Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

A buck-per-tonne is too cheap for our most precious resource

By Brad Ruting - posted Monday, 29 January 2007


With Australia now mostly in drought, and decades of under-investment in urban water infrastructure catching up with our big cities and growing regions, water is quite rightly a hotly debated topic. Plenty of solutions have been put forward to help alleviate the problems Australia’s cities are facing - some sensible and some not so good.

Water is a tricky resource: it’s sometimes abundant, sometimes not; it’s heavy, difficult and expensive to distribute; it’s necessary for the survival of natural and man-made environments. In this broad, sunburnt country of ours water is crucial.

Understandably, many farmers are short of the stuff and river systems are suffering across rural Australia. However, our big cities - which historical don’t have low rainfall compared to many other places - are all facing water crises.

Advertisement

There are many options available on the supply side for fixing the urban water crisis: recycling, desalination, new dams. These are certainly now needed in many places, and decades of under-investment in infrastructure needs to be hurriedly rectified. However, demand management has been bungled.

To date, demand management of water has involved restrictions. Recently, the level of restrictions was raised in Melbourne and Brisbane, and Sydney is likely to follow after the New South Wales state election in March. However, restrictions mostly target the use of water outdoors, distort individual behaviour and, according to recent media reports, can cause hostilities between neighbours.

Furthermore, the effectiveness of restrictions is undermined by three key factors. First, around two-thirds of household water use occurs indoors, where policing by water inspectors is hard. Second, restrictions can’t last forever, as they’re not politically sustainable for an indefinite amount of time. And third, water is essentially costless for many people.

Is beating households with a stick to do the right thing and use less water the right way to approach the issue? Is goodwill the solution to excess water use?

There’s a good case for long-term restraint in water use: treating this resource as the precious commodity that it is will ensure there’s enough to go around, and that lifestyles don’t continue down environmentally unsustainable paths. How else, then, can water use in cities be reduced?

Economics has a neat, efficient, tried-and-tested answer: price.

Advertisement

As noted, water is essentially costless in Australian cities. Households use about two thirds of urban water. Although average household water consumption has fallen recently, it was still 225 kilolitres per year in 2004-05. Almost everywhere it’s charged with a tiered tariff. There’s a low rate - around 82 cents per kilolitre in Melbourne or $1.26/KL in Sydney - for a reasonable amount of water each day (usually up to one kilolitre, depending on the city). Anything extra is then charged at a higher rate: $1.42/KL in Melbourne or $1.63/KL in Sydney.

The rates for Brisbane, Adelaide and Perth are even cheaper, but follow a similar structure. Commercial rates are usually the same as those for households, or a bit cheaper. On average, urban tap water in Australia is charged at $1 per kilolitre. That’s one-buck-per-tonne of water.

Quite simply, this is too cheap. However, raising the price is an effective way to curtail demand. To date, cutting back on excessive water use (restrictions) only has an economic incentive for households and businesses insofar as not being caught out and fined. Scare economics is not smart economics.

  1. Pages:
  2. Page 1
  3. 2
  4. All


Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

23 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Brad Ruting is a geographer and economist, with interests in the labour market, migration, tourism, urban change, sustainable development and economic policy. Email: bradruting@gmail.com.

Other articles by this Author

All articles by Brad Ruting
Related Links
Australia's Urban Water Management
Department of Prime Minister and Cabinet - Securing Australia's Urban Water
Melbourne Water - Water restrictions
Sydney Water - Water Restrictions

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Article Tools
Comment 23 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy