Home > Environment > Water, again

Water, again

September 28th, 2006

My piece in today’s Fin is about water pricing. My main idea is to set prices equal to marginal cost, but to give every person a free allocation as a basic right.

I’ve also uploaded my presentation at the ACE conference.

Water

In most Australian cities, water restrictions have become a seemingly permanent fact of life. Populations are growing steadily, and with them the demand for water. At the same time, it is becoming increasingly evident that the hotter, drier weather we are experiencing in south-eastern Australia is not just another fluctuation around a stable long-term level of rainfall.

Rather, the evidence suggests that we are experiencing the onset of climate change driven by human activity, a trend which will inevitably continue for decades to come. A sensible water policy must start from the assumption that inflows of water to our main catchments will continue to decline.

In the short run, with the drought having caught us unawares, there is little alternative to restrictions. Yet as John Howard has observed, permanent water restrictions make no more sense than permanent electricity restrictions. Permanent restrictions are bound to lead to distortions, with some low-value uses of water escaping the restrictions while higher value uses are prohibited. In the long run, prices are the best mechanism to deal with scarcity.

A substantial increase in water prices is needed to get supply and demand back into balance. On the supply side, with most of the cheap water options exhausted, we need to look at alternatives such as recycling or desalination. These options are comparatively expensive, with typical costs of delivered water from $1.20 to $1.50 a kilolitre or more, depending on local circumstances.

On the demand side, sensible use of water will only be achieved in the long run if users pay a price that reflects the social cost of the water they use. For some people, uses that are currently restricted, such as watering gardens, may be worth $1.50 a kilolitre. In other cases household water users may be able to find water saving options, which could be as simple as changing guttering to direct flows onto gardens or into water tanks.

The big problem with raising water prices is the perception that since water is a basic necessity of life, an increase in its price must be bad for poor families. At current consumption levels, this view does not appear to be supported by the data, which suggests that household expenditure on water grows roughly in line with income. Nevertheless, at lower levels of consumption, water demand is probably inelastic.

Moreover, large increases in prices would involve transfers of wealth to owners of existing water infrastructure and water rights, without any necessity for additional investment. The problem, therefore is to increase the price of water at the margin, without greatly increasing total expenditure.

The preferred solution to this problem so far has involved increasing block tariffs, in which the cost of water increases. Although the idea is right, there are some big problems with the way it has been implemented. One problem is that the use of three or more blocks adds complexity, and potential inequity, but does not really improve the incentives generated by the pricing scheme relative to a two-price system. Variations in household circumstances are sufficiently great

A more important criticism is that the increasing block system discriminates against large households. Even without wasting water, a large household can easily find itself paying high prices.

There is a relatively simple way of resolving both problems. Instead of applying a multipart tariff to households, water could be supplied at a uniform price, equal to marginal cost of around $1.50 a kilolitre.

In place of a free or low cost initial block allocation to households, every person in the community could be given a free allocation of water, sufficient to meet basic needs for drinking, bathing, washing and so on. An allowance of 200 litres a week or around 75 kilolitres a year could be considered.

Such a scheme would raise some practical difficulties. It might also be inconsistent with the COAG approach to water pricing, which seeks to impose a cost-reflective connection charge. However, given that connection to the water supply is effectively compulsory, such a requirement makes little economic sense.

The water crisis is a political problem and requires a political solution. A pricing scheme that recognises the special status of water as a basic human need, while ensuring that effective prices are in line with economic and social costs, seems like a natural solution.

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  1. econwit
    September 28th, 2006 at 22:56 | #1

    “it is becoming increasingly evident that the hotter, drier weather we are experiencing in south-eastern Australia is not just another fluctuation around a stable long-term level of rainfall.

    Rather, the evidence suggests that we are experiencing the onset of climate change driven by human activity, a trend which will inevitably continue for decades to come.�

    Is this true Mr Quiggin?

    This SCIENTIST says the evidence is inconclusive at this point in time.
    “We have no way of knowing how much of this rainfall decrease could be due to natural rainfall variability as our instrumental climate records are too short to define multi-decadal trends. I am thus reconstructing rainfall for the past 1000 years using stalagmites.�

    http://wwwrses.anu.edu.au/environment/eePages/eePeople/eePaulineTreble.html#currentresearch

    Maybe wait for conclusive evidence before proposing a new tax on water Mr Quiggin.

  2. econwit
    September 28th, 2006 at 23:42 | #2

    A dam built 50 years ago to service 2 million people is not going to service 4 million people. Bob Carr and others obviously can not add up. Yet he siphoned $4billion out of SydneyWater over ten years leaving Sydney high and dry.

    SydneyWater had enough time and money to build another dam (or desal plant), but Bob Carr squirted that option up against the wall. He would of even of had money spare to fund meaningful research like that conducted by DR Treble, so he could plan for the long term.

    If Sydney water was a private regulated monopoly it wouldn’t have its till constantly raided by socialists, forcing it to run out of the essential commodity it supplies.

    Now we will all have to pay more for water than we should.

  3. September 29th, 2006 at 00:32 | #3

    At the lower levels of consumption and in low income households water is a health issue. Enough water supplied free (or close to free) for each person results in some public health savings, and prevention of productivity loses, due to eye disease as one example and infections generally.

