Saturday, November 25, 2006

Saturday Forum: All the water we want.

Worried that you'll never be able to water your lawn again? Don't be. As unlikely as it seems at the moment, you'll soon be able to make your front yard as green as you like.

That's the one reassuring message to emerge from an otherwise bleak assessment of the water supply situation in Australia's towns and cities issued this week by the Parliamentary Secretary for Water, Malcolm Turnbull. The report is unusual in that it has been prepared by economists rather than, as is usual, by either engineers or environmentalists. And as a breed, economists are particularly indelicate. They don't mind who they offend.

Engineers will be offended to hear that building new dams is one of the worst ways to boost water supplies during a drought. As the report, by Marsden Jacob Associates, puts it: “the best sites for dams have already been taken”. And in any event, new dams have a near fatal flaw when it comes to helping out in times of drought. That's the time they are most likely to be dry.

Environmentalists will be offended to hear that rainwater tanks are pretty useless as well. Installing enough tanks to make any difference would be far more expensive than building a desalination plant, and next to useless in a continuing drought.

By far the cheapest and quickest way of obtaining water for cities is to buy it. According to Marsden Jacob, irrigators along the Murrumbidgee and the Murray are prepared to hand over their water entitlements to utilities such as Actew for as little as 63c per thousand litres (that's right, 63c per thousand litres, as opposed to a minimum cost of $1.15 per thousand litres for a desalination plant or $3 per thousand litres for a network of rainwater tanks). But with the exception of Adelaide and Perth, most cities won't do it.

And it is here that the Marsden Jacob report is particularly useful to a politician like Peter Costello. It says for him the things he would rather not say for fear of offending his Coalition partner, the National Party.

The belief that city dwellers (to whom water is exceedingly valuable) should not buy water from farmers (who really can't make that much out of it) has a long history in Australia...
In 1967 Victoria's long-serving premier, the Liberal Sir Henry Bolte famously declared that “not a drop of water will cross the divide to meet the needs of Melbourne”.

Since then even Labor state governments have railed against the idea for fear of offending farmers. But why would farmers be offended by being given the right to sell their water to people who needed it more than them and were prepared to pay for it? Perhaps they wouldn't. They would certainly be enriched.

But the National Party and its frontbencher Peter McGauran, who is the Minister for Agriculture, is holding out against the idea because of what it would do for farms. It would empty them. If the water entitlements were sold permanently, it would empty them permanently. (And as it happens also reduce the pool of potential National Party voters).

Turnbull has made his position as clear as propriety allows. He has said: “I think it is important that we allow water to trade and farmers to make their own choices in their own judgments about what crops to plant.” It wouldn't be going much further to add it was important farmers be able to make their own choices about whether to plant

Marsden Jacob has done that for him. At between 63c per kilolitre and $1.30 per kilolitre, buying water from irrigators is a far cheaper way of adding to city water supplies than recycling treated sewerage, which would cost anywhere between $1.68 and $2.61 per k/L and cleaning seawater which would cost between $1.15 and $3.

And it could be done much more quickly. The ACT water authority Actew is already thinking in that direction. Soon it will link its pipes to the Snowy Hydro Corporation's Tantangara Dam on the Murrumbidgee River, allowing it to easily buy water from Murray and Murrumbidgee irrigators.

Marden Jacob believes that it is important that Actew does. It says that to 70 per cent of Australians in cities having a healthy, green garden is important. It has performed willingness-to-pay calculations that suggest the annual cost to the community of our now extreme water restrictions is about the same as the capital cost of building a new desalination plant.

It needn't be borne. The consultants quote Prime Minister John Howard: "The simple fact is that there is little or no reason why our large cities should be gripped permanently by water crises. Having a city on permanent water restrictions makes about as much sense as having a city on permanent power restrictions."

Marsden Jacob believes that Australians have a right to as much water as they are prepared to buy. Buying water from farmers or installing desalination and recycling plants is not that expensive, and Australia's water authorities should have been doing so years ago. With the exception of the Water Corporation of Western Australia, most of Australia's water authorities have instead preyed on the goodwill of the people who rely on them.

