It is now more than 3½ years since John Howard and his newly appointed minister for Water and the Environment, Malcolm Turnbull, promised to fix up the Murray-Darling Basin with a great big $10 billion dollar splash.

The figure, and indeed the plan, were apparently plucked out of the air; they came as a complete surprise to Treasury, the Finance Department and even to Howard’s cabinet, but they produced spectacular headlines at the start of an election year.

Unfortunately, that was about all they produced; the state premiers in Queensland and Victoria simply refused to sign up to a scheme, which, they correctly foresaw, would involve their own irrigators losing out. And in its first term, Kevin Rudd’s government, beset by the global financial crisis and the wider issue of climate change, didn’t do much better. Penny Wong did manage to spend $1.5 billion dollars buying back some 700 gigalitres from willing sellers, but until the recent rains came the health of the rivers continued to worsen.

The problem was obvious; human activity was taking too much water out of them. The solution, therefore, was to curtail the human activity, but this involved political pain that none of the six governments concerned — one federal, four state and one territory — was prepared to suffer. Thus, it was left to the Murray-Darling Basin Authority to come up with a hard science-based analysis of just what the options were.

Business as usual was not one of them; if the rivers continued to deteriorate at the present rate, within a couple of decades the local environment would break down altogether and human activity would not only be curtailed but would become altogether unviable. But going back to the pristine natural state wasn’t on either; this would require the return of some 7000 extra gigalitres at a current cost of $2.3 million each. At present just $3.1 billion is budgeted for the next three years. And quite apart from the money, taking back that quantity would wreck most of the agricultural industries that are the basin’s economic raison d’etre.

Clearly a compromise had to be found, but even so it was always going to be a controversial one: thus the authority’s report was not released until after the election. And even now, the report makes it clear that it is only floating ideas for consideration by all the interested parties: the final decision will have to be made by governments after extensive consultation and explanation. However, its conclusions are clear: to get the system working to the extent that the Murray flows through to the sea for a reasonable amount of the time, an absolute minimum of 3000 extra gigalitres will be needed.

This would involve cutting existing allocations across the entire area of the catchment by about 27% on average at a cost of about $7 billion, which would be spent on buying back water and improving infrastructure. A much better result would be achieved by a cut of 37% at a cost of more than $9 billion, but this would involve more dislocation and would therefore be harder to sell. Even the lower figure would result in the loss of about $800 million a year in production and about 800 jobs.

The irrigators claim these latter figures are a drastic underestimate: the National Farmers Federation put the job losses at 10 times as high. And obviously the high water users such as rice and cotton growers would be hit hard. It could, of course, be argued that such crops should never have been grown in Australian conditions in the first place, but there are still a lot of workers — and votes — involved.

The redoubtable Barnaby Joyce came to a predictable conclusion: “It’s not going out on a limb to say that if you take 45 percent from an area, the area for all intents and purposes is decimated.” Well actually it’s worse than that; decimation would mean a loss of just 10%. But Barnaby was never very good at arithmetic.

The electoral arithmetic is actually quite straightforward; almost the whole basin is Liberal or National Party territory, so in purely political terms a federal Labor government has little to lose by going in fast and hard. But in a broader social context, the choices are more complex. Obviously the environment is a precious and irreplaceable resource. But the rural lifestyle of some of the small farmers and irrigators, especially in the horticultural areas, is also a valuable national asset.

The economic rationalists may deride it as wasteful and uncompetitive, and no doubt in the cold hard terms of the global economy they are right. But that does not mean that it is not worth preserving. Faced with a similar dilemma many years ago, France made what it usually seen as the irrational choice: it used high tariffs and subsidies to prop up the regional lifestyle of its small farmers. The free traders screamed with indignation, but the fact is that the French countryside remains one of the most desirable destinations in the world: the same well-paid economists who insist that they loathe the very basis of its existence, queue to sample the delights of its local cuisine and culture.

The Murray-Darling Basin is not just Australia’s major food bowl, and an important economic resource in its own right; it is also one of the most varied and interesting parts of the country. Restoring it to the environmental paradise of the years before white settlement might be the preferred solution of the extreme greens, but it would involve losses well beyond the immediate disruption of the present generation.

Julia Gillard has promised that she will not shrink from the hard decisions. They won’t come much harder than the one she will have to make on the Murray-Darling Basin.