By the end of the recent state election in Queensland, the Labor Party was proposing not one, but five new dams and the the Coalition a whooping eight new dams. The Wyaralong dam is being planned for a catchment just south of Brisbane and west of the Gold Coast in the Beaudesert Shire. Occasional responder at this blog Sylvia Else, has done some research, and claims even desalinated water would be cheaper than water from the Wyaralong Dam:
Hi Jennifer,
I've been puzzling over the proposed Wyaralong dam. Given the government's own cost estimates and the estimated yield, and using an interest rate of 7.5% and inflation rate of 3%, I cannot get the cost of the raw, i.e.
unfiltered, water below $1 per kilolitre, even when I assume a life of 100 years for the dam. I don't know how much it costs to filter water, but Sydney Water charges 46 cents per kilolitre less for unfiltered water, so filtering is presumably reasonably costly.
This appears to mean that bulk filtered water from Wyaralong dam will be more expensive than desalinated water. With Perth's desalinator capital and running costs, I get a bulk water cost of $1.02 per kilolitre.
It's true that the only place one can desalinate seawater is on the coast, but it appears that the government's intention is that all of the water supply systems should be connected together in a network, so desalinated water could be distributed to anywhere that the Wyaralong dam could serve.
So why build the dam? It seems to make no economic sense, even if the wished for rainfall (based on the next 100 years being like the last) appears.
There was a line in the Hitch-Hikers' Guide to the Galaxy. When asked why it was necessary to build a by-pass over the top of Arthur Dent's house, the council official's reply was "What do you mean, why has it got to be built? It's a by-pass. You've got to build by-passes."
May be that's the reasoning being used here.
Regards
Sylvia Else
It appears to me that now the dam has been built and we didn't directly correlate the cost of water to it's quiet opening that all discussion has died down.
But I have been researching the dam and it's 'worth' and in doing so spent some amount of time considering the full environmental costs of the options? This goes beyond the economics of what we may or may not pay for clean reliable drinking water to our doorstep. In doing so I have also been looking at what is considered 'limitless' supply from desalination, which pumps then a 'limitless' supply of brine solution back into the marine environment ... what cost it that? or is it considered that as it does not hit our hip pocket directly we don't really care about those things?
As for the cost to build such a dam as Wyaralong ...
"The dam project on the Teviot Brook also involved construction of the Bromelton Offstream Storage facility and Cedar Grove weir. The A$348m project was built by Queensland Water Infrastructure (QWI)." [sourced after the fact of building on water-technology.net]
and as for yield ...
"When operated in conjunction with the Cedar Grove weir, the Wyaralong dam can hold up to 103,000 million litres at full capacity. It will supply 26,000 million litres of additional water to South East Queensland (SEQ) every year."
The only question now for the dam is why and when will it be connected into the grid? I would assume the real answer to that, regardless of economics, is 'when we need it'. Even if for now, it's only current use is 'to float a boat'. What value do you place on additional recreational activities in a region?
For an area that was already devastated and contaminated by historically poor agricultural practices, mass tree clearing and weeds invasion causing the existing water quality up and down stream to be extremely poor (such that an extensive weed management plan had been put in place). Environmentally there are arguments for both sides. To build or not to build. But I ask ... if we did not build, do we wait until there is absolutely no suitable land left due to urban sprawl before we stockpile some surface water catchments because it would be cheaper per kL now? I am also curious that if engineers/economists etc. don't use the 100 years of historical information, what would you suggest to use for economical evaluations for any construction projects?
The $348m spend included quite extensive revegetation and other environmental impact mitigation measures being put into place. Would you suggest that to keep the build price down that 'like' projects don't bother to do this, so that the average cost per kL can be more palatable?
With respect to the remaining landowners on non-government purchased land who were directly affected ... although no money is enough to replace what money can't buy, but there would have been large costs there also. Would you reduce these costs instead?
Not trying to be confrontational but for researching purposes I am curious. On a blog concerned with the natural environment very little beyond the economics has been considered in this particular case.
It seems as though there hasn't been a lot of conversation on this blog lately but since the dam seems to be progressing I thought it may be worth continuing the discussion. I agree with Murray in regards to energy costs of desal, they are very susceptible to the current market and who knowswhat the future costs associated with desalination are.
