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4655.0.55.002 - Information Paper: Towards the Australian Environmental-Economic Accounts, 2013  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 16/08/2013  First Issue
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CHAPTER 2 WATER



Introduction

Water is a vital natural resource and changes in its availability impact upon the environment, the economy and society. Measures to manage and adapt to changes in water availability include improvement in the efficiency of irrigation systems, creation of tradable water markets, increased use of water saving technologies in industrial processes and in homes and, when necessary, restrictions on household water use (i.e. “water restrictions”). Other changes are likely to include production processes that are more adaptable to variable water availability and increased flood mitigation.

Two major publications account for water in Australia, emphasising different aspects of Australian water resources and the use of these resources by the Australian community; Water Account, Australia (ABS cat. no. 4610.0) and the Bureau of Meteorology publication, National Water Account (NWA).

The ABS publication is compiled in accordance with the System of Environmental and Economic Accounts for Water (SEEA-Water) and shows how much water is used by human activity It focuses on flows of water from the environment to the water supply industry and other economic activities, particularly agricultural production and the flows from the water supply industry to households and businesses. The ABS water accounts equate to the physical and monetary supply and use of water. Water Account, Australia was first released in 2000, for the reference years 1993-94 to 1996-97 and has been produced annually since 2008-09.

The Bureau of Meteorology publication is compiled in line with the Australian Water Accounting Standard 1 and focuses on the volume of water in the environment (natural and man-made), its availability, the rights to abstract water and the actual abstraction. This standard has been mapped to the key concepts and structure of the water asset account in the SEEA-Water(footnote 1) .

These publications are complementary, with the key overlapping feature being the “actual abstraction of water for economic, social, cultural and environmental benefit”, a volume that flows from the National Water Account into the Water Account, Australia.

Figure 2.1 represents the physical flows of water within the Australian economy. The section bounded by the dashed line is the scope of Water Account, Australia. While in scope of the SEEA-Water supply and use accounts, rain-fed agriculture is not currently included in estimates of water use by the economy.


FIGURE 2.1 PHYSICAL FLOWS OF WATER IN AUSTRALIA
FIGURE 2.1 PHYSICAL FLOWS OF WATER IN AUSTRALIA



The beginning of this chapter outlines the importance of rainfall in the water account. This is followed by a description of the supply and use of water in physical terms; the consumption of water and water intensity.


Rainfall

Water supply and use in the Australian economy needs to be considered in the context of Australia's climate. Rainfall is important for analysing water availability to households and the economy, as it is the primary source for water stored in the landscape as surface water, particularly in dams and other water storages. Rainfall also determines that amount of recharge to groundwater.

Australia’s rainfall can vary significantly year-to-year, season-to-season and across geographical areas. Annual rainfall variability is greater for Australia than any other continental region. The assessment of water supply and use over time helps improve understanding around the impact of this variability. This publication includes comparisons for the three years from 2008-09 to 2010-11.

Rainfall over Australia averaged 708 mm during 2010-2011, very similar to 2009-10 (703 mm) and much higher than that for 2008-09 (461mm). There were large variations in national average rainfall both during the reference periods and geographically.

Figures 2.2 and 2.3 underline the variability in rainfall both across Australia’s geography and from year to year.
FIGURE 2.2 Average Rainfall, Decile ranges, Australia, 2010-11
FIGURE 2.2 Average Rainfall, Decile ranges, Australia, 2010-11

FIGURE 2.3 Average Rainfall, Decile ranges, Australia, 2008-09
FIGURE 2.3 Average Rainfall, Decile ranges, Australia, 2008-09

Water Supply and Use

Although ABS water accounting data has a history going back nearly 20 years, only the past three iterations are presented as a time series. Changes in collection of data, methods of deriving estimates, and the framework in which the accounts were presented prior to 2008-09 limit the extent to which it is possible to make comparisons with earlier water accounts.


Water supply

There are three ways in which water can be supplied to the economy:
      1. Self-extracted;
      2. Distributed; and
      3. Reuse.

The ways in which water is supplied are not independent of one another and therefore cannot be added to estimate a total supply. Both distributed and reuse water are effectively subsets of self-extracted water. In addition the supply of water includes water which is returned to the environment after it has been used (i.e. regulated discharge). The following provides an outline of the types of water supply indicating their inter-relationships.

Self-extracted water occurs when water is extracted directly from the environment (i.e. rivers, lakes, groundwater and other bodies) for use by industry and households alike. Self-extracted water is supplied by the environment free of charge in general. It is the source for distributed and reuse water. Most of the self-extracted water in Australia is used in-stream for electricity production and is returned to the environment (e.g. the river) as regulated discharge water. Some water that is extracted directly from the environment is distributed via water providers to industry and households, at which time it becomes distributed water.

