Letter to Editor CT 26th Jan
The Prime Minister’s water initiative will solve the overuse of rural water but it is more costly than it needs to be. The underlying problem with water in rural areas, as well as in cities, is that the price of water is lower than the cost of saving water. That is, it costs more to build pipelines and more efficient ways of using water than the water can be sold. The government is proposing to purchase water allocations from property holders and to fund water savings projects on properties where 50% of the savings go to reducing water allocations and 50% to the property holder. Neither of these schemes will give the most efficient allocation of money to saving water. Buying allocations does not put money into water savings infrastructure and funding water savings schemes where there is no cost to the property holder will not encourage them to use the money efficiently.

Another way is to allow farmers to sell their existing allocations of water but require that the money they receive from the sale of water allocations be invested in water efficiency measures. If farmers are unwilling to sell water allocations then the price of all water can be increased until they are willing to sell their rights. This is politically possible because it increases the value of water allocations. Using this approach will allow the market for water infrastructure projects to indirectly set the price for existing water. This ensures that all government funds are spent on water saving measures because all buyers of water allocations will want to get the best value for their allocations which is the most efficient way to spend money on saving water. Governments will only need to purchase water allocations for environmental flows.

Kevin Cox
22 Yirawala St
Ngunnawal ACT 2913

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