  4. September 29th, 2006 at 02:04 | #4

    John,

    I don’t know if you heard about this or not, but the interaction of the regulatory regime for ACTEW-AGL and water scarcity led to a rather perverse result in the ACT a while back. Because the ACT Government declared a particular stage of water restrictions, the expected volume of water sold by ACTEW-AGL was below what it was “expected” to be. As a result, when the rain finally came and water was less scarce, the ACT regulator authorised an increase in water prices to compensate for this loss. In effect, you had the perverse situation where the price of water rose when it became less scarce!!!

    Regards,

    Damien.

  5. Ian Castles
    September 29th, 2006 at 06:34 | #5

    John, Can you please direct me to the empirical support for your statement that “it is becoming increasingly evident that the … drier weather we are experiencing in south-eastern Australia is not just another fluctuation around a stable long-term level of rainfall”?

    According to the Bureau of Meteorology map and supporting time series data available at http://www.bom.gov.au/cgi-bin/silo/reg/cli_chg/timeseries.cgi , the 11-year moving average of rainfall in South-eastern Australia centred on 2000 (the latest available) is 5% higher than the earliest available (centred on 1905).

    According to a recent paper by Bureau of Meteorology researchers Neville Nicholls and Dean Collins (“Observed Climate Change in Australia Over the Past Century”, Energy & Environment, v. 17, no. 2, 2006: 1-12), “There is some evidence suggesting that some of the rainfall trends [in Australia over the past century] are the result of human influences, but this evidence is less convincing than is the case with the increases in temperature.”

  6. proust
    September 29th, 2006 at 07:23 | #6

    The 800lb gorillas in the room are the irrigators. While they continue to consume 80% of the country’s water at a tiny fraction of the price city dwellers pay, there’s absolutely no justification for increasing the prices for the city.

    Why don’t the water policy boffins ever discuss this? I’ve not see Turnbull talk about it.

    Buggered if I am going to put up with restrictions and price rises while the cotton-growers upstream have a license to waste.

  7. Mark Hadfield
    September 29th, 2006 at 07:34 | #7

    RE:

    “it is becoming increasingly evident that the hotter, drier weather we are experiencing in south-eastern Australia is not just another fluctuation around a stable long-term level of rainfall.

    Rather, the evidence suggests that we are experiencing the onset of climate change driven by human activity, a trend which will inevitably continue for decades to come.�

    I want to take issue with that statement, too, not with its truth but with its relevance. My contention is that in a semi-arid area like SE Australia the alleged stable long-term level of rainfall may not exist. So, anthropogenic climate change or no, there is a possibility of protracted drier weather and it is sensible to plan for this. (Or, if you’re a techno-libertarian, to expect it but not have the government do anything about it.)

    The best reference I could find to support this contention was on Roger Pielke Sr’s WWW site (and I don’t quote him with approval very often):

    http://climatesci.atmos.colostate.edu/2006/05/01/drought-history-in-the-rocky-mountain-west/

    He refers to a paper called “Holocene climate instability in the Rocky Mountains” that shows strong variability in drought on decadal and longer time scales in the Rocky Mountain area, based on diatom time series. (I haven’t read the paper yet. I’ll see if I can get a copy.)

    Is there any corresponding data for Australia, I wonder?

    Anyway, the history of European habitation in SE Australia is not long and maybe not all the natural climate fluctuations have been sampled yet. Given that Australia is marginally habitable already :-) , those natural climate fluctuations might well be significant.

  8. conrad
    September 29th, 2006 at 07:47 | #8

    econowit, even if the climate change wasn’t due to human activity, is there any real argument against the trend that things are getting warmer? Personally, if I had the same level of evidence that exists that the world is getting warmer for, say, having cancer, I wouldn’t wait and do nothing even though it would cost me a fair bit to fix.

  9. Ernestine Gross
    September 29th, 2006 at 08:05 | #9

    econwit,

    “If Sydney water was a private regulated monopoly it wouldn’t have its till constantly raided by socialists, forcing it to run out of the essential commodity it supplies. ”

    To the best of my knowledge, the trouble with the lack of capital works and maintenance for Sydney Water started with the corporatisation of Sydney Water.

    Not sure at all that a private regulated monopoly would constitute an improvement over what existed before corporatisation. According to Crikey, 28 September, Sol T. at Telstra used up $54 million on consulting fees in 2005 just for a ‘strategic review’ (in addition to the approximately $9 million in fees for him and then there are other senior managers).

    It seems to me there is wastage when ‘socialists’ or ‘capitalists’ or ‘managerialists’ (or other -ists’) run a company instead of knowledgeable people who do an honest day’s work for very good pay.

  10. jquiggin
    September 29th, 2006 at 08:21 | #10

    Ian, there does not appear to be any inconsistency between my summary and the statement you cite. As far as I know (and Wikipedia provides no counterexamples no climate scientist disputes the fact that global warming is taking place – this phase of the debate ended by the time of the Third IPCC report in 2001.

    So, in saying that “it is becoming increasingly evident”, I’m clearly not asserting that the evidence is as convincing as the evidence for increasing temperatures – the latter is a proven fact. The fact that we have observed one similarly dry period in the past leaves open the possibility of a natural fluctuation, but the plausibility of this hypothesis is declining with every year of below-average rainfall.

    Mark, it’s obvious that natural climate fluctuations are significant, but adding a trend to drier warmer climate still makes a big difference.

