National Snapshot of Current and Planned Water Recycling and Reuse Rates

Transcription

1 National Snapshot of Current and Planned Water Recycling and Reuse Rates Final Report prepared for the Department of the Environment, Water, Heritage and the Arts June

2 Marsden Jacob Associates Financial & Economic Consultants ABN ACN Internet: Melbourne office: Postal address: Level 3, 683 Burke Road, Camberwell Victoria 3124 AUSTRALIA Telephone: +61 (0) Facsimile: +61 (0) Brisbane office: Level 5, 100 Eagle St, Brisbane Queensland, 4000 AUSTRALIA Telephone: +61 (0) Facsimile: +61 (0) Authors: Kym Whiteoak, Rozi Boyle, Nadja Wiedemann This report may be cited as: National Snapshot of Current and Planned Water Recycling and Reuse Rates. Marsden Jacob Associates 2008 This report has been prepared in accordance with the scope of services described in the contract or agreement between Marsden Jacob Associates Pty Ltd ACN (MJA) and the Client. Any findings, conclusions or recommendations only apply to the aforementioned circumstances and no greater reliance should be assumed or drawn by the Client. Furthermore, the report has been prepared solely for use by the Client and Marsden Jacob Associates accepts no responsibility for its use by other parties. Copyright Marsden Jacob Associates Pty Ltd 2008

3 TABLE OF CONTENTS Page Executive Summary...iii 1. Introduction and Background Objectives and approach of this study Background and context Definition of water recycling Outline of report Drivers of water recycling Environment protection Recycled water as a resource Contemporary urban water planning Water Reuse and Recycling in Supply Planning Water recycling across Australian jurisdictions Water Recycling in Australian Jurisdictions New South Wales Victoria South Australia Queensland Western Australia Northern Territory Tasmania Australian Capital Territory A 30% by 2015 national water recycling target Unit Costs of Supply Options Economic framework Deficit analysis Economic, environmental and social risks Economic Risks Environmental Risks Social Risks Conclusions and key findings...61 Attachment 1: Wastewater treatments and water classes Sewage and wastewater treatment Water quality classification...63 Attachment 2: Jurisdictional analysis of recycled water estimations by

4 GLOSSARY AND ABBREVIATIONS ALP ASR ASTR ATSE AWA BASIX BOD CoAG CRSWS DSE Greywater GWR IPR IWCM IWSS KWRP LMWQCC LRMC MAR MJA MWRP NCWRS NPV NWC NWI NWQMS Australian Labor Party Aquifer storage and recovery: the injection and subsequent extraction of (often recycled) water from groundwater aquifers, in the same geographic location and without treatment by movement through the aquifer. Aquifer storage, treatment and recovery: involves the injection of water into an aquifer, treatment of the water by transferral through the aquifer, and subsequent recovery of the water from a different location. Australian Academy of Technological Sciences and Engineering Australian Water Association Building Sustainability Index in NSW biological oxygen demand Council of Australian Governments Central Region Sustainable Water Strategy (Victoria) Department of Sustainability and Environment, Victoria Greywater is non-industrial wastewater generated from domestic processes such as dish washing, laundry and bathing Groundwater replenishment, a type of managed aquifer recharge (MAR) Indirect potable reuse: purified recycled water for human consumption involving storage of the water for a period of time prior to subsequent use in potable water system. Usually stored in dams, mixed with surface water, or in aquifers. integrated water cycle management Integrated Water Supply Scheme (Source Development Plan of the Water Corporation in WA) Kwinana Water Recycling Plant (near Perth, WA) Lower Molonglo Water Quality Control Centre long run marginal cost the long term incremental cost associated with the demand (say from a new entrant), often a period of 20 years or more in utility industries. Managed aquifer recharge: the broad term for injection and subsequent extraction of (often recycled) water from groundwater aquifers. Marsden Jacob Associates Mackay Water Recycling Project in Queensland North Canberra Water Reuse Scheme net present value National Water Commission National Water Initiative National Water Quality Management Strategy i

5 RAMSAR wetlands Recycled Water PRW QWC SEQ Wastewater WCRWP WPA WPS WSAA WSDS WSUD WWTP Wetlands with fundamental ecological functions and economic, cultural, scientific and recreational value are stated on the List of Ramsar wetlands of international importance. See also Recycled water is generated from sewage, greywater or stormwater systems and treated to a standard that is appropriate for its intended use purified recycled water (QLD), a term for IPR Queensland Water Commission South-east Queensland Wastewater is liquid waste discharged by domestic residences, commercial properties, industry and agriculture. It can comprise a wide range of potential contaminants and concentrations. Western Corridor Recycled Water Project Water Proofing Adelaide Water Purification Scheme (ACT), a term for IPR Water Services Association of Australia Water Demand Supply Strategy Water Sensitive Urban Design Wastewater treatment plant Basic measures kl kilolitre = 1,000 litres or 1 m 3 (cubic metre) and weighs 1 tonne ML megalitre = 1,000 kl (or 1,000 m 3 ) GL gigalitre = 1,000 ML TL teralitre = 1,000 GL or 1 km 3 (cubic kilometre) ii

