to large scalewater environmental problems, that:

Trade-offs in meeting … internationalcommitments are inevitable. It is very certainthat the condition of inland waters … has beencompromised by the conventional sectoralapproach to water management, which, if continued, will jeopardise human well-being.

A study of different institutional arrangements (centralisedgovernment, community organisations, and water tradingmarkets) shows that there is no panacea or universal remedy formanaging water (Meinzen-Dick, 2007). Variability in localcontext and the difficulty in transplanting governance structuresand institutions between countries and jurisdictions make watermanagement case-specific. For the mining industry, this meansthat effective strategic management of water resources requiresan adaptive approach capable of diagnosing problems, learningfrom trial and error and accommodating local biophysical, social,regulatory and economic conditions (van Beers et al, 2007). As a

result, solutions to water management problems in the miningindustry will increasingly require balancing short term needswith long term aspirations and consideration of the complexinteractions associated with water and other environmental issuesacross multiple sectors of society.

To promote a strategic water management ethos in the miningindustry, requires developing the means of assessing thecumulative impacts of water use, establishing new conservationmeasures by the industry, attributing credit for the benefits of these measures to parties who instigate them and quantifying thebenefits achieved through maintained or enhanced ecosystemservices. Integrative or cumulative impacts on water relate to thetime or space integration of extractions, solutes or their chemicaltransformations in aquatic systems. The integrative impacts areproblematic because through accumulation they can lead tooff-site environmental problems even when all environmental

Water in Mining Conference Perth, WA, 15 - 17 September 2009 147

THINKING OUTSIDE THE LEASE – TOWARDS A STRATEGIC VIEW OF REGIONAL WATER MANAGEMENT BY THE MINING INDUSTRY

2. Based on electrodialysis energy costs of 2.64 kWh m3

at 2500 ppm

and emissions from black coal power generation of 0.95 kg-CO 2kWh

-1.

FIG 1 - The interlinked issues of carbon, water and energy within a

fully allocated landscape where mining and minerals processing

intersects with other economic sectors around greenhouse gas

emissions, land use and water supply. Strategies that improveefficiencies of energy and water use in mining aim to reduce the

carbon intensity of energy consumption and improve the water

efficiency of mineral processing, respectively. Increasingly, more

extensive impacts of land use change (eg for food and fibre

production), biodiversity conservation and carbon mitigation

programs can impact on water availability in landscapes potentially

threatening security of water supply to mining.

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indicators have been met on-site. Figure 2 illustrates therelationship between a range of important contemporaryenvironmental issues and the mining industry’s requirements forwater and energy at scales from mine to regions. At the mine sitelevel (central box), issues of concern are primarily aboutmanaging threats and maximising opportunities for security of energy and water supply for production and efficiency of use. Forwater, additional management issues are associated with water

quality for processing, water storage and discharge. Acrossmultiple sites, associated concerns are the long term security of water and energy supply to meet ongoing production andexpansion, and the impacts of discharge and emissions on theregional environment. At the regional to global scale,considerations of supply, discharge and emissions interact with arange of environmental issues associated with global change,large scale water resources issues, climate change, population,pollution, and biodiversity. While these issues are separatelyidentified and addressed by different international conventions,government regulation and company policies, they have in mostlandscapes overlapping causes and effects.

It is becoming increasingly important for the industry tocollectively address the cumulative environmental impacts atregional scales because actions and responses at this scale have amajor influence on public perception of industry responsibilities.In the long-term, these perceptions feedback on to shareholder

choices and the legislative and policy frameworks developed bygovernment. Perceptions about unjustifiable or profligate use of water, over-zealous competition for scarce water resources,over-allocation of limited surface and ground water supplies orcumulative impacts of mining on water supply and quality is amajor threat to mine expansion. A weak understanding of thecumulative environmental impacts represents an industry risk tofuture access to resources resulting in non-participation in

community debate and marginalisation during the developmentof public policy. In other words, the mining industry is exposedto threats posed by weak strategic planning unless it has acomprehensive understanding of the interplay between multipleand interacting environmental issues so that it can respondcollectively across multiple mines and companies through thedecision making and management process.

