FENNER CONFERENCE ON THE ENVIRONMENT

Barney Foran is a Visiting Fellow at the Fenner School of Environment and Society at the Australian National University. He has degrees in agriculture and ecology and, most recently, developed and led a futures group in CSIRO in the period 1993 to 2005. This group published major 'futures' reports on human population, fisheries, land and water, energy and greenhouse and environmental accounting. Prior to 1993 he was a rangeland scientist in central and northern Australia, New Zealand and southern Africa. His current work seeks to design physically feasible solutions for the Australian economy that meet greenhouse targets, achieve energy independence and resilience, while maintaining reasonable rates of economic growth and infrastructure refurbishment.

Who uses all the water?
Mr Barney Foran

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I would like to start by putting before you a bit of the structural complexity of the economy and our society that we have to manage. A number of years ago, just to try and bring this into some relevance for the population debate in regard to environmental issues, I tried to simplify our very complex models by noting that we all talk about population size and we usually talk about water for our baths, gardens and so on – that is, the direct requirements at the primary level – but when we add the obvious complexity as we scale-up our urban settlements, as we improve our lifestyles, then that all has a knock-on effect through how we trade in a globalised world. And as we fail, as Australia does, to balance our trading accounts, then we are having and will have more and more of a problem with the level of our international debt.

To think of population and water, if we had that tertiary and quaternary level somewhat under control, as opposed to its being an absolute runaway train, then perhaps the pressure on our national water systems would be much less. We will, later in this conference, get down to the micro level of pumps, membranes and things like that, but we are working in a big runaway-train system and it would help us a lot if we brought some of those higher-level drivers and more remote drivers a bit under control.

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Just to remind you of some of the big numbers, this is the most recent ABS account. It gives us a number of 2,689,424 for our continental rainfall in the year of the account. Of that total rainfall – in a significant drought year, admittedly – about 10 per cent ran off. And of the amount that ran off, we used about 8 per cent. In capacity in our large dams, we could have stored – if it fell in the right place, of course – about a third of what ran off that year, but our volumes were significantly down. But when a physical scientist thinks about how much water it took to generate a dollar in that drought year, it took about 22 litres to account for each dollar of GDP.

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Four or five years ago, when I was with CSIRO, we released a big report on population–development–environment issues. When we looked at direct water use under three different population scenarios driven by different rates of net immigration that Graeme Hugo alluded to, the lower, medium and higher rates of population growth that would have led to 20, 25 and 32 million by 2050, then we found the water requirement well within the levels of what we could sustain, given that we did need a lot more infrastructure.

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But when we looked at the whole economy, with all the things that were going on in it – the mining, the agriculture, the industry, the growing affluence, where people were living and so on – we saw that, as in the enlarged graph on this slide, by about 2050 we needed a managed water requirement of about 40,000 GL per year. You can see the very small spread for the different population scenarios there. A lot of that activity was going to go on anyway, driven by the wonderfully perverse thing called the market, with a whole lot of things operating totally independently of national government or population size and dealing with the world of globalised trade.

We reported also for 2100, for that large population scenario when it had reached 50 million people and we had two mega-cities, Sydney and Melbourne, with 10 million people each. It was interesting that, even at 10 million people each and provided we removed agricultural water use from the catchments, one in from the catchments supplying those cities – that is, we got into significant inter-basin transfer but not of the size suggested by the Bradfield scheme – there was reasonably enough water to supply the direct water use requirement of those high population scenarios.

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Something just to keep in the mind of a growing economy, one that grows in the way this one grows, at about 2.2 per cent long term and perhaps up to 3 per cent at times, is that from about now on and over a whole range of different big lumps of the economy, for example, we may have a water requirement in 2050 that is double the managed water requirement that we have today.

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To think of the very large system boundary around our economy as seen in water terms on a per capita basis: to run this economy needs about 1.4 ML per person at the moment. So when we talk about each person that we want to breed in-house or bring in on the plane, we should be thinking in general terms of at least a megalitre per year over their lifestyle, rather than this rather fanciful figure of around 0.1 ML or 0.15 ML that we ascribe to the direct use that we have in town.

The big blue lump of 0.65 ML you see on the slide is obviously us and our extended lifestyle; I am going to talk a lot more about that. But sitting at the back there, in the burgundy, is the 0.42 ML or so of water that is embodied in the exports that we need. We actually import about 0.2 ML in the food and products that we import, and then there are various bits like running the place – government and so on. So let’s get a big system boundary and put it around this water requirement as we relate it to people, and later on I suggest that we do need to do considerable structural change, changing the nature of the economy. At the moment we have to think that well over a megalitre per person is what it takes to run this economy.

Let’s just take the bit there that is really in our own individual lifestyle, and not worry about capital, government, exports and so on.

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I have just done this for the Sydney Statistical Division, which is a big part of Sydney – inner Sydney, in a fairly affluent part – with just that individual lifestyle component, the bit that is in our discretionary expenditure where we use 0.85 ML per capita per year. The breakdown there gives it to you. About 44 per cent is in the total water embodied in our food; we use about 20 per cent at home having showers and watering the three pot plants we have out on the terrace and so on. And then things that people seldom talk about are the 13 per cent or the 18 per cent – nearly a third of our total water requirement – in the non-food goods and services that we buy. People don’t talk about that, of course, because they are the things that drive economic growth and you wouldn’t want to get to the nexus of the real issue.

