The ACT government is planning to build a dam on the Cotter River to store an extra 70 gigalitres of water for use when there is little or no water in the rivers. Over a period of 40 years we can expect the dam to fill at least twice and for at least 140 gigalitres of extra water to be sold during that period.
The ACT government can auction this water so that a person who purchases it gets the right to a kilolitre of water for the next 40 years. That is the lots would be auctioned in 40 kilolitres lots. The government has to raise $220M and it can be expected that the price that people are willing to pay will be a minimum of $2 per kilolitre as the maximum price today is $3.60. That is the amount of water needed to be sold is likely to be less than the 140 gigalitres of extra water. These water rights can be traded independently and can be used as currency. It is likely that many building construction companies will be happy to be paid in water rather than money.
This investment would be most attractive to superannuation and pension funds who have a need to preserve their assets and to have an asset whose value keeps up with inflation.
If the government borrows money at 7% interest rate with a repayment of 20 years then it will cost the ACT water consumers $381,700,000 in interest and repayment costs. If the water is presold then it costs the ACT water consumers and government nothing.