The economics of stormwater

The economics of stormwater

16.05.2013 - Posted by Dan O'Halloran
Stormwater Victoria’s annual conference was held recently at the Bayview Eden Hotel in Melbourne. The presentations ranged from technical, across environment and society, to economics as the industry grapples with a range of drivers guiding recent work. One of the main areas of interest for the industry recently has been how to build the business case for the delivery of integrated water services in a way that will satisfy the State’s economic regulator. 

My conference highlights included a presentation from the Office of Living Victoria discussing ‘shadow pricing’ for water, wastewater and stormwater services. A ‘shadow price’ estimates the cost of providing these services and illustrates the variation in that cost spatially across Melbourne. It aims to include life cycle costs, including future infrastructure requirements. This is useful when comparing conventional with alternative systems. While the price itself would be a useful indicator of viability, of greater importance is the robustness and transparency of the models and its assumptions if it’s to gain industry acceptance.

The role of water in liveability and measurement of benefits continues to present a complex problem. It was timely for the forum to hear economist David Pannell from the University of Western Australia discussing the relative merits of evaluation methods and the common pitfalls for engineers. For an area where on-ground data is hard to come by, David reminded us that the community’s perception of value is a valid starting point when dealing with the questions surrounding integrated water service delivery and liveability.

Another highlight was hearing about the Bolin Bolin Billabong (Bulleen, Melbourne) project, which aims to use stormwater to improve the health of the billabong by achieving multiple positive social and environmental outcomes. We learned that, despite the best efforts of the project team, the stormwater harvesting element had been removed (in favour of river water) due to sufficient recent rainfall. It was a good reminder of the importance of retaining flexibility in integrated water management systems to ensure they can deliver over the longer term given likely changes in climatic, social and economic conditions to avoiding costly retrofits in the future.

Bolin Bolin Billabong sourced from