Water Journal : Water Journal August 2012
feature article water AUGUST 2012 39 environmental values in monetary terms so that their value can be compared directly with economic uses of water. Others insist that environmental outcomes should receive equal weight and that attempts to monetise non-economic impacts distort long-term planning. Technological Opportunities Innovation and new technologies play a crucial role in driving green growth in the water sector. The technological opportunities in the water sector can be assessed against selected green growth indicators covering economic, environmental and social impacts. The long lifetime and capital- intensive nature of water infrastructure necessitates a careful and robust process for evaluating investment decisions. The implementation of green growth policies requires a sound appreciation of the true value of water by the community, businesses, regulators and policy makers. Integration of economic-environmental accounts will go some way to improving the quantitative evaluation of water, but other non-market goods and services also need to be valued. The productivity of the water sector has declined over the past decade, due to a combination of inadequate or inappropriate investment in infrastructure, population growth and drought. Drought conditions prompted governments in most states to impose restrictions on the use of water, which detracted from the output of businesses without commensurate reductions in factor inputs such as labour and capital. Demand- side measures such as water efficiency programs are often the cheapest cost to implement, but when they extend to water restrictions, the external social and economic costs are born by the broader community. Excessive government-led investment in water infrastructure (including desalination in five states) made with a view to guaranteeing security of supply in drought conditions but with little subsequent use, has resulted in inefficient use of capital. Improvements to productivity in the water sector will be underpinned by better resource management, more efficient use of labour and advances in technology, as well as integration with other services such as electricity and waste disposal. Adaptive planning, using real options for investment decisions, minimises the risk of unnecessary, high-cost investments. Efficient water markets ensure that water is most effectively allocated between competing uses to where it has highest value. Water pricing should reflect the value of water, but there is a need to improve the technical and economic evaluation of water externalities so that they can be incorporated into policy decisions. Policy barriers that restrict rural-urban trading and potable reuse of recycled water should be removed. A holistic approach taking broad economic, environmental and social issues into account is essential for sustainable water management. Key Findings of the Study Green growth Sustainable economic development requires a deep understanding of the inter-relationship and interdependence of the elements of the economy, the environment and society as a whole. A green growth strategy harnesses the economic opportunities provided by new technologies and advanced products, while reducing the environmental impact and social disruption. Green growth principles can provide a comprehensive framework for management of Australia's water resources and prioritising investment decisions. The integration of Australia's national economic and environmental accounts to enable consistent analysis of the contributions of economic sectors and natural capital (e.g., water, soil, biodiversity and ecosystems), advocated by the ABS, provides an excellent metric for assessment of progress towards a greener, more sustainable economy. Investment decisions The long lifetime and capital-intensive nature of water infrastructure necessitates a careful and robust process for evaluating investment decisions. Triple- bottom-line approaches ensure that social, economic and environmental factors are taken into account. The price charged for water should transparently reflect the full cost of water provision (as recommended in the National Water Initiative), with environmental externalities such as climatic variability, greenhouse-gas emissions, land degradation and water pollution included wherever possible to provide market signals that improve environmental and social outcomes. These externalities can be quantified and understood by targeted science and research. Investment in technology Technological and scientific innovation will underpin green growth in the water sector. However innovation can be impeded by existing long-term investments in infrastructure and systems (sunk cost) and entrenched path dependencies (technology lock-in and stranded assets). The ATSE report identifies 63 scientific and technological opportunities in the water sector that would increase efficiency and productivity and reduce environmental impact. New industries will be created in the areas of energy- and water-efficient equipment and appliances, new decentralised stormwater and wastewater treatment technologies, more efficient agricultural practices, better weather forecasting, climate and hydrological modelling, improved recycling technologies and co- and tri-generation of energy, water and waste technologies. Some of these technologies will be developed locally through R&D and innovation programs (and this will offer export potential), while the remainder of the technology will be imported. Australia needs to be an efficient developer and fast adopter -- this means a focus on early deployment of a mix of technologies for which we have good quality resources to facilitate domestic learning and skills development. This also requires excellent education and research systems to support the training of engineers and scientists with the understanding and know-how to exploit these technologies. Water has multiple roles Water as a resource is interrelated with almost all sectors of the economy, including agriculture, mining, electricity production, manufacturing, recreation and tourism. Water also supports the environment and our social amenity. The difficulty of achieving an acceptable policy that recognises the multiple roles of water is highlighted in the progressive evolution of water management plans for the Murray-Darling Basin, where tensions between irrigators and environmental groups, townships and communities, and upstream and downstream users have been exacerbated by historical over-allocation and extended periods of drought. An optimal Basin Plan would recognise the multiple roles and incorporate processes for adaptation to changing climatic, economic and environmental conditions. Portfolio approach and alternative water sources Expanded access to a wide range of water sources can provide a reliable and secure, cost-effective water supply that can respond to changes in population and climate. Greater integration of water sources (catchments, groundwater, desalination, recycled wastewater and harvested stormwater) in urban water supply will require sophisticated risk management and water quality monitoring strategies to continue to ensure the primacy of public health.
Water Journal September 2012-1
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