6 Executive Summary 1. Contemporary Australian water supply planning is undertaken in a context of increasing demand due to population growth and decreasing reliability from traditional rainfalldependant water supply sources. 2. In this context, most urban water supply planners have incorporated alternative water supplies into future plans, especially desalination and large scale water recycling projects. 3. At the same time, many jurisdictions have introduced water recycling targets, aimed to promote recycled water as an alternative to other options. The Commonwealth Government announced a national wastewater recycling target of 30 per cent by Marsden Jacob Associates have been commissioned to explore the economic feasibility of this target and implications of meeting it. MJA have also been asked to explore the economic, social and environmental risks of achieving a national target of 30 per cent recycled wastewater by This report draws on a range of published sources (as cited) and interviews with several people working at a responsible level within public and private water sector organisations across Australia. OVERVIEW 6. Implicit in the idea of a national water recycling target is the question, How much water recycling should Australia be undertaking? 7. In the main, the jurisdictions and their water businesses do not recycle water for its own sake. They recycle water to reduce impacts on the environment, and to improve supply security. However, to establish recycled water as a viable alternative water resource, and to identify and resolve key barriers to this occurring, most jurisdictions did initially invest in water recycling that was not economically viable. Several of them used targets to assist this goal. In the past 5-10 years, in particular, this has led to reforms that now allow recycled water largely to be considered on its merits. Key barriers have been mostly removed e.g. high costs due to unfamiliarity, uncertainty about environmental protection and public health requirements, gaps in the plumbing regulatory frameworks, and uncertainty about how economic regulators will approach cost recovery. Barriers that still remain in most jurisdictions include environmental protection and public health requirements for recycled water environmental flows, and clear property rights for managed aquifer recovery. Community acceptance for potable consumption remains largely untested, but a number of projects are underway which will overcome this if successful. 8. Recycled water is now considered one of several options to manage demand and supply, and each city or town evaluates it in this context. The costs and benefits of recycled water differ in relative terms for each town, compared to options such as water conservation, desalination and other augmentations. iii

7 9. The different types of recycling also have their own, locally variable costs and benefits. Recycling tends to be expensive, but provides a largely climate-independent water source that is cost-competitive in some contexts. Most jurisdictions now use an adaptive management approach that means the role of different water options, including recycling, is periodically reviewed. 10. COAG has issued draft guidelines for urban water planning that reflect a locally-tailored, adaptive, portfolio approach to demand and supply management in the face of uncertainty, including population and climate change. 11. Given the more adaptive, portfolio-based approach to water supply and demand management now in place in most urban areas in Australia, targets are generally seen to have satisfied their original purpose of making water recycling a viable option. 12. Water recycling is now regarded as a mainstream option for urban water supply management in most of Australia. In particular, Perth, Adelaide and Brisbane are implementing water recycling on a significant scale, through household consumption of recycled effluent or stormwater Key features of water recycling in each state include the following: a. Queensland: water recycling is dominated by the Western Corridor Water Recycling Project, an IPR project which will reach full operation by the end of Otherwise, a number of important projects exist along the Queensland coastline, often driven by a regulatory requirement to reduce environmental impacts of ocean outfalls. b. New South Wales: rural NSW has estimated water recycling levels of 23 per cent, substantially higher than the projections for Sydney by 2015 of 70GL (or an estimated 13 per cent of wastewater). While Sydney has a number of projects planned and in operation, there are no projects of comparable scale as the Western Corridor or Melbourne s Eastern Treatment Plant. Lack of proximate agricultural use, and an absence of plans for IPR leave Sydney without a large scale demand for recycled water. c. ACT: water recycling has been limited to date in the ACT, however, plans are being prepared for an indirect potable reuse project which, if accepted, would produce 9.1GL by 2015 and would dwarf any other recycling in the Territory. d. Victoria: a number of water recycling projects are being undertaken, involving third pipe and agricultural recycling. By 2015, Victoria expects to be fairly close to 30 per cent of wastewater recycled. e. South Australia: water recycling in SA is characterised by effluent recycling for agriculture, horticulture and viticulture, and stormwater recycling using ASR for domestic and industrial third pipe. 1 Brisbane has plans to commence indirect potable reuse (IPR) of recycled effluent by August 2008, and Perth is undertaking a trial of IPR through aquifer storage and recovery (ASR). Adelaide is undertaking largescale stormwater ASR, through a number of projects in Northern Adelaide. iv