Distributed water is supplied to industry and households through a natural (e.g. river) or man-made network (e.g. pipelines or open channels), where an economic transaction has occurred for the exchange of this water. It is sourced from self-extracted water.

Reuse water is water that is made available for use again without firstly being discharged to the environment (e.g. treated effluent, drainage, waste or storm water). It may occur as waste water from production processes as well as collected storm water. Reuse water may have been treated to some extent and it is ultimately sourced from self-extracted water. It excludes "on-site" recycling.

Regulated discharge water is water that has been sourced from self-extracted water, used and is returned to the environment. However its state may have been altered (e.g. temperature, quality) during this process or the return not match the natural flow of the body that existed prior to its use (e.g. stored for a period of time). This type of water is primarily seen in the water supply, electricity generation, mining and manufacturing industries. Figure 2.5 provides a comparison of the quantity of self-extracted water to regulated discharge water in megalitres (ML).

Figure 2.4 Water supply by type (ML), Australia - 2008-09 to 2010-11

Self-extracted
Distributed
Reuse

2008-09
59 808 214
9 578 857
357 772
2009-10
64 076 308
9 405 342
373 987
2010-11
71 796 494
7 105 843
351 014

Source: Water Account, Australia (ABS cat. no. 4610.0)


Of the total volume of extracted water from the environment in 2010-11 (71,796, 494ML) (Figure 2.4) only 10% was supplied as distributed water to industry and households. The remainder of self-extracted water is either extracted as in-stream water for hydro-electricity generation or used by the industry or household that extracted the water.

The proportion of distributed water varied between States and Territories in 2010-11, from less than 1% in Tasmania (where 98% was extracted for hydro-electricity generation in-steam use) to 96% in the Australian Capital Territory.

Figure 2.5 Self-extracted water and Regulated discharge (ML), Australia - 2008-09 to 2010-11

Self-extracted
Regulated discharge

2008-09
59 808 214
47 939 788
2009-10
64 076 308
51 911 904
2010-11
71 796 494
62 237 821

Source: Water Account, Australia (ABS cat. no. 4610.0)

Water use

Water use describes all water that enters the economy for use by industry and households. Most of this water enters for only a very short time as in-stream use, for example in hydro-electricity generation. Other types of use include household use of water that has been distributed by the water supply industry, self-extracted use by farmers accessing water stored in dams on their properties, and the reuse of non-potable water supplied to households via purple taps(footnote 2) . Figure 2.6 shows the types of use outside of electricity and gas supply, and water supply industries.

Figure 2.6 Percentage of total water use by type, selected industries* and households, Australia, 2008–09 to 2010–11

The reuse of water has increased slightly through each successive year, both in volume (235GL in 2008-09 to 256GL in 2010-11) and percentage of total use (1.9% to 2.1%). Although 2008-09 and 2009-10 were years with very different total average rainfall, the split between self-extracted and distributed water use changed only 3% (a decrease in self-extracted use from 46% to 43% of total use), while between 2009-10 and 2010-11, years with similar total average rainfall, the pattern of use swung to a 10% decrease in self-extracted water use. This may indicate a “lag” year after a prolonged drought, before industry and households begin to access increased surface water storage for self-extracted use. In-stream use by industries outside of the electricity and gas supply and water supply industries dropped from 7% of total use in 2008-09 to 6% of total use in 2010-11. Electricity and gas supply, and water supply industries are excluded from this graph as their use of water is both large and anomalous. Electricity and gas supply uses most of its water in-stream and the water supply industry uses its water by distributing it to other industries and households.


Water consumption

Consumption of water differs from water use in that consumption does not involve water being returned to the environment, used in-stream or supplied to other users. Electricity, water and gas supply industries use far more water than all other industries and households combined. However a very large majority of this water is returned to the environment (e.g. as regulated discharge) or supplied to other users and is therefore not included in estimates of consumption. For example the water used to generate hydro-electricity is used (i.e. in-stream use) but because it is returned to the environment, and hence available to other users, it is not consumed.

Figure 2.7 Total water consumption (ML), Australia, 2008–09 - 2010–11
Figure 2.7 shows that total water consumption has declined steadily over the past three years. 2010-11 saw a total of 13,337GL consumed, a 5% reduction since 2008-09. The reduction has been driven by both households and industry. Households decreased from 1,818GL to 1,699GL (a 7% decrease), compared with industry water consumption decreasing from 12,242GL to 11,637GL (a 5% decrease).

The share of total water consumption between households and industry has been stable at 87% by industry and 13% by households, varying by less than 1% over the three years.

Figure 2.8 Total water consumption (ML) by States and Territories, 2008–09 to 2010–11

Total water consumption is decreasing in most states and territories, with the most notable exception being the large (17%) single year increase in consumption in NSW in 2010-11. This increase was driven by the increased consumption of self-extracted water for cotton and rice, the most heavily irrigated crops between 2009-10 and 2010-11. Victoria and Tasmania both consumed just over 20% less water in 2010-11 than in 2008-09, while QLD, SA and ACT all reduced consumption by over 10%. WA and NT recorded small increases in consumption over the three year period.

