Desalination 'a waste of money', warns Australian economist
Updated
A leading Australian economist says spending billions of dollars to build water desalination plants in a bid to drought-proof cities is a waste of money. The Australian National University's Economics Professor Quentin Grafton says a better solution is to put up the price of water. He was speaking at an international conference held at the weekend in Canberra, to look at planning for drought in expectation of climate change.
Presenter: Sarina Locke
Speaker: Australian National University Economics Professor Quentin Grafton
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PROFESSOR QUENTIN GRAFTON, AUSTRALIAN NATIONAL UNIVERSITY: That's a huge variation, a huge change for farmers and their communities are going to have to deal with. It's obviously very serious. We call it climate risk but it's obviously part of climate change but this is the variability we face here in Australia with our climate and what we try to do is come up with a set of ideas here in Australia and from overseas as well where there are similar sets of problems to actually deal with these issues.
SARINA LOCKE, REPORTER: What can we learn from countries like China that have suffered terrible degradation of river systems, various river systems and also they're seeing drought in them?
PROFESSOR QUENTIN GRAFTON: Obviously the Chinese have got a major set of problems and they're just starting to work on those sets of solutions. I mean they've got a pipeline that's going out into the northern part of China which I don't think is the way we should be proceeding here in Australia but they have other things they're trying to do as well. They're trying to develop water rights, trading of water, which of course is what we do here in the Murray-Darling Basin, so there's a number of things they're trying to do that we're doing and moving in other areas we haven't moved into yet.
SARINA LOCKE: Quentin Grafton, economics professor at the ANU, says Australia has no choice but to buy back water licences from willing sellers ensuring that they have money to start life afresh and not leave families destitute and communities with no resources.
PROFESSOR QUENTIN GRAFTON: Look, it's very serious. I mean I read the newspapers every day about how suicide rates, there's a whole bunch of issues associated with depression, let alone bankruptcies. So I mean there has to be money on the table. It seems to me there's two ways to do this and both need to be implemented. One is you put money on the table to actually buy water entitlements and that's part of the solution. The other thing is you put money on the table to give what I would call structural adjustment packages to communities to assist them in that adjustment process.
SARINA LOCKE: You've said that this year Australia will spend $2 billion on water infrastructure and billions over the next few years to drought-proof Australia, what are the problems there?
PROFESSOR QUENTIN GRAFTON: The basic issue is the notion that you can just sort of spend yourself out of this problem in terms of what I would call "Think Big" projects. So politicians are obviously looking for cover when people are facing mandatory water restrictions and are concerned about what's going on in terms of water availability so they press the button to make investments in de-sal or recycling or these grid systems in Victoria and south-east Queensland. Some of them may well be needed at some time in the future. The point that I simply raise - and the reference in particular to Sydney - is that they made a decision to build that de-sal plant in July of 2007 when they didn't need to build that de-sal plant and they still don't need to build the de-sal plant. So you're spending well over $1 billion or close to $2 billion if you include all the infrastructure associated with that de-sal plant which is actually not needed at the moment. The alternative would have been to raise the price of water two, three, four years ago as the dam levels started to decline, people would pay a higher price, consumption would decline and then as rainfall lines which has in fact happened in Sydney then you can drop the prices somewhat so you have flexible prices upwards and downwards and that saves you $2 billion and a de-sal plant.