8 KEY FINDINGS f. Western Australia: high quality recycled water for industry has formed a large part of WA s water recycling to date. However, the future of water recycling in Perth is characterised by firm plans for IPR using ASR in the Gnangara Mound. g. Northern Territory: an absence of water shortages in the North has resulted in little water recycling in Darwin. Large projects such as in Alice Springs have been driven by environmental regulations. h. Tasmania: an absence of urban water shortages in Tasmania has accounted for the lack of large scale urban water recycling in Tasmania. Several small water recycling projects occur in individual wastewater treatment plants (WWTPs). 14. Nationally, it is likely that by 2015 Australia will recycle about 23.8 per cent of wastewater effluent, and 24.6 per cent if stormwater is also included. 2 Most jurisdictions, except New South Wales and to a lesser extent Tasmania, will also achieve (or nearly achieve) an equal part of the 30% national target. 15. Our analysis estimates that the volumetric shortfall between expected water recycling rates, and a 30 per cent target across Australia is 130.5GL/a (see Table 1). 3 If the notable stormwater recycling project in Northern Adelaide is included to the estimate, this shortfall becomes 112.5GL/a. Table 1: Overall wastewater recycling shortfall in 2015 (GL/a) Expected Required to meet Shortfall 30% target NSW Victoria Queensland Western Australia South Australia Tasmania Northern Territory ACT Australia Notes: 1 Does not include around 18GL of stormwater harvesting. If included, SA will more than meet its component of the target. 2 Total figure reflects the credit from Queensland (and ACT) exceeding target. Source : MJA analysis 2 3 The difference between these two figures comes from expected volumes from stormwater recycling projects in Northern Adelaide, estimated at 18GL/a by If Queensland and the ACT s surpluses are netted off the total. v

9 16. On a jurisdictional basis, the largest estimated volumetric shortfall was identified in NSW (100GL/a) and Tasmania (21GL/a). Queensland is expected to exceed a 30 per cent target due to the Western Corridor and a number of regional projects. South Australia will exceed 30 per cent if stormwater is included in the analysis, or fall 16GL/a short otherwise. 17. The ACT s contribution is largely dependant on the successful introduction of an IPR project that is in a preliminary phase, and is at this stage not certain. If it is rejected by the ACT Government or community, the shortfall will increase by 9.1GL/a. The Northern Territory and Tasmania fall short of 30 per cent, however they do not make a large contribution to the volumetric shortfall. 18. The economic costs of reaching the 30 per cent target depend on where the shortfall is rectified. To achieve the lowest economic cost, the lowest cost projects should be undertaken, which is usually low level recycling for agriculture. However, this ignores whether a suitable demand exists for the recycled water, and it also ignores what type of use has the highest value in each circumstance. Table 2: Volumetric shortfall of 30% recycling by 2015, with associated economic costs Location Shortfall (ML) Economic cost ($m) Note : NSW 100,122 $2,458 Victoria 7,305 $215 Queensland -7,007 $0 Western Australia 3,949 $87 South Australia 1,355 $19 Tasmania 20,777 $357 Northern Territory 4,400 $83 ACT -412 $0 Australia 130,488 $3,219 Figures for SA exclude 18GL from stormwater harvesting in Adelaide which if included would meet SA s target. Source : MJA analysis 19. If the target is to be met across all jurisdictions, then the costs for achieving the target depend on the individual circumstances of each jurisdiction. MJA has prepared a model for this instance, estimating an appropriate levelised cost per kilolitre for the next water recycling project expected to be undertaken in each jurisdiction which would make up any shortfall. Often this involves an expansion of current or expected projects. 20. On this basis, the total economic costs of a 30 per cent national target for recycled water is $3.2bn (Table 2) of which, as demonstrated in Figure 1, the vast majority of costs would be incurred in Sydney ($2.25bn). 21. These costs are calculated on a jurisdictional basis, i.e. the cost of meeting at 30 per cent target in each jurisdiction. If we allow for meeting the target on a national basis (i.e. jurisdictions that exceed 30 per cent offset those jurisdictions that fall short), total costs of achieving the target will be lower. vi

