Sunday, November 15, 2009

Drinking water - in SA just wash it down the plughole!

Just following up my previous post ... I got a shock this weekend, when a friend advised me that water usage is basically free in Adelaide, so there is absolutely no dis-incentive for people to use as much water as they want.

Apparently there is a $300-$400 annual connection [or 'service'] fee for most users, but the cost of the actual water you use is only a token monthly amount on top of that - for most people not much more than a further $12-$15 per month - even for very heavy users!

This is the complete opposite of 'user pays' and means there is very little reason not to waste water in South Australia - Australia's driest state - and absolutely no reason for Adelaidians not to waste thousands of litres of drinking water in a domestic swimming pool.

There are two reasons why people who use drinking water to fill their swimming pools should have to pay more for the privilege:
1.The sad reality of resource allocation is that the only way people value something [in this case, water] is if it has a price.
2. Under the current system, non-users are effectively subsidising the [usually wealthy] pool owners.

I believe there are both efficiency and 'social justice' reasons why swimming pool owners should pay more.

So what am I advocating? A sliding scale of charging for water, where in effect, moderate water users get charged moderately, but that the per litre price increases dramatically as your usage increases, and that hopefully the level where the dis-proportionately higher charges cuts in should be around about the usage level of most pool owners.

"But that means we'll end up paying a lot more for filling our pool!" I hear those pool owners complain! "Yes, precisely" is my answer. If you insist on wasting pristine drinking water by the thousands of litres, why not expect to pay more? There is no question in my mind that you should.

How did we get the ludicrous situation where water users in Australia's driest state pay virtually nothing for the water they use? In the absence of rigorous research, there are two fairly obvious reasons:

Firstly, water pricing policies are a hold-over from the 'good old days', when the supply of fresh drinking water was almost limitless. Pricing would therefore reflect the cost of what was once a highly abundant resource [ie the marginal cost of an extra litre of water was pretty much $0]. Now we live in a completely different [scarce water] environment.

Secondly, there may also have been some social equality argument to the model we have inherited: everyone should have equal access to what was seen as a 'common right'. This would apply to most utilities - power, water etc.

No longer - with respect to water usage, 'user pays', and on a sliding upward scale, is the only solution to our current climate, and the sooner this is implemented in South Australia, the better.

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