Irrespective of this I find it disnconcerting that the argument is based on economics, I thought that the environment in recent years is having an increasing role in determining what society should do in response to any demand (water, electricity, energy etc.). In this regard any dam infrastucture has a very small carbon footprint compared to desalination of saline water over the lifetime time of the water supply.
I've just come across this blog and find it refreshing that most of the posts are constructive, rather than comfrontational, especially when the topic has political, vested interest, and ethical dimensions.
It has concerned me for some time that in the talk of desalination as the future long-term source of the nation's water, no one seems to have addressed the (very likely) prospect of steeply escalating energy costs with the imminent onset of the peak oil catastrophe. There is an unquantifiable, but potentially enormous, added energy cost to be factored into the calculations.
Of course, we may not need any more water if peak oil leads to the anticipated collapse of the industrial world. No more water hungry fossil fuel power plants, mines or manufacturing - there should be lots to drink!
But if we must boil sea water, can it be done with solar?
If the $400-500 million includes the (capital) cost of the water treatment plant, then that obviously invalidates my claim about the unfiltered water price. It puts the filtered water price above $1 per kilolitre instead. How much above would depend on the operating costs of both the dam and the treatment plant, about which I currently have no information.
It bothers me that governments are still willing to use the historical 100 year rainfall figures as the basis for calculating yields. At the very least there is a significant risk that we're experiencing climate change rather than (or as well as) a drought, and since his represents a risk that the asset will not perform as well as predicted, it should be reflected somewhere in the costing (pushing it up).
Another thing that does not appear to have been incorporated into the cost is the value of the land already owned by the government that is to be dedicated to the dam. If the dam were not built then the land could conceivably be sold, so it should not be regarded as worthless for costing purposes.
Sylvia.
Dear Jennifer and bloggers,
I am an affected landholder at Wyaralong, currently writing a PhD thesis on resource management issues and co-author of the document referred to by Sylvia, Wyaralong Dam: Issues and Alternatives.
As landholders at Wyaralong, (it is my family's property the dam is named after)we have had communication with DNRM staff since the dam was first proposed in 2005. I found it wryly amusing to read and follow the above debate about correct figures for yield and costs.
Basically, all of you are right, yet at the same time all of you are wrong. This is becasue the figures quoted by the government in various documents and press releases have changed each time.
The report, "A Long term future" I have heard was thrown together days before the final announcement on 4 July and refers to information from the GHD report, a desktop analysis of data from 1990. This is the only data the DNRM had on Wyaralong as they had not been anywhere near the site since the weekend before 4 July.
The $400-500M fihure is the latest for costs, which are said to include Cedar grove Weir, relocation of the road, water treatment, as well as land purchases.
The state owns 36% of land surrounding the Wyaralong dam. At the current prposed water level, almost none of this land is in the inundantion area of the dam. I am currently working on a map to illustrate this which will be posted on our website.
The yeild of 21000 ML INCLUDES 5000ML in Cedar Grove weir. For our report we used yield for Wyaralong dam alone, which is 17000ML.
Water quality in the Teviot is notoriously poor (salinity, pollutants and Boonah township's effluent)and the costs of water treatment are expected to increase.
Another point for consideration in the costs of water issue, is distributional equity. The water from Wyaralong does not directly service Brisbane consumers. The water is for urban and industrial use in the lOgan, Beaudesert and Gold Coast Shires.
We calculated that at the current pricing of water, which Peter Beattie assures us will not rise, this amounts to $3500-$4000 subsidy by the State per household. This would buy a good sized tank, or a community storage facility. We are no economists though, so if someone would like to clarify this, go ahead.
We calculated this using the 104 000Ml capcity and an average water use of 300L/day/household.
I hope this clears up some points of contention and opens the way for more constructive dialogue.
I have found this document
http://www.nrm.qld.gov.au/water/water_infrastructure/pdf/long_term_solution.pdf
On page 65 there is a table relating to Wyaralong dam. In the table it shows a preliminary cost estimate of $170 million, and a cost assumed by the NRMW of $500 million. There is a foot note that explains "Major factor causing the large increase in costs is a revised estimate of road relocations – optimisation of the
design is to occur, giving consideration road relocations and yields."