  11. jquiggin
    September 29th, 2006 at 08:52 | #11

    Proust, I’ve written a lot about transfers from irrigation to urban use. I’ll post my ACE presentation shortly, which covers this topic.

  12. derrida derider
    September 29th, 2006 at 09:29 | #12

    John, I do think your “it is becoming increasingly evident …” sentence was unfortunate – it went beyond the evidence. Surely its better to just make two points:

    1) Its *possible* the current dry spell is the harbinger of things to come. A moderate application of the precautionary principle is warranted.

    2) Even if its not AGW, there is now some evidence that SE Australia is subject to *whole decades* of natural rainfall fluctuations, not just dry years. We haven’t planned around this but we should.

  13. econwit
    September 29th, 2006 at 09:47 | #13

    “as the evidence for increasing temperatures – the latter is a proven factâ€?

    “Proven Fact�

    The same argument that is used for rain fall can be used for temperature fluctuations.
    We just do not know if these temperature variations are outside “multi-decadal trends.�

  14. Tom
    September 29th, 2006 at 09:48 | #14

    derider, derider – don’t be such a denialist! :)

  15. Ian Castles
    September 29th, 2006 at 10:09 | #15

    John, My request was that you cite “the empirical support for your statement that ‘it is becoming increasingly evident that the … DRIER weather we are experiencing IN SOUTHEASTERN AUSTRALIA is not just another fluctuation around a stable long-term level OF RAINFALLâ€?”(EMPHASES added).

    Have you studied the Bureau of Meteorology chart for Southeastern Australia to which I provided a link. If rainfall for 2006 is below average, that will become the 6th year running that rainfall has been below the 1961-90 average. Rainfall was below average in this region for at least 11 years running to 1910, for the six years from 1925 to 1930 and for the 6 years to 1940 to 1945. Nicholls and Collins weren’t talking about south-eastern Australia in particular: they were saying that the evidence for human influence on rainfall CHANGES in Australian regions over the past century (increases and well as decreases) was not nearly as strong as that for temperature.

    It’s also worth mentioning for the interest of many readers on this blog that Neville Nicholls is the author of “William Stanley Jevons and the Climate of Australia”, 1998, Australian Meteorological Magazine 47(4): 285-93, and that John Zillman cited this paper In the history of Australian meteorology that he contributed to ABS “Year Book Australia 2001″, as follows:

    “The first thorough study of the Australian climate was published in 1859 by William Stanley Jevons, a gold assayer at the Sydney Branch of the Royal Mint who was subsequently to make major contributions to the fields of logic, statistics and economics … Jevons’ 52-page study of the climate of Australia and New Zealand covers the general characteristics of Australian temperature and rainfall and patterns of drought and flood. Among the achievements of his pioneering study, he correctly recognised the highly variable nature and spatial coherence of Australian rainfall (Nicholls 1998).â€?

    The fact that the highly variable nature of Australian rainfall was recognised 150 years ago by one of the pioneers of the econometric analyses of time series should make us especially cautious about drawing strong conclusions from annual or even multi-decadal fluctuations in rainfall in Australian regions.

  16. FDB
    September 29th, 2006 at 11:58 | #16

    And therefore we should do nothing? Did this Jevons fellow say “Oz rainfall varies a lot, therefore we should throw up our hands in despair every time it dries up rather than plan for sensible resource use”?

    The only ‘strong conclusion’ we need draw is that water is scarce right now, and seems to be trending that way in the near future, so we need to be more sensible with its pricing and use. Right now. You can sit and wait for a golden age of bumper crops and swimming pools, but forgive me for calling you a hopelessly unhelpful dreamer. :)

  17. jquiggin
    September 29th, 2006 at 13:47 | #17

    DD, I’d put it more strongly – the balance of probabilities now favours the conclusion that we are observing a reduction in rainfall driven by climate change. This indicates that we should plan accordingly and the precautionary principle backs this up.

    I’m happy to express this in probability terms. On the basis of the evidence (rainfall records and model results) now available I give at least 75 per cent probability to the hypothesis of a reduction in rainfall driven by global warming. This is significantly higher than the probability estimate I would have given 5 years ago, and therefore I regard it as increasingly evident that we are observing such a change.

    Ian, are you willing to give a differnt probability estimate? Alternatively, are you willing to tell the people in charge of water planning, all of whom (at least, all those I meet) are now working on the assumption of permanently lower rainfall, that they are doing the wrong thing?

  18. wilful
    September 29th, 2006 at 14:33 | #18

    The water pricing plan is nice and simple and clear in theory – a problem with a lot of economics!

    What about people at the edge of town, who may be on town water but septic tanks?

    Does everybody in the State get the same basic allocation?

    Do I have to update when the number of residents changes?

    Are water authorities still allowed to make a profit?

  19. Joseph Clark
    September 29th, 2006 at 15:54 | #19

    wilful,

    Out-of-towners get an allocation which they can sell to others. Best mechanism would be an online auction (ebay?, w-bay?). Everybody can make a profit, though it’s best that the profits remain private. This gives the price signal its best chance to do its work.

  20. Ian Castles
    September 29th, 2006 at 16:34 | #20

    John, The view that climate change will lead to lower rainfall is contested by many scientists.

