Australia’s Millenium Drought May Teach California How to Prepare and Respond to El Niño

Pat Mason: At the California Foundation on the Environment and the Economy, we work on environmental enhancement, with a growing economy and jobs. We are a non-partisan labor, business, and environmental coalition. 

We do international study tours, in which we take members of our legislature, administration, and agencies to meet with counterparts in countries around the world. We go there to bring our knowledge and best practices on things that we’re good at, like energy efficiency, our carbon regime, and integrating renewables in a very complex system. We also go to learn, particularly about transportation infrastructure and, of course, water.

We went to Australia in October with a delegation led by Senate President pro Tem Kevin de León; Mark Levine, chair of Assembly Water; Danny Curtin of the California Water Commission; Paul Wenger of the Farm Bureau; and David Gomez, of IBEW. It was so popular that we’re taking another delegation.

We went to Canberra, Adelaide, Melbourne, and Sydney, viewing sewer mining projects, in situ desal, and the Oaklands water park. We saw different large and small projects, but mainly we got a big policy overview. In my 32 years of doing this work, this is the most impactful study tour that we’ve done. I think it’s already bearing some fruit.

When we talk about programs and projects, we take for granted project delivery. We talk about water policy, but how do you actually get projects built, financed, and delivered? Australia has invented the model being used around the United States in a number of different areas. California is not good at this, and we’re getting better. We now have an authority to do transportation projects using alternative delivery methods like Australia, and we really need to be able to apply that to water.

We took a group to Infrastructure New South Wales, which is a center of excellence. They discussed: What’s the role of the government and the private sector in this? What’s the role of investment? Where are the standards and the responsibilities?

Felicia Marcus: There are a lot of things that we’ve gotten from our colleagues in Australia over the course of the last few years. I picked five lessons to share:

The first was to conserve early, just to be on the safe side—to buy time to do the other things you may have to do if it goes long. Australia had the same three-to-four-year drought cycle for the hundred-plus years we’ve been measuring, and then thought for about six years that it was going to rain the next year. The Australian experience of having it last 10-12 years, in and of itself, was a powerful lesson. Our Australian colleagues explicitly recommended we conserve early and not wait until year six like they did. They had to spend billions on everything all at once. That influenced us tremendously. We did move early with the remarkable response of our water agencies and of our public. 

Second, they gave us a sense of what’s possible because of all that they did. We saw what they could do through a combination of conservation, efficiency, recycling, storm-water capture, and desal in the appropriate places, and the huge cost of overbuilding earlier than you might need to if you didn’t conserve. We saw, also, the value of the insurance policy they now have as the drought comes back. I’m sure they would have liked to have done it in a more measured, economical way if they had had the time to see just how far they would get on conservation, recycling, and storm-water capture.

Storm-water capture is one of the most compelling things they accomplished in a big way. We have been well on our way for over 20 years, thanks to Andy Lipkis’ leadership, and others. But their example lit a fire under us about what’s possible in an urban setting—not just a theoretical possibility in an environmentalist dreamscape. Major metropolitan areas have done it successfully and have been able to preserve their communities. It inspired us to accelerate and double down on the things that we’ve already started and that we’ve put into our Water Action Plan. We’ve streamlined recycling permitting, done financial incentives, and worked on our approach to storm-water management. We’ve even gotten to create a level playing field with our desal policy, which deals with the marine impacts of desalination, so that people have a roadmap to the target they’re going to need to meet if they want to go that route. 

Third: Where did they save all that water? It’s toilets, to be sure; even though we’ve done a lot on toilets, there’s a long way to go. It’s outdoors; that’s why we focused on outdoors in our conservation messaging and in crafting our conservation regulations. Many communities have done the same thing—over half a billion in turf rebates for permanent changeout by water agencies in Southern California. Leaks are the next frontier, but that costs more money to deal with. If we hadn’t done mandatory conservation regulations, that’s where we would have gone next. We have a tremendous partnership with the American Waterworks Association to figure out how we can accelerate the detection of leaks. It’s expensive, but that’s a big chunk of water that we can get.

Fourth is the power of community and messaging. They spent a lot, but it was a heavy lift for them, too, when they started. They provide an example of what you can achieve by investing more heavily. It’s easier to get the money for bins, buckets, trucks, loaders, and infrastructure—but you need to spend it on public messaging to engage the community to take the myriad actions only they can take that add up to a lot. You also need to be aware of the fact that it’s hard, and then get help from experts. We saw the power of the possible, and the numbers they achieved were staggering.

Fifth is the power of information. This may be the most significant. It was fascinating to see the legwork that had been done well in advance for other reasons—the metering and measuring binge that the Australians went on in the ’90s in many of their states. There’s a foundational need to know what you’re even talking about to be able to manage a complex water system for the benefit of water users and the environment. There is a lot in the water public policy sphere that is based on feeling and long-held belief.  But actually having the data allows you to make decisions in a more transparent way to get beyond feelings into action. 