I don't see how it's now possible to avoid the conclusion that the $500 price tag really is just for the Wyaralong dam project, and that the bulk raw water cost really is in excess of $1 per kilolitre.
Dear Sylvia, Pinxi et al
The news from Premier Beattie this afternoon is that, after allowing for inflation, future charges for water will remain the same as at present; reason so that low-income water users will not be worse off.
So I guess in the words of my favourite singer-songwriter, Neil Young, "we're all just pissin' in the wind"
Blair
Motty I'm surprised if you don't realise that your assumptions are implicit in Blair's proposition. I too have wondered, although with less certainty than you, if the rush for tanks might produce excess supply - particularly as the decision to instal private tanks isn't just based on economic rationalism, there are an assortment of motivations. Hence I referred above to the commoditisation of water supplies. Despite privatisation, the traditional infrastructure models still dominate our mindsets and economic planning, so govts find it hard to consider the impact of decentralised supplies of utilities.
Blair
I can't find anything resembling a break-down of tap-water costs in Queensland. However, we know that there are some costs of providing the bulk water from storage schemes, and some in filtering the water. The remaining cost is the distribution cost. If Brisbane water prices reflect the true costs, then I would venture to suggest that distribution comes in at no more than 60 cents/kilolitre. That puts an upper limit on the price of desalinated water in the tap at about $1.60.
Ian Mot's pricings for the large scale rainwater tanks are believable (though I think a touch optimistic) for houses where installation is straight foward. If extra construction work is required form a level base for the tank, than I suspect that pushes the price up considerably.
I have also questioned whether it is reasonable to ignore the cost of the land on which the tank sits. If one does not intend to install a tank, then there is a saving to be made by using a smaller plot of land.
I am also concerned about the implications of having a large number of people treating the municipal water system as a supply of last resort. That is, that they'll only buy water from the municipal system when their own tanks run dry. This would require a large capacity in the municipal system that is most of the time not generating income. Since using the system that way pushes the cost up, households who derive most of their water from rainwater tanks should have to pay a significant premium for the privilege of being allow to use the municipal supply only when rainwater is scarce.
It would be a brave politician indeed who tried to explain that to the electorate.
Dear Ian
"The notion that mains water delivered today should be priced at the cost of delivering it in future is breathtaking in its total lack of grounding in economic reality.
The upper limit to any capacity to raise prices in a competetive market is defined by the lowest cost competitor/supplier. And that lowest cost competitor is "everyman" with his own roof and own tank"
Obviously Ian I have not expressed my view clearly enough.
Brisbane water supplies are metered and domestic users pay 93 cents per KL for each KL used. Presently at that price demand exceeds supply and in the future demand will also exceed supply hence the current practice of non-price rationing via water restrictions and the plans for mega public investments in water supply.
Average water consumption,in the absence of non-price rationing is around 750KL per household. If current and future supplies at that price amount to (say) 500KL per household then households face a shortfall at the current price of 250KL per household or a shortage of 33 percent. If it costs in the future from the cheapest source of publicly supplied water (say) $1.50 per KL then the solution is to charge "average" water users for any water use above 500KL per household at $1.50 per KL. Of course I am talking in averages but using past Council records it should not be too difficult to determine previous household water use and adjust the cutoff figure where the higher price will apply.
If "average" water users know that they face a water charge per KL above 500KL of $1.50 per KL then they have quite a few options and one of these is to use in your words "the lowest cost competitor, namely the rainwater tank". Because water is metered then the household using the rainwater tank avoids the stepped price of $1.50 per KL for supplies above 500KL and if all households, to avoid the higher price, invest in rainwater tanks then the need for the(higher priced) public water is avoided. All the households will pay above the charge for 500KL is the costs of supply from their rainwater tanks. Other options include investing (at a cost) in water saving devices etc.
But the history of public pricing of water does not make one believe that economic rationality enters the equation and so I suspect we will end up with the current pricing practice with a few subsidies thrown in.
Blair