Drought prospects

I recently wrote a post on water recycling. In it I touched upon the grim prospects for the water supply in the south east Queensland region. To illustrate how bleak the outlooks are, have a look at the graph below sourced here. [click on the image for a larger view]

It illustrates current and forecast water storage levels in the Wivenhoe, and North Pine Dams (the main source of water in the region). Currently, the dams are 28% full. The forecast is based on a scenario where the inflow into the dams continues at the levels experienced between April 2004 and March 2005. The different numbers indicate the implementation of different drought contingency options. If no drought contingency measures are developed (blue line), then the Wivenhoe, Somerset and North Pine dams will be almost empty by September 2008. The yellow line depicts the situation with all the suggested 13 options implemented (timing shown in the graph). The green line is without a major recycling project (number 10) called the Western Corridor Recycling Water Scheme.

According to the graph we will be facing level 4 restrictions in September and no doubt yet unknown level 5 restrictions after New Year.

In our household we try to implement a water conscious line. But for some unknown reason our water consumption is not metered. This is of course absurd when we are running out of water and can use as much as we like for free and it seems even more absurd once you consider that the apartment block we live in is only one and a half years old. You would have thought that every new apartment block or house would be required by law to have water meters installed.

Is it possible to explain this apparent absurdity?

First, could it be the case that current drought condition is a relatively new phenomenon and no one gave any thought to metering water just one and a half years ago? It was certainly not a subject that achieved much attention in the media when we arrived in Australia two years ago. I doubt it.

Second, the demand for water is relatively inelastic. [For non-economists: When the price of a good rises for example, consumers will usually demand less of that good, perhaps by consuming less, substituting for other goods etc. The greater the extent to which demand falls as price rises, the greater is the price elasticity of demand. However, for some goods consumers may not be able to consume less or are unable to find substitutes even with substantial price rises. For such goods, the price elasticity of demand is called inelastic.] Apartment blocks like the one we live mostly have indoor water use (we do not have a garden). We are unlikely to change our consumption patterns should prices rise or other circumstances change, hence the inelastic demand. One could therefore argue that metering water and price rises will do little to curtail water demand.

Ultimately it is question of cost versus benefit, but the cost of a meter is unlikely to be prohibitive and ensure that consumers face the (resource) cost of their consumption decision no matter the relatively minor cost of water on the overall household budget.