What the Australians had done in the ’90s positioned them to make some big decisions during their drought more rapidly than we could. They could manage their system more effectively for environmental, economic, and other human uses, but also make decisions about broad-scale water marketing. (Whether you agree with that isn’t the question.) 

Between the governor and the Legislature, we’ve gotten more authority in the last two years on managing our water system than in the last 20, and we’ve done it with agreement from water users. There are disagreements about how to make it easy to do, but we have had tremendous support in the agricultural community to get information and data. We just did regulations on metering and measurement, but we also had emergency information orders. We’re having a very intelligent conversation, because that data helps people as much as it may expose them. It requires some handholding and thoughtfulness.

Daniel Curtin: The Water Commission was created by the water bond. It’s been allocated a continuous appropriation of $2.7 billion to invest in storage. What we invest in is restricted to the five public benefits outlined in the bill. We are allowed to finance up to 50 percent of any given project, but 50 percent of the amount we spend has to be on ecosystem benefits. The other elements that we’re allowed to spend money on are clean water, flood control, reservoir reoperation, and recreation. 

This might have been the most significant legislation I’d seen in 20 or 30 years. It required two-thirds and every piece of it was a knuckle-dragging tough fight. Since we’re continuously appropriated for our money, we have to set up regulations and go through the state regulation process, which is another mind-numbing event. 

But the stakeholder differences did not get very well clarified in the legislation. So now we’re here on the pitched battle on the regulatory side.  People whose battles didn’t get decided upon the way they wanted in the statute are now fighting it in the regulations. 

We do know what we have: this money to do this work. It has to have an impact on the Delta. Beyond that, we’re flailing around quite a bit.

The first thing that stuck in my mind on the tour was the trees. Most of our water starts in the mountains. The forestry practices do not allow most efficiently for water capture and water quality. I’ve been trying to figure out how we can help some watershed management programs, meadow restoration, and things like that, with Commission money. The biggest problem is: How do you quantify water capture in an upper watershed? So, I’m focused on trees in the upper watershed, and in urban areas as well. The pressures of reduced water in suburban areas had an impact on trees. I believe the Resources Control Board has done a course correction to say: Lose your lawn, but don’t lose your trees. That’s the messaging issue.

Urban development of water—in situ desal and sewage mining—was fascinating to me. We went to a racetrack where all of the water dealing with that racetrack was being developed onsite. We went to a soccer stadium in a park in Melbourne where almost all of the water utilized in that stadium was developed onsite through a sewage mining process. These were all small, discrete, individual projects, but they were all fantastic. We went to a winery using all recycled water through water treatment. Those kinds of things add up dramatically. 

The thing that really stuck with me was how to quantify public benefits. You can’t believe the conversations we have in our rulemaking: How much is a salmon worth, versus waterfowl, versus wetlands? How do you put a value on that, to determine the money we’re going to contribute to these storage programs? 

Australians have solved that very simply by putting a value on an acre-foot of water that has an ecological value. We don’t have to sort out what that ecological value is. Then we would hopefully rely on the Department of Water Resources to put the money we are investing in those acre-feet toward proper ecological programs. If we invest in your project, we have the ability to control a portion of that water that goes to the environment, and that’s how we’ll develop our investment. 

Integration of projects is a complicated issue. We’re not given the authority to integrate projects, but I know I am going to look at a project as a suite of projects that come to the Water Commission—from the first raindrops, to perhaps a smaller-scale surface storage, to reservoir reoperation to make sure the water is moved differently so it can ultimately get into the groundwater. I haven’t heard anything from flood-control projects, but the intent is not to move all the water out to the ocean, but to figure out ways to re-channel that water and get it into the ground.

There are only about 3,000 water agencies in the state of California governing all of the stuff we’re talking about, so what could possibly go wrong? 

I want to look at the projects presented to the Water Commission in terms of their value from a public benefits point of view, but also ask how they work together.

While it’s not in our Commission’s purview, the tunnels of the Delta fix are critical. Storage and conveyance have to work together. We’ve talked about a reservoir above the Delta sites reservoir, which is an interesting and expensive project. The value of that has been proven: Just this year, we would have hundreds of thousands more acre-feet of water, which we could store below the Delta. But without the tunnels, we can’t utilize it. 

The US ambassador pointed out that there are $3 trillion in what they call “superannuation funds” in Australia, which are our pension funds, looking for a place to make a safe, two-to-three percent, 50-year investment. Public-private partnerships for big projects can offer safe, long-term, return; there’s plenty of money out there to do it. We’ve just got to get our heads together and figure out how to deliver big projects and make them work together with lots more practice. 

We can solve this problem. It can be done. Australia’s shown us the way. But it’s going to take a lot of integration and a lot of hard work.

