Securing unlimited water supply in Adelaide over the next century: balancing desalinated and Murray-Darling Basin water

This paper assesses the two major water supply options for a growing but relatively dry metropolitan Adelaide – desalination and expanded trading of water from the Murray-Darling Basin (MDB). What we present in this paper is a portfolio approach suggesting a mixed strategy of desalination and water trading to meet growing demand over the hundred year period from 2014. Crucially, the scope for expanding water trading keeps average costs down, for as long as the political agreements work and drought does not prevent the use of allocations. However, our modelling shows that in the long run water trade in combination with modular augmentation of desalination capacity can achieve a mix of security and cost that avoids spikes in market prices of MDB allocations during drought. The strategy also avoids the real business and household costs, loss of garden value and inconvenience of water restrictions.