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The way we look at these things – I won’t go into methods here – we talk about the ‘full production chain’ of our yearly water requirements. This is what I call a layered-cake diagram. Where you see the big red arrow is what we use at home. In this case the average Canberran is responsible, through their consumption budget, for about 0.8 ML and uses 0.15 ML at home. The purple-red bit at the bottom is the embodied water as we go through the production chain of our agriculture and the food we eat; the yellow bit is the water utilities giving our water at home but then it expands as we go out into the coal-fired generators that need water and where coal needs to be washed to run them. The green bit accounts for our trade and so on. And so through these production layers, if you like, that go to many millions of physical and economic/financial transactions within the economy, we can get a pretty good view of what goes where.

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The dots on this graph relate to how much we spend. These are the 1400 or so statistical local areas that make up our evidence base for thinking about water and all things in Australia. You wouldn’t have to be a great and deep statistician to work out that there’s a fairly linear relationship there: the more you spend, all other things being equal, the more water you use across your full consumption budget. And so the lower spenders in Australia are doing about 0.5 ML a year, the big spenders about 1 ML. This is very important: which of us, I would put it to you, would not wish to rise to a higher affluence level and spend more and do better?

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Information like this now allows us to map this sort of thing spatially. This is work that is coming out in the Australian Conservation Foundation’s Environmental Atlas in the next few months. The much heavier tones there are for where the big water users are, the people responsible for the highest demand for water right through the production chain. And the various outliers you see around the ACT, out on the left and the right, are the various non-ACT feeder suburbs that Canberra keeps going. The big area around Sydney, which perhaps we should call New Sydneygong, is a very densely watered area, if you want to call it that, and then there is another outlier up around New England and Armidale.

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When we get down into Sydney itself and look at things there, we find that the closer-in, more affluent, longer settled suburbs and those all around the Harbour and to some degree up to the inner north of Sydney are the ones with the high water demand, and then as you go further out to the less affluent suburbs and the less high-spending suburbs, so they are fairly marginal slices, you would agree. It gives some idea of those inner Sydney areas. Certainly my sons live in Glebe at the moment and they are part of that, and that is where you see all the bumper stickers talking about the environment and things like that. And we, I should say, are the ones actually producing the problem.

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As we go around the capital cities, those of you who come from Melbourne would recognise some of the patterns there, again with a few outliers in the more affluent areas further down around the seaside, the suburbs that go onto the coast. Most of the high consumption or the water embodied in the full consumption basket is close in, in that bumper sticker zone.

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That is so too in Brisbane – the older, more affluent, more well-developed suburbs are certainly the high water demanding ones, in a full chain sense, with the outliers out in those treed and lovely areas where people like to live.

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This is just to make a broader environmental point when we think about ‘embodied everything’. The water use is still the one in the blue there, but whether you want to use as an indicator your ecological footprint or the greenhouse gases you emit on a per capita basis, you will see that the denser tones all through are related to those more affluent suburbs from where we keep the economy going.

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But this is an election year, and I do want to make sure that there is equal provision of information to both major parties, for the incumbent man or the aspirant. Certainly the aspirant has got 0.1 ML advantage if he has got his hand on his heart about his environmental credentials, but when he looks at his greenhouse gas account and his ecological footprint, he will find he is within a whisker of the incumbent.

I am being a bit light here, but I am making a broader point that I will come to at the end, that the provision of suitably scaled and presented information is very much part of the water debate we have got to have.

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So why not go to the Minister for Environment Resources and Water, Malcolm Turnbull, or the shadow spokesman for water and infrastructure, Anthony Albanese. She’s a dead-heat race, that one, I can tell you! Poor old Anthony would like to be able to pull in the workers, but they are all urban yuppies in his electorate of Grayndler, in a holistic sense anyway – although I can tell you that Malcolm’s immediate area where he actually lives has a lot greater water use than the average over the whole electorate. (Perhaps I should write him a note about that.)

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I come now to the point I was making about more appropriate accounting for water. This is work not out yet but funded by the Victorian Water Trust, where we have tried to look at the flows of water for a whole economy, the Victorian economy. On the left of this slide you see the flows of water in goods and services that go via those arrows into the Victorian economy. You see that New South Wales, mainly through rice and cottonseed, and Queensland, through sugar and fruit, contribute significant flows of virtual water to Victoria’s economy, and then there are lesser amounts as you go down through the other states, along with a major input of some 300 GL from overseas. These are then processed through the various value adding sectors within the Victorian economy, and some of the virtual water spits out at the bottom of the diagram to work out the water that Victorians consume in their goods and services at home, as well as the amounts that are exported back to the other states. New South Wales loses out; Queensland does too. Western Australia, South Australia and Tasmania gain a bit, and the Northern Territory and ACT gain a bit, but there is a whopping 2300 GL of embodied water exported overseas. That is a significant amount.