Stuart White: To give an overview of Sydney’s water demand: We’ve seen a dramatic increase in total per-capita demand as people started to get more water-using appliances, like large, top-loading washing machines, and then a significant decline since 1990 in per person demand. We’ve added a million people to Sydney, and the water consumption has not increased. In fact, it has decreased—a similar story to Los Angeles.

If you dive down, you tell a story across every different sector, fixture, and appliance. The unique Australian invention, the dual-flush toilet, has meant a decline in the number of single-flush toilets that exist in Australia. They’re improving efficiency over time. In 1990, we reached peak toilet flushing. We will never use as much water flushing toilets as we did in 1990, no matter how much population grows. 

It seems like this is a small thing. But multiply this by washing machines, cooling towers, urinals, and industrial processes, and you see a picture that spreads across the sectors. It shows the power of the demand side. 

We see this in Melbourne. If it had not been for the demand reduction that occurred during the drought (not even the dual-flush toilet, which dates back to the late 1980s) then Melbourne would have reached dead storage. Almost certainly that would be true of Sydney and Brisbane, as well.

There’s nothing worse to ruin your day than having a $2-billion desal plant that comes on six months after you’ve reached dead storage. So another dimension is the importance of the demand side in supporting appropriate infrastructure. 

From our work and the work of Californian colleagues, we know that water efficiency options—investing in front-loading washing machines, water-efficient toilets, shower heads, cooling towers, and so on—is worth in the range of $300-700 per acre-foot, whereas if you buy new water, create a new dam, or new desal plants, you’re talking upwards of $2,000 per acre-foot. There’s absolutely no question about the relative costs. If we hadn’t done that work, then we are wasting the money we’ve been gifted through these monopoly service providers, the water utilities.

One of the big success stories was the communication element—the ability to communicate and engage with citizens. There’s a long-term sense that restrictions are just an accepted part of water management. Banding together to work on getting through the drought is an important part of the culture. That was absolutely true during this drought. 

In fact, in South East Queensland, there was a program called Target 140, which is roughly 37 gallons used per person per day. The program was so successful it actually reached 33 per person per day. Brisbane was late to pricing reform. It didn’t have meters until relatively recently. And yet they were able to achieve this massive reduction through a huge campaign.

We are privileged to be part of one of those, which is sending the top 10 percent of users a letter asking them to participate in the program. There was a 90-percent response rate, and as a result, a significant reduction. 

The interesting thing is that it hasn’t bounced back very much. We’re now only up to about 170 liters per person per day. That’s 42 or so gallons per person per day. Those new initiatives have stuck.

There’s very strong support for restriction levels. Even during the height of the most severe restrictions in most jurisdictions, there was still very strong public support for them. 

What we didn’t do so well was ask people what we should do about it or discuss the trade-offs. There was a paternalistic, top-down approach. These are subjective issues: questions about how much you should trade off environmental flows, versus expenditure on the supply side, versus the level of restrictions. After all, this is about level of service, so we should be asking customers. It wasn’t done, and that’s a real missed opportunity. 

Given that California and the United States have the strongest tradition of using techniques for deliberative community engagement, there’s a real opportunity to learn from that lesson. 

I just want to end with the importance of spreading your bets. For the first time in Australia, we applied the principles of real options to the water sector. 

We applied this idea in Sydney. We projected what might happen to dam levels in a worst-case scenario if the drought continued with the same level of severity. We looked at what you would need to do on the demand side in order to slow down the depletion curve. It doesn’t take very much reduction in demand to buy another six to 12 months, which gives you some time to put in place your other supply-side measures. What we were looking at here was: What would a desalination plant do in this context? We worked out that if you triggered the build at 30-percent dam levels, you would have something like 24-26 months to actually build it, but only if you’d done all the planning, preparation, and approvals. So you didn’t need to build it; you just needed to know that you could build it in 24 months if dam levels got to 30 percent. 

The government accepted that advice, which was the first time that kind of thinking had been applied in the water sector. Roll the clock forward 12 months’ time: dam levels are at 34 percent and dropping, an election is around the corner, and the mix of politics, water, drought, and scarcity is a fairly potent mix. The problem was signing the contract to design, build, and operate the desal plant when dams were at 55 percent and rising. The massive rains had already occurred. Signing the contract was a $2-billion issue that people are still paying for when the desalination plant was operated for commissioning. It’s been mothballed, as have a couple of the others around Australia.

So we’ve got a significant lesson here about flexibility, adaptability, and the sheer size of capital investment. We did some analysis, which showed that it’s much better to look at a range of smaller options that give you that flexibility and modularity, in order to be able to bring things online in a much quicker way to suit the need. 

We’re seeing a massive disruptive revolution in the electricity sector. The utility sector is dramatically changing. We’re about to see, probably with a 10-20 year delay, a similar situation happening with water, and an emerging fourth generation of water infrastructure that is more efficient, decentralized, and integrated. 

It’s quite possible, and some of our research is showing, that that will be a lower cost to households than the current system.