    In a presentation at Australia’s “Greenhouse 2005� conference in November 2005, three of Australia’s leading climate researchers – Mike Roderick and Graham Farquhar of the Australian National University and Leon Rotstayn of CSIRO – noted that the message currently reaching the public is that ‘greenhouse’ is associated with a ‘brownhouse’ – i.e, drought. They contended that, on the contrary, intuition suggested that a “greenhouse� should be “green�, and that globally averaged trends to date, of more rainfall and less evaporative demand, will result in a “greenhouse�. Professor Graham Farquhar FAA FRS, a co-author of this presentation, was a lead author of the carbon cycle chapter of the WGI contribution to the IPCC’s Third Assessment Report (2001).

    The conclusions of the Australian Academy of Science Workshop on Pan Evaporation (22-23 November 2004), included that “The observations strengthen the need for more careful theoretical assessments of (i) whether or not Australia (and other places) will get drier as temperature increases, and (ii) whether cloud feedback will strengthen or diminish global warming. It is affirmed that global atmospheric warming does not necessarily mean a more drying atmosphere or a drier land surface.� The Report of the Workshop is published online on the Academy’s website.

    The most statistically significant change in Australian rainfall over the observation period has been a decline in rainfall in the far south-west of Western Australia. However, a recent paper by three CSIRO researchers reported that the CSIRO model also produced multi-decadal long drying trends comparable to those that have been observed in an experiment without climate change forcing (Cai, W et al, “Multidecadal fluctuations of winter rainfall over southwest Western Australia simulated in the CSIRO Mark 3 coupled model� in Geophysical Research Letters, vol. 32, L12701, 2005).

    I think that I may already have quoted on this blog the conclusions about regional climate projections of John Zillman, as reported in his World Meteorological Day Address 2003 (“Our Changing Climate�):

    “The most important question for most individual countries and individual regions is how will the global greenhouse warming, if it were to proceed as the IPCC reports suggest it could, be manifest at the national, regional and local level and what would that mean for each of us?

    “I believe the question is, at present, completely unanswerable. There are many global climate models that have been run on increasingly finer spatial scales to provide patterns of human-induced change at the regional level or, even if not run on those scales, have been downscaled by various techniques to suggest patterns of regional change of temperature, rainfall and so on.

    “The IPCC reports have stressed that the level of confidence in these regional ‘projections’ is very low but this has not deterred some scientists with great faith in their models from suggesting a higher level of confidence than some of their colleagues, including me, are prepared to concede. And in some ways more seriously, agreement has been used to bolster confidence in the proposition that the likely patterns of future climate will be the same, in their geographic detail, as the pattern that emerges from the models.�

    I think that Dr. Zillman, Review Editor of the chapter of the last IPCC Report on regional climate projections, may be referring to the projections which are now being used by many of Australia’s water planning authorities. The question whether they are “wrong” to use these projections is a difficult one to answer. Obviously many of these authorities have been wrong in the past, in that they’ve paid insufficient regard to the evidence of rainfall variability that was apparent to Jevons with only a fraction of that amount of evidence, let alone the massive evidence that is available from this country’s instrumental records.

    If the water planning authorities been brought to the realisation of the reality of uncertainty by climate model results, then perhaps that’s “right” in one sense. But if John Zillman’s conclusion in the last sentence of the above-quoted extract is right, these authorities are still not approaching the reality of uncertainty in the way that they should.

    The question of whether it is increasingly evident that we are observing a reduction in rainfall driven by global warming can only be determined on the basis of scientific examination of the evidence, not on your subjective judgment that this probability is 75% now and was less than that five years ago. How do you draw these conclusions? Have you examined rainfall trends in the rest of the world?

    FDB, the conclusion that we should “do nothing” about water is certainly not mine, nor can anything that I’ve said on this thread or in the past be so construed.

  21. wilful
    September 29th, 2006 at 16:53 | #21

    Unfortunately, the climate change lead in turned out to be a bit of a distraction. Point of fact, we’re in a spot of bother with water at the moment, and whether or not this part of a long term trend doesn’t really matter, water pricing reform is necessary.

    What can we do?

  22. Roger Champion
    September 29th, 2006 at 16:57 | #22

    Silly and offensive comments from Tim Curtin deleted. Tim, I’ve advised you in the past that you’re barred – please don’t try and circumvent this

  23. September 29th, 2006 at 17:28 | #23

    wilful,
    best solution would be to price water correctly – to all users, including farmers. They are currently far and away the biggest users.
    Removing the control of the water from politicians would be a good next step and actually allowing some competition in supply and distribution another good step.
    I would not hold my breath for any of these, though – look to more short term stopgaps actually being deployed, more environmentally insensitive huge projects and other silly outcomes that cover the problem up as far as the next election.

  24. FDB
    September 29th, 2006 at 17:32 | #24

    Ian, you’re quite right. You said nothing of the sort. I was leaping to conclusions from your quite clearly delimited disagreement with PrQ, and I apologise.

    Got me a bee in my bonnet.

  25. Ian Castles
    September 29th, 2006 at 17:59 | #25

    Thanks FDB. I accept your apology with appreciation.

  26. jquiggin
    September 29th, 2006 at 19:12 | #26

    “Obviously many of these authorities have been wrong in the past, in that they’ve paid insufficient regard to the evidence of rainfall variability that was apparent to Jevons with only a fraction of that amount of evidence, let alone the massive evidence that is available from this country’s instrumental records.”