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So the simple figures are that in Victoria – in a water crisis – direct household use is around 400 big units, and with the imports from interstate and overseas, the actual consumption at a household level is somewhere near six times the amount that we use in direct terms. Some of it is exported back, but the major point that we would be making in a Victorian economy sense is that there is quite a large water requirement for the whole Victorian economy, and a huge amount is sent overseas – for what price, you might ask.

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So, in terms of what you might think to do about just a part of the water crisis in Australia, one thing is to change population policy. Which way, I don’t know, but Premier Bracks desperately needs another million people in his capital city by about 2030 just to keep the housing industry going.

It is an obvious thing to radically alter the volume and composition of personal consumption. The whole revamping of the Australian dairy industry has meant that it has shifted predominantly to Victoria, and one of the things that we know from our dairy cow genetics is that they are right on a level now where they can’t eat any more grass to perform to their genetic potential. So the question arises of whether to change the dairy industry to a predominantly grain diet and so put pressure on grain areas but save water, or whether you might shift it predominantly to Tasmania and New Zealand. These are the big structural change questions we have to deal with.

There needs to be a major question about whether we are getting a decent economic and social return from the more than 2000 GL of virtual water that is exported. For example, if you didn’t put in any more coal generators but put in wind and solar PV, then you would start to save units of about 100 GL. You could compare that with the 400 GL that is used in a direct sense by households in Victoria.

And I put as the last dot point on the slide, ‘many small marginal changes’. It seems to me, as a point I am pushing here, that all we talk about is the small marginal changes. We never get into those major drivers up top.

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I have already shown the graph at the top of this slide. As we spend more money, in a full chain sense we spend a lot, we require a lot more water services through the full production chain – as I have suggested, there is a fairly straight-line relationship there, R-squared of at least 0.9.

But if you want to use your other indicators of overall environmental impact/ecological footprint, at the left of the slide, or the greenhouse gas emissions from personal consumption, you see that these relationships are maintained for all the big, important things. We have a national and world water crisis, we have a national and world biodiversity crisis, and we have a national and world global change crisis. These are the most important and potent relationships that I place in front of you here, and they are ones that we have to radically change. And of course they are all interconnected if we want to bring these three crises somewhat under control.

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As I said, there are the challenges of growth and materialism, but those are also the things we all do. We all aspire – we all aspire to get us and our kids up there. And most importantly there is the challenge of something which the sociologists in this area call time poorness: rushing home, we hardly have a chance to rush out and pick the fruit from our own tree, so we had better rush down to the supermarket and buy it instead. And this is the human predicament, I think.

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In summary, growth and development, and the way we are going to roll this economy, mean that that growth and development is going to outrun a lot of things we want to do down at the fine structure of water.

There is a probable doubling of requirement. That doesn’t have to be all virgin water, of course; there is a lot of reuse and recycling allowable in there.

Only a little bit of this water is used at home. Most of it is used in the full chain implications of our composition. And also there is another knock-on or layered effect as we try to balance our trade account, as we show in the Victorian example.

Public policy always talks about the minor bit; it never gets into the major bit.

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What to do? I guess from my perspective it is, first, to focus clearly on the primary drivers. Growing affluence and population number are part of a complex mix, and we have to make our decision-making and our policy analysis a lot simpler but more complex, if I can say it that way.

Holism in water accounting: the water accounting things I have been presenting to you are done by my mates at Sydney University, Manfred Lenzen and Chris Dey, and it is incredibly hard to do this work when you look at the really dreadful data that this nation collects on all things related to water.

We have to start to get into instruments like an environmentally weighted GST – we can do this now at the cash register, because we know how the whole economy works in terms of every water transaction through the system – but we do have to have cross-compliances. If you were at last year’s Fenner Conference, you would know that it was all about the obesogenic environment and the global and national rush towards obesity. We can’t charge people for water, cut down their consumption of grains, fruits and vegetables and have them all drinking oil, getting very unhealthy and fat. So we are getting into complex areas here.

We have to get into ‘water smart’ shopping – whole aisles of these items, and putting labels on things.

I have suggested with the Victorian example that we have to radically restructure this nation over the next 50 years.

And my last point here is to re-nature the economy. There has been a very concerted effort over the last hundred years of economics to take all environmental and resource implications out of what makes economic growth, and that is just not a valid way to go. Underpinning every dollar generated in this economy is an energy, a water and a land transaction, somewhere back there, and so we have to reintroduce a concept up-front that nature is well inculcated into.

Discussion

Question: I have a question about the idea of externality pricing of water. You have shown a 14-fold subsidy of water into exports, for example, so when are we going to start pricing these externality costs into the products? And from your analysis, at what sort of dollar value, or how many cents in the dollar, are we actually subsidising this export water?

Barney Foran: I can’t give you an exact dollar value on that, but if I was wanting to do something about it, to change the way that we spend and consume, I would be suggesting that we may have to double, triple or quadruple our food costs, just for example. I would be horrified at that, but these are the realities of the degree to which we are skinning out most of Australia’s environmental resources to have poor farmers and high quality food in our supermarkets. That is the big challenge that we need a political leader to be able to talk about, without the electorate failing to vote for him or her.