According to one of the authors of a new report the focus on water in NSW has traditionally been on centralised infrastructure that utilities want to build rather than water efficiency. But what saved us during the Millennium Drought was the citizens, not utilities. Nor was it the winding back of the BASIX the NSW housing sustainability standard, that some quarters advocate.

It might feel like a lifetime ago but in early February Sydney’s water supply was in jeopardy, with the dam that supplies most of the city’s population, the Warragamba Dam, dropping below 42 per cent. 

The worst of the drought is now over for most of NSW and the dam is now close to overflowing. But the chance of the harbourside city running out of water in the future is expected to only increase due to climate change and a booming population. Greater Sydney, for instance, needs to find 80 per cent more water by 2050 than it provides at the moment. 

Sydney’s water security is at even greater risk if it fails to adapt its water management strategy for emerging challenges, according to a new report commissioned by Kingspan Water & Energy and Urban Water Cycle Solutions.

The report by Professor Peter Coombes, a Fellow of Engineers Australia and Chair of Engineering at Southern Cross University and Michael Smit, the technical and sustainability manager for Kingspan Water & Energy, has identified water policy settings that could save water utilities $5.3 billion and the entire community $7.1 billion – at almost no cost to the government. 

Coombes told The Fifth Estate that this would jump up to $11 billion when compared to not having BASIX, as some are calling for.  BASIX is a planning tool for residential property that mandates energy and water savings.

A system-wide approach to urban water management 

The report takes into account distributed behaviours – that is, the actions taken by individual households to save water, such as harvesting rainwater and using efficient appliances. 

This is a departure from the usual analysis of Sydney’s urban water resources. So is taking a whole-of-system approach that considers more than just water supply but  factors such as stormwater runoff and greenhouse gas emissions.

Coombes says that there are a few reasons why a systems-wide approach to water management is unusual. 

The first is that it’s scientifically challenging. 

The second is that the organisation responsible for supplying water, sewerage services, stormwater drainage and wastewater disposal, Sydney Water, functions as a business. So it has no incentive to encourage people to save water when they make money for every drop used. 

“There’s an inherent conflict of interests.” 

What saved us during the Millennium Drought was the citizens, not the utilities

In June the NSW auditor general canvassed the possibility that the Department of Planning, Industry and Environment and Sydney Water had effectively “dropped the ball” on water conservation.

“The Department and Sydney Water have not effectively investigated, implemented or supported water conservation initiatives in Greater Sydney,” the audit said.

“The agencies have not met key requirements of the Metropolitan Water Plan and Sydney Water has not met all its operating licence requirements for water conservation. There has been little policy or regulatory reform, little focus on identifying new options and investments, and limited planning and implementation of water conservation initiatives.

“As a result, Greater Sydney’s water supply may be less resilient to population growth and climate variability, including drought.”

According to Coombes, the focus has traditionally been on centralised infrastructure that water utilities want to build rather than water efficiency.

But he says: “What saved us during the Millennium Drought was the citizens, not utilities.” 

“That little factor has been lost in the narrative – the reason people didn’t run out of water was the amount of water people saved.”

The Productivity Commission is calling for a reform of BASIX

This fact seems to have completely bypassed the Productivity Commission, both at the state and federal level. Coombes says in its Urban Water Reform work, it reported that saving water doesn’t stack up and that buying more water is the better economic alternative.

“I was staggered by this and got worried about the future of our water.”

It’s this narrative that he says is being used to lobby against BASIX, the NSW government’s scheme for setting minimum targets on emissions and water for new homes and major renovations.

In the NSW Productivity Commission Green Paper, released in August this year, the merits of BASIX were noted but the productivity of its water efficiency components questioned.

“Rainwater tanks, which contribute significantly to the BASIX water efficiency rating, have been shown to be a very expensive and ineffective way of reducing usage and achieving stormwater run-off objectives,” the report states.

“Likewise, the effective cost of water savings from other fittings and appliances is generally higher than the value of the water saved.”

