Leverage Opportunity but Beware of Politicized Panic

The Millennium Drought provided an opportunity to leverage community concern and political will for change and innovations in the way that urban water systems were managed and planned. Falling reservoir levels and growing concern about climate change brought about a realization that the country was too vulnerable to drought because of high water usage and reliance on rain-dependent water sources. These concerns highlighted the need to adopt comprehensive demand management programs and diversify water sources. In response, Australian cities and towns implemented world-leading approaches and ideas to build more resilient and sustainable water systems.

Major, comprehensive demand management programs were an essential element of drought response efforts across Australia. Large-scale conservation and efficiency programs were implemented quickly by utilities and governments across drought-affected states, building on decades of industry experience in demand management. Some of the programs implemented included:

  • • "Do-it-yourself" water savings kits and subsidized home water audits, leak repairs, and installation of water-efficient fixtures, conducted by authorized plumbers
  • • Showerhead exchange, toilet replacement, and washing machine rebate programs
  • • Information and product rebates for outdoor water savings, such as swimming pool covers, irrigation systems, rain sensors, and faucet timers
  • • Targeted information, support, and incentives (both rewards and punitive measures) for the highest residential water users
  • • Business water efficiency management plans and water saving actions plans, in some cases mandatory for high water users, developed with the support of utilities or governments (including for audits and other technical advice)

These investments, in combination with restrictions on water use, proved to be highly cost-effective ways to reduce reservoir depletion, delay or eliminate the need for major expenditures on new supply and treatment infrastructure, and prevent cities from running out of water (Chong and White 2017b). In many cities, large structural and behavioral shifts in water demand were achieved. For example, in South East Queensland, residential water demand fell by 60 percent to 33 gpcd (125 lcd) and has only increased to around 45 gpcd (170 lcd) since then (Turner et al. 2016).

The Millennium Drought also presented opportunities for new policy and management approaches to urban water planning. For the first time, governments considered "real options planning," an approach pioneered in the finance industry and predicated on the principle that the value of an investment lies in its readiness to be implemented, when and if required. For example, Sydney Water incorporated this approach by being "ready to construct" a desalination plant should dam levels drop below a specified trigger level, which was calculated through stochastic modeling of rainfall, water demand, and the amount of time needed to bring the desalination plant online (Metropolitan Water Directorate 2006). This planning approach allows greater flexibility for investment in large capital items by making the expenditure "staged" and modular, and it allows the option to curtail completion of a plant if conditions change.

In addition to these innovations, the Millennium Drought also spurred crisis-driven, politicized decisions that set aside the extensive planning undertaken by government agencies and utilities. These included the New South Wales government's decision to construct the desalination plant regardless of dam levels and prior to the trigger point established through real options planning. The government persisted in releasing tenders to construct even after the drought broke. Another example is the controversial decision to construct the Traveston Dam in South East Queensland (Chong and White 2007)—a decision subsequently overturned. In several locations, crisis-driven decisions resulted in costly, and in some cases energy-intensive, investments that were ultimately not used.

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