I think there is a lot to be said for these suggestions. So often when environmentalists come up with schemes for conserving resources, the pro-growth gallery yells "socialism, they want to steal from those who have property." In this case, market forces are used to conserve and if you don't want to conserve, that is okay as long as you pay.

The difficulty is identified at the end when Dr. Cox says that monopolies often produce a "dividend" for the government that goes straight back to the government coffers to be used which ever way the government wants. That is certainly one of the biggest obstacles in sorting out Sydney's water issues. Breaking that cycle will be very difficult because the government will certainly say that they need the revenue for schools, hospitals, etc. In that case, services will decrease or taxes will increase. Neither of these are likely to get a strong vote in any election.

A hidden tax is almost like no tax because you don't really notice it. Taxes only hurt when you notice them. Politicians know that and that keeps the hidden taxes alive and thriving. I hope some day we can get the political will to adopt strategies like Dr. Cox's.

Let's suppose I'm one of the consumers who uses less than my allocation. So I receive rewards vouchers. What will I do with them?

Well, since I can use them to pay for water, one thing I could do is use them to pay for the water I am using. This means that they'll go straight to the existing mononpoly water provider.

But let's suppose a voucher for a kilolitre of unconsumed water has some face value - call it $voucher.

But my neighbour uses more than his allocation, and pays some amount for each marginal kilolitre. Call that amount $water. If $voucher is less than $water, then rather than not consuming a kilolitre of water, it makes more sense for me to consume it, and then sell it to my neighbour for some amount less than $water but greater than $voucher. In this scenario, it's not a capital scheme, but simply a transfer of wealth from high consumers to low consumers.

Now, if $voucher is greater than $water, then I should not use any water from my meter at all, and instead buy all my water from my neighbour for an amount greater than $water, but less than $voucher. Let that amount be $exchange. Then I sell my vouchers to people who use more than their allocation for an amount greater than $exchange, but less than $voucher. Those vouchers are then used to pay for the water consumed by those people, and again end up in the hands of the monopoly provider.

In this second scenario, anyone can choose to be a non-consumer who gets vouchers, by simply buying their water from other people. The limit is reached when all the water passes through one meter, and everyone else is buying their water from that consumer. The price they pay for the water is slightly higher than the mariginal price so that that consumer gets their share of the benefit of the vouchers.

In practice, of course there are physical limitations. Nevertheless, that fact that you get this outcome in principle makes me rather sceptical of the idea.

Sylvia.

One of the most effective ways to break the Telstra monopoly is by undergrounding of power. If power lines in areas where they are currently overhead are put underground, high capacity optic fibre cables can be installed at the same time at very low marginal cost. These can then leapfrog the obsolete copper technology in short order. The same thing happened to radio valves about fifty years ago; US electronics manufacturers didn't want to lose their investment in valve technology, and so the Japanese leapfrogged them with their move to transistors and the US manufacturers went out of business. Of course nothing like this will be allowed to happen until Telstra has been privatised; nothing must affect the price the government is to receive for Telstra.

Citizens of Sydney, I expect that the Battle of Sydney is about to begin.

Upon this battle depends the survival of civilized and decent social and community welfare. Upon it depends our own Democratic way of life, and the long continuity of our institutions, of our rights and our Freedoms. The whole fury and might of the Carr Labor Government and their plutocratic backers must very soon be turned on us.

Plutopulationists, those who build populations for power and profit just for the benefit of the elite, know that they will have to break us on a 5 year moratorium on further immigration into Sydney or lose the war. If we can stand up to them, all Sydney residents may be free and the life of the city may move forward into broad, adequately watered uplands and clean ocean shores and river banks. But if we fail, then the whole city, the wider NSW, including all that we have known and cared for, will sink into the abyss of a new Dark Age made more sinister, and perhaps more protracted, by our lack of rights in the lights of perverted science.

Let us therefore brace ourselves to someone like Clover Moore, who may provide us with a 5 year moratorium on immigration, a consensus on infrastructure vis a vis immigration levels, a fair and adequate taxation scheme and a windfall immigration development profit sharing scheme and so bear ourselves that if Sydney and its commonwealth last for a thousand years, men will still say, 'This was their finest hour'.

Sylvia has missed the point of the idea.

The vouchers ARE NOT used to buy water - only to spend on systems that either save water or capital projects to increase the supply of water. This is NOT water trading. It is a method of bringing competition to who gets the capital to build water supply and conservation systems.

However, she has still misunderstood even if we allowed the vouchers to be used to purchase water. The ONLY way you can get vouchers is to consume less than your allocation. Not everyone gets vouchers and so most of the scenarios she outlines cannot occur.

Fickle Pickle,

It does seem that I've misconstrued the sentence that discusses how vouchers can be used.

However, I have not assumed that everyone gets vouchers. That is clearly not the case.

The consumer who holds vouchers can sell them to someone constructing a water supply or recycling project. The price they get will be less than the amount that the project gets when it redeems the voucher. The difference is the capital available for the project.

If there is no other mechanism to limit the redeeming of the vouchers, then I can see no reason that the price paid to the consumer will be much less than the redemption price. Competition for vouchers would see to that.

If vouchers can be redeemed only up to the capital value of the project, then the difference between the price to the consumer and the redemption price is a capital subsidy. Which is fine, but the rest of the capital has to come from somewhere else.

There are significant risks with a water project. A major one is that in future years, rainfall will increase, and the current monopoly supplier will be able to undercut the price of any other simply because their cost of water is so low.

I cannot see why any capital funding would be forthcoming for a project that is so inherently risky.

Sylvia.