    This is a strong claim, which is inconsistent with my experience of water planners. They are highly aware of natural variability, and have made plans on the basis of continued variability around a stable mean. The low levels of rainfall seen in recent years have led them to revise their assumptions.

  27. Seeker
    September 29th, 2006 at 22:26 | #27

    At the lower levels of consumption and in low income households water is a health issue. Enough water supplied free (or close to free) for each person results in some public health savings, and prevention of productivity loses, due to eye disease as one example and infections generally. FXH

    Good point, though it is a bit more than just “some”.

    Clean drinking and washing water, proper sewerage management, and good quality food (nothing fancy, just the basic stuff), together account for something like 75% of the improvement in the average human life span (and probably similar improvements to the quality of life, and economic productivity, as well).

    Clean drinking and washing water is a very cheap and high return investment.

  28. Ian Castles
    September 29th, 2006 at 22:38 | #28

    John, Your initial claim was quite specific. You said that “it is becoming increasingly evident that the … drier weather we are experiencing in south-eastern Australia is not just another fluctuation around a stable long-term level of rainfall�. I asked you for some empirical support for that statement, noting that the latest 11-year moving average rainfall in this region (centred on 2000) was 5% higher than the earliest available 11-year moving average (centred on 1905).

    I didn’t make up the 11-year moving average: that is the Bureau of Meteorology’s method of smoothing the data in the chart to which I’ve drawn your attention.

    You countered with the argument that “The fact that we have observed ONE similarly dry period in the past leaves open the possibility of a natural fluctuation, but the plausibility of this hypothesis is declining with every year of below-average rainfall” (CAPITALS added).

    But there has not been just one similarly dry period in south-eastern Australia. This region has been in such dry periods for most of the time. In the 11 years centred on 1910, the average was 561 mm., or 4% lower than the average of the latest 11 years centred on 2000. In the 11 years centred on 1923, the average was 567 mm. or 3% lower than the latest 11 years. In the 11 years centred on 1940, the average was 533.5 mm., or 9% lower than the latest 11-year average. In the 11 years period centred on 1967 and again in the 11 years centred on 1984, the average annual rainfall was 3% higher than in the 11 years to 2005.

    In terms of rainfall, this latest period has been entirely unremarkable. If the water planners in South-eastern Australia have been “highly aware of natural variability, and have made plans on the basis of continued variability around a stable mean”, why have they been led to revise their assumptions in the light of the latest 11-year period, during which rainfall has been on average fractionally HIGHER than on average during the five 11-year period named in the preceding paragraph (a total of 55 years out of the 85 years from 1905 to 1989)?

    Of course it is true that rainfall was on average higher in the periods between the 11-year spans I’ve identified. If years of higher rainfall never return, there will indeed have been a permanent decline in average rainfall in Southeastern Australia. But I question whether there is any basis for concluding this when higher rainfall periods repeatedly returned during the 20th century – in 1916 and 1917, between 1929 and 1934, between 1946 and 1961, between 1973 and 1978 and between 1990 and 1994. I can only repeat that your opinions, and the opinions of water planners, are not “evidence” – and reiterate that the level of average rainfal in Southeastern Australial since the mid-1990s has been unremarkable.

  29. Ian Castles
    September 30th, 2006 at 06:43 | #29

    A postscript to the above. The only reason I used 11-year running averages, rather than 5 or 15-year running averages, was to replicate the span chosen by the Bureau of Meteorology for the purpose of the trend lines in their charts for Australia as a whole and for all States and selected regions. This does not imply a prediction that rainfall will rise at the end of any particular 11-year span, or that if it does not the rainfall pattern has “permanently” changed.

    The recent run of below average (i.e., below the 1961-90 average) rainfall in South Eastern Australia will have reached 6 years in 2006 (assuming, as is likely, that this year will be below average). But the 20th century began with a run of 15 below-average years, and the same might happen in the 21st century. If water planners did not expect that this could happen as a result of natural variation they failed to take account of the variation that is demonstrated in the relatively brief observational record that is available. I don’t understand how my statement to this effect can be considered a “strong claim”: it is an obvious inference if the observed rainfall record is accepted.

    This discussion will not ne helped by attaching the “denialist” label to such a point of view. I don’t deny that the temperature increased globally and in “nearly all” of Australia during the twentieth century, as Nicholls and Collins have reported. Like N&C, I don’t deny that there is SOME evidence that SOME of the rainfall changes (some of which have been in an upward and some in a downward direction) are due to human influences.

    But this evidence is not conclusive and there can be no presumption that increasing concentrations of GHGs in the atmosphere will lead to lower rather than higher levels of rainfall. There are differing views among scientists on this point, and the large water policy issues confronting many regions of Australia can and should be addressed in their own right.

  30. jquiggin
    September 30th, 2006 at 07:14 | #30

    Ian, picking particular points the way you’ve done here is not an appropriate procedure. This gives many more than 10 potential sets of 11 years in a 110-year period.

    An unbiased procedure is to take the 11-year average for every year, and see how the current situation relates to that of the historical record. At the end of 2005, the 11-year average was 585mm. There were plenty of years with an 11-year average lower than this in the early part of last century, though very few since 1950. However, with 2006 being very dry also, the 11-year average is likely to fall below well towards the bottom of the distribution once it is complete.

