1. Prof. Mike Young Research Chair, Water Economics and Management The University of Adelaide AMCHAM Luncheon, 15 th February 2008 Water fundamentals

2. 2 Fixing the Nation’s & SA’s Water Crisis 1.Fix MDB allocation foundations 2.Get the pricing signals right 3.Stop impeding innovation

3. 3 Total River Murray System Inflows (including Darling River) DRY WET

4. 4 Re-live from 1938 2014

5. 5 MDB Foundations A future-proofed sharing system for the MDB  Can be confidently explained as likely to work 1.Hydrological integrity 2.Acknowledges that long dry shifts might occur 3.Commits to maintaining the river in a state that allows it to transport water 4.Formally Shares water with the environment

6. 6 Volume of Water in the System A future-proofed regime Volumetric allocation for evaporation, required transfers and losses

7. 7 Urban Policy Innovation  Pricing – competitive pressures  Standards – stop crowding out initiative  Develop all sources  Groundwater  Storm water  Grey water  Substitutes for water use  Trading Subsidies and grants v’s the basics

8. 8 Pricing Two, three or “zero” tier pricing?  Why a fixed service fee?  Why a sewage charge based on land value? Intelligent Software’s Research  Tiered pricing with fixed connection fee disadvantages low income households Non competitive pricing and subsidies crowds out innovation  Innovative solutions can’t compete without subsidy  Stormwater  Waste water recycling Why doesn’t SA have an independent price regulator?

9. 9 Regulation SA Health is crowding out innovation Unlike other states, stopping development of small high standard treatment systems  2008 Approval score card NSW 7, Qld 9, Vic 4, ACT 7, SA 0 SA Health still requires 24/7 continuous monitoring  Reclaim Water Since Jan 2008, Qld requires Development Applications to include alternative water supply  Greywater treatment or rain water tanks

10. 10 Opening flood gate 1.Getting the foundations right A new MDB Agreement 2.Competitive Innovation Pricing to maximise opportunity for  All sources  At all scales 3.Prepared for a water constrained future

11. Contact: Prof Mike Young Water Economics and Management Email: Mike.Young@adelaide.edu.au Phone: +61-8-8303.5279 Mobile: +61-408-488.538 www.myoung.net.auwww.myoung.net.au Subscribe to our Droplets at www.myoung.net.au