10 22. This volume totals 7.4GL/a from Queensland and the ACT. If we assume that the offset reduction is achieved in the highest cost jurisdictions, this means a saving of $22.3m. This exclusively reduces the Victorian total cost (at a levelised cost of $3/kl), bringing the total cost of meeting the target across Australia from $3.219bn to $3.196bn. Figure 1: Costs in each State or Territory to meet target shortfall $3,500 $3,000 $2,500 $ million $2,000 $1,500 $1,000 $500 $0 Sydney Rest of NSW Melbourne Rest of Victoria Brisbane Rest of Queensland Perth Rest of WA Adelaide Rest of SA Hobart Rest of Tasmania Darwin Rest of NT Canberra Total Note : Costs for non-metropolitan regions are set at the metropolitan average cost reflecting the likely economies of meeting a State target by recycling gin the metropolitan region. Source : MJA analysis RISKS 23. Various risks, from an economic, environmental and social perspective, are associated with the national 30 per cent target of water recycling. These are risks both to meeting the target (those that may prevent the target being reached), but also risks of meeting the target. That is, meeting the target itself will lead to a number of environmental, social and economic risks. 24. Economic risks associated with the 30 per cent target include: inefficient allocation of resources, resulting in higher water costs or tax burden; depending on how it is achieved, small rural centres in greater need may miss out on much needed supply augmentation while urban centres may have excess water supply; inflationary pressures due to increased infrastructure activity; and no decreased costs of ocean outfalls (more of a reality than a risk). 25. We identify no real capacity constraints as a risk to meeting the target. 26. Environmental risks associated with the target include: vii

11 environmental regulations may prevent the use of recycled water for environmental flows, inhibiting a potentially high value use for recycled water; unnecessary environmental burden associated with unjustified recycled water projects, including greenhouse gas emissions; and where appropriate risk management of ocean outfalls exist, reduced ocean outfalls may not correlate with reduced environmental costs. 27. Social risks include the risk of a health scare affecting community acceptance for recycled water, and the risks to regional towns if the target is achieved through a focus on urban water supply. POLICY CONSIDERATIONS 28. In considering a target of 30% wastewater recycled by 2015, the Australian government has several options to focus on noting that urban water recycling is overwhelmingly undertaken by urban water authorities, which are all wholly state-government owned, and therefore that urban water policy primarily is within the control of state governments; a. Option 1: the target has largely been met, and the states mostly have firm plans to secure supplies for large cities and towns, so the government could focus its efforts on other issues such as the intergovernmental agenda for urban water that is developing through the NWI and COAG; b. Option 2: encourage the states to each reach 30% by This may mean large projects that might not otherwise be justified would have to be cross-subsidised by one or more governments (particularly in New South Wales); c. Option 3: work with the states to encourage projects across the country that could help reach the target overall, but not necessarily for each state (this likewise may mean projects that would not otherwise be justified would have to be cross-subsidised by one or more governments); or d. Option 4: the government could work with the states to focus on supply security for those smaller urban centres that may need outside support, such as advanced planning techniques, national reforms, or cross-subsidies. This could be done in a way that was deliberately consistent with the COAG draft principles. However, while this may help those towns secure their water supplies in the face of climate change often through recycling it may not yield volumes of recycling that make a big, or quick, difference to the national target. viii

12 1. Introduction and Background 1.1. Objectives and approach of this study The objectives of this study are to provide background information and analysis to inform decision-makers on issues affecting recycled water and other alternative water sources, in the context of a commitment to achieve a national water recycling target of 30 per cent by This includes: reviewing existing documentation and data on current water recycling rates across Australian jurisdictions; reviewing current Commonwealth, State and Territory policies and strategies on recycled water and other alternative water sources in Australian jurisdictions, including exploration of targets; exploring principles of best practice policy in the water sector; discussing scenarios for recycled water uptake and other non-traditional water sources; exploring economic and financial costs of achieving the 30 per cent recycled water target; and exploring environmental, social and economic risks associated with meeting the target. The study also explores surrounding issues such as the treatment of externalities (e.g. environmental and health), and rationales for targets such as the promotion of community acceptance and driving technology advances. The approach to the study is to combine a number of research methods, namely: documentation review and web search; structured interviews with key departmental and water authority representatives; strategic workshop of key risks; and drawing on MJA s substantial previous work on water recycling in particular, and the water sector more broadly Background and context The 44th Australian Labor Party s National Conference, held on April 2007, debated and adopted the ALP s National Platform and Constitution. 4 Part of the platform included: 60. Labor supports recycling wastewater and sets a goal of 30 per cent of Australia s wastewater being recycled by Labor believes greater use of recycled water by industry and agriculture will free up valuable drinking water and help increase environmental water flows

