Water is the single most essential resource that keeps the world functioning. However, it is scarce in many places, including some regions in Australia. Besides, all production processes in the industrialised economy need water to some extent. However, prices do not reflect the water shortage, especially when compared to residential consumption and industry. For this and many other reasons, water prices have been rising and could continue rising in Australia. As explained below, other reasons are inflation, weather conditions, and market forces.
Water Cycle Changes
As precipitation changes from snow to rain, rainwater volume becomes more concentrated in the most intense storms. These changes increase flooding and decrease snowmelt supply to water sources. In addition, they hinder the availability of water required for food, human health, and energy demands.
Infrastructural Expenses
Water infrastructure can be costly to maintain, update, and replace. It includes infrastructure such as pipes, treatment plants, and reservoirs. These expenses are frequently passed on to customers through their cost to buy water.
Government rules and regulations
Water conservation measures or pricing structures can represent water production and delivery costs. The government may implement policies or regulations that raise the cost of water in this case. The following are the expectations of government agencies and water managers:
1. Water will get to farmers via more efficient irrigation equipment. It makes water use more effective and sustainable from an economic and environmental view. A more efficient application technique will enhance output per unit of water applied. It will also decrease the impact on the water table and salinity. Therefore, people should divert water away from furrow irrigation and overhead sprinklers and toward the following:
- drip irrigation
- micro sprinklers
- centre pivot systems
2. Water will migrate out of places impacted by water table and soil salinity issues. Instead, it will go to more suitable locations. It helps to alleviate these issues and make irrigation more environmentally sustainable.
3. Water will go to irrigators, which will apply to higher-value crops, enhancing economic efficiency. Water should move from broad-acre applications like:
- lucerne
- grain
- Pastures
It will go toward viticulture, horticulture, and vegetable cultivation.
The economic reasoning behind this is that sellers will only sell if the sales price exceeds the net present value of the seller’s estimated future revenue stream. Meanwhile, the buyer will only get it if the cost to buy water is less than the net present value of the estimated future income stream provided by the water in the buyer’s possession.
Increasing demand as a result of population shifts
Population growth, urbanisation, industrialisation, and other development activities demand water resources. It has negative social and environmental consequences. Water demand can rise as populations grow, resulting in increased pricing. The Australian population is expanding and concentrating in specific locations. Long-term access to safe drinking water is a big concern in these locations. Furthermore, in some areas, consumer conservation behaviours are reducing the net volume of water usage, which necessitates a rate rise to cover system construction and operational costs.
The market forces
Water, like any commodity, is subject to supply and demand dynamics. For example, if there is an increase in demand for water, the price may rise.
Water prices vary due to several factors and can fluctuate over time. Water prices in Australia may vary greatly depending on geography and other factors. If you feel concerned about the cost of water in your area, you should seek more information from your local water authority or utility provider.
