While researching desalination, I found this interesting presentation (big PPP file) from the Water Corporation, including (slide 22) an estimated cost of $6.10 for a Kimberley pipeline with a capital cost of $11 billion[1]. It’s from a 2004 GHD report, so there’s no question of its being a political stunt. The pumping requires two 600 MW power stations, which suggests (if my mental arithmetic is right) around 50kw-hours for each Kl of water delivered. I’ve extracted the relevant slide here.
As an aside, I saw in the Fin that the proponents are suggesting diverting as much as 80Gl of the flow to irrigation along the way, leaving only 120/Gl for Perth. It’s unrealistic to expect any contribution to the capital costs from irrigation users, so the entire capital cost would have to be spread over the 120/Gl supplied to Perth, and the unit pumping cost would probably also rise. The delivered cost could easily exceed $10/Kl.
Update As Rob Corr points out, towing icebergs from Antarctica would be a lot cheaper.
Further update Rob’s source puts the iceberg option at $3.20/kl, but I’ve found another study that puts it at $17.00. So a canal at $10/kl would split the difference between these two.
fn1. Either the implied rate of return here is well below the one I used or the capacity is higher. I’d guess they are assuming bond financing and low depreciation. Still this sounds like a more realistic figure than the $2 billion Tenix estimate being used by Barnett. The power stations alone would chew up most of that.
John Quiggin 
How does this compare with towing icebergs up from the Antarctic?
According to Rob Corr, “badly”. See update for link
Still, John – if water is desperately needed water is desperately needed. The cost is irrelevant if Perth’s annual rainfall doesn’t turn around. I predict this project will one day go ahead and Barnett will be hailed as the visionary everyone ridiculed. The Utzon of H20.
The words that John picked out from the Fin Review should send up bright red flags. Diversion to irrigation is an invitation to massive rorting and the ultimate undermining of the water pipeline. Irrigation is an unquenchable monster. Irrigated areas would expand and demand ever increasing amounts of the water from the pipeline.
The question, respectfully, is still being avoided. Perth needs water. What’s Labor proposing? Cloud-seeding?
JQ – you have made what I would call an heroic assumption about any water for irrigation not incurring capital costs. Are you trying to make as negative an argument as possible simply because a conservative politician is making the proposal?
As a resident of Perth I believe that we pay too little for water. I also make the point that if there really was a water crisis we haven’t even started making a real effort to conserve water.
Sorry to be a wet blanket, but one piddling correction: I think you meant kW-hours/Kl, not kW/hour/Kl.
C.L., if people in Perth need water badly enough that they will pay $10/Kl then this project (or rather a new, relatively expensive project to provide water to Perth) should go ahead.
But if you ask people to pay that much, will you get many takers? You may find that people are not as desperate for water as you think, and will happily change their gardening habits, cover their pool, collect rainwater etc. rather than spend the money. If they won’t spend it directly out of their own pockets, why would it be a good thing for the government to extract it via taxes to give them cheap water they don’t want that badly?
CL,
A desalination plant at Kwinana is already in development. That project was announced by Gallop mid-last year.
CL, as you are aware (because I told you on my blog) Labor has committed $5 million to a feasibility study that will consider the Tenix proposal as well as other options for our long-term water needs. Please don’t pretend Labor opposes the canal, or that there are no other options available.
Razor, this is simple ag. economics. $1/kl is $1000/Ml and few irrigation enterprises would be viable at this cost. The operating costs alone will be more than this, so there’s no chance of irrigators contributing to capital costs.
forget towing icebergs from Antarctica. what about towing western australia to Antarctica?
A week ago Terry Lane interviewed the chair of a panel looking into the WA water situation. Listen to it at
http://www.abc.net.au/rn/talks/natint/
This will clear up the iceberg nonsense and a few other wild speculations.
Water is not “desperately needed”. 50% of Perth’s consumption of potable water goes on gardens. Putting the price up 1000%-2000% per cent would help a great deal.
WA has plenty of water, it’s just that most of it doesn’t fall on Perth.
If they charged a market price for the water, you might find people would also be more willing to live in the more hospitable, southern part of the state.
Gaddafi commenced his water project in 1983-the ninth wonder of the world.
Concrete pipes carrying water 5000 k’s from aquifers in the south,gravity fed to the north of the country.
Did it work?
The GHD report, which has been relied upon for the $6.10 per kilolitre estimate, was in fact a study of the costs of a fundamentally different proposal, originally made many years ago, long before the Tenix proposal (a pipeline, rather than a canal, with consequential much higher construction and energy costs, and a dam on the Fitzroy, which Tenix claims would not be required for the much slower rate of water extraction associated with a canal).
The differences are evident if you compare the GHD report, which is available at http://www.watercorporation.com.au/publications/12/Kimberley_Pipeline_Project_Review.pdf, with the Tenix concept, which post-dates the GHD study and is summarised in a brochure available at http://www.tenix.com/PDFLibrary/231.pdf.
The minor obstacle of apples’ being compared with oranges seems not to have bothered either the Treasury bureaucrats and the Premier in WA, who have blatantly applied the GHD costings to the Tenix proposal without any acknowledgement of the differences, or the media reporters who have faithfully regurgitated their claims.
