Abstract
South-east Queensland suffered a record drought for several years after 2005 while accounting for almost one quarter of Australia’s entire population growth. This resulted in an urban water supply crisis. The state government’s response was to plan new dams, construct pipelines to create a water grid, and build a massive recycling plant and a desalination plant. Policy makers are in an invidious position, in so far as they will be accused of not preparing for the future should they underinvest in water infrastructure. Were a drought to continue indefinitely, it would be possible to justify much of the new infrastructure. Yet with a return of average rains, analysts may regard some of the new infrastructure as an excessively expensive means of maintaining a secure water supply.
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- 1.
The annual fixed cost calculated as 5% of the net present value cost is $285 million (2010 dollars), but the annual payment by the state government to AquaSure will total $654 million in 2012–13, even if no water is delivered (The Age 2011). Melbourne’s annual water usage is around 300–400 GL (inferred from ABS catalogue no. 4610.0). The Baillieu state government elected in 2010 was unable to back out of the desalination contract (Jenkins 2011). Given South Australia’s small population, its desalination plant is also a costly form of water security.
- 2.
The Queensland government report (2006, p. 18) notes that a combination of these measures may reduce additional supply needs by 40–80%.
- 3.
Melbourne’s reservoirs take time to fill. Those near Brisbane do not. Consequently, in the case of Brisbane, variable marginal pricing would be harder to implement.
- 4.
Downloaded from http://www.qwc.qld.gov.au/Level+5+restrictions. No longer available.
- 5.
This contrasts with TERM-H2O, in which all regional labour market adjustment is via migration rather than a combination of interregional wage differentials and migration. This reflects the policy focus of TERM-H2O, which is on farm factor adjustment.
- 6.
The average price of water in the baseline in year 2006 is $1 per kilolitre, including both fixed and marginal costs, within south-east Queensland.
- 7.
Pipelines to establish a water supply grid may not increase the overall supply of water but provide benefits by reducing supply risk.
- 8.
The 19 sectors in the aggregation used in this study are agriculture, forestry and fishing; mining; food, beverages and tobacco; other manufactures; metals; utilities (excluding water); water supply; construction; trade; hotels and cafes; transport; communication; property and business services; ownership of dwellings; government and defence; education; health and community services; cultural and recreational services; and other services.
- 9.
A 35% increase in run-off would result from a smaller percentage increase in rainfall, as higher rainfall is usually accompanied by lower evaporation, indicating a non-linear relationship between rainfall and run-off.
- 10.
Queensland Water Commission (2010) estimates that the pipelines raise the LOS (level of service) system yield by 14%. With growing population and demands, the marginal benefits of the pipelines will grow over time.
- 11.
Following torrential rain and flooding in the Lockyer Valley, Wivenhoe’s level rose from 103% to 189% in 5 days on 12 January 2011: http://www.seqwater.com.au/public/catch-store-treat/dams/wivenhoe-dam (accessed 21 February 2011).
- 12.
Brisbane’s major floods were in 1893, 1974 and 2011.
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Wittwer, G. (2012). Urban Water Supply: A Case Study of South-East Queensland. In: Wittwer, G. (eds) Economic Modeling of Water. Global Issues in Water Policy, vol 3. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-2876-9_8
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