The case for desalination investment



Sharply reduced catchment inflows across Australia around the end of the 20th century led to a sequence of water restrictions. As the drought persisted these constraints were followed by approximately $10 billion of state government investments in desalination plants over 2009-12 in Perth, Adelaide, Melbourne, Sydney and Brisbane.

Currently there are no comprehensive life-cycle approaches to modelling city water balances that incorporate a grid of water supply opportunities and economic feedbacks, such as the relative costs of new investment in supply options. Modelling potential revenue and relative supply costs – capital and operating – would enable an expanded understanding of investment responses to lower catchment levels in face of rising population and rapidly growing demand for water. Such a model would provide significant and valuable policy information of new desalination options for water planners in the context of increasing water insecurity.


Determine the best way to manage bulk water and retail supply given the facts and fears of uncertain rainfall and generate a 100 year simulation model. Conduct System Dynamics and Monte Carlo style studies to capture the new tensions and trade-offs regarding uncertain climate, rainfall, costs and security of water supply.


Models were developed separately for Perth, Melbourne, Adelaide Brisbane and Sydney using a new systems dynamics approach that augments the usual water utility representation of the physical linkages and water grids. Inter-connected feedback loops in tariff structures, demand levels and financing capacity were also incorporated. In some versions, such as for Brisbane, tariffs are reset in association with drought and the modelling of responses is both in terms of reduced consumption, and increased revenue of the utility, depending on the elasticities of demand responses to higher tariffs, both short and long term.

Desalination costs were not simply compared with other costs from rainfall-dependent sources; instead a blend of water supplies was used and resulting water security, costs and consequences over the next century were looked at. Population growth more than rainfall variability will eventually lead to more investment in desalination in all mainland states in Australia. In all states, construction of up to four desalination plants was found to be a realistic and economically viable option.

Given reasonable proximity to oceans, desalination across water grids is an integral and scalable part of an efficient economic and environmental strategy for water security for any region facing potential water supply shortages from natural sources. The modularity of desalination investments, and the effectively unlimited supply of recyclable ocean water, makes desalination of seawater relevant to planning decisions for far more than water, but for population settlements and the pattern of economic development.

Future Direction

A fine modelling and conceptual “launch pad” has been developed for ongoing work, enabling exploration of where desalination of seawater fits over times and rainfall cycles in water supply grids of dams, catchments, pipelines, rivers and recycling opportunities.


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Total Value: $812,332 (cash and in-kind contributions)

Principal Investigator: Professor Michael Porter

Title: Desalination within Supply Networks: exploring and communicating the bigger picture for water, technology and economic development

Length: 40 months

Personnel: 9 collaborators contributing 1.7 FTE

Further Information

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