Water Pricing in Australia: Unbundled Politics, Accounting, and Water Pricing

Abstract

This chapter presents a review of water-pricing arrangements in each of Australia’s state jurisdictions. The pricing approaches for urban, environmental, and rural (i.e., agricultural) water uses are scrutinized and compared against the ambitions established as part of the National Water Initiative (NWI). While the framework for water pricing in the NWI has been generally deployed in most states, local nuances give rise to quite different price outcomes. Moreover, there is still opportunity for political influences to shape water prices, even though the NWI is committed to full-cost recovery with regulatory oversight that seeks to objectively align costs and prices. We conclude that there remains scope for improvement that would remove artificial differences in the way water is priced for different water users and thus support the distribution of water to its highest values.