Instead of providing those people with the water they need, and would be prepared to pay for, they have imposed “temporary” water restrictions and justified them because of “severe” and “unusual” circumstances. But the circumstances are no longer unusual. The water authorities in most of Australia's cities have traditionally planned on the basis of 100-year average inflows. Behind this is the assumption that if inflow is lower than that average in one year it will bounce back up to above average in the years that follow.

The graph on this page showing the water inflow for Perth demonstrates that is probably no longer a realistic assumption. The Water Corporation of WA has come to the view that it is no longer realistic to plan for a 100-year average. Not only has Perth's inflow been bouncing around from year to year but the average has been dropping. And not smoothly.

The WA Water Corporation has identified two sharp step-downs in the average inflow, one about 1975 and another about 1996. The latest average is just one-third of the old one. Turnbull explained it this way: "While graceful linear progressions fit well on graph paper, they do not suit the natural world. We are experiencing step-downs, hard instead of soft landings, abrupt and shocking changes rather than the gradual impact where climate change is something in the future, something to be addressed in the future".

His message, and that of the economic consultancy advising him, is that the problem of properly supplying water to Australia's cities is easily solved. All it needs is recognition and a modest amount of money.

Push for higher water prices

Nov 23 2006

Dramatically higher prices for water and a raft of new infrastructure projects including desalination plants co-located with nuclear power stations have been foreshadowed by the Prime Minister's Parliamentary Secretary for Water as part of an all-out attack on the worst water crisis since settlement.

Delivering a National Press Club address in Adelaide, which he said was in danger of running out of drinking water next year, Malcolm Turnbull said yesterday that most water authorities had not invested any money in finding new water for years, some of them decades. They hoped, or assumed that “something would turn up”. Mr Turnbull said that at the same time the authorities were “generating buckets of cash and paying massive dividends” to their state and local government owners.

Asked whether he would use the Commonwealth's newly confirmed corporations power to take control of Australia's water from the states he replied, “Thanks for the suggestion,” adding, “many people raise it with me, but our policy, our focus, is on collaboration.” He said funding the new initiatives he proposed would be no problem. The price of water could rise. “Basically all this is affordable. The cost of water is not that high - go home tonight and compare your water bill to your electricity bill,” he said.

Mr Turnbull released a consultant's report which found that water prices in the ACT would have to increase by 25 per cent just to fully recover the true cost of providing the water at present. In Sydney, prices would have to climb 48 per cent.

The report finds that new dams are not a particularly good way of increasing supplies of water because “the best sites have already been taken” and because dams are at their least useful during long droughts. It recommends instead plants to recycle sewerage and desalinate seawater. Mr Turnbull noted that desalination was twice as expensive as recycling sewerage, but said that if “the yuk factor” prevented us from drinking recycled sewerage, desalination plants were realistic.

They could sensibly be co-located with new nuclear power plants to make use of their waste heat. “You use that water that you are using for cooling, you raise the temperature and when the temperature is raised it is actually easier to desalinate, and that's why [desalination and nuclear power plants] compliment each other, that is certainly a possibility,” he said.

Mr Turnbull lent more support for nuclear power by declaring that climate change was real. He said the current drought was “beyond the contemplation of all but the most urgent and apocalyptic forecasters.” And he said even scientists had failed to appreciate the nature of the change.

This year the inflows into the Murray River are expected to be only 9 per cent of the long-term average; half the previous all-time low. Mr Turnbull said by April the dams which had insulated Adelaide against the drought would most likely be empty. The only water that would be available for South Australians would be that which flowed into the Murray.

The report prepared for Mr Turnbull by the economic consultancy Marsden Jacob recommended that other cities follow the lead of Adelaide and buy water entitlements from farmers. It said the ACT would be in an excellent position to do this because of its proximity to Murray irrigators, but noted that there was political opposition to such an idea. Asked if governments should offer to pay farmers to abandon their land, Mr Turnbull did not reply.