    We’ve then got three hypotheses in contention
    (i) a bad draw from an unchanging distribution
    (ii) multi-decadal shifts caused by an unknown process other than AGW (dry in the first half of C20, wet for most of the second half, dry again now)
    (iii) a long-run shift caused by AGW

    For the purposes of my article, the difference between (ii) and (iii) is unimportant. But the majority of scientific analysis seems to favor (iii).

    I reason as follows. It is increasingly evident that AGW is taking place (the fact of global warming is proved, and there is little remaining doubt that it is largely anthropogenic). Despite the qualifications you’ve cited, most models predict that AGW will reduce rainfall in south-eastern Australia. Very dry weather is in fact observed. Hence, I would say that it is increasingly probable that the observed dry weather is an effect of AGW rather than a random fluctuation or the outcome of a hypothetical effect we haven’t yet identified.

  31. taust
    September 30th, 2006 at 09:25 | #31

    If the immediate cause of the water ‘shortage’ is the anthropogenic climate change surely it is against the ‘true believers’ creed to adapt to it.

    We should I understand put all our eggs into the stop the emissions basket.

    Why is water being treated differently in that money must be spent on adapting to climate change. Surely our cafe latte policy elite is not putting practicality before ideology?

  32. proust
    September 30th, 2006 at 09:30 | #32

    Looking at Ian’s link (reproduced here so others don’t have to trace back through the thread as I just did), there is absolutely nothing to distinguish the current period.

    It was drier but with lower variance up until around the end of WWII, wetter with higher variance from WWII to around 1995, and then drier (but lower variance again) for the last decade.

    JQ’s argument that the recent dry period supports the AGW hypothesis would have some legs if not for the long dry period in the first half of last century. Unless he has an explanation for why that period was dry (in the absence of any significant AGW effect), how can he claim that the current period is a result of AGW?

  33. Ian Castles
    September 30th, 2006 at 09:32 | #33

    John, You haven’t answered my question “Have you examined rainfall trends in the rest of the world?” As for Australia, which represents about 3% of the world’s land surface, here are a few sentences from Nicholls and Collins:

    “The annual total rainfall averaged over all of Australia since 1900 shows a moderate increase (8.0 mm/decade), but is dominated by high year-to-year variability… Rainfall trends vary between regions and seasons. The greatest increases in rainfall have occurred in tropical regions, and in eastern New South Wales… The southwest of Western Australia and parts of the southern continental fringe show a decline in rainfall in the latter part of the 20th century, sugfgesting a weakening or southward shift in the frontal systems that bring most rain to these areas…

    “The percentage area of Australia in the bottom and top rainfall deciles for each calendar year since 1900 shows a weak trend toward a greater proportion of the continent experiencing extremely wet conditions, and a corresponding decline in the proportion experiencing dry conditions… Using daily rainfall data, Nicholls et al (2000) and Haylock and Nichols (2000) reported a strong decrease in both the intensity of extreme rainfall events and the number of extremely wet days in the far southwest of Australia and an increase in the proportiion of rainfall on extremely wet days in the northeast, from 1910-1998.”

    Those are the findings of the experts on the observational record. It is clear that there are imperfectly understood processes that have a major influence in inducing multi-decadal shifts in rainfall patterns, and I think you are drawing over-strong conclusions from some developments with which you are (for good reasons) especially familiar.

    On your point that “most models predict that AGW will reduce rainfall in south-eastern Australia”, it’s worth noting that the CSIRO’s projection for the change in average rainfall in New South Wales from 1990 to 2030 is nil, and their middle-of-the-range projection for Victoria is for a decrease of 2.5% (“Climate Risk Scenarios for initial assessment of risk in accordance with risk management guidance”, May 2006).

  34. jquiggin
    September 30th, 2006 at 09:37 | #34

    “Unless he has an explanation for why that period was dry (in the absence of any significant AGW effect), how can he claim that the current period is a result of AGW?”

    It’s not necessary to have a complete explanation of everything to explain some things.

    But, as I mentioned, for the policy purposes I’m concerned with it doesn’t matter much whether drier climate, relative to the average for C20 and particularly to its second half, is due to AGW or to a long-term climate shift. Either way
    (i) AGW is happening
    (ii) We are going to be short of water (at current prices).

    Taust, climate change is going to happen – a lot if we do nothing, but some regardless of what we do. So adaptation is obviously necessary. The problem is with those (I can give you a long list) who advocate adaptation only.

  35. gordon
    September 30th, 2006 at 10:08 | #35

    Prof. Quiggin refers to: “…the COAG approach to water pricing, which seeks to impose a cost-reflective connection charge”. I wonder if he can please provide a link to the relevant document?

  36. jquiggin
    September 30th, 2006 at 11:26 | #36

    Gordon, this is the
    attachment to the 1994 communique.

    Ian, I’m aware that there’s no general association between climate change and reduced global rainfall. Rainfall is likely to increase in some areas as you say, but the projections I’ve seen for the Murray-Darling Basin generally involve reduced rainfall over most of the catchment. This is fairly typical. I thought the same was true for SE Australia generally (and also for SW Australia, which has influenced my thinking in terms of rejecting the hypothesis of no change), but I will look further into the references you’ve given.