It recommends an overhaul of the BASIX tool to ensure it meets both “environmental and economic objectives” and includes recommendations such as splitting it from the energy component and updating the key technologies required to meet targets.

The NSW Productivity Commission also recommended surveying “the range of alternative policy measures available to meet the same objectives to ensure that BASIX is still the most appropriate.”

Some people want BASIX wound back, not toughed up

Coombes says some are calling for the removal of BASIX despite its major contribution to Sydney’s water security. 

According to his research, which included a retroactive look at how BASIX has performed since 2010, the scheme has saved Sydney an entire desalination plant.

This accounts for about $3.5 billion, and about 123,000 tonnes worth of emissions a year. 

“That’s a huge benefit that’s in the background that people aren’t even aware of.”

Other estimates, such as the 2010 estimate used in the Productivity Commission’s Green Paper, are much lower. Its cost-benefit analysis in 2010 estimated that the net benefit to the state was $255 million to $1.1 billion.

The report does note that externalities, such as benefits to the environment, were not included in this count. 

“Most of the benefits accrue through reduced energy and water bills, although the energy measures are estimated to have additional broader network and environmental benefits.”

Water pricing also has a dramatic effect

The other major player in Sydney’s water system is IPART, the independent regulator that determines the maximum prices that can be charged for water and other utilities in NSW. 

The regulator has recently implemented new pricing structures to reward people for saving water. One widely publicised component is the dual-pricing system that will see Sydney households pay more for water when dam levels are low, but what was more important, says Coombes, was modified charges to water tariffs to reduce fixed service prices.

He says that before July this year, there was no incentive or reward to use less water and contribute to water security. 

“Now, if I use half as much water, I’ve got $100 extra back in my pocket.”

The changes, which are “hiding in plain sight”, have seen fixed tariffs reduced by $126.76 per household, which means using less water results in more substantial benefits to people than before the IPART decision.

“Rather than paying (say) a fixed tariff of $97 for water and $619 for sewerage with a usage tariff of $2.11 a kilolitre, people are now paying a fixed tariff of $40.24 for water and $549 for sewerage with a usage tariff of $2.35 a KL.”

Coombes says this makes water savings more valuable than before.

“For example, if a household now reduces its water use by half, there is a $360 saving.”

He would also like to see fixed tariffs removed completely, “but this is a good start”.

Fairer pricing models are a good start to reform

In an ideal world, pricing for water and sewerage would also reflect the the cost transfers because it’s expensive to pump heavy liquids over long distances and uphill.

While the point of the existing “postage-stamp” price framework is to allow equitable access to water services, he argues that this model, in reality, isn’t fair on anyone. Better would be to incentivise people living in areas that are costly to service to install water saving features. This would bring down the cost of the service for all customers.

Western Sydney University senior environment lecturer Ian Wright agrees that Sydney needs a more efficient water pricing system that takes into account factors such as distance travelled. 

Wright has also been critical of Sydney’s flat pricing model and failure to implement an inclining block pricing model where there are higher tariffs for higher use customers.

IPART did not implement this model in the recent pricing changes on the grounds that this pricing structure would penalise large households and provide less incentive for smaller households to conserve water.

Wright says this is a valid concern but that the water utility could find ways to assist struggling families.

He says this charging structure is used in other places, such as Canberra, Perth, Melbourne, Southeast Queensland and South Australia.

Sydney is falling behind on demand management and water recycling 

Wright says Melbourne is better at water conservation measures than Sydney, despite having similar governance structures (Melbourne Water is also a state owned corporation).

Initiatives such as the “Target 155” program, which encourages Melburnians to curb water use to just 155 litres a day, has helped Melbourne use the least water per residential property of all the mainland capital cities, 25 per cent less than the average.

Wright is also supportive of Melbourne Water’s tactic of calculating how much water an individual household consuming daily and displaying this on their bill. 

Melburnians have some of the lowest bills despite having among the highest priced water

The water saving measures mean that households have some of the lowest bills in the country despite having among the highest priced water.

Wright worries that Sydney is falling behind when it comes to water conservation measures, namely demand management and water recycling, which will see enduring reliance on desalination plants. 

