Confronting our water challenge

Streams can be either gaining streams which are charged from ground water, or they can be losing streams which return water to ground water through seepage. The two resources are in fact one. Most importantly the impact of excessive groundwater extractions often takes many decades to be fully felt. Long after groundwater allocations are reduced to sustainable levels, the impact may be felt many kilometres away as streams dry up.

The scientists tell us to expect a hotter and drier future. CSIRO's rainfall estimates forecast significant declines in rainfall and stream flow in South Eastern Australia. Perth has already felt the brunt of a change in weather: the stream flow into its catchments has declined by 64 per cent in less than 30 years. The city has doubled in size but its surface water resources have declined by two thirds.

At the same time that nature is able to make this scarce resource scarcer, so too are we able to make it more abundant. All of us have the ability to use water more wisely. In my travels this year I have seen irrigators who by using smart techniques have been able to reduce their use of water by half; and increase their productivity. I have seen farmers who were losing nearly 90 per cent of the water they extracted from a river, save all of it by simply replacing open channels with pipes.

The water architecture of our cities has been based on two false premises. The first was that water was in such abundance we needed to use it only once. The second was that stormwater should be ignored, rushed away as fast as possible to the sea. We have more than enough water for our needs here in our own cities which we can recycle and reuse. We must learn to judge water by its quality not its history.

In the final analysis we can desalinate anywhere on the coast for a cost of between $1.00 and $1.50 a KL at the factory gate - not much more than the retail price in Sydney and the upper bounds of those cities who do impose volume related block charges. And in that sense regardless of what you think about the merits of desalination it has one great merit; it has provided a benchmark cost price for large scale production of freshwater in any coastal city of Australia.

Some people seem to take pleasure in pinning the blame for inadequate water planning on the users of water. As though the gardeners of Brisbane are personally responsible for the water level in Wivenhoe.

That is as unjust as blaming people with home computers for electricity blackouts.

The simple fact is this: our cities can afford to have as much water as they are prepared to pay for.

For many years our urban water utilities have been milked for their cash by their owners. So that I do not offend my hosts, let me observe, as one typical example, in the last four years of crippling drought Sydney Water has managed to pay, net of all receipts from Government, nearly $500 million to its shareholders - the NSW Government.

Water is a highly profitable business. Costs are largely fixed and, as a consequence, marginal costs of supplying additional water are low.

Consider a normal business, privately owned, a coal mine for example. Demand for coal is rising, but the coal mine is almost mined out. Two choices. Go out of business? Or find another coal mine. We want to stay in business. Demand exceeds supply so we invest to increase supply.

Unless of course, you are a water company and the Government is your owner. Then you can avoid making the investment to augment water supply. That extra supply will have a high marginal cost, maybe higher than your retail price. So rather than augmenting supply with water you cannot sell at a profit, you simply impose restrictions and constrain demand. Because you have no competition, nobody can undercut you.