  37. taust
    September 30th, 2006 at 11:52 | #37

    JQ

    at the risk of tweaking the tail of a lion with auto immune disease.

    My memory of the US senator who made lists of names infamous is that he quoted the number.
    Are you going to send your list to the Royal Society and will they have televised shows where the people have to say who their associates are?

    A strong ideology to cover the world, suppression of dissent OK if it is for the cause; lists of unbelievers. If it looks like a duck. Quacks like a duck…………..?

    Are you comfortable with all your fellow travellers?

    On the adaptation to the need to increase water supplies.

    Given the investment cycle for major water infra-structure of say 20 yrs and considering Australia only. Would it not be true that we would have (in respect of water) paid most of the costs of climate change in Australia? So imposing mitigation measures on Australia would be (as far as water is concerned) paying the cost twice.

    Is this not likely to be true of most other impact on Australia of climate change?

  38. proust
    September 30th, 2006 at 14:23 | #38

    “it doesn’t matter much whether drier climate, relative to the average for C20 and particularly to its second half, is due to AGW or to a long-term climate shift.

    True, but there is little evidence of either in the data. Apparently, SE Australia can fluctuate between wetter and drier over a period of several decades or more, without there necessarily being any fundamental underlying change in the climate.

    In other words, it seems “weather” is not just a daily, or seasonal phenomenon, but exhibits at least mult-decadal cycles. This is surely something that is already well-understood. The statement:

    it is becoming increasingly evident that the hotter, drier weather we are experiencing in south-eastern Australia is not just another fluctuation around a stable long-term level of rainfall.

    is just not supported by the data.

  39. taust
    September 30th, 2006 at 16:42 | #39

    JQ

    The good Professor has advanced the concept of their being a price for water.

    Here on my backward home planet we have a body called the Monopoly Creation and Conservation Council which due to a quirk of our language has the initials ACCC. It puts a lot of time and effort into how to maintain monopolies.

    For our substitute for water called glugglug (GG) the ACCC makes several simplifying assumptions.

    Set 1 GG supplies several services for simplification called domestic and industrial.

    Set 2 the GG supply system is made up of several different mutually interacting parts arranged serially in order. These parts are called for simplification: Source, Production, Transmission, Distribution, Sales.

    This is not a unique division of the parts. For instance I have put a bid in for the monopoly to operate the valves which turn the GG on/off to each user and there is also an active monopoly to explore for sources of GG.

    Set 3 Each part is envisaged as acting as an independent agent (let us say that this maximises the ACCC ability to make money).

    Standard economic theory on my home planet says:

    1. The resource owner is entitled to charge up to the economic rent earned by the resource for some peculiar reason lost in time this is called the “Brown Tax� and is set at 30% of the economic rent. No resource owner agrees to pay the tax back when the others earn negative economic rents.
    2. the production, transmission, distribution and sales functions are all empowered to charge a price for their services sufficient to recover anywhere between the short run costs (lets call them the variable operating costs) and the long run operating cost (fixed plus variable costs).
    3. The practice of the sales function acting as brokers bundling together all the various function prices is allowed and is a separate monopoly.
    4. To preserve its administrative people the ACCC does not allow one monopoly owner to own more than one function.

    Now the ACCC claims that price will serve three functions:
    • ensure that the various functions can attract to their function the resources needed to supply that function
    • to ensure that demand and supply are balanced and
    • Give estimated predictions of the need for expansion in the capacity of the various functions.
    Now what I wish to take back to my planet (where I must admit I will keep the source secret and thus win our highest ward for economics the ‘Smith Prize�) is how a single price for GG will achieve the three functions as set up by our ACCC. Obviously I will also need to know how to calculate that price.

    Not being skilled in the art, science and craft of resource economics and coming from a backward planet that no other civilisation visits, I hope are good Professor will treat me kindly if I have committed some obvious error or shown a total lack of understanding (although I know I deserve no such mercy).

  40. proust
    September 30th, 2006 at 17:07 | #40

    Even better, the BOM has trendmaps

    Select
    Variable: Rainfall
    Region: Australia
    Season: Annual
    Period: 1900-present

    If there is a trend in SE Australia, it is getting wetter, not drier.

    That would be an inconvenient truth for the lefties, wouldn’t it? AGW actually making life better. Would blow rather a big hole in their ability to exploit the issue to further their political goals.

    Better pick on a different AGW effect – polar bear habitat is probably safer.

  41. taust
    September 30th, 2006 at 17:13 | #41

    N
    The polar bears are getting over theiir problem of habitat by mating with the brown bear to which they are that closely related.

  42. Roger Jones
    September 30th, 2006 at 19:30 | #42

    Pr Q’s original assertion was that it is becoming increasingly evident that the hotter, drier weather we are experiencing in south-eastern Australia is not just another fluctuation around a stable long-term level of rainfall.

    This has been challenged by a number of comments.

    There is a need to manage the risk to water resources from human-induced climate change and both short and long-term rainfall variability. I agree with the need for action because I think the underlying evidence is solid. I also think that that the attribution of human-induced global warming on rainfall itself does not need to be proven at this moment to warrant action – the sufficient evidence is enough to suggest there is a signficant likelihood we will need to adapt to long-term deficits in water supply. The risk is sufficient on the basis of the current evidence that can both be observed and measured. Where attribution can be given, warming is acting on temperature and on water demand (though this is a lesser driver than supply).

