Australian Water Crisis: Demand And Supply Essay


Discuss about the Australian Water Crisis for Demand and Supply.



Australian is an economy that is being faced by the scarcity of water. The amount of rainfall received in some parts of this economy is too low such that some areas have turned to semi-deserts. It is not clear as to what is the real factor causing water crisis all over the world; many nations are struggling with the challenge of low supply of water. It’s globally agreeable that water is the basic source of life and thus an important resource that should be maintained at higher supply level for an economy to thrive well. Shortage of water have significant implications on the economy’s performance since all sectors are dependent on water for production (Tranter, 2015). Agriculture is the primary sector that has really felt the squeeze of this water scarcity.

Most of the rivers have low water levels; due to drying of some areas, the water level has gone down. This has resulted in the restriction on irrigation water which in turn has greatly undermined the productivity of the agricultural sector (Ejaz, Hanjra and Ward, 2015). This paper shall discuss the various climatic changes that are responsible for the Australian water crisis and also some other contributing factors. The Australian water consumers’ awareness will be raised on the present water condition and will understand why the government is employing various policies. They will also develop a personal sense of water conservation. By considering the various factors behind the current situation, recommendations drawn may be crucial to the government in decision making towards controlling the situation. This paper shall help in understanding that water is a scarce resource in Australia and thus its supply is limited compared to its rising demand.


Whigham (2017) wrote an article known as “The approaching crisis: Is the world running out of water?” this article was meant to create an awareness of the current Australian water crisis. It tells about some of the factors responsible for causing such a crisis and the various policies that the government has enacted so as to satisfy the rising demand with the scarce water resource. In his notion of how the Australian supply of water was endless and that taps never went dry, Whigham is trying to let us know that Australia was an economy of plentiful supply of water. The question now is “where did this shortage come from?” the article emphasizes on the need to abate the current water consumption pattern; it pointed out that without this, a large proportion of the world’s population (2/3 to be specific) will be facing a water shortage by 2025. The supply of water is falling but the demand is going up (OECD and OCDE, 2013). The market forces on their own has failed in bringing about desirable results in the water market. Most urban cities in the world are becoming increasingly thirsty and a global water crisis is predicted to emerge in future.

Fig: Australian Water supply and demand

Source: Onselen (2017)

From the graph, water deficit can be said to have been a serious issue only from 2005. Whereas the world is covered by water, there is insufficiency of fresh water in most economies (Hubbard, Garnett and Lewis, 2016). Our interest is only on 2.5% of this water. If this 2.5% was available, the water shortage would come to an end. The 2.5 % is available, but glaciers and snowfields traps approximately more than 1.5% of this and leaves less than a percent to serve the billions of world’s population. The major factors responsible for the shortage are; growing population (, 2016), increased affluence of economies (where more water is used in production of goods) and the climatic changes. Su (2014) noted that greenhouse gas emissions are responsible for climatic changes. According to Opray (2016) the shortage in Australia is being tackled through using desalination and water recycling.

View and Recommendation

The analysis of the current situation and the future implications if the situation worsens clearly tells the government that it has some work to do. This water crisis is being experienced all over the world; since there are some economies that have had water crisis before and have regained control of the situation, the Australian policy makers should analyze the policies implement that help on the same and weigh if they would be effective in bringing such control to Australia.

In economics, resources are always scarce, thus, the most appropriate control is to lower the water demand level. This is only achievable by raising the price at which water is supplied. Most consumers will opt to spend less volumes of water at higher price in comparison to the initial low price. However, the government should bear in mind of the fact that water is the basis of life for both the poor and the rich. Thus, price increment may raise the level of poverty in Australia. The recommendation to the government is that if this strategy was to be effective, it should try to use price discrimination so as to have a positive change in demand as is the objective without bringing about some economic implications. The price should be raised on the sectors that use large volumes of water to relieve some supply to other sectors. The government should use the current predictions of the future water crisis and raise its spending on infrastructure that would increase water conservation and storage.


Water in Australia is a scarce resource and thus the government has a sole obligation of ensuring that there is efficient allocation of the same. Without the government enacting various policies, the Australian water supply is at a risk of experiencing extreme shortages in the future which would turn this to a natural disaster that may not be easily brought to an end. The Australian climatic condition is deteriorating and given the current increased carbon emissions, the water supply is not expected to recover very soon; it may take time and thus a need to allocate efficiently what is available so that it may serve the consumers for a long time as we wait for the situation to be put under control.


Ejaz, Q., Hanjra, A. and Ward, J. (2015). Impact of water scarcity in Australia on global food security in an era of climate change. [Online] Available at: [Accessed 22 Aug. 2017].

Hubbard, G., Garnett, A. and Lewis, P., (2016). Essentials of Economics. AU, Pearson Higher Education.

OECD and OCDE. (2013). Water security for better lives. Paris, OECD.

Onselen, L. (2017). Australia's phantom housing shortage. [Online] Available at: [Accessed 23 Aug. 2017].

Opray, M. (2016). Not a drop to waste: how expanding Australian cities can tackle water shortages.

[Online] Available at: [Accessed 22 Aug. 2017]. (2016). Perth faces water shortage: report. [Online] Available at: [Accessed 22 Aug. 2017].

Su, R. (2014). Australia to Face 'Water Crisis' Due to Rainfall Shortage and Climate Change. [Online] Available at: [Accessed 22 Aug. 2017].

Tranter, K. (2015). Global Water Woes: Australia’s looming water crisis. [Online] Available at: [Accessed 22 Aug. 2017].

Whigham, N. (2017). The approaching crisis: Is the world running out of water? Available at: [Online] [Accessed 22 Aug. 2017].

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