First, will there be enough water on the market for me when I need it at a price I can afford? Second, will enough farmers be left to share delivery costs so that the system remains affordable?

If the draft Basin Plan is accepted in its current form, then the answer to both questions is 'No'.

To understand what it means for day-to-day farm operations and business planning, it helps to understand the basic numbers. The draft Basin Plan essentially proposes to recover 2750GL of water, split between the northern Basin (390GL) and the southern Basin (2370GL).

These two targets are then split into two components: in-valley targets for each river valley to meet its own environmental needs from its own water resources, and an additional shared "downstream" target (143GL in the north and 971GL in the south). The "shared" water will be recovered from anywhere across the north or south deemed cost-effective; buyback is the Government's preferred method.

The dairy industry does not support 2750GL as a target. The Basin Plan should not be based on a number, but how to achieve improved environmental outcomes in smarter ways than just stripping water out of production.

Our position reflects the fact that dairy will be among the worst-affected commodity groups if the Government keeps going the way it has been.

The Government has already bought 721GL in the southern-connected system, where most dairy farms are. Its preference is to buy another 970GL-odd for the shared downstream component described above, with the balance met with savings on projects such as the Northern Victorian Irrigation Renewal Program (NVIRP).

While the buyback tenders do not affect the reliability of an individual farmer's entitlements, they do reduce the total pool of water collectively available for irrigation, trade and carryover in any given year.

Even in a year when water is abundant and cheap, we can see what this might mean operationally.

Thanks to the large carryover from 2010/11, dairy farmers by and large have effectively had well over 100% allocation this season – yet half-way through, many dairy farmers are now entering the temporary market to top up.

The reasons are varied, but essentially everyone wants to maximize home-grown feed to make more milk at low cost, make some money and maybe start paying off those big debts from the drought.

The question is how we maintain the momentum next season, without that carryover boost. The answer is greater reliance on the temporary market to top up – a market 721GL smaller in an average season than before.

Now fast forward to a repeat of, say, the extremely low allocations of 2008/09 season. Imagine the small pool of total water allocated then being 17% smaller again in, for example, the Goulburn and Victorian Murray systems where the Government already owns 17% of high reliability shares.

And then imagine how much smaller again, if the Government goes ahead and buys another 971 GL of water now available for irrigation through allocation, trade and carryover in an average year?

Modelling for Dairy Australia shows that with the 721GL already lost from the collective pool, milk production in the GMID alone could stabilise at 1.8 billion litres a year, well below the pre-drought average of 2.3 billion litres. The challenge will be to boost productivity to cover the gap, but stay in business with higher production costs.

Milk production could then dip further to drought-like levels of 1.6 billion litres if the 971GL "shared" downstream target is met through further buyback tenders.

Industry modeling suggests a permanent loss of up to 500 dairy farms in this scenario. That means fewer farmers left to cover the higher costs of maintaining modernised irrigation systems. Decreased production puts pressure on regional processing which is already under-utilising capacity.

And with dairy being a high service industry, we will see a domino effect across communities. Less milk means fewer jobs in factories, and less work for service people like milking machine technicians, vets, herd advisers and agronomists. As the work dries up and populations decline, that means fewer customers for local businesses, smaller schools with fewer teachers and less funding, sports clubs struggling to field teams and fewer volunteers for vital supports like meals on wheels.

As we know only too well, we have already been stretched to the limit adapting to produce more milk with less water, and surviving the drought came at a high price with rising production costs and debt. Further government investment in programs to boost water efficiency on farms, in return for a share of the savings, is essential if dairy farmers are adapt to the water already lost from the collective pool.

And the 971GL for downstream needs must be replaced with a commitment to achieving similar environmental outcomes the smart way, with an integrated package of improved river management improved river operations, environmental works, infrastructure savings and other measures.

Then us dairy farmers might have a chance to actually recover from the drought, grow our businesses using less water, and sustain a healthy landscape and rivers for our children's future.

Daryl Hoey is a United Dairyfarmers of Victoria regional representative and Australian Dairy Industry Council Basin Taskforce chair.