    The recent run of dry years in SE Aust could be due to:
    (1) Combination of a series of dry years in a short-run fluctuation. Rainfall may recover shortly
    (2) A downward step change in rainfall somewhere between 1994 and 1999, similar to that which occurred in 1895 and persistent through to 1946/8
    (3) Anthropogenic climate change leading to reduced rainfall, where that rainfall my either be trending or stepping downwards.
    (4) A mixture of 2 and 3 or 1 and 3.

    It is difficult to attribute any of the above changes with complete certainty (e.g. 100% confidence) because of rainfall variability, data length and quality. However, the chances that we are in 2, 3 or 4 are, in my opinion higher than 50/50 (much – I’m being conservative). The signal in the climate models that suggest drying on the southern edge of the Australian continent are theoretically sound and seen in all climate models. The westerlies intensify and move south. The major doubt remaining is to what will happen in summer, from rain that may come from the east or north.

    Both short and long-term fluctuations have been with as for a long time and will continue. It is clear that the water resources of the MDB were developed during a particularly favourable period of the 2nd half of the 20th century. If we returned to the conditions faced from 1895-1946 many catchments would be under severe stress – this is basically the type of conditions we see at the moment. How long will it persist? This is a matter of risk assessment, not saying yes it will , or no it won’t.

    For evidence and analysis of past long-term rainfall fluctuations on SE Aust river geomorphology, see Robin Warner’s work

    Warner, R.F. (1987) The impacts of alternating flood- and drought-dominated regimes on channel morphology at Penrith, New South Wales, Australia. IAHS Publ. No. 68, 327–38.

    Warner, R.F. (1995) Predicting and managing channel change in southeast Australia, Catena, 25, 403–418.

    For analysis of step changes in decadal rainfall regimes see here
    http://www.cmar.csiro.au/e-print/open/jones_2005a.pdf

    For this reason (step changes and long-term fluctuations) when debating rainfall it is best not to look at trend data but use more sophisticated analysis. It’s an inappropriate tool to use.

    There is currently a research project working on rainfall and climate in SE Australia funded by the Australian Greenhouse Office, MDBC, Land and Water Australia and Vic and NSW Govts and the work will be carried out by the Bureau of Met and CSIRO. The work has recently commenced.
    This is modelled on the Indian Ocean Climate Intiative which has work in SWWA. Their website is here:

    http://www.ioci.org.au/

    The key findings from the IOCI work in 2002 were
    â?– Winter rainfall has decreased sharply and suddenly in the region since the mid 70s.
    â?– The decline was not gradual but more of a switching to an alternative rainfall regime.
    â?– The rainfall decrease accompanied and was apparently associated with, documented change in large scale atmospheric circulation at the time.
    â?– The decrease in rainfall, and associated circulation changes, bear some resemblance to model projections for an enhanced greenhouse effect (EGE) but are not sufficiently similar to indicate, beyond doubt, that the EGE is responsible.
    â?– Most likely both natural variability and the EGE have contributed to the rainfall decrease.
    â?– The climatic shifts, which include warming have resulted in an even sharper fall in regional streamflows.
    â?– Findings have altered previous interpretations of the climate of the region and decision-makers need to alter their decision base-lines to reflect observed and projected changes but also to include increased levels of uncertainty.
    â?– The changing climate will exhibit wetter and drier periods throughout the 21st century due to natural variability, overlaid on trends of continued warming and of probable decline in mean rainfall consequent on the EGE.
    â?– A major scientific challenge is to further determine the relative influences of natural multi-decadal variability and the EGE in contributing to the recent decrease in rainfall.

    Further work is being prepared for publication but dynamic evidence from models and obs are suggesting that human induced climate change is playing its part.

    Water managers in Perth are basing their future water management on the most recent, driest 8 years of record.

    Note that Melbourne Water is acting on the basis that rainfall will reduce in the future based on this research conducted collaboratively with CSIRO:
    http://www.melbournewater.com.au/content/library/news/whats_new/Climate_Change_Study.pdf

    Projections of runoff change using a simple model for Victoria can be found here:
    http://www.greenhouse.vic.gov.au/CSIRO%20Report%20-%20Runoff.pdf

    Similar projections of rainfall across the MDB (though they’re not as uniformly negative further north) suggest that the southern NSW part will experience like changes

  43. taust
    September 30th, 2006 at 21:37 | #43

    Roger Jones;

    thank you for a very informative posting.

  44. Palè Paxton
    October 1st, 2006 at 21:14 | #44

    My family has saved heaps of water and everyday I check the water bill.

  45. Phil West
    October 5th, 2006 at 11:52 | #45

    I have seen this argument regarding lower rainfall, occuring in a number of places.
    The one piece of hard evidence which exists, for long term rainfall, is the barrier reef core drillings. Why have they been forgotten? Does their evidence not suit the argument?
    These cores have evidence of long periods of, drier than present, rainfall.
    More than a few of these events lasted longer than 25 years.
    I believe, from memory, that the last of these long dries occurred in the 1600s. If this is correct, & they reoccur, only desalination will have any chance of supplying the water requirements of the huge city states, in which most of our population chose to live.
    Surely, some of the learned folk here have access to, & interest in, this information.

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