Could level 2 water restrictions drive up prices?

From Tuesday, 10 December, level 2 water restrictions will commence in Sydney, the Blue Mountains and the Illawarra, applying to all residents and businesses.

Water restrictions target outdoor water use, but there are some indoor water uses that are subject to restrictions, such as filling indoor swimming pools and water features, and operating car wash businesses in shopping centre car parks.

School of Civil Engineering academic and environmental engineer, Dr Petr Matous explains Sydney's water policy and coments on whether the new water restrictions could lead to a price hike. 

“Level 2 water restrictions are necessary given we are in a severe drought and our water supplies are dwindling. However, what hasn’t been discussed is that water may become more expensive as a result of the stricter government-mandated restrictions," said Dr Matous.

“Given the drought we’re in, that’s not necessarily a bad thing, but things could be done smarter. When Sydney Water starts implementing the restrictions, many of us (but not all) will waste less water and will further adjust our water usage toward more sustainable levels. However, Sydney Water is in the business of selling water, so if their conservation message is successful, they will have a cash-flow problem. 

“Sydney Water is proposing to recover potential financial losses by increasing service charges accordingly. If their proposal is accepted, the more water we collectively save due to restrictions, the more we are likely to pay in service charges the following year.

“However, most of us probably don’t even know how much water we use. Moreover, if charges uniformly increase, some people won’t care, while many others could struggle to pay their bills.

“Water usage charges can be unfair if you live in a strata unit with only one water meter for the whole building and the bill is split among everyone regardless of your water saving efforts, which is typical in Sydney.

“It is hard to ask families to conserve water, if no one even measures how much water each family uses. Everyone’s water consumption should be measured, and Sydney should consider following the example of other cities by penalising water wastage by charging heavy users more for every litre and cross-subsidise the bills of water savers.

“Overall, the current water problem is a result of a mismatch of demand and supply, and both sides need to be addressed. Although the lighter water restrictions currently in place have resulted in some consumption reduction, experience from other cities show that more can still be achieved on the demand side. 

“We can talk about building dams and desalination plants, but this may not completely solve the problem, if we do not address the ways in which we use and reuse water.

"Measuring and charging water consumption appropriately is an important part of that; like adding new road lanes that get quickly filled with cars if there’s no good transportation management, any new water resources will get used up, if we don’t set the right incentives guiding their use," he concluded.