Towards Urban Water Reform: A Discussion Paper

Abstract:     
Most urban households face severe restrictions on their use of water. These impose hidden costs that could amount to billions of dollars each year. Australia's urban water shortages are only partly due to low rainfall. An important contributor has been inadequate institutional arrangements for the management of our urban water resources.

In a discussion paper released today, the Productivity Commission identifies a number of deficiencies in how urban water is currently managed, the most fundamental being the lack of any effective market.

Commission Chairman, Gary Banks said, 'From storage and distribution through to delivery and waste water removal, urban water supply is the domain of government monopolies. Water charges cover storage and distribution costs, but ignore whether dams are overflowing or running dry. With no real urban water market, the difficulties of making efficient investment decisions are compounded.'

The Commission argues that appropriate reforms would be best advanced through a comprehensive public review, to determine the merits of different options and build a greater understanding within the community of the costs of the status quo and the tradeoffs in pursuing change.

Number of Pages in PDF File: 163

Keywords: water use, water demand, water recycling, water resources, water trading, desalinisation

Accepted Paper Series