Adam Lovell Shares Australia’s Water Management Priorities/ Best Practices

Adam Lovell: Water services in Australia are generally provided by state-owned corporations—water utilities that are owned by the state but are also under corporations’ law. In other words, they have independent boards, and most of them have some form of economic regulation. The prices are set independent of the government and independent of the board, and each utility needs to go to their economic regulator to make their case for the way prices are set. 

Where we currently stand in Australia for most of the capital cities is that we are very well secured for water, at least for the medium term, for the next five to 10 years. The challenges that we face fall more around the structure of the industry and the structure of the way we manage water in an urban context. We have set out a new vision for urban water services in 2030, and that is customer-driven, enriching life. 

If I had given this presentation 10 years ago, it would have been a science and engineering presentation about desalination, pipes, pumps, and other great innovations that you can build into a city. This is a new way of thinking—it is about delivering customer services. And, it is about enriching life, because that recognizes the health that people expect from water supplies, and the healthy, livable communities that they expect from managing sewage services. 

Look at the outcomes we’re trying to achieve—and in particular I’d like to highlight the top two outcomes. Outcome three, a valued partner in land use planning to enrich communities—this is one of the biggest challenges that water utilities now face in delivering water services in Australia. The cost of delivering water services ranges, going upwards of $35,000 for water and sewage. For an infill development much closer to the city, it’s around $5,000. So, you can see the big pressures that we face. 

The big frontier, though, is managing pulling stormwater into the urban water cycle. While I’m speaking at a national level, my home city of Sydney, for instance, has one utility managing water, sewage, recycled water, and desalination, but I have 44 councils running stormwater. When you see some of the statistics I’m going to put out, you will see how important it is to pull stormwater management into the total urban water cycle. 

Finally, there is waterway health. Waterway health is one of those situations where nobody quite knows who to talk to about management. Stewardship of the total urban water cycle is critical.

This is the hottest year in record across the country. We even had to increase the colors on our heatmaps. Our Bureau of Meteorology had to invent new colors for temperatures above 50 degrees and above 122 degrees Fahrenheit. 

Focusing back on Sydney, we had the hottest day on record, warmest year on record for maximum temperatures, for mean temperatures, a record lack of cool days and nights, and most rainy days with at least 25 millimeters. So, there’s an extreme there. We actually had an above-average year for rainfall. I admit that when it rained, it absolutely poured. We’ve seen these extremes. What does that actually mean for our community? They’re engaged with water management because they know that, particularly in Sydney or in Perth, it just stops raining for months on end. Then, it absolutely pours down, and they see stormwater going down the street. Why isn’t this captured? I’ll come back to that a little later on. 

Here are some key stats for the Australian water industry. We came off a big capital spend in the late 2000s. We were spending about $12 billion on desalination, on water recycling. We’re now back down to $5 billion. In that period when we were spending $12 billion the investment in water was second only to mining. We are currently spending 8 percent less than what we did in pre-restriction years. 

Communities completely embraced the approach and use of water. Deepening private sector involvement in Australia is one of the big challenges that we face in managing water. In fact, you’ll see that for most utilities, nearly 100 percent of their capital is done with the private sector, and around 55 percent of their operational expenditure is delivered through the private sector. 

What we’ve found looking at our key statistics for water utilities is that we’re heading toward what you’d call—I hate to say—junk status in investment. What does that mean? If the private sector is to get further involved in managing water in Australia, if you’ve got a return of less-than-investment grade, why would you? 

Our call at the moment is that economic regulation needs a major overhaul in Australia because we need to have utilities operating at investment grade. 

One of the key things that we hear from our customers of utilities, of course, is “I’m using less, but I’m paying more. How does that work? What is the value proposition for me?” A typical bill is rising toward $1,200 total for water and sewage per year, and demand is falling down. In Perth at the moment water use is around 250 liters per person per day. In Sydney, it’s around 300 liters per person per day, which includes industrial uses, not just residential. 

Bills are going up. It’s a big affordability concern. However, as a sector, we’re operating really well. There are very few complaints from our customers. 

Let’s focus in now on Sydney. Sydney has huge storages. We’ve got one big one—Lake Burragorang, which is out toward Blue Mountains and we’ve got other ones in the Southern Highlands. We’ve got non-potable recycled water and we’ve also got desalination down on Botany Bay near the airport. Desalination can supply up to 15 percent of Sydney’s supply. It’s probably off for another three years—there are operating rules attached to it. The dams filled up last year, and as soon as the dams fill up, we’ll go about 90 percent. Then they turn it off to save just a little bit of money. Dams, recycling, desalination, water efficiency—that’s the equation for Sydney. By diversifying your portfolio, you get to cope with that uncertainty that’s presented through climate change.