BIODIVERSITY AND ECOSYSTEM WATERSERVICES

In the original text of the   United Nations Convention on Biological Diversity, ratified in 1993, the term ‘BiologicalDiversity’(or ‘Biodiversity’) was defined as the:

variability among living organisms … and theecological complexes of which they are a part.

This original definition did not refer explicitly to thepreservation of ecosystem functioning per se, but rather it notedthe importance of ‘in situ   conservation of ecosystems’ asfundamental to biodiversity conservation, by ensuring theviability of species populations. Subsequently, the MillenniumEcosystem Assessment (MEA, 2005) expanded this definition toinclude, the variability in functional types, biologicalcommunities and landscape units that determine the provision of ecosystem services and, as a consequence, human well-being.This shift in definition reflects increasing recognition thatpreservation of the underpinning ecosystem services isparamount to the goal of sustainable development rather than justthe preservation of biological diversity alone.

Current ecological theory regards ‘functional traits’ as thefundamental link between abundance and function in ecosystems(Hooper  et al, 2005; Diaz  et al, 2007). Thus, a community’sspecies composition is more important than abundance  per se, indetermining ecosystem services. Functional traits are thecharacteristics of organisms relevant to resource acquisition,growth, survival and reproduction that determine the nature andthe intensity of ecosystem function and the resilience of communities (Walker, Kinzig and Langridge, 1999; Diaz andCabido 2001). Ecosystems with high levels of functionaldiversity are more resilient to external forcing by disturbance orhuman impacts (Diaz and Cabido 2001). A resilient ecosystemrecovers more readily from the impacts of disturbance withessentially the same complement of species and performing thesame ecosystem services that existed prior to disturbance.

Water plays a pervasive role in the provision of ecosystemservices both directly and indirectly by supporting otherecosystem functions (Table 1). The importance of these servicesto society is determined by the value placed on differentecosystem functions (Diaz   et al, 2007). Functional traitsassociated with water related ecosystem functions includetranspiration rate and water use strategies; water uptake by roots,root distribution, architecture and branching pattern; leaf stomatal properties, leaf area and thickness, drought tolerancephysiology and drought avoidance strategies; and, albedo,phenology and vegetation canopy structure. The resilience of water related ecosystem services diminishes when species withthese functional traits are removed from plant communities byselective local extinction, or where abundance is altered   viarelease of waste or toxins, climate change, human impacts orwhere the magnitude, frequency and duration of disturbance ischanged (Folke et al, 2004).

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FIG 2 - Relationship between contemporary regional to global

scale environmental issues (listed on right) and mine water and

energy issues at a range of scales. These scales range from

individual mine operations (‘extraction and processing’) through to

the entire mining sector. The diagram depicts the industry’s need

for security of supply of energy and water and its responsibilities

around discharge of waste water and greenhouse gas emissions.

The cumulative impacts resulting from industry needs (water and

energy) and its waste releases back into the environment

(discharge and emissions) with respect to the environmental

issues (on right) directly impact on the industry’s reputation,

community attitudes to mining and the industry’s long term access

to resources.

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The strength of the relationship between a biologicalcommunity’s complement of functional traits and the supply of water-related ecosystem services is not straightforward. Current

ecological theory points to a complex interaction between bioticand abiotic controls on ecosystem function (Hooper et al, 2005).The provisioning of ecosystem services is not only stronglyaffected by abiotic drivers (eg climate) and disturbance (eghuman induced land use change) but is also modulated by bioticdrivers such as the functional diversity of an ecosystem. Thedegree of this modulation depends on species composition andabundance, and the time and space scale under consideration(Hooper et al, 2005). Due to the highly non-linear response of many hydrological processes to variation in abiotic drivers (egrun-off and drainage in response to variation in precipitation) anecosystem may suddenly shift its water resource regime to a lessdesirable state in response to trends in an underlying driver (egprecipitation). This response may be amplified or dampened byvariation induced by biotic controls (eg vegetation cover)

depending on the interactions between biotic and externallyimposed abiotic drivers. For example, reduced precipitation insouthwestern Western Australia (Lyons, Smith and Xinmei,1996) and central Queensland (McAlpine et al, 2007) in the lastquarter of the 20th Century has been partly attributed to largescale clearing of vegetation and its effect on regionalevapotranspiration, convection and rainfall. This is an example of how slow, incremental changes over time can lead to criticalcumulative impacts on the availability of natural resources.These cumulative impacts pose risks for expansion of mining insemi-arid regions where extraction and processing are dependenton the supply of limited surface and ground water resources.