As for your comment on the issue, I guess it confirms, yet again, the perils of relying on a Powerpoint presentation as a substitute for a real analysis.
I’m not arguing here for or against any concept, as it’s obviously very early days and the inquiry into all the options is still open for its initial submissions. What I am arguing for is for the debate to be based on facts, rather than politically motivated assertions from either side and the mindless repetitions of bureaucrats.
I’m aware that this is a different proposal, Sandy. I mention in the post that this a pipeline, not a canal. I don’t buy the unsupported claim that the change in technology can produce an 80 per cent cost reduction.
My apologies; you did make the distinction.
But the WA Treasury bureaucrats and Premier did not, when they merrily “costed” the Tenix concept and released the “results” of the Treasury “analysis” to the press. Nor did the consequential mass media reports.
As for whether the cost reduction claimed by Tenix — incidentally, nowhere near as great as the 80% you refer to, using the respective costs per kilolire of water delivered as the basis — is believable, that’s one of the reasons why there’s an inquiry, I hope.
The capital costs for an earthen canal and no dam would obviously be less than those for pipelines with a dam, and the friction losses of canals (and hence their energy costs) are very much less than those for pipelines, but the extent of the saving is, so far, a matter of claim v claim, rather than careful analysis.
Some good points, Sandy. To clarify, my 80 per cent is the approximate difference between $11 billion and $2 billion, or between $6.50 and $1.10/kl.
More generally, I agree that the right process is to have an inquiry and test Tenix’s claims before making a commitment. Unfortunately, of course, that’s exactly the opposite of Barnett’s approach.
Tenix doesn’t seem to have considered the fact that the slow water movement will cause stagnation and allow, for example, mosquitos to breed along the canal. And how would a 3700km canal be secured if someone wanted to deliberately contaminate the water supply?
A bit of trivia that might end up material later: curves in a pipe or canal make vortices which materially increase friction by moving more of the fluid through the boundary layer.
That’s true Lawrence, I believe it was an engineering feat accomplished by the Abassids, which would odviously significantly reduce the amount of energy required to sustain an acceptable level of water flow – thus reducing the overall cost of the project.
That aside I am concerned with the points rasied by Robert – mosquito breeding could be an issue (are they filtering the water before it enters the canal or after it reaches Perth? as this will determine whether mosquitos will/could become an issue… ?)
Then there is also the possibiltiy of terrorists targetting the pipeline. The effects of such an action could be catastrophic – how could that be pervented? the costs of securing the pipeline would be astronomical.
Of course Victoria has been and is considering much more capping and tunneling of open canals to increase water quality and reduce evaporation. So it probably would be a tunnel.
One of WA Labor’s election commitments was to do just that, wilful. There are a lot of open irrigation channels that waste a great deal of water through evaporation.
A few comments:
Re JQ’s comment 10, that irrigators could not afford to pay $1/kL. It is long overdue that irrigators in Aust paid more for their water. The current ways of using water in irrigated agriculture are simply irresponsible in a country as dry as Australia. Perhaps if they had to pay more, they would use it more sparingly and for crops that returned more relative to the water input.
Re the use of water in Perth – as pointed out by one of the commenters, 50% of the potable water used gets poured onto gardens. This is crazy in a dry place. A lot of public education is needed so that people accept a less green (but more Green! 🙂 ) urban environment. The xeriscape garden (ie designed for arid climate) can be very attractive if done well. If you must have a green lawn, there is always the artificial turf alternative – very popular in the arid areas of the US, such as Arizona, Utah, New Mexico.
Pricing – it looks to me like Perth residents are getting off cheaply in relation to water pricing. I understand that the current rates are 41.6 cents per kL for the first 150 kL, and 79.4 cents per kL above that. In the ACT we pay 51.5¢ per kL for the first 100 kL, $1.00 per kL for usage between 100 and 300 kL and $1.35 per kL for usage over 300 kL. (I think our basic supply charge could be less, however.)
At the moment we also have water restrictions in place, in common with many places in eastern Aus.
I would be interested to see this discussion broadened to include the issues of water rights markets, and whether they would or would not solve some of the perceived problems with water usage and quality currently facing Australia. My initial reaction would be that water rights markets would force us to use water in ways that reflect its scarcity and real value in a very dry continent.
Water rights markets… I sniffed around Coasian solutions for a long time trying to work out the catch, since there seemed to me to be something missing from the rationale that could lead to trouble. My instincts were itching.
Eventually I spotted the catch, the omissions. The big one is the who/whom problem, that it provides for better aggregate use without specifying who gets the lion’s share. If you make the property system one way the farmers with burned fields get the benefit, if the other the railway operators making the sparks get the gain. Coasian solutions do not distinguish, and proper apportionment becomes a separate issue with problems of its own.
Another problem is that policing a system of property rights is itself an external cost, in a system in which states insist on maintaining that monopoly. If there is no broad consensus on the nature of the property – if it represents a major change in custom (18th century Ireland) or a new thing altogether (most of today’s innovations) – it requires a great deal of policing. “Property” works naturally when it comes naturally, i.e. when there is a broad consensus and active policing requires only a proportionally small regulation (compared with directly regulating the resource).
There’s a lot of history on the correct (“engineering correct”, not “ethical”) use of licensing systems here. The Victorian goldfields were handled in