Drought and desalination: Melbourne water supply and development choices in the twenty-first century

Sharply reduced catchment inflows across Australia around the end of the twentieth century led to a sequence of water restrictions followed, as the drought persisted, by approximately $10 billion of investments in desalination plants near Perth, Adelaide, Melbourne, Sydney and Brisbane. This Deakin University project jointly with Griffith University, for the National Centre of Excellence in Desalination (NCEDA), follows these new investments. We ask how best to manage bulk water supply and retail supply given the facts and fears of uncertain rainfall, modelled over a 100 year simulation period. We use Monte Carlo style studies aiming to capture the new tensions and trade-offs regarding uncertain climate, rainfall and water supply. There are presently no comprehensive life-cycle approaches to model city water balances that incorporate economic feedbacks, such as tariff adjustment, which can in turn create a financing capacity for such investment responses to low catchment levels, models that could provide significant policy implications for water planners. This project addresses the gap, and presents excerpts from a system dynamics model that augments the usual water utility representation of the physical linkages and water grids. We add inter-connected feedback loops in tariff structures, demand levels and financing capacity. Tariffs are reset in association with drought and the modelling of responses both in terms of reduced consumption and increased revenue to the utility, depending on the elasticities of demand responses to higher tariffs, both short and long term, while also allowing effects from any transitional restrictions. Before reporting on parts of the simulations applied to Melbourne, this paper will first review the general issues surrounding whether desalination is or can be a “game changer” for economic development that hinges on secure water supply. We then explore options in bulk water supply management when desalination augments the choices, including catchments, dams, recycling, pipelines from rivers and savings in irrigation. Finally, the paper addresses the intriguing and important question of the value and cost of providing water for environmental uses.

Financialisation of official development assistance

Official Development Assistance is a significant global enterprise. Organsiations engaged in funding and implementing ODA (the bilateral donors, multilateral organsiations such as the World Bank and IMF) have unprecedented political and economic influence over a large number of sovereign developing countries. This paper analyses if, and how financialisation impacts on development aid, and implications for effective aid policy agendas, drawing on and linking critical debate on finacialisation, and ODA. Subsequent to the Global Financial Crisis (GFC) and the persistence of the European Monitory Crisis (EMC), specific needs of developing countries became increasingly sub-ordinated to political and ideological power relations between ‘real’ economics and financial economics otherwise known as financialisation. The paper finds ‘financialisation’ as the ideological, political and economic catalyst for economic growth potentially confusing long-term development to combat poverty, and a short term need to overcome the lack of financial capacity in developing recipient countries. Sustainable economic development requires developing countries to forsake the pursuit of financialisation and to re-delineate their national finance, trade and investment regimes, and re-state it in a balanced manner as to take into account their unique economic development needs rather that the donor agencies’ demands and to advance their own ‘real’ economies.