Download PowerPoint - Water Droplets – Mike Young

Large Dams: What is their role in
a brave, new, greener world?
Prof Mike Young
The Environment Institute
The University of Adelaide
Investment phases
After World Bank 2007
Global water use
70% Agriculture, 20% Industry & 10% Urban
After Molden 2007
General messages
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By 2030, over half the world’s population is expected to be living
in a water stressed region.
Failure to provide reliable access to water and sanitation services
is one of humankind’s greatest failings.
Demand is growing and costs rising.
The aggregate affect of climate change on water supplies is
expected to be negative.
By 2030 child malnutrition is predicted to increase by 20%.
The rate of change and structural adjustment necessary to resolve
existing challenges and cope with the new ones expected as a
result of climate change and a larger more affluent global
population is an order of magnitude faster than has been
achieved in recent times.
Global water scarcity
After Molden 2007
Water stress
After OECD 2009
Water scarcity gap
After 2030 Water Resources Group
Cost issues
1. The recent financial crisis means there is a has brought
attention to the need to bring greater economic discipline
to water investment and management decisions.
2. Donor willingness to pay for the provision of water
infrastructure appears to have declined.
3. A larger proportion of the money needed to finance the
necessary investments is going to have to come from user
charges.
4. Whilst administratively more challenging, the least cost
solution to the resolution of water supply and sanitation
challenges is around four times cheaper than those
usually proposed.
5. Considerable policy and governance reform is necessary.
Pricing arrangements
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The public and more importantly national leaders need to be made more
aware of the consequences of not charging the full costs of water use.
Lack of economic discipline is crowding out the innovation and
investment needed to solve water scarcity and investment challenges.
This raises the cost of solving water supply problems and decreases the
rate of economic development.
In many cases, the poorest of the poor would be better off paying the
full cost of supply rather than exposing themselves to the extremely high
cost of obtaining access to water from other sources a central source
and the impact of unsanitary conditions on them.
When considering the case for the provision of water at subsidised
prices to the poor, it is important to understand influence of this practice
on the likelihood that services will be maintained.
The more targeted cross-subsidies are the better. Blanket subsidies
should be avoided.
Entitlement and planning systems
1. Most entitlement systems are not designed to reward
innovation and facilitate rapid adjustment as
conditions change.
2. One of the secrets to solving water supply problems is
to define entitlements and make allocations in a
manner that has hydrological rigour and promotes
innovation.
3. Adaptive integrated planning approaches to
management need to be underpinned by fullyspecified entitlement systems.
4. Where possible, entitlement systems should be
unbundled.
Returns to investment in entitlement
systems & trading
After Bjornlund & Rossini 2007
Enabling conditions
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Parallel investments in governance, the development of taxation
systems, the removal of market distortions and freer trading
arrangements for agricultural products.
Freer international trading arrangements will significantly reduce
the costs of facilitating adjustment and attaining MDG targets.
The early introduction of greenhouse gas trading or taxation
arrangements in concert with the use of market-based
instruments can be expected to reduce the costs of achieving a
transition to more sustainable forms of resource use and in
particular, encourage greater investment in ecosystem services.
Increases in the capacity of a nation to collect income and other
taxes will make it easier for nations to transition to full cost pricing
arrangements and, where appropriate, provide rebates to the
most dis-advantaged.
International Trade
After Hoekstar & Chapagain 2007
Governance
1. There is a need for a much more disciplined
approach to the management and
administration of water resources.
2. The development of governance arrangements
and political support for processes and
mechanisms that promote change and structural
adjustment is critical to the development of
administrative regimes that can cope with
sudden climatic shifts and the rapid emergence
of extreme water scarcity.
Enhancing supply and supply reliability
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In the agricultural sector, water use tends to be very inefficient.
This is aggravated by the use of electricity and other input
subsidies.
Subsidised tariffs promote inefficient water use.
The removal of subsidies, the development of water trading and
full cost recovery can do much to increase water use efficiency.
Throughout much of the world there appears to have been underinvestment in the maintenance of urban water supply systems.
Governments have failed to understand that options for
infrastructure finance are inextricably linked to tariff policies.
Water flow is conditional upon cash flow.
Finance
1. There has been insufficient attention to the economic
scrutiny of proposals to invest in new infrastructure and
renew existing infrastructure.
2. Proposals need to take much greater account of likely
population shifts and vulnerability to climate variability
and change.
3. As economies become greener, the costs of water
treatment and flood control can be reduced be making
greater use of natural environmental processes.
4. Costs will be less if parallel investments are made in the
development of mechanisms to enable widespread use of
market based instruments.
5. Greater use of the private sector is possible.
Financing investment (3 T’s)
After Marin and OECD 2009
Millennium Development Goals
• Halve the number people without access to
drinking water and sanitation by 2015
– Drinking water goal expect to meet
– Sanitation will not be met
Flood management
Billion $
% GDP
700
14
600
12 GDP
400
10 Economic
300
8
200
6
100
4
0
2
0
Losses %
Losses
Richest Nations
Poorest Nations
Disasters Losses, Total and as Share of GDP, In the
Richest and Poorest Nations, 1985 Ğ99 (world watch 2001)
After Delli Pricsoli & Wolf; WWDR
Investment required
• Total cost of replacing ageing water supply
and sanitation infrastructure in industrial
countries may be as high as $200 billion a year
(WBCSD 2005).
• The world is seriously behind on maintenance
Large Dams
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Will always be there supplying water
New sites are becoming harder to find
The shift is clearly towards diversity of supply
Increased demand management
Different types of infrastructure