AN AUSTRALIAN SAVANNA EXAMPLE

The Australian Government is committed to the introduction of aCarbon Pollution Reduction Scheme (CPRS) in 2011 to regulate

greenhouse gas emissions by industry. To this end it hasprescribed a range of preferred options including the use of reforestation programs (as defined in the first commitment period

of the Kyoto Protocol) from its commencement (CPRS, 2008).The Garnaut Climate Change Review has taken this idea further,recommending that Australian rangelands, Mulga woodlands andsavannas be exploited for their greenhouse gas abatementpotential through biosquestration, reforestation, biofuels,management of fire and increased soil organic matter (Garnaut,2008). Restoring the condition of the Australian rangelandstherefore offers considerable scope for greenhouse gas mitigationdue to its large area and carbon sequestration potential. Use of bio-sequestration options represent an opportunity for themining, minerals processing and energy sector, to achievegreenhouse gas abatement targets relatively cheaply. However,exploitation of such opportunities may also have unintendednegative side effects particularly with respect to wateravailability, soil organic matter and nutrient cycling (Jackson  et 

al, 2005). The benefits of carbon bio-sequestration may bepartially offset by reductions in soil moisture recharge, run-off,stream flow to water storage and groundwater recharge whichmay have implications for water availability. This is a particularproblem in regions like Queensland, Australia, where miningrelies on surface water resources or where surface aquifers arethe primary water sources of groundwater for mining andgroundwater dependent ecosystems (Claydon and Milligan,2003; Sophocleous, 2007).

To illustrate the tradeoffs that exist between water and carbonin landscapes undergoing reforestation, a fully coupledbiophysical model of surface hydrology and land and soil carbondynamics (Barrett et al, 2005) was used to examine profile soilmoisture, run-off and carbon contents of a savanna ecosystemwith variation in tree/grass cover. Figure 3 shows modeledsoil-profile volumetric moisture content under different

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THINKING OUTSIDE THE LEASE – TOWARDS A STRATEGIC VIEW OF REGIONAL WATER MANAGEMENT BY THE MINING INDUSTRY

Functions Ecosystem process Ecosystem service

Water mediated effects on ecosystem services:

Regulation functions – maintenance of essentialecological processes and life support systems.

Water regulation – availability and supply. Retention and storage of water.Drainage and natural irrigation.

Water quality – filtering and storage of freshwater.

Provision of water for consumptive use includingaquaculture, domestic and industrial uses.

Waste treatment – transformation or toxiccompounds and sediment removal.

Water purificationPollution control and detoxification of wastewater.

Habitat functions – Provision of suitable livingspace for wild plant and animal species.

Refugium and nursery function – habitat forreproduction and survival of species.

Habitat for viable fish, aquatic invertibrates andplant populations.

Cultural functions – social, educational andspiritual wel being of communities.

Recreation – landscape diversity for recreationalactivites.

Leisure activities involving water (recreationalfishing and boating).

Cultural and artistic – landscape diversity of natural features of local importance.

Inspirational and community cohesion aroundwater features in landscapes.

Aesthetic – landscape diversity of beauty andiconic features.

National symbols and landscape beauty aroundwater features in landscapes.

Water mediated indirect effects on ecosystem services:Regulation functions – maintenance of essentialecological processes and life support systems.

Food production – conversion of solar radiationinto edible plants and animals.

Maintenance of arable land for food productionby soil water retention characteristics.

Raw materials – conversion of solar radiationinto biomass for construction.

Maintenance of arable land for fiber productionby soil water retention characteristics.

Cultural functions – non-material societalbenefits from ecosystems.

Spiritual and historic information – landscapediversity of natural features with spiritual andhistoric value.

Heritage value of water in landscape.

Science and education – landscape diversity of natural features with cultural and artistic value.

Educational value of water in landscape.

