The results reveals that the value of water to the environment is much higher than water prices in Melbourne. Water is therefore undervalued in decision-making on options to manage resources. The Paper calls on the water industry, regulators and researchers to develop new approaches to evaluate water so that decision-making considers the true costs and benefits of infrastructure, technologies and practices that conserve water.
The research found that Saving one cubic metre of water delivers an economic gain of AU$6 through avoided damage to the environment. This average value for water, which reflects its role in supporting natural capital, is far higher than the price of under AU$2 that consumers and businesses in Melbourne pay for water. Decisions around water supply and use are based on market prices and therefore undervalue options that deliver water savings and support ecological functions.