It takes about 1000 litres of drinking water to produce $1000 of steel roofing: allocation policies should favour higher-value uses over lower-value uses
Posted by waterweek on 17 October 2007
According to Graham Kraehe, sensible water pricing and allocation policies should favour higher-value uses over lower-value uses. Nevertheless, BlueScope Steel’s Port Kembla steelworks in NSW has more than halved its drinking water use in the past year since implementing a major water recycling project reported The Age (12/7/2007, p. 1)
Water allocation policies should favour higher-value uses over lower-value uses: Importantly, each litre we use generates significant economic value. From raw materials to finished product, it takes about 1000 litres of drinking water to produce $1000 of steel roofing. The same 1000 litres used for cotton or rice irrigation would produce much less value. The point of this comparison is not to disparage those industries, but to point out that sensible water pricing and allocation policies should favour higher-value uses over lower-value uses.
Governments need to encourage industries to save water: In the rural sector, horticulture and viticulture typically generate higher returns for the water they use. Government restrictions on water trading and inadequate infrastructure mean market signals we muted and trading to higher-value uses is limited. Second, governments need to encourage everyone, including industry, to save water. Companies wanting to implement water savings projects in order to meet corporate social responsibility objectives, are often faced with the fact that such projects do not meet commercial hurdles.
Victorian State Government to contribute $4.1 million for water saving project: Water pricing changes could make some projects more attractive. But financial incentives are needed to allow others to proceed. The benefits of such water savings projects also flow to the environment and community. It is therefore appropriate that governments contribute a proportion of the cost. Such a project was recently announced in Victoria. The State Government agreed to provide $4.1 million towards a $21.5 million water-recycling project. This project will see the partial upgrade of South East Water’s Somers treatment plant and a new 13-kilometre pipeline to take recycled water to a BlueScope plant. The project will cut the plant’s drinking water consumption by more than 60 per cent, as well as reducing discharge from the South East Outfall and waste to landfill. In return for Government support, it is reasonable that industry be required to prepare water savings plans and meet savings targets. Finally, governments need to do more to encourage decentralised water solutions, such as rainwater harvesting.
Reference: Graham Krache is chairman of BlueScope Steel, a non-executive director of Brambles, and a member of the Reserve Bank board. This is an edited version of a speech to an Australian Industry Group forum.
The Age, 12/7/2007, p. 1