By Neil Palmer and Michael Porter
I love a sunburnt country,
A land of sweeping plains,
Of ragged mountain ranges,
Of droughts and flooding rains.
I love her far horizons,
I love her jewel-sea,
Her beauty and her terror
The wide brown land for me!
— Dorothea Mackellar (1906)
Australian history powerfully reveals the risks and broad-based costs of reliance on traditional rainfall-dependant sources of water supply. Sharply varying rainfall patterns, apparent new climate trends, and the unprecedented 14-year “millennium drought” across much of Australia, have caused a major rethink of water supply in this, the driest continent. All mainland states have now built at least one large scale desalination plant, with WA implementing its second. And this is the beginning.
Yet some politicians and pressure groups in the eastern states continue to criticise both the size and the fact of these investments, neglecting the game-changing dimension in being able to tap into the inexhaustible sea. Australia’s population and lack of spread of towns and industry is now a matter for rethinking, as the relative price of desalinated water and the falling costs of reverse osmosis plants could mean a far greater and more dispersed Australia, albeit with a coastal bias.
A recent project at Deakin, Victoria and Murdoch Universities involved an extensive Australia-wide survey of community attitudes towards desalination. A random sample of 3077 households held after rain had fallen in the eastern states, and when current need for alternative water sources had sharply diminished, revealed that 54% of Australians surveyed were supportive of desalination to address water shortages while only 21% were unsupportive.
However there are significant groups and new Ministers who are critical of what now seem very large investments. What appears undervalued, is the “game-changing” dimension of wide access to climate-independent water supply. For much of Australia it is no longer possible to knock back water intensive investment or community developments and population growth on grounds of water scarcity. We are now the potential masters of our water supplies to a new and vital degree, and have comparative advantages on many landlocked countries, countries with over exploited aquifers, or countries with smaller effective coastlines and rainfalls.
The very nature of desalination plants accessing and replenishing an effectively infinite sea makes water supply much like capital, such that it is possible to invest, build new communities and expand our economy without water shortage as a binding constraint. Like capital, it’s a cost, not a barrier.
It is clear the rainfall patterns and water “game” have changed when politicians in five states supported by the Commonwealth all make similar decisions to invest in reverse osmosis plants, a relatively new technology. When dams drop dangerously low it is hollow indeed to question the fact rather than the scale of such investments. What is in question is the mix, size and efficient principles for managing an asset that can be fully activated when droughts or El Niño come back to our sunburnt country. Indeed, the scale of capital investment and, unlike electricity, lack of a market mechanism to put a price on scarcity, suggests more efficient operation as “base load” rather than “peak load” plants.
The 2012 CSIRO update on rainfall patterns states:
“Climate models suggest long-term drying over southern areas during winter and over southern and eastern areas during spring. This will be superimposed on large natural variability, so wet years are likely to become less frequent and dry years more frequent. Droughts are expected to become more frequent in southern Australia; however, periods of heavy rainfall are still likely to occur. For Australia as a whole, an increase in the number of dry days is expected, but it is also likely that rainfall will be heavier during wet periods.”
Very much a Mackellar projection of more “droughts and flooding rain” as a result of climate change.
Whereas in earlier years there was little choice beyond dams, and pumping across various water networks to share the captured rainfall, the advent of desalination as an economically viable water source is a new phenomenon and opportunity, given our coastline and potential population centres. While many view dams as having been the subject of under-investment in recent years, and environmentally controversial, they also suffer from being rainfall dependent.
The fact that post the drought there is now greatly increased water security in what the CSIRO projects as an increasingly drought prone Australia is remarkable. The insurance premium is not small, but affordable when spread over the consumer base and a great investment when set against the developmental possibilities. It is estimated the $5 million invested in the WA Goldfields pipeline to Kalgoorlie in 1902 has directly and indirectly facilitated more than $50 billion in minerals related wealth around Kalgoorlie.