13 This was adopted as Labor Party policy and taken to the election of November COAG principles for urban water planning It should be noted that the Council of Australian Governments (CoAG) has recently accepted the Council for the Australian Federation draft urban water planning principles for targeted consultation. The agreed urban water planning principles will be submitted to COAG in October 2008 for adoption. The (Draft) Urban Water Planning Principles are as follows: 1. Deliver urban water supplies in accordance with agreed levels of service including specified levels of reliability and safety. 2. Base urban water planning on the best information available at the time and invest in acquiring information on an ongoing basis to continually improve the knowledge base. 3. Adopt a partnership approach so that the community is able to make an informed contribution to urban water planning, including consideration of the appropriate supply/demand balance. 4. Manage water in the urban context on a whole-of-water-cycle basis. 5. Consider the full portfolio of water supply and demand options, from both natural and manufactured water sources. 6. Develop and manage urban water supplies within sustainable limits. 7. Use pricing and, where efficient and feasible, market mechanisms to help achieve planned urban water supply/demand balance. 8. Periodically review the assumptions upon which urban water plans are based and make adjustments if the assumptions change. Australian Government decisions on water source planning should be consistent with the finalised principles Definition of water recycling The term recycled water can apply to a number of alternative definitions, but broadly refers to the treatment and reuse of wastewater which would otherwise be discharged for no productive use. A more narrow definition would refer to the productive reuse of treated effluent from a sewage treatment plant, while a broader definition would incorporate stormwaterand or greywater reuse, and contributions to environmental flows or other environmental uses. The term wastewater can itself refer narrowly to treated effluent, or more broadly could include stormwater or greywater. Most Australian jurisdictions in policy terms use a broad definition of recycled water, although there are exceptions (for example, the Water Act 1989 (Vic) states, recycled water means water derived from sewage or trade waste that has been treated for the purposes of re-use ). 2

14 MJA considers the broad definition of recycled water used in the Australian Guidelines for Water Recycling 5 to be useful: recycled effluent: sewage effluent treated for the purpose of reuse; recycled water: water generated from sewage, greywater or stormwater systems and treated to a standard that is appropriate for its intended use. However, given that the policy commitment relates to a proportion of treated wastewater, MJA s statistical analysis focuses on treated effluent but includes stormwater projects where identified, in a scenario analysis. 6 Water recycling may take a number of forms, each with substantially different costs, quantities and value to the end user. The various forms include: municipal parks, gardens and golf courses: for many regional communities, municipal water recycling schemes represent the lowest cost method of disposal. Municipal water recycling opportunities are proportionately less in large cities, where substantial volumes of wastewater must be disposed of; industrial reuse: commercial users may apply water in cooling, wash-down or other industrial processes. In some cases, recycled water is treated through reverse osmosis or similar processes to obtain a high quality water product. The quantity that can be recycled is constrained by the number of industries within a close proximity of a wastewater treatment plant that can make use of recycled water in their processes; agricultural reuse: substantial volumes of recycled water could be made available for agricultural use. In many cases, the vast distances between the wastewater treatment plant and the customer make the cost prohibitive; residential third pipe: treated wastewater can potentially be used for nondrinking purposes such as garden watering and toilet flushing. Many third pipe schemes are currently under way across Australia. The benefit of third pipe schemes often hinges on the ability to reduce costs in other parts of the water supply or wastewater system; indirect potable reuse: water can be treated to an extremely high quality and then returned into a river, surface- or ground-water supply for eventual reextraction and use in the potable water supply system; direct potable reuse: water can be treated to an extremely high quality and returned directly to the potable water supply system 7 ; and environmental flows: wastewater treated to an appropriate standard to contribute to flows and provide an ecosystem service in a waterway. The Water Services Association of Australia defines water recycling in the following way: Water recycling is the multiple use of water that is treated to a standard appropriate for its intended beneficial use Published by the Environment Protection and Heritage Council at In practice, this relates to one major project in Adelaide of 18GL/a. MJA is aware of no current project of this nature in Australia 3

15 For urban communities, recycled water is a rainfall-independent source of water that can: Provide a source of water for non-drinking purposes such as commercial and industrial processes, for irrigating parks, gardens and other open spaces, and flushing toilets. Be blended back into dams and groundwater aquifers to supplement drinking water supplies subject to appropriate management and control. Avoid the need to invest significant sums of money upgrading wastewater treatment plants that discharge into inland rivers and creeks. Reduce the discharge from wastewater treatment plants to rivers and oceans. Provide a source of water for irrigation of agriculture and horticulture crops. Result in the beneficial use of nutrients. 8 While MJA considers a broad definition of recycled water appropriate in the context of water source planning, we note that recycled water targets are often made as a percentage of treated sewage effluent. Further, data on greywater recycling is lacking, as it is often undertaken in small private projects. As such, while we are adopting a broad definition, in general we have only been able to report on recycling of sewage effluent in this paper. Where information about the recycling of stormwater or other alternative water sources is available, it has been identified and included Outline of report The remainder of this report is structured as follows: Section 2. Water recycling in the context of water supply planning. This will explore broad objectives of best practice policy in the water sector, drawing on COAG objectives, and previous MJA work. Section 3. Australian water recycling rates, explored by jurisdiction. This draws on published documentation, updated with jurisdictional input. The chapter covers current water recycling and other non-traditional water sources, projections of future use, and jurisdictional targets and policies. The object of the chapter is to provide a full overview of current water recycling rates and policies. Section 4. Economic framework and analysis, which will address the economic theory and explore the economic scenarios associated with meeting the 30 per cent target. Section 5. Economic, environmental and social risks associated with achieving 30 per cent recycled water by Section 6. Conclusions and key findings. 8 WSAA Position Paper No. 2 Refilling the Glass 4