TABLE 1The direct and indirect role water plays in the functioning of ecosystems and the provision of ecosystem services (adapted from Costanza et 

al, 1996; de Groot, Wilson and Boumans, 2002; Maynard, 2007).

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combinations of sand/clay soils and tree/grass cover for asavanna system. The impact of soil type influences rates of rainfall infiltration into the soil, and hence soil moisture content.Figure 3 also shows that vegetation modulates profile soilmoisture for a given soil type and rainfall regime. Rainfallinfiltration into soil is greater, and vegetation and soilevapotranspiration is lower under grass cover than under treesdue to differences in the functional traits associated with water

acquisition and transpiration (ie canopy structure, root profiledistribution and stomatal sensitivity to soil moisture content).These differences lead to drier soils for a given rainfall and fasterrecycling of rainfall back to the atmosphere byevapotranspiration under trees than under grass vegetation.Higher soil moisture content under grasslands also contributes tohigher run-off because infiltration is impeded in wet soils.

These functional differences result in a trade-off betweencarbon and water when pastures are reforested particularly giventhe strong non-linearity between rainfall and run-off. Steady statecarbon densities of above ground biomass in Queenslandrangelands vary from ~1 t-C ha-1 in the Simpson-Strzeleckideserts to ~61 t-C ha-1 in Cape York tropical savannas (Barrett,2002). This tradeoff between carbon and water (Figure 4) showsthat an increase in carbon content with increasing tree cover

results in an approximate linear decrease in soil moisture contentand run-off for a given mean annual rainfall. For example, anincrease in tree fraction from zero per cent to 80 per cent coverresulted in a decrease in run-off by 29 per cent. However, soilmoisture and run-off responses to rainfall are highly non-linear.Halving mean annual rainfall from 600 to 300 mm yr-1 decreasedrun-off by ~95-96 per cent as tree fractional cover changed fromzero to 0.5. This illustrates the dramatic impact decrease inrainfall under climate change can have on water availability insemi-arid ecosystems.

This example shows that the spatial distribution of reforestation can influence surface hydrology and subsequentprovision of ecosystem services, such as water supply and carbonbio-sequestration. To utilise this sort of information in strategicwater management requires development of optimisation tools,to spatially distribute reforestation plantings in landscapes inways that maximise the benefits of the carbon and water

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FIG 3 - Five years of simulated soil moisture in the upper 50 cm of a soil profile showing the effects of interactions between abiotic (soil

physical properties and regional climate) and biotic factors (expressed as functional properties of vegetation, ie root depth distribution,

vegetation structure, plant physiology). Colour bar shows volumetric soil moisture content (cm3

cm-3

). Model output based on five year

climate sequences from Barrett et al (2005) for a tropical savanna open woodland. (A) and (B) show results for 90 per cent tree cover; (C)

and (D) show results for ten per cent tree cover (grass dominant vegetation). Soil properties for sandy (A) and (C) and clay (B) and (D) soils

were taken from Rawls et al (1992).

FIG 4 - Trade-off between median ecosystem carbon

bio-sequestration (t-C ha-1

) and median soil water availability (cm3

cm-3

) for a tropical savanna in northern Australia, assuming

different fractional areas planted to grassland and woodland

vegetation type and different locations on a rainfall gradient.

Results based on model and climate data from Barrett et al (2005)

and soil profile moistures from Figure 3 for a duplex soil.Circle,

diamond and triangle symbols show results for 600 mm, 300 mm

and 150 mm mean annual rainfall, respectively. Dashed lines

connect points of constant fractional tree cover. Values against

points indicate five year average run-off in mm yr-1.

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ecosystem services provided. Optimisation tools provide themeans whereby planning decisions can assess where conservationinterventions (eg conservation easements, reserve establishment,and environmental covenants on land tenure) achieve maximumpositive environmental outcome at minimum cost (Naidoo et al,

2008). Use of such tools would substantially add to the businesscase required to justify particular management actions withincompanies such as where and when to invest in reforestation

programs for greenhouse gas emissions abatement.

