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The economics of water use

FELLING a forest to ensure Perth has a sustainable water source sounds like a radical solution to one of the city’s enduring dilemmas.

It’s not so radical an idea to some, however, as a glance through a recent report, Western Australia’s Water Supply: A Holistic Study, indicates.

A recommendation to remove the Gnangara Pines during the next two decades and replace it with banksia vegetation and residential development is just one of a raft of proposals put forward in the study.

Undertaken by the final year environmental engineering design team within the Centre for Water Research at the University of Western Australia, Western Australia’s Water Supply: A Holistic Study addresses the issue of climate change predictions on water sources in WA.

This study is the first independent research undertaken in relation to the availability of sustainable water resources in WA.

Centre for Water Research chair Professor Jörg Imberger said no-one else had looked at the availability of water resources in WA in conjunction with economic factors.

“This is the first independent study of its kind; the Waters and Rivers Commission has done some research but only in relation to certain aspects,” he said.

A proposal that water users should be charged the real cost of water is a central recommendation of the study.

“Firstly there is a need to work out what the actual subsidies are and what the real cost of water is,” Professor Imberger said.

“And secondly we need to work out with government some sort of compensation for those who are disadvantaged [by the process].”

The study recognises that agricultural users, who currently pay about four cents a kilolitre for water, wouldn’t be able to cope with a massive price rise.

“You’d have to introduce it over a number of years, something in the order of about 10 years,” Professor Imberger said. “Some industries, such as irrigated agriculture, may have a very hard time.”

Professor Imberger suggested changes to the price structures of water and the use of water in agricultural practices could be sensitively introduced in a similar fashion to the downscaling of the forestry and logging industry in WA.

The study recommends the removal of cross-subsidies between different consumer groups and the imposition of a tariff on all water allocations to cover the cost of maintaining the source of water.

This tariff should be drawn up by an independent economic regulator with fixed and volume based components, the study says.

“[A structure] that reflects the full costs of supply … volumetric-based charges have the potential to generate incentives for users to reduce water consumption and provide revenue to ensure sustainability of water resources in WA,” the study says.

The students worked with the Water Corporation and the Waters and Rivers Commission and examined the projections developed for the future use of water in WA.

Demand and supply estimates under a range of climate change scenarios were used.

“The results … showed that the area most severely affected by the impacts of climate change would be the Perth Basin,” the study says.

In response to these findings the group considered a number of new source development options, including the expansion of the existing groundwater supplies, the removal of the Gnangara Pines, reuse of water in industrial processes, the reuse of waste water and desalination.

It also proposes that an independent Water Conservation Agency be created.

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