the environment institute where ideas grow water futures where is the world headed and what is...
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The Environment InstituteWhere ideas grow
Water Futures Where is the world headed and what is Alberta heading for?
Mike Young Executive Director, The Environment Institute
The Environment Institute
Life Impact The University of Adelaide
Global water use
70% Agriculture, 20% Industry & 10% Urban
After Molden 2007
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 costs rising.4. The aggregate affect of climate change on water supplies is
expected to be negative.5. 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
Global water scarcity
After Molden 2007
The Environment Institute
Life Impact The University of Adelaide
Water stress (scarcity)
After OECD
2009
The Environment Institute
Life Impact The University of Adelaide
Water scarcity gap
After 2030 Water Resources Group
The Environment Institute
Life Impact The University of Adelaide
Alternative augmentation costs ($/m3)
The Environment Institute
Life Impact The University of Adelaide
0
500
1000
1500
2000
19
11
19
14
19
17
19
20
19
23
19
26
19
29
19
32
19
35
19
38
19
41
19
44
19
47
19
50
19
53
19
56
19
59
19
62
19
65
19
68
19
71
19
74
19
77
19
80
19
83
19
86
19
89
19
92
19
95
19
98
20
01
20
04
Ra
infa
ll (
mm
)14% less 20%
less
Rainfall for Jarrahdale
0
100
200
300
400
500
600
700
800
900
1000
19
11
19
14
19
17
19
20
19
23
19
26
19
29
19
32
19
35
19
38
19
41
19
44
19
47
19
50
19
53
19
56
19
59
19
62
19
65
19
68
19
71
19
74
19
77
19
80
19
83
19
86
19
89
19
92
19
95
19
98
20
01
20
04
Str
ea
mfl
ow
(G
L)
48% less
66% less
S tre a m in flo w fo r P e rth d a m s (P rio r to S tirlin g D a m )
PERTH
- 1%
- 3%
The Environment Institute
Life Impact The University of Adelaide
With half as much water, how much can you use?
Users
Environment
River Flow
Environment
River Flow
Users
River Flow
Environment
Users
The Environment Institute
Life Impact The University of Adelaide
Cost issues1. The recent financial crisis means there is a has brought attention
to the need to bring greater economic discipline to water investment and management decisions.
2. Donor willingness to pay for the provision of water infrastructure appears to have declined.
3. A larger proportion of the money needed to finance the necessary investments is going to have to come from user charges.
4. Whilst administratively more challenging, the least cost solution to the resolution of water supply and sanitation challenges is around four times cheaper than those usually proposed.
5. Considerable policy and governance reform is necessary.
The Environment Institute
Life Impact The University of Adelaide
Pricing arrangements1. The public and more importantly national leaders need to be made more
aware of the consequences of not charging the full costs of water use.2. Lack of economic discipline is crowding out the innovation and
investment needed to solve water scarcity and investment challenges. 3. This raises the cost of solving water supply problems and decreases the
rate of economic development.4. In many cases, the poorest of the poor 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 a central source and the impact of unsanitary conditions on them.
5. When considering the case for the provision of water at subsidised prices to the poor, it is important to understand influence of this practice on the likelihood that services will be maintained.
6. The more targeted cross-subsidies are the better. Blanket subsidies should be avoided.
The Environment Institute
Life Impact The University of Adelaide
Entitlement and planning systems1. Most entitlement systems are not designed to reward
innovation and facilitate rapid adjustment as conditions change.
2. One of the secrets to solving water supply problems is to define entitlements and make allocations in a manner that has hydrological rigour and promotes innovation.
3. Adaptive integrated planning approaches to management need to be underpinned by fully-specified entitlement systems.
4. Where possible, entitlement systems should be unbundled.
The Environment Institute
Life Impact The University of Adelaide
Water Rights Reform & unbundling
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
The Environment Institute
Life Impact The University of Adelaide
Return to investment in entitlement systems & trading
After Bjornlund & Rossini 2007
The Environment Institute
Life Impact The University of Adelaide
Enabling conditions1. Parallel investments in governance, the development of taxation
systems, the removal of market distortions and freer trading arrangements for agricultural products.
