Tuesday, February 06, 2007

Personal water trading: a great idea.

From this morning's Canberra Times.

How city dwellers could trade their liquid assets

By Rosslyn Beeby

City households would be able to buy and sell water over the internet under a radical savings and trading scheme proposed by two of Australia's leading economists.

Under a scheme currently being developed by a national water- broking company, both farmers and city residents will eventually be able to sell or donate water anywhere in Australia to improve rivers' and wetlands' environmental health.

The new urban water pricing scheme proposed by University of Adelaide resource economist Professor Mike Young and CSIRO land- and-water research fellow Jim McColl suggests that all households be given a capped ''second-tier'' allocation of 200 kilolitres of tradeable water. That would be over and above an ''essential use'' 100 kilolitres that could not be sold.

Any water use above this household allocation would be charged at a ''scarcity'' rate up to five times the price of first- and second-tier water, in the range $3 to $5 a kilolitre. Households using less than their 300 kilolitre allocation could sell any savings to those needing more water for gardens, pools, sporting ovals or urban manufacturing...

''Second-tier entitlement shares could be sold using a tender process, where anyone including water utilities could bid for a share of the available pool,'' Professor Young said. ''Every quarter, shareholders would be notified of the tradeable allocation that they could either use or sell,'' Professor Young said.

Large regional cities already coping with extreme water restrictions such as Canberra, Goulburn, Bendigo and Toowoomba would be ''perfect'' locations for a pilot trial, using internet systems already being extensively used for rural water trading , he said.

''What we've come up with is a very simple system and one that encourages people to think about the value of the water they use and to improve household water efficiency. ''Water restrictions aren't an effective long-term solution because they send the wrong message about scarcity and water use to consumers. You pay the same but get less access to water, and experience considerable inconvenience as the level of restrictions increases.''

Restrictions also created a neighbourhood climate of animosity and suspicion, with many people becoming too embarrassed to water their gardens even when entitled to do so under the odds-and-evens system for fear of ''being dobbed in'' or seen as selfishly wasting water, he said. Professor Young also wants urban developers to be required to certify that any block of land they sell has guaranteed access to water for the next 100 years.