16 2. Drivers of water recycling Historically, water planning 9 in Australia has focussed on easy-to-access and cheap-to-use surface water sources rather than alternative sources, such as recycled water and other manufactured water such as desalinated seawater. These non-traditional sources tended to be avoided because of their economic cost and community perceptions of poor quality. However, surface water resources - and to some extent groundwater supplies - in Australia have, in recent decades, been adversely affected by extended droughts and climate change. Mitigating the risk posed to water supplies by reduced streamflow reliability, through diversification of supply sources, is gaining significantly in importance. In particular, best practice in water supply planning emphasises a diversity of water sources in a portfolio selected not simply on least cost and timing but also on management of the risk profile of the entire supply system. A fundamental indicator of the performance of water supply systems is resilience in times of drought and stress - ensuring access to potable and fit-for-purpose water without lengthy or severe restrictions Environment protection Water recycling is subject to regulation in regard to environment protection and public health. This regulation sets out chemical, microbiological, and management requirements for different end uses of water. A key concept in water recycling is that water should be fit for purpose high levels of treatment may be both prohibitive and unnecessary for some applications. The degree of treatment and management processes required generally depends on the likelihood of contact with humans, the likelihood of environmental damage, and the likelihood that water will not be retained on site but will discharge into the environment. These matters are largely regulated on a jurisdictional basis, by Environment Protection Authorities and Public Health Authorities (sometimes in partnership). The classes and language therefore sometimes vary between states. The different treatment levels are set out in Appendix 1. Supported end uses include agricultural, horticultural, industrial, urban (non-potable e.g. toilet flushing, garden watering 9 Water planning across Australia is typically conducted through two mechanisms statutory water plans (specified in Schedule E of the NWI) and water supply plans: the statutory water plans relate to specific water sources and specify the environmental and other public benefit outcomes for the relevant water system, the overall objectives of water allocation policies, pathways to correct overallocation or overuse, the reliability of the consumptive pool and a range of other matters; water supply plans set out the strategy for ensuring demand and supply balance is achieved and maintained into the future. They set out the intended order and sequence by which supply sources will be accessed, infrastructure required and demand reduction strategies to be implemented. The statutory water plans define the consumptive pools and entitlements to them; the water supply plans describe the intended timing and extent of access to these pools. Statutory plans are typically drawn up by the relevant government department with input from water businesses and natural resource management bodies. 5

17 and clothes washing) and potable (direct into a distribution system, or indirect such as into a reservoir). Use for flows in waterways occurs, but is not encouraged in most jurisdictions. Recycled water can, conversely, provide beneficial flows to rivers and streams, and sometimes supports internationally recognised RAMSAR wetlands. While this potential is recognised by some jurisdictions, and while it may occur in practice, frameworks for recognising recycled water as an environmental flow have not actually been developed in any jurisdiction except New South Wales. This is regarded by some in the water industry as a missed opportunity for the environment. 10 It should also be noted that environmental regulations can also act as an economic driver for recycled water. In Queensland, where sensitivity to the health of the Great Barrier Reef has resulted in tight restrictions on water quality ouflows, land based discharge of recycled wastewater for agriculture can be an efficient outcome compared with highly treated discharge to ocean outfalls. In this case, the marginal cost of recycling water compared with its immediate alternatives could be very low Recycled water as a resource In the late 1990s through to the early 2000s, recycled water began to be seen as a potential water resource to satisfy unmet demand for water, as treatment technologies became more familiar and affordable to the Australian water sector. The Virginia Pipeline was commissioned in South Australia in 1998 (for agriculture) and the Rouse Hill urban development recycling scheme (potable substitution) commenced in Sydney in By the early 2000s, most state governments were interested in water recycling and began to develop policies to encourage it. Several states issued targets for their water businesses to meet. Water recycling (beyond land-based discharge) was new, poorly known, and not generally part of the environment protection, public health, water industry, or economic regulatory frameworks in the states, so these targets provided an impetus for water businesses to overcome the inevitable barriers facing this new potential resource, and an impetus for governments to reform regulatory frameworks so that recycling could go ahead. Education and awareness programs began to explain water recycling to the community. Against a background of continuing severe drought and growing awareness of climate change, recycled water has become accepted by water businesses and the community as a part of potential water resources. The targets set by jurisdictions when their policy frameworks were first developed are now largely achieved. Some of the projects that went ahead during the early 2000s might not go ahead today, now those lessons have been learned. Urban water planners now have a better understanding of the characteristics of a range of alternative and traditional water sources including risks, management and treatment measures, environmental and health issues, and costs and recycled water projects increasingly happen as a result of strategic planning for demand and supply management, rather than a focus on recycling alone. 10 See for example Gale AJ, 2007, Return to stream it is beneficial. Presentation by the General Manager Technical Services Goulburn Valley Water to the VicWater Conference, September. at 30 May