“I don’t think we’re doing well in terms of the price of water, the recycling of water and sharing helpful information with customers.”

He says pricing set by IPART also makes water recycling uneconomic.

Sydney Water has ramped up its water saving strategies since the drought

According to a Sydney Water spokesperson, the utility has doubled down on water savings in the wake of Greater Sydney’s worst drought on record. This includes launching the Water Wise Coach, a digital tool to help people become more water efficient by understanding how their habits translate into water usage.

To reduce leaks and breaks in the network, it’s also investing in new technology, such as sensors, as well as highly trained dogs that can smell chlorine used to disinfect drinking water to detect leaks.

It’s also got a program called WaterFix that helps customers repair leaky taps and showerheads that has assisted about 16,500 customers since July 2019.

The utility also plans to at least double its water recycling to more than 80 billion litres a year.

“…despite a 26 per cent increase in population, we have seen the total consumption of drinking water decrease to its lowest since mandatory restrictions were introduced 17 years ago,” the spokesperson said.

“Our water conservation awareness and education campaigns, along with water restrictions, have reduced the average residential daily water usage from about 210 litres per person in 2017 to about 180 litres per person in 2020.”

The water you don’t use is the cheapest water 

According to the executive director of Water Services Association of Australia, Adam Lovell, water saved through efficiencies is still the cheapest water.  

The industry body has just released a report about transitioning the water industry into the circular economy, which ranks water savings as the first priority in accordance with the waste hierarchy. 

“In terms of water use, minimising water losses in the system and increasing customer efficiency is a utilities first step,” the report states.

He says that while Australia remains a global leader in managing water wisely, there is always room to improve. 

When it comes to water efficiency, Lovell says water saving messaging tends to disappear when dam levels are high. 

“The one thing we’ve learnt in Sydney, and around the country, is that even in times of abundance and the dam levels are sitting at about 90 per cent, utilities should be working really closely with customers and the community to make sure the water conservation messages are still top of mind.

“There’s a sense of complacency that creeps in across the board when the dams get full.”

Lovell also says there are many levers to pull to improve water security, including water recycling, desalination, water efficiency and dams. He says the more levers are pulled, the most resilient a city’s water supply is likely to be. 

Next generation water policy needed to meet future challenges

The report by Professor Coombes and Michael Smit looked at four different scenarios for Sydney’s water future up until 2050. The “Rolls Royce option” involves extending BASIX to reward households for minimising impervious surfaces and activities that reduce the demand on local stormwater infrastructure, and a more efficient price structure for water and sewage treatment that accounts for the distance it has to travel. 

In this hypothetical future, the net present benefits to the water utilities are $5.3 billion and $7.1 billion for the whole of Sydney.

Coombes says these advantages should be attractive, especially as they come at virtually no cost to government.

For him, a key takeaway from the research is that the demand side of water security should not be ignored.

“The key insight is that a combination of supply and demand management is more efficient than relying entirely on supply solutions when considering whole of society benefits.”

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  1. Social concerns should not be the responsibility of water suppliers/authorities. A water supplier should price water to reflect the cost.
    Social and environmental benefits need to be achieved through other agencies and mechanisms.
    The problem with commentators is that confusion of responsibilities leads to inefficiencies; higher costs and poor outcomes

  2. Almost every household in the cities and surrounds, would, I guesstimate, allow 6-8 litres of water to escape down the drain until the water is warm enough to get under. Consequently, a heat switch or reticulated system which would hold up, or return the flow would save this amount of water ,DAILY.

  3. It’s time for new demand management options to be supported – one new initiative is AWS’s Water Steward Household Labeling Program for domestic water customers.

  4. Lots of talk about BASIX in this article. No explanation in the article as to what BASIX is, and I do not know what BASIX is. Nice story, but I have no idea what it was about. Maybe the article did not tell me what BASIX was, because this story was only meant for those “in the know” and not for us ordinary people.

    1. thanks for your comment Gary. We will amend to say that BASIX is the sustainability standard for NSW housing that mandates minimum energy and water savings