Tony Wong & Vivek Chaudhri

Transcription

1 The Water Economy of Melbourne Tony Wong & Vivek Chaudhri

2 Population growth Climate change

3 Melbourne Future Water Demands DSE (2008) Augmentation of the Melbourne Water Supply System: Analysis of Potential System Behaviour

4 Stage 1 restriction from 2036 DSE (2008) Augmentation of the Melbourne Water Supply System: Analysis of Potential System Behaviour Melbourne Future System storage levels

5 Beyond the apparent Water Economy of water demands d and consumption, what is the hidden water economy that is inextricably linked to the economy of the city? Prosperity and liveability

6 A city that plans for diverse and flexible water sources - local stormwater harvesting and recycling as well as dams, desalination and water grid A city that values water and promotes water conservation A city where the planning system promotes water sensitive urban design A city where waterways, trees and vegetation make the city more liveable and improve the environment A city intertwined with productive landscapes irrigated by recycled water A city that has the social and institutional capacity for sustainable water management

7 1. Drought resilience establishing a diversity of water sources 2. Flood resilience reducing the risk of flood damage 3. Improving the local climate reducing urban heat island effect, health impacts 4. Environment reducing pollution, protecting/improving waterway health, flora-fauna diversity 5. Liveability and prosperity improving market appeal and liveability, and increasing property values 6. Fire resilience water sensitive towns that incorporate water in the 6. Fire resilience water sensitive towns that incorporate water in the landscape and passive watering of landscape features can establish fire breaks/buffers from surrounding bushland

8 Green Infrastructure

9 3. Improving local climate reducing urban heat island effect, health impacts Climate predictions highlight the likely increase in the frequency of heat wave days and the duration of heat wave days Source: Alexander and Arblaster, IJoC (accepted) January 2009 heat wave: 374 excess deaths over expected; 37 % increase in emergency department attendances by people 75 years+ (Victorian Chief Health Officer Assessment)

10 Source: Ishida 1993 (AIJ)

11 3. Improving local climate reducing urban heat island effect, health impacts Influence of WSUD features is controlled by its size and location, and local meteorological conditions. Areas affected can extend by as much as 1km downwind

12 Area of Public Open Spaces created as part of new development over the next 4 years is approximately 5,220 ha Well-designed public spaces can significantly influence the micro-climate of adjoining buildings

13 Constructed wetlands in urban spaces filters stormwater, create habitats while providing urban amenities and reduces the urban heat-island effects

14 4. Ecological resilience protecting/improving waterway health, flora-fauna fauna diversity WSUD applied to greenfield development (Clause 56 VPP) will protect 6.5 km of waterways over the next 5 years ~$120M of avoided maintenance costs on these waterways In the next 5 years, WSUD will deliver a community water quality benefit of over $56M by reduction of discharges of suspended d solids and nutrients to the receiving waters (eg. Port Phillip Bay)

15 5. Improving liveability and increasing property values WSUD increases property values by effective use of green spaces and water features Brisbane City Council s survey found that for every dollar invested into WSUD there is a 90% return on increased property value Source: Brisbane City Council

16 6. Fire resilience Urban design of water sensitive towns that incorporate elements of keeping water in the landscape and passive watering of landscape features can establish fire breaks/buffers from surrounding bushland

17 Economic valuation of the hidden Economic valuation of the hidden water economy

18 Valuation ation for decision making the hidden water economy Alternatives Policy options Expected returns In the water sector,,policy evaluation was predicated on a (dated) view of water as an undifferentiated public commodity. - Minimise costs not maximise value - Value is WTP OC - Static (or at least temporally fixed) evaluation - Need to change the calculus of value in water Why, what and how?

19 Extensive e literature re on valuation ation of ecosystem stem services. Many different (contested) methods in theory and practice Revealed Preference Approaches Market prices Production o Function Approaches Hedonic Pricing (surrogate markets) Cost Based Approaches Replacement costs Mitigative costs or Avoided costs Valuing Externalities

20 Stated Preference Approaches Contingent Valuation Conjoint Analysis Choice modelling/experiments Valuing Externalities

21 The advent of the many methods for valuing external costs and benefits has resulted in a more textured policy evaluation framework. Least Cost Plus Sufficient statistic? Multi Criteria Decision Analysis Are we missing important values - Heat island effect? Back to what we are valuing

22 Policy and investment appraisal in an uncertain world Standard investment appraisal tools (NPV), based on appropriate discount rates, IRR. But, what about the value of flexibility in an uncertain world? - Valuing optionality (resilience) - Infrastructure investment options and associated valuation needs to be accounting for value across time and space. - Valuing externalities is about expanding the space frontier - Valuing options is about incorporating temporality New Calculus of Risk and Uncertainty

23 Valuation ation today entails judgments on the present and future costs and benefits of different alternatives Which futures? Paramaterising aa ae the possible futures u based on the best scientific input Modelling the investment options around those uncertainties. Describing futures