Water investment during drought

Many parts of regional Australia are currently experiencing prolonged drought and water shortages. Regional towns in QLD and NSW such as Stanthorpe, Tenterfield, Tamworth, Dubbo and Orange are currently at significant risk of running out of water within the next twelve months. Meanwhile, water storage levels in some major cities have decreased significantly. Both Sydney and Melbournes current levels are 50 per cent.

In response, water authorities in some States are considering additional measures to increase the supply of water and manage demand. In Sydney, operation of the desalination plant has commenced and planning is underway for Stage 2 of the desalination plant. Water restrictions have been introduced for the first time in almost a decade. The drought has also furthered interest in new dams and pipelines, particularly in regional areas.

Time is critical for effective and efficient urban water security planning. As the prospect of an urban centre running out of water draws closer, the response options narrow while the cost increases. For towns like Stanthorpe in QLD, addressing the immediate need is and should be the number one priority. In major cities, there is still time to plan and invest wisely. Responding to climate uncertainty and population growth effectively and efficiently will require innovative techniques that explicitly deal with uncertainty to meet desired service levels at least cost.

In our view, improving the standard of economic appraisals is part of the solution. Too often, economic appraisals exclude relevant options, omit important benefits and costs (including customer impacts), and fail to adequately account for uncertainty. These issues are material and, with modern technology, can be addressed in a transparent and straightforward way. For example, Aither’s urban water model evaluates the performance of hundreds of options across hundreds of possible futures (some dry and some wet) to ensure that the selected option is robust across different futures. This approach helps water authorities better understand and manage their risks – mitigating water shortages while avoiding white elephants. Our experience applying the model has led to improved timing and scale of investments, better customer and community service, less angst and stakeholder concerns, and better project justifications.

As challenges related to urban water security continue to intensify, there is scope to further improve response strategies that ensure a resilient urban water supply. The lessons learnt from delivering secure water supplies in a challenging climate mean that Australia’s water businesses are well-positioned, with help, to meet these challenges. We look forward to further supporting water businesses and governments deliver urban water security effectively and efficiently and welcome the opportunity to discuss how we can assist.