Also pertinent are the new facts that Israel will shortly have a majority of water for home and industrial use coming from desalination. While rising energy costs make such water more expensive, in combination with other economic reforms and efficiencies it is indeed possible to be quite bullish about our economic future, despite the climate doomsayers.
The combined and improving technologies – membranes for reverse osmosis, new generation small scale nuclear power, solar, wind and other renewable power cost reductions – can all combine into a framework for population and economic expansion. It should be noted at all the major Australian seawater desalination plants purchase wind and solar energy to offset all energy use.
We would contend the criticism of desalination investments by some new ministers may be good short-term politics, but almost certainly bad economics and bad engineering; given the value of at last having scope for comparative water security and thus economic and environmental security in the driest continent on earth.
The short-sightedness looks worse, given that needed long-term infrastructure and resource investments, new and larger communities, and food production for world markets, are all water critical.
As noted later, the real issue now the rains have come for a while is not so much for the pejorative “mothballing” of plant but for water balance and optimisation rules for desalination and other systems within water supply networks and grids.
Researching just how much and when to run desalination systems is a key task. So is the detail and risk apportionment in the contractual and public-private-partnership model between governments and the private investors and managers. How should the public sector best contract for security? How can we achieve a balance between security and economic cost? All these dimensions are matters for careful modelling and application.
In calculating the benefits or costs, the comparison is not just between alternative bulk systems, their costs and pressures, but the expected value and security of new business, the reduction of closures and the territorial spread of business owing to new desalination supplies. As said in earlier times, “it’s not just the gold in them thar hills” (to quote an assayer in 1846 during the California gold rush), it’s what’s on the hills and the plains; the people, the infrastructure and the towns, not to mention quality of life.
Value in the 21st century also needs to be attributed to food production for the world and particularly Asian markets, notably those suffering damaged aquifers and even more serious water shortages due to growth. The fact we can depend on our water being secure, in relative abundance and in the right places is very much a matter of comparative advantage in food exports.
More starkly, is it fair to ask those who talk of decommissioning desalination plants whether they have decided to terminate their health, fire, automobile and other insurance on the grounds that they have not had a disaster for a long while?
Singapore, 50 years ago a poor and water constrained country, is now as smart with water as it is with other liquid assets; with a well priced portfolio of natural, piped, recycled and desalinated water. This means Singapore is secure from networks being turned off, from drought or population and economic growth causing water shortage. Potable water is indeed little different from other liquid assets in that island state.
Thirteen cities in China are installing desalination plants; India is aware that desalination is a development game changer, though dependent on the other keys to economic, social and environmental development . Globally, 16,000 desalination plants of large scale are now in place with many more planned.
California, a key contributor to the development of reverse osmosis technology, is now joining Middle East countries in implementing at Carlsbad one of the largest desalination plants on earth – almost the scale of Wonthaggi.
The membrane technology of reverse osmosis, which separates salt from a permanent flow of potable water, can also remove heavy metals and human matter from wastewater and storm water. Thus a key policy and research question is more about optimising, locating and running new timed technology within water supply grids with differing bulk waters; and how to find the right trade-off between water sources, recycling, price and security?
With properly optimised desalination systems within Australia, plus water supply networks, the costs of diminution and volatility in rainfall are now likely to loom relatively small. This is in the context of the economic development options faced by this resource rich “lucky country” making secure water affordable, and resource and associated development adding a basis for a wealthier Australia.
Just when we seemed again severely water constrained and plagued by drought, and at a time of dramatic mineral development, we find technology has moved to the point that all governments including the Commonwealth deemed it economic and prudent to invest in desalination plants.
True, the scale of the Wonthaggi plant looks large in retrospect, and the Baillieu government now criticising the scale of the plant, when in opposition had consistently proposed a 50 gigalitre per annum plant, one third of the eventual size chosen by the Brumby government. As in all dimensions of life, attitudes to risk differ, and depend on threats at the time. Former Premier Steve Bracks still ranks the Wonthaggi decision “a good call”, just as the large scale for Thomson Dam and catchment turned out to be prudent when eventually completed back in 1983.