VALUE AND ALLOCATION OF WATER

The ‘true’ value of water means taking into consideration itsmarket value (as private goods), as well as its social andenvironmental importance (as public goods). Valuing thedifferent uses of water can be difficult because:

•   water supply is spatially and temporally variable and so itscost varies to different users at different times,

•   the social costs and benefits of water use are often difficult toestimate, and

•   water is essentially non-fungible and non-substitutable.

In addition, simple measures of water ‘intensity’, such as wateruse efficiency ($ tonne-1 of product) or embodiment of water($m3 water), cannot necessarily be related to environmental valueof water, such as the value of evapotranspiration in regulatingregional climate or the value of aquatic phytoplankton inmaintaining the health of river habitat. Difficulties in valuationalso extend to the business case concerning infrastructureimprovements on mine sites aimed at conserving water use. Netpresent value methods do not sufficiently capture long-termbenefits of water infrastructure improvements and so are unlikelyto support immediate expenditure decisions (Evans, Moran andBrereton, 2006). Furthermore, when based on gross value of production (as opposed to profit) price does not necessarilyreflect the true economic value of the commodities produced(Moran, 2006). Three main problems exist with current water

valuation methods (Evans, Moran and Brereton, 2006): Firstly,they do not factor in hidden or indirect costs of water. Decisionsabout water acquisition within a company are generally made onpurchase price which does not accurately reflect real costs thatare hidden in the overhead accounts and, therefore, do not figurein the business case. Secondly, current water valuation methodsdo not generally consider risks and uncertainties associated withwater management decisions (Moran, 2006). As a result of significant externalities, a water trading market is not necessarilyefficient and cannot, therefore, operate without significantoversight to avoid perverse outcomes. Finally, water costs tomining operations are not a large proportion of the totaloperating costs. Hence, utilising a pure business or economiccase to justify instigating change in water managementprocedures on site is often difficult to argue (Cote  et al, 2007).Exacerbating this problem is the disproportionate income amongvarious sectors of the economy which effectively act as a barriersto many groups from entering and trading in an unrestrainedwater market. This is the case in regions where the mining sectorcan effectively set water prices due to its combined highest valueuse and highest income.

The ‘true value’ of water refers to the recognition of itseconomic, social and environmental values. The economic valueof water includes costs associated with assessment of waterresources, as well as the pumping, delivery, storage, treatment,monitoring, production and discharge of water. Theenvironmental and social value of water include the ecosystemservices provided by environmental flows, the cultural andspiritual associations of water and place, and the recreational andamenity value of water. The values that society places ondifferent uses of water ultimately determines the proportions in

which it is allocated between production sectors and theenvironment.

Leading practice in water management requires companies to:

•   recognise the ‘true’ value of water,

•   incorporate water management into the business decisionmaking process,

•   develop a strategic and adaptive response to water

availability and use,

•   engage with community and other stakeholders on waterdecisions, and

•   implement improvements in operational water efficiency(MCMPR, 2006).

Consideration of the business value of water alone leaves theindustry exposed to risks arising from the social, cultural andenvironmental value of water to other users (Corder and Moran2006; Moran et al, 2008). Other users may identify concerns thatare actual, perceived or potential risks to the continuity of supplyor the quality of water they receive (DRET, 2008). These risks, inturn, may increasingly limit access to water for mining throughchanges in water entitlements, compliance procedures orincreased costs of supply or discharge thereby placing long-termproduction at risk (Moran   et al, 2008). As society becomesincreasingly aware of the environmental value of water,particularly in Australia where shortages in water supply arebecoming endemic (Corder and Moran, 2006), the miningindustry is being required to more rigorously demonstrate controlmeasures to reduce overall dependency on regional waterresources.

Advances in valuation methods of natural capital are needed tobalance the economic and environmental values of water andenable the fair and equitable distribution of water resourcesbased on sustainable development principles. Daily and Matson(2008) suggest three areas of profitable research to advance thesemethods. These areas are:

1. Improved understanding of the science of ecosystem

functioning, the mapping of ecosystem services and theirchange in time. This includes developing a more completeknowledge of the relationship between biodiversity andecosystem services across landscapes through thedevelopment and application of dynamic models capable of translating structure and function of ecosystems intoservice provision.