18 2.3. Contemporary urban water planning The challenge of water supply planning is to ensure that demand and supply are kept in balance and that future shortfalls in water supply (whether due to climate variability, climate change or other factors) are to occur no more frequently than indicated by objectives relating to the frequency, severity and duration of resulting water restrictions. The second part of this challenge is to achieve this balance at minimum expected total cost. Risks and environmental considerations can be incorporated into this analytical framework. To cater for drought years, water service providers must construct more capacity in their system than they would typically need in a non-drought year. Regulators and other decision makers must therefore weigh up the trade-off between the likelihood of drought occurring and the cost of maintaining additional capacity into perpetuity. Minimising future costs does not only require that the costs of planned infrastructure are both necessary and efficient: all costs must be considered. This includes recognition of the costs to the environment, the cost of contingency options, the costs of restrictions and the costs of all other measures, such as water saving measures, that are likely to be included in a drought strategy. Water planners have two fundamental options available to ease water restrictions to encourage water conservation or to increase water supply. All options have associated costs and benefits. Options available to restore and maintain the balance between water demand and supply include: demand management through the introduction of water saving appliances and behaviour modification; new dams and groundwater access; desalination of seawater; better interlinking of water sources (existing and future) through pipelines and grids; recycling of water for agricultural, industrial and potable uses; greater use of stormwater, especially in greenfield locations; and the purchase of water from other sectors and/or other suppliers. Voluntary water conservation is often the most affordable, environmentally sensitive option available to urban water users. Mandatory water conservation through water restrictions entails costs on some members of the community, which may be significant. Structural alternatives to potable water supplies, including stormwater recycling and water sensitive urban design, are often more cost effective in greenfield situations, where new developments can be designed with water conservation in mind. While greenfield sites represent only a small proportion of the city in any particular year, the growing population will mean that structural changes introduced on a small scale now will dominate the cityscape of the future. The majority of urban water in Australia is currently sourced from large dams and piped to city centres, with the exception of Perth and Adelaide, which rely largely on groundwater resources and the River Murray, respectively. Most other cities in Australia depend heavily on dams for their water supply and hence are subject to variability in rainfall and streamflows. Some diversification of this risk is possible through geographical separation of 7

19 dams and large storage volumes, but regional declines in rainfall have generally affected them all to different degrees. In the current drought, water restrictions across Australia have been invoked more often and at deeper levels than is consistent with stated objectives, the possibility of acute supply failure has become increasingly apparent, and some smaller towns have actually run out of water. Governments and their water authorities in affected jurisdictions have responded to this challenge by planning to adapt to increased climate variability and reduced average runoff projections. Different approaches have been apparent in: the varying recognition of past changes in streamflow and the reliance on, or rejection of, long-term streamflows as the best indicator of future streamflow levels and variability; 11 the extent of, and manner in which, climate change projections are incorporated into projections regarding future streamflows; the level of service requirements adopted, i.e., what probabilities/frequencies, severity and duration of water restrictions are appropriate and acceptable; the willingness to consider alternative options for city supply such as the purchase of water from irrigators or the direct injection of reclaimed water; the degree of reliance on reductions in per capita levels of water consumption through behavioural change or changes in urban design; and the extent to which explicit and specific options or strategies have been identified as contingencies to be triggered in the event of extreme and/or continued drought conditions. The traditional planning approach for water supply has been to identify all possible options, determine relative financial costs and benefits, rank options, and select those that meet the supply shortfall most cheaply. These are generally large infrastructure options that offer economy of scale and low treatment such as dams. Integrated Water Supply Planning In recent years, there has been an increasing focus on integrated water supply planning, including water recycling. This allows different sources of water to be compared side-byside with traditional infrastructure solutions. Recognition of the full water cycle means that often-overlooked options, such as stormwater, are given equal opportunity to be assessed on their merits. This advance blurs the traditional boundaries between the supply of water, wastewater and stormwater services to provide what is termed integrated water cycle management (IWCM). IWCM is gradually being adopted across Australia and is reflected in the wide range of water sources examined in recent metropolitan water plans. Each city has a unique combination of issues and available resources, however, general trends in cost and resource availability can be seen to emerge. However, alternative water resources are generally more expensive than traditional supply options, so traditional water supply planning has not generally fostered diversification even 11 For an early example of recognition of the potential for climate change in the context of Canberra s water supply, see CSIRO (2004) and Marsden Jacob Associates (2003a, b, c). The approach was recently published in Risbey, Hamza and Marsden (2006). 8

