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governing water issues « Previous | |Next »
April 20, 2006

John Quiggin had an important op. ed. in yesterday's Australian Financial Review on water governance and policy. Governance of water supply by the states has been marked poor planning, poor funding, and ignoring problems.

Quiggin says that as water supplies fall short of demand in many Australian cities state governments have responded by imposing a range of restrictions on restrictions on water use whilst exploring a range of options to increase supply. Quiggin's op.ed. questions the widespread use of permanent water restrictions as a policy tool by the states.

His argument is that:

to use price based measures as a relatively modest but sustained increase in prices can be effective in matching long-term supply and demand....If prices are allowed to do the job of matching long-run supply and demand, restrictions are still available as an option to manage short-run shocks, such as droughts. By contrast, if permament restrictions are used to hold down long-run demand, there is little flexibility left to handle unexpected shocks like droughts or climate change. The only options are large price increases or more draconian restrictions on water use, neither of which are likeky to be very cost-effective.

That's good policy advice isn't it? Restrictions are the tools for short term disruptions to water supply, whilst the instrument of prices is to address the long term.

Will the states take heed?

| Posted by Gary Sauer-Thompson at 11:11 PM | | Comments (8)


Sounds like a good idea to me. Alas the reaction to a suggestion to introduce price based measures is generally one of alarm and outrage that water is an essential commodity therefore it is unfair to increase prices.
Pesonally I'd have thought that the essential nature of the resource was a strong argument in favour of price increases, but then old habits die hard.

water restrictions actually cause dirty water and stain clothes with the build up of various treating agents and not enough flow of water to keep pipes relatively clean

Not exactly on topic but still a point worth making I feel.

I don't know if other states have something similar but in NSW new houses are required to follow the BASIX energy/water saver system and I think this goes along way towards addressing the water issues.

The problem with water allocation over the last decade is that the share of costs has been unfairly redistributed, as the example of the notorious Cubbie Creek cotton development in Queensland has proven. The implementation of neo lib "competition" policy including between states means that the overall management of water resources on the basis of need and availability (including conservation of sources and catchment) has been abandoned in favour of a market approach that favours vested interests with influence over regional governments.
As the recent problems in state capitals have proven, PPP's involving privatisation of water supply for cities have enabled rent-seekers to artifically inflate the value of water and refuse methods that may increase the availability of water, like rainwater storage, run off collection, etc. To have water "captured " by vested interests has meant that factors that conflict with short-term profiteering are obscured, but this could have dire consequences in the future as water sources are depleted while the water is squandered.

Water is not just an essential commodity. Most of the demand for water in the Murray-Darling Basin is for irrigated agriculture; an industry that has been heavily subsidised by the states since the beginning of the 20th century to foster development.

In many cases the cost of delivering the water to the irrigators is not even covered by the price charged for its use--there 's part of the subsidy.

That kind of governance by the states has to change to ensure a more sustainable use of water.

It is good that urban households are encouraged to be more efficient in their use of water. But the key problem in NSW is the over-allocation of water licences to irrigated agriculture. There is not enough water to meet the licenced use.

So there needs to be cutbacks to sustainable use of water --something the NSW government has dragged its heels on. It ought to be severely penalized in terms of national competition payments for failure to take the reform process seriously.

yes Cubbie Station stands for all that has gone wrong.It was done legally by buying up lots of water licences in Queensland. It has access to so much water (including floods) that it starves the downstream users in NSW of water and has the effect of killing off the Mcquarie marshes.

Queensland is to blame is to for this situation. McCubbie Station should be buying water through the market for its cotton--not being allowed to use its economic power to buy up all the watrer licences so that it can trap al the flood waters.

Gary thanks for commentary. Off now for a bibliography search.

I hope you share your new found knowledge with us.