October 30, 2007 | Graham

Diminishing returns on urban water

There’s less water than there used to be, because of global warming, so to make up the shortfall we build desalination plants, which are the most energy intensive way of harvesting water, leading to more greenhouse gases, leading to less water, leading to more desal plants. You can dispute the truth of the initial syllogism, but the Labor Party doesn’t, which is why they are promising to build up to $10 Billion more of desal plants.
I’ll agree with the Greens on this – it doesn’t make any sense.
But then, if the Greens didn’t kick-up a demonstration every time someone proposed a solar desalination plant, aka dam, then we wouldn’t need coal-fired desal at all.
Of course, there’s more. The policy isn’t really to build $10B of plants. It’s to hand out tax deductions or grants to the value of 10%, and to a maximum figure of $1B. So, the opposition figure is inflated. Many of these plants would have gone ahead anyway, so the $1B mostly represents a transfer from one set of tax payers to another with much the same number of plants being constructed. In fact, the policy will have no effect on overall water harvesting – it is hard to think of a commodity where the demand is more inelastic than water! (Go without beer? Yep. Go without water? Not while my tail points to the ground, thank-you very much.) But it might shift it away from more sustainable solutions like dams and domestic water tanks.
That’s of course if it’s actually worth anyone’s while to take-up the subsidy.
Kevin Rudd says that he won’t fund any projects that aren’t “carbon neutral”, meaning that plants will have to buy carbon credits. Putting aside the issue of how real carbon credits are, this will raise the costs of operating these plants substantially. I don’t have the information to do the sums (perhaps a reader does), but I’d be prepared to bet that the increase in running costs, given that energy is the biggest input into desalination (you get the water for free), will eat-up all the subsidy, and then some. This is potentially a very cheap promise for Rudd – no-one will take the money if it ends up making their projects more expensive – so he’ll be able to spend it on something else after the next budget, while getting the benefit from the announcement effect.
There’s another angle to this as well. Note the word “tax credit” and that it precedes “grants”. The expectation of the ALP appears to be that more of these projects will be private rather than public. Water is one of the few areas where most, if not all, provision at this level ought to be via government. If there is profit to be made in water reticulation it should stay in the public domain. The commercial risk is not significant enough to warrant private sector ownership, although commercial management agreements are another matter.
It’s a sign of how shallow the MSM coverage is of the substance of this campaign that the greenhouse issue that they’re all concentrating on this morning is Labor’s policy muddle yesterday about Kyoto, while there’s no analysis of this one at all.
This criticism doesn’t just extend to the opposition’s policies. Both major parties are playing us for mugs on greenhouse issues. They don’t intend to do anything that would make a real difference, because that could cost them the election.
BTW, following on from my comments yesterday, has anyone else noticed that Macolm Turnbull isn’t Malcolm in the middle at all anymore – he seems to have been plucked right out of the Kyoto debate? This morning on Fran Kelly it was Alexander Downer who was arguing the government’s case, yesterday it was John Howard.

Posted by Graham at 9:08 am | Comments (8) |
Filed under: Australian Politics


  1. If we don’t build the desalination plants, will the greenhouse problem go away, so that we don’t need them? No, it won’t, so by not building them we would be burying our heads in the sand, given that we need the water.
    Although desalination consumes energy, the description “energy intensive” needs to be seen in context. The average domestic consumer uses more energy to heat the water for their shower each day than would be used to desalinate their entire water usage.
    I don’t think the greenhouse gas credit requirement will make much difference to the cost. Although it feeds into the cost of energy for desalination, by far the major cost component of the water produced is the capital investment required for the plant. Add that to the unchanged cost of delivery to the tap (about 90 cents per kL in Sydney) and the consumer won’t notice the difference.

    Comment by Sylvia Else — October 31, 2007 @ 10:07 am

  2. I share your doubts about how real the carbon credits are. The presence of intermittent power generators like wind farms, and solar power systems, forces other parts of the generating system to operate in less thermodynamically efficient ways to allow them to compensate for variations in the intermittent output. Thus those other generators produce more CO2 per unit electrical energy than they would have done in the absence of wind and solar power. This effect should be taken into account before wind and solar plants are given their carbon credits.

    Comment by Sylvia Else — October 31, 2007 @ 10:13 am

  3. We are actually going without water now. For example, there are significant restrictions on water use in Brisbane.
    Desalination plants can supply water whether it rains or not. Furthermore if the source of energy is, for example, nuclear, we could have our water without carbon emissions.

    Comment by Jennifer — October 31, 2007 @ 3:14 pm

  4. Water restrictions are turning deadly …

    Comment by Evan — November 1, 2007 @ 7:16 am

  5. Before Bob Carr went to the Middle East,he described desalinated water as bottled electricity.When Bob returned from his little junket,he waxed more lyrical than all the reseviors in Kevin Rudd’s ears.NSW had to have desal.
    We were told that desal water would cost us double,but now learn it will cost us 5 times that of dam water and the plant itself will cost much more.
    There is something deeply suspicious about ex-pollies who do extreme reversal of attitudes and then work for organisations such as the Macquarie Bank who secure Govt contracts.
    Perhaps we should stop criticising Indonesia and tidy up our own backyard.
    PS,Recycling sewage is far cheaper.but state Govts can make more money selling us bottled electricity.

    Comment by Arjay — November 1, 2007 @ 7:15 pm

  6. The beginning of this articel “There’s less water than there used to be…” is erroneous. The earth is a closed system there cannot be less water. The distribution of water and it’s variability is very much of cilmate change, something that has been happening since the planet was formed. The climate changes, we as humans may not like the results.

    Comment by Ross Carpenter — November 4, 2007 @ 10:54 am

  7. Ross Carpenter,come on,talk about splitting hairs,you know what Graham meant.There is less available water because of changing climate change and the growth of human populations.At least make a valid criticism that finds flaws in arguments not semantics.

    Comment by Arjay — November 4, 2007 @ 10:41 pm

  8. Tired of politicians never listening to a word you have to say?
    The Australian Government is thinking about setting up a ‘blog’ to let the public have their say on public policy.
    Have your say on what shape it should take here
    Yes, it’s for real.

    Comment by Nick Mallory — November 5, 2007 @ 6:35 pm

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.