However there is a need to assess the criticisms, the economic and environmental costs and benefits, and the indirect opportunities they represent. The quality of investment decisions in water grids, desalination plants, wastewater treatment and irrigation transfers all need to be carefully assessed within a logical model and framework, which is our research task. While the governance of our water supply systems seems far from acceptable to many, as exemplified in the extreme report burning and flak over the Murray Darling Basin “Guide to the Plan” controversy, we need some perspective.
Other countries and experts look enviously at the separate water rights laws, water trading, remote irrigation technology schemes, water auctions, desalination, recycling and aquifer recharge research and projects in Australia. Australia is seen as a world leader, even if stressed by rainfall patterns.
In retrospect, the Kalgoorlie region did require the security of the Gold Fields pipeline. But opposition at the time and the virtual political assassination of the leader of the project is perhaps a fitting current reminder of the complex short-term politics of long-term water supply.
The pipeline, financed by a $5 million state loan (£2.5 million in 1902) was a bigger proportional burden on the WA Treasury than plants today (at a 6% discount rate the figure would be $607 million, c.f. the capital cost of the Kwinana desalination plant of $387 million!). But it was an even larger personal burden, the constant public criticism causing the WA Engineer in Chief, CY O’Connor to commit suicide in 1902, before former Premier and then national Defence Minister John Forrest opened the pipeline.
Estimates of the mineral wealth generated by the Kalgoorlie area would now be well over $30 billion. (A Kalgoorlie Mines Ltd valuation in 2003 estimated at $26 billion from 50 million ounces produced by that time. Now add nickel, and the countless other minerals and benefits and the number would well exceed $50 billion.) Kalgoorlie is an engine room of prosperity for WA to this day and the upgraded pipeline remains critical, although probably destined for a desalination augmentation from Esperance.
Reflecting on the goldfields water story raises the question for research: what can desalination deliver in terms of minerals, population and social development in Australia’s regions?
In Melbourne, water security was greatly enhanced by the 1975 decision on the Thomson Dam, although the Board of Works and Ministers copped flak for its scale and eight year construction period. And in Adelaide, completion of the 1955 Mannum-Adelaide pipeline provided a secure supply of water, permitting more rapid expansion of the economy and population than otherwise.
But none of these water security measures would probably stack up today, against a best practice, twenty five year whole-of-life service and maintenance contract for fine-tasting, climate resilient desalinated water at around $2.00 a tonne.
Stepping aside from the unusual particularities of one plant, our emerging research will assess whether relative water costs are lower, economic development opportunities greater and general productivity and thus incomes higher with the security of water supply enabled by desalination. The answers from Singapore, Israel and Perth all look very positive.
The virtue of desalination systems is that with sound location, they allow as much water investment as you like, and if well planned at a predictable cost that is a low percentage of income. The resulting level of security makes it possible for all regional investments, businesses and communities to plan their own water futures, whatever happens to the rainfall.
Similarly, those who happen to like gardens, washing cars, cleaning their teeth while the tap runs, or simply enjoying long showers can now act as if water is just like any other renewable commodity. Some may argue there is a price to pay, but as a percentage of incomes, water will remain a relatively cheap essential service.
To conclude: water can and should be a source of comparative advantage for Australia. We can be a food bowl for Asia, and a country where investment plans and city and regional expansion is no more critically constrained by water than it is by that other liquid asset, capital.
|Neil Palmer is CEO of the National Centre of Excellence in Desalination Australia (NCEDA), a partnership of 14 Australian universities and research organisations administering $20 million from the Australian Government’s Water for the Future initiative.||Michael Porter is Research Professor of Public Policy at the Alfred Deakin Research Institute, Deakin University, and the leader of an NCEDA project on The Economics of Desalination within Water Supply Networks in Australia.|