20 though it has been recognised that recycled water is less climate-dependent than dam water, and has environmental benefits. Water authorities and governments have become increasingly aware that this relatively simple approach does not easily support planning to manage uncertainty. The actual impact of climate change is particularly uncertain its existence is accepted, but the range of impact on inflows to dams could be anything from a few per cent reduction to 40-50% in some regions. Water infrastructure tends to be highly costly so building for the wrong scenario could be an expensive exercise. Planning tools are needed that account for uncertainty, allow for adaptation as new information becomes available, and that value flexibility. New approaches are emerging around Australia that provide for adaptability in planning. Perth has used a scenario-based approach to water supply planning for some time, and most cities are now also using climate change scenarios. 12 For example, the Victorian thinking for Melbourne and the wider central region has shifted sharply: the Central Region Sustainable Water Strategy (CRSWS) adopted a robust scenario approach to deal with the uncertainties of climate change and variability, and some aspects of the CRSWS were revisited within 12 months of its publication, in response to continuing record low inflows. 13 While climate change scenarios allow planners to see the result on supply of their planned demand and supply management measures, adaptive management requires more than the use of scenarios alone. Real options analysis has begun to be used in water supply and demand management planning in Australia, because it incorporates risk, the value of flexibility, and the probabilities of different scenarios into investment decision making. 14 Governments and water utilities are increasingly turning to alternative sources of water supply including demand management, water sensitive urban design, desalination, water recycling and the purchase of water entitlements from irrigators. The consideration and evaluation of alternative sources is leading to an increasingly integrated approach albeit with some gaps and omissions Water Reuse and Recycling in Supply Planning Water recycling On average, Australian cities recycled around nine per cent of wastewater in 2005/ The proportion of reuse is higher in many regional urban centres, where alternative methods of wastewater disposal are often costly and where water can be more economically transported for municipal or irrigation use. Thus, the much higher level of recycling in regional cities is in large part explained by the smaller volume of recycled water available, relative to the demand for recycled water from horticulture and other irrigation in the local area. 12 Reliance on the long-term 100-year historical record is a feature of both traditional water supply planning and operational rules. In particular, the operational rules applied by several governments in determining seasonal allocations for irrigators depend on minimum flow levels recorded historically. These rules are inadequate when, as in the current season, minimum flows are below previous minimums. 13 The resulting document, Our Water Our Future: The Next Stage of the Government s Water Plan (2007), included announcements about various interconnections and desalination. 14 See for example Borison A and G Hamm, Real Options and urban water resource planning in Australia. Water Services Association of Australia occasional paper number WSAA Media Release First national performance report for urban water utilities released, 17 May

21 In contrast, the major cities have the potential to produce very large volumes of recycled water but have relatively little irrigation activity within proximity of the treatment plant. The high cost of pipelines to take recycled water to where it can be used means that the economics of large-scale recycling are frequently adverse compared with other sources of water. In addition, supplementing drinking water supplies with recycled water requires the recycled water to spend time in an environmental buffer such as a reservoir, river or aquifer. This is the reason recycling is often an expensive option given the coastal location of our sources of wastewater. Several state and territory governments have set recycling targets for their water organisations. Note, however, that some targets are best described as aspirational rather than firm as the economic feasibility of achieving these targets has not be evaluated. 16 Therefore, relying on these targets as a proxy for the demand for recycled water may overstate future levels of demand for recycled water. Nonetheless, several major proposed water recycling plants will increase the level of water recycling in the capital cities significantly, including: the Western Corridor Recycled Water Scheme in South East Queensland has the potential to free up to 80 GL per annum of fresh water from the region s dams; the Western Sydney Water Recycling Initiative will recycle 27 GL per year; the proposed upgrade to Melbourne s Eastern Treatment Plant in Victoria could recycle over 100 GL per year; and the Groundwater Replenishment to the Gnangara Mound in Perth could add up to 40 GL per annum by 2015, if trials are successful In addition to cost, increasing the uptake of recycled water faces a number of barriers: The main barriers to re-use of water in Australia are issues of public confidence, health, the environment, reliable treatment, storage, economics, the lack of relevant regulations, poor integration in water resource management, and the lack of awareness. 17 Assurance to the public of the quality of the reclaimed water is essential, if reclaimed water is to be used widely. Resistance on the part of the public has the potential to remove some water supply options, such as water recycling, from consideration. Moreover, anticipation of public concerns sometimes leads to likely controversial options being culled before options are put to the public as is the case with recycling and potable re-injection. Strong and timely leadership is required to determine which options should be pursued, and how and when the community should be engaged, especially if the risks of inaction are potentially catastrophic. Public trust is bolstered by having clear, widely adopted standards and guidelines. Recently, a number of national guidelines have been developed to address the full range recycling options, It should be noted that targets can lead to inappropriate investment and undermine rational pricing of recycled water. Dillon, P Call for national bid to save water, CSIRO Media Release - Ref 2002/129 - Jul 18, at 10