The Environment InstituteWhere ideas grow
Securing our Water Supplies
Mike Young Executive Director, The Environment Institute
The Environment Institute
Life Impact The University of Adelaide
Millennium Development Goals• 3,900 children under 5 die every day from
water supply & sanitation related diseases• MDG to halve the number people without
access to drinking water and sanitation by 2015– Drinking water goal expected to be met– Sanitation goal will not be met
The Environment Institute
Life Impact The University of Adelaide
Current global water scarcity
After Molden 2007
The Environment Institute
Life Impact The University of Adelaide
Water stressed people!
By 2030 half the world will live in a water stressed region
After OECD 2009
Water stress = Opportunity for Australia
The Environment Institute
Life Impact The University of Adelaide
Water scarcity gap – billions m3
After 2030 Water Resources Group
How big is the opportunity?
The Environment Institute
Life Impact The University of Adelaide
Clever green economies• Reflect the full costs of resource use
• Water Storage• Water Use • Water Returned to Rivers, Aquifers, the Sea, etc.
• Commitment to prevent renewable resource depletion• Promote the restoration of degraded environments.• Recognise value ecosystem services
• In green economies, pricing matters
The Environment Institute
Life Impact The University of Adelaide
General messages1. By 2030, over half the world’s population is expected to be living in a
water stressed region.2. Failure to provide reliable access to water and sanitation services is one
of humankind’s greatest failings.3. Demand is growing and supply costs rising.4. Health and quality of many rivers and aquifers is declining. Restoration
is a non-trivial challenge!5. The aggregate affect of climate change on water supplies is expected to
be negative.– By 2030 child malnutrition is predicted to increase by 20%.
6. The rate of change and structural adjustment necessary to resolve existing challenges and cope with the new ones expected as a result of climate change and a larger more affluent global population is an order of magnitude faster than has been achieved in recent times.
The Environment Institute
Life Impact The University of Adelaide
Pricing arrangements1. Lack of economic discipline is crowding out the
innovation and investment needed to solve water scarcity and investment challenges.
2. This raises the cost of solving water supply problems and decreases the rate of economic development.
3. In many cases, the poorest would be better off paying the full cost of supply rather than exposing themselves to the extremely high cost of obtaining access to water from other sources.
4. The more targeted cross-subsidies are the better. Blanket subsidies should be avoided.
The Environment Institute
Life Impact The University of Adelaide
Australian investment mistakes• Grants to States to pay for desalination plants• Grants to “upgrade” irrigation systems• Restrictions on water trade• Restrictions on carry forward• Postage stamp pricing
The Environment Institute
Life Impact The University of Adelaide
Water
Tradable Right Price
Land
Single Title to
Land with aWater Licence
Entitlement Shares
in PerpetuityBank-like Allocations
Use licences with limits & obligations
Delivery Capacity Shares
Delivery Capacity Allocations
SalinityShares
SalinityAllocations
National CompetitionPolicy 1993/94Plus Cap
National Water Initiative2004
Australian water management innovations
The Environment Institute
Life Impact The University of Adelaide
Returns to investment in entitlement systems & trading
After Bjornlund & Rossini 2007
The Environment Institute
Life Impact The University of Adelaide
Water accounting 101• River Murray• Dredge in Oct 2002• A few accounting flaws in our entitlements
– Forests– Dams– Groundwater– Return flow– Salinity interception
The Environment Institute
Life Impact The University of Adelaide
Users
Environment
River Flow
Environment
River Flow
Users
River Flow
Environment
Users
Impact of adverse climate change
The Environment Institute
Life Impact The University of Adelaide
Volu
me o
f W
ate
r in
th
e S
yste
mIndicative template – regulated river systems
The Environment Institute
Life Impact The University of Adelaide15
Water needed to ensure conveyance
Entitlements Environment
Flood water
Shared WaterEntitlements
Vo
lum
e of w
ater availab
le
Environment with a fully-specified share
The Environment Institute
Life Impact The University of Adelaide
Clever governance1. Need for a much more disciplined approach to
the management and administration of water resources.
– Independent expertise-based Authorities2. Need processes and mechanisms that promote
change and structural adjustment.3. Must be able to cope with sudden climatic shifts
and the rapid emergence of extreme water scarcity.
4. Independent price regulators.
The Environment Institute
Life Impact The University of Adelaide
Clever finance1. There has been insufficient attention to the economic
scrutiny of proposals to invest in new infrastructure and renew existing infrastructure.
2. Proposals need to take much greater account of likely population shifts and vulnerability to climate variability and change.
3. Costs will be less if parallel investments are made in the development of mechanisms to enable widespread use of market-based instruments.
4. Greater use of the private sector is possible.
The Environment Institute
Life Impact The University of Adelaide
Financing investment (3 T’s)
After Marin and OECD 2009
The Environment Institute
Life Impact The University of Adelaide
text
Summary• At the global level Australia is leading in water
policy
• But we are way behind where we should be in this ever changing world
• Huge business opportunity if we get it right