2. Freer international trading arrangements will significantly reduce the costs of facilitating adjustment and attaining MDG targets.
3. The early introduction of greenhouse gas trading or taxation arrangements in concert with the use of market-based instruments can be expected to reduce the costs of achieving a transition to more sustainable forms of resource use and in particular, encourage greater investment in ecosystem services.
4. Increases in the capacity of a nation to collect income and other taxes will make it easier for nations to transition to full cost pricing arrangements and, where appropriate, provide rebates to the most dis-advantaged.
The Environment Institute
Life Impact The University of Adelaide
International Trade
After Hoekstar & Chapagain 2007
The Environment Institute
Life Impact The University of Adelaide
Governance1. There is a need for a much more disciplined
approach to the management and administration of water resources.
2. The development of governance arrangements and political support for processes and mechanisms that promote change and structural adjustment is critical to the development of administrative regimes that can cope with sudden climatic shifts and the rapid emergence of extreme water scarcity.
3. Independent Expertise-Based Authorities4. Independent Price regulators
The Environment Institute
Life Impact The University of Adelaide
Enhancing supply and supply reliability1. In the agricultural sector, water use tends to be very inefficient.
This is aggravated by the use of electricity and other input subsidies.
2. Subsidised tariffs promote inefficient water use. 3. The removal of subsidies, the development of water trading and
full cost recovery can do much to increase water use efficiency.4. Throughout much of the world there appears to have been under-
investment in the maintenance of urban water supply systems. 5. Governments have failed to understand that options for
infrastructure finance are inextricably linked to tariff policies. Water flow is conditional upon cash flow.
The Environment Institute
Life Impact The University of Adelaide
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. As economies become greener, the costs of water treatment and flood control can be reduced be making greater use of natural environmental processes.
4. Costs will be less if parallel investments are made in the development of mechanisms to enable widespread use of market based instruments.
5. 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
Millennium Development GoalsHalve the number people without access to
drinking water and sanitation by 2015– Drinking water goal will be met– Sanitation will not be met
The Environment Institute
Life Impact The University of Adelaide
Investment required• Total cost of replacing ageing water supply and
sanitation infrastructure in industrial countries may be as high as $200 billion a year (WBCSD 2005).
• The world is seriously behind on maintenance
The Environment Institute
Life Impact The University of Adelaide
Water reform in Australia• Two decades into the process of trying to fix
governance• Commitment to restoring systems to health• Commitment to development of robust
entitlement and allocation regimes• Commitment to the development of markets to
facilitate adjustment, innovation and investment
The Environment Institute
Life Impact The University of Adelaide
Scarcity and Trading
Source: Murray Darling Basin Commission, 2007
Murray-Darling Basin Water Entitlement Transfers - 1983/84 to 2003/04
0
100
200
300
400
500
600
700
800
900
1 000
1 100
1 2001983/8
4
1984/8
5
1985/8
6
1986/8
7
1987/8
8
1988/8
9
1989/9
0
1990/9
1
1991/9
2
1992/9
3
1993/9
4
1994/9
5
1995/9
6
1996/9
7
1997/9
8
1998/9
9
1999/0
0
2000/0
1
2001/0
2
2002/0
3
2003/0
4
Tra
ns
fer
Vo
lum
e (
GL
)
0
100
200
300
400
500
600
700
800
900
1 000
1 100
1 200
1983/8
4
1984/8
5
1985/8
6
1986/8
7
1987/8
8
1988/8
9
1989/9
0
1990/9
1
1991/9
2
1992/9
3
1993/9
4
1994/9
5
1995/9
6
1996/9
7
1997/9
8
1998/9
9
1999/0
0
2000/0
1
2001/0
2
2002/0
3
2003/0
4
Intrastate Temporary (GL)
Intrastate Permanent (GL)
Interstate Temporary (GL)
Interstate Permanent (GL)
Water Reform Trading opened up