Figure 2.9 Water consumption by Industry (ML), Australia, 2008–09 to 2010–11

Agriculture, forestry and fishing continued to be the largest consumer of water throughout the three year period, consuming around 7,300 gigalitres of water each year (accounting for 55% of total and 63% of industry consumption in 2010-11). The water supply industry has experienced a drop in water consumption, from 2,317 GL in 2008-09 to 1,570GL in 2010-11 (32% decrease).

Figure 2.10  Average price paid per kilolitre of distributed and reuse water ($), Industry Divisions and Households, Australia, 2008–09 to 2010–11
Prices paid per kilolitre (KL) of distributed and reuse water have risen for most industries. While data on types of distributed water (i.e. potable and non-potable) are not available for all industries and households, water paid for and used by agriculture is almost entirely non-potable. This may contribute to the price per kilolitre of the water being far less for agriculture, forestry and fishing than other users. Similarly, water used by agriculture is typically transported through open water-ways and channels, which reflects cheaper infrastructure than that required for potable water. In addition, the value of water associated with water entitlements and allocations used in agriculture are not currently available for inclusion in the total value of water supply and use.

Figure 2.11 compares relative consumption and expenditure on water across industries and households. Agriculture consumes the most water (46% of total) and pays comparatively less for it (6% of total), while households consume relatively little water (26%) and account for 62% of the national total water expenditure. These two groups combined represent around 70% of the nation’s total expenditure on and consumption of water.

Figure 2.11 Expenditure and volume consumed (% of total), distributed and reuse water, Industry Divisions and Households, Australia, 2010–11

Figure 2.12 Household volume of water per capita and price paid, distributed and reuse water, Australia, 2008–09 to 2010–11

Rainfall, price and water restrictions influence the use of water across the states and territories.

The volume of water consumed per capita in Australian households has declined by 10% over the three year time period, from 83KL to 75KL, whereas the average price paid per kilolitre of water has risen steadily from $1.83 to $2.44, a 33% increase (Figure 2.12).

The volume of household water consumed per capita varies considerably between states and territories, and reflects the variation in distribution of rainfall (and subsequently the availability of water) across Australia. In 2010-11 Northern Territorian households consumed on average 136KL per person, whereas Victorian households consumed only 55KL per person.

The price paid per kilolitre compared to average consumption by households in different states (see figure 2.13) shows the relationship consumption and price paid, i.e. the higher the price of water, the lower the average volume consumed.

Figure 2.13 Average household price per kilolitre of water, States and Territories, 2010–11
The average annual spend on water per household varies substantially between states. South Australian households pay on average $519 per year for their 168KL consumed, while Victorian households pay on average $335 per year for their 143KL consumed. Households in all other states and territories pay on average between $451 (ACT) and $482 (QLD) per year.


Water intensity

Water intensity is a measure of how much water is consumed to generate income. As with other environmental inputs to production (such as energy), a decrease in water consumption relative to industry GVA (and thus lowering of water intensity) is an indicator of a move towards environmental sustainability. The following two figures illustrate the water intensity by industry. It is necessary to split the figure as agriculture, forestry and fishing and water supply, sewerage and drainage water intensity is significantly greater than the remaining industries.

Figure 2.14a Agriculture, forestry and fishing and water supply, sewerage and drainage industries water intensity (ML/$million GVA), Australia, 2008–09 to 2010–11

Water intensity for the agricultural, forestry and fishing and water supply, sewerage and drainage industries are the most significant consumers of water per GVA. Though decreasing, the agriculture, forestry and fishing division consumed nearly 229ML of water for every million dollars of GVA in 2010-11. The water supply, sewerage and drainage industry has decreased its water intensity by 53% from 2008-09 to 2010-11 by consuming 32% less water while increasing its GVA by over 40%.

Figure 2.14b All other industries water intensity (ML/$million GVA), Australia, 2008–09 to 2010–11

Figure 2.14b presents water intensity for industries other than agriculture, forestry and fishing and water supply, sewerage and drainage. Electricity and gas consumed just under 14ML of water for every million dollars of GVA in 2010-11, 8% of that consumed by water supply, sewerage and drainage and 6% as much as the agriculture division.

1 Vardon et al. in Water Accounting: International Approaches to Policy and Decision–making, pp. 42, 45–46, ed. Godrey & Chalmers, 2012. <back
2 Purple taps are those that are connected to non-potable reuse water supply. Separately metered and distributed to regular mains water, this water can be used to water lawns, flush toilets, wash cars, and more. http://www.sewl.com.au/SiteCollectionDocuments/LearnAboutWater/TypesOfWater/RecycledWaterAndYourHome.pdf <back

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