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Thirsty for change: The UN Conference on Water

In late March, the UN hosted the first international water conference in 46 years, placing water in the international policy limelight – if only for a few days.

The conference was timely, with climate change threatening to permanently alter our relationship with the water cycle. 90% of climate impacts are related to water - whether too much or too little - but the Climate Policy Initiative finds that only 3% of climate finance is dedicated to water resources. Water is central to critical policy areas such as food security, energy, climate resilience and national security- and will become even more important for a clean energy economy.

At a time of impending crisis, the UN Conference on Water drew 10,000 delegates from governments, non-profits, academia, and the private sector. The conference recorded 700 commitments totalling billions of dollars - from governments and private sector representatives.

But the jury is still out on whether the conference achieved enough. All commitments were non-binding and, according to some experts, only 1/3 of commitments would make contributions above and beyond current policy.

For Australia, water is critical to the climate transition. As climate change alters our rainfall profile, we risk our water supply becoming scarce and/or expensive. This will have implications for agriculture and urban use as well as our aspirations for a clean energy and manufacturing economy.

As water availability decreases, pricing will become a key policy tool for efficiently allocating industrial water. As shown in Chart 1, industrial water usage amounts to five times that of households – at only half the cost. Agricultural water use is a key driver, accounting for 70% of industry water usage, but only 20% of expenditure. While water trading markets have significantly improved the efficiency of water allocations, the Productivity Commission has recommended that policy makers take a holistic view of water markets in the context of supply constraints to improve long-term resource management.

Chart 1: Total use and expenditure on distributed water by households and industry

Source: ABS Water Accounts

Note: This data reflects use of distributed water or water that was extracted from the environment with intent to sell to others. Expenditure is in terms of purchaser’s prices. There may be price differences driven by treatment/sanitation costs between industry and households, and jurisdictional differences across industrial and household water prices. *kGL = thousands of gigalitres (GL)

Additionally, Indigenous Australians are over-represented in areas with poor-quality drinking water, and largely absent from water policy decisions. Incorporating Indigenous knowledge into water and environmental conservation could result in more just and equitable outcomes that are sustainable over the long-term.

The management of water will form a key element of managing the climate crisis, and it is something we have only begun to tackle in Australia. Solving the water crisis will require a wholesale re-imagination of how we value water and other environmental resources, how we think about infrastructure, and how we approach water as part of an ecosystem. This will not happen overnight, but the clock is ticking. The UN Conference on Water has provided some momentum to build on.

This blog was co-authored by Arka Chanda, a Graduate in the Deloitte Access Economics team.