Let’s look at the 12-year drought that we had, the Millennium Drought as they call it. Water Wise was started in 2009, and our biggest industrial water recycling scheme in Sydney came on in 2000. Business Water Efficiency was kicked off in 2001. In many respects now, water utilities in Australia are acting also as energy-efficiency advisors for their major industrial customers because the retail market for energy is not working quite as well. Dam storages hit 68 percent in about 2002. No daylight watering was put in place. Basics came onboard, and Basics is looking for 40 percent reduction for all new dwellings. There are now rainwater tanks and water efficient appliances in the home. 

Dam storages hit 40 percent—oops, starting to get a little bit worried now. What do we have in place? We talked about desal. And, all of a sudden restrictions were really ramped up. No filling up of pools. The first sewer mining scheme was kicked off in 2007. We got to 2009. By that stage, the government had decided to go ahead with desalination and households had fully embraced the mandatory restrictions, and we’d gotten down to 25 percent less use than the year 2000. 

From 2009, when it started to rain significantly, it leveled out quite a lot, and we’re seeing customers holding. That’s a really fantastic result. You can see the inflows have changed. I’ll show the Perth inflows, too, but in Perth it’s far more significant than what this is. 

The interesting thing about Sydney is that among those dams, if all of those dams were full, if it did not rain another day, there’s a four year supply right there. Sydney has the biggest per capita supply of storages in the world for a developed city. They’re very large catchments. 

Again, you can’t reinforce enough the water efficiency message. There are two major steps in water efficiency. Outdoors, we’ve got Smart Approved Watermark. It’s a really fantastic scheme where innovative products are brought to the market and are given a tick of approval. This is for people who want to irrigate around their home—it maps out what’s water efficient and what’s not, what delivers and what doesn’t. 

Inside the home, there’s a government sponsored WEL scheme—a Water Efficiency Labeling scheme—that applies for toilets and all the white goods. We’re currently at a point now in Australia where nothing much more can be squeezed out of water efficiency, particularly in the home. We’re doing pretty much as well as we can, and in fact, we don’t even talk in Australia now about water conservation and water restrictions. We talk about water efficiency. We talk about using each drop wisely. 

If you look at the supply costs for Sydney going forward, you can see that there’s a huge range from rainwater tanks to water efficiency. Desalination turns out far better than what you’d think. Future water sources, water transfers from the Southern Highlands, and desalination. 

I just wanted to highlight this really quickly: competition coming into the market in New South Wales. Flow Systems is developing a site right near Sydney Railway Station with 5,000 residential lots. They buy potable water from Sydney Water, but the rest of it is delivered by them. All sorts of water recycling, onsite stormwater, black water, and rainwater recycling are on site.

A quick overview of Perth because, I think, if anything, it is most similar to Los Angeles—practically desert right up against the sea. If you look at those bottom sites down there back in 2010, they had 10 gigaliters coming into their storages with an average of 300. Perth has developed a program called “Water Forever, Whatever the Weather.” Don’t say that after a few drinks, but it’s well worth remembering. Perth is moving to be the first city—it’s the world’s most remote city with 1 million people—to be climate independent. 

There’s a second desalination plant with 150 gigaliters a year. So looking at Perth, you can see that SSDPs has a big transfer back up to Perth, but that whole southern space, south of Perth, is a big growth area. It’s catering for growth as much as it’s catering for climate change. Perth is also working very hard on its water use, and often probably performs the worst across Australia. But, Perth’s built on sand, and it’s working very hard on its water use. It’s now also implementing the Groundwater Replenishment Scheme, and that trial has gone through. 

I congratulate both sides of government on this one. Both sides of government were supportive this whole way through, with huge community engagement in this. 

Perth is moving toward climate independence by 2022. Desalination will be approximately 60 percent, 40 percent from groundwater replenishment. 

This is all about liveability of our cities. It’s about creating vibrant communities and cities. This is what our customers are now expecting of us. It’s all about people and places, land and waterways, and our cities’ futures. Our communities are expecting to connect to their local area. They are looking for green space, and what’s water’s role in providing that green space? Aquatic recreation is so important to Australians, as is meeting affordable targets, and innovation will be critical to achieving that success. Here’s some interesting work that Sydney Water’s been doing with their customers about what matters to them most. What should Sydney Water do more? What are the minimum expectations? Right at the top there is stormwater capture. It’s at the top of mine. Fixing and preventing leaks. Just as I left Sydney on Sunday, there’s a story breaking: Sydney Water’s leakage rates. The community has a right to ask those questions, to have that focus.