30 June 2009

Water From Conventional Sources Is Better

Whilst we may be pleased with the progress we have made, and continue to make, with waste water reclamation and desalination, which enable us to reduce if not eliminate our dependence on adequate rainfall and imported water, we should not lose sight of the fact that obtaining potable water from waste water or sea water is more costly than that from conventional means because of the extensive use of membranes and the energy intensity of the purification processes.

However, we don't necessarily have to incur this higher cost, at least for part of our water consumption.

So long as the relevant reservoirs in Johor collect more than enough water to satisfy Johor's own needs and our entitlement under the existing water agreements, it probably makes more economic and environmental sense for both countries if we purchase such surplus water from Malaysia.  This will be particularly so when the 1961 water agreement expires in 2011, freeing up 86 million gallons per day which Malaysia is obligated to supply to us until then.

Of course, both parties must be willing and the price must be right.  The price needs to be lower than the lowest variable cost of producing our own water to a comparable level of purity by reclamation or desalination.  The price can be much lower if the quantity that is offered to us is not fixed over an extended period, but is allowed to vary from time to time, so that it is really water that is surplus to Johor's needs and will otherwise flow into the sea.

We benefit from a lower cost of water and Malaysia benefits from realising some monetary value for a commodity it cannot harvest at the moment.  It won't affect our overall trade balance, but it will improve Malaysia's.  It will reduce the impact on the environment.

This does not mean that we should revert to being dependent, even partially, on imported water.  We should, and must, continue to develop the infrastructure to reclaim and/or desalinate water, but we may want to use these facilities only to the extent that we can't get imported water at a meaningfully lower cost than the variable cost of doing so ourselves.

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