2. The development of appropriate policy, finance andgovernance structures to ensure support and viability of programs that preserve ecosystem functions and theirservices. This includes the promotion of payments forecosystem services, micro-financing of projects indeveloping countries, and development of governmentpolicies that are cognisant of, and serve, multiple

environmental outcomes.3. The application of knowledge embodied in the biophysical

sciences as interventions across spatially diverseecosystems in ways that maximise benefits and minimiseunintended consequences, such as the development of methods for assessing appropriate distribution of catchmentwater resources among uses.

Without a robust commensurate means of valuation of theeconomic and environmental uses of water, assessment of itsappropriate allocation among production and environmental usesis difficult. In the case of water allocation, price is not anadequate allocation mechanism because it is non-commensurate,does not fully account for the different values of water amongusers and does not take into account income distribution amongstakeholders. To avoid a disproportionate allocation of waterresources, innovative financial instruments are being trialed to

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provide incentives and income for land owners, particularly indeveloping countries, who choose to implement conservationinterventions and provide ecosystem services such asbiodiversity credits, water quality improvement schemes and soilerosion abatement programs (Goldstein   et al, 2006;Steffan-Dewenter   et al, 2007). However, three barriers arefrequently encountered to the success of these schemes: highup-front costs, long lag times before income is generated andrisks of project failure due to poor knowledge and technologiesfor implementation. Governments, non-government organisationsand companies therefore have a leadership role in generatinginstruments (subsidies and incentives) to land owners toovercome these barriers, establish fair and equitable means of allocating water resources and enabling a transition to regionalsustainability goals across economic sectors. As theseinstruments are developed, they can be delivered operationally intwo ways (Cote   et al, 2007): Firstly, by justifying additionalinfrastructure through improved water use efficiencies andsimultaneously identifying where concomitant sustainabilitybenefits can be picked up as ‘added value’ in the business case.Or secondly, explicitly identifying long term benefits for bothon-site and off-lease stakeholders of meeting specificsustainability goals when new projects are initiated. The firstrepresents a ‘bottom up’ or project driven approach to meetingsustainability goals where environmental objectives areconsidered but essentially ride along with decisions basedprimarily on costs. The second is a ‘top down’ approach wheresustainability goals are set at corporate level and projects aredesigned explicitly to meet these targets.

SUMMARY

Increasingly, community, consumer and advocacy groups want tobe assured that the ecosystem services they consume and enjoyare not under threat by development. The mining industry isattempting to generate this assurance through its initiatives insustainable development. While substantial progress has beenmade in biodiversity, similar attempts to improve on thesustainability of water use are relatively under-developed. Issuesassociated with water supply, use and discharge are currentlyhigh priority in many regions under mining development andpresent risks for the long-term supply of water for production.This paper has discussed a range of topics on the sustainablemanagement of water resources from a strategic viewpoint.These topics included the accelerating appropriation of land andwater resources by society, the interconnectedness amongenvironmental issues, the role of species functional traits indelivering water related ecosystem services, the need forpreservation of water related ecosystem services through thestrategic management of water resources, the importance of assessing the cumulative impacts of multiple users on watersupply, the business case for sustainable water management, andthe risks to long term supply of water posed by inadequatevaluation of the true value of water as a public and private good.For the maintenance of important water related ecosystemservices it is necessary that run-off, drainage, erosion, anddecontamination processes be preserved throughout the life cycleof a mine from exploration to closure   via   management of vegetative cover, key species assemblages, and resilience againstdisturbance. This paper has argued that informed strategic watermanagement needs to be based on rigorous science, sound dataand a synthesis of knowledge derived from multiple informationsources. Once acquired, this knowledge can be used to guidedecision making within companies with the intent of maximisingreturns on investments in water efficiencies. Attaining thisknowledge requires developing a comprehensive understandingof the ‘true’ value of water in landscapes and assessing thecumulative impact of multiple mine sites that are interactingwithin a region against a background of other land and waterusers. Once achieved this knowledge will better serve the

industry by contributing positively to the complex set of factorsthat relate mine operations, environmental performance and thesocial licence to operate.

ACKNOWLEDGEMENTS

I am indebted to Nadja Kunz and Usha Pillai-McGarry whoprovided useful comments on an earlier version of this manuscript.

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