There is resistance to water pricing. This is most serious in agricultural settings that offer the greatest opportunities for price signals to work in economising on water use. The idea is to trade water permits and make relatively more expensive crops that are water intensive. The costs associated with that will flow to consumers who will then presumably change consumption patterns and force a change in the crops that are planted. In the end, we will match water to utlimate consumer value. Ta da.
The problem is that there is resistance to this. I don’t get it but that is the way it is. So what can you do? An alternative would be to price water and measure the intensity of water usage by crop. Then at the consumer end you would price a given unit of produce, say an apple, and alongside it you would also list the cost of water (unpriced) that went into producing it. Consumers only have to pay the usual price but they will see the ‘environmental harm’ they are causing. It is a form of good product labelling. But consumers might with this information use it to change their consumption patterns. And come up with a way of using less water and you will reduce the ‘water price’ that consumers see. So while it isn’t perfect, some price signal could be sent and replace the desired intent of a fully fledged water market.
The ACCC is likely to recommend unit pricing as part of the grocery inquiry. Why not go further and include various environmental labels too? After all, the worst that happens is consumers don’t care but the same pricing label has to be printed anyway so what would we lose. The best thing that happens if we get signals going even without a real market. It would be a good start at least.