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Water Forum at Wodonga

I have been attending the 4th Annual Water Forum at La Trobe University Albury-Wodonga and -incidentally I hasten to note – golfing near Albury (at Thurgoona) and at  Cobram-Barooga. The Water Forum was organised by La Trobe’s Professor Lin Crase. Over the past few years it has evolved from an informal discussion between academics and executives from water utilities to becoming a major conference. LTU is a small regional campus with an excellent teaching staff and an impressive research record. This Forum was a credit to them and LTU Wodonga’s leader Lin Crase.

I talked about the economics of desalination using option pricing techniques.  I am starting to make some progress on this topic and have several small scale analytical models up and running.  The general story is that cost-benefit rules change when investments are irreversible and when risks become more accurately understood through time. Option pricing techniques outperform conventional cost benefit analysis although I am yet to be convinced the gains are huge. Rainfall-independent water supply technologies such as desalination offer insurance against climate change that will affect the availability of water from conventional rainfall-dependent  sources.  The argument that such technologies represent a mistake because they were completed just as a disasterous drought finished are foolish – you were not foolish to insure your house simply because it was not burgled!  But the issue of the size of the desalination insurance premium is of concern.  My own view is that the premium seems reasonable given the estimated per capita extra costs it imposes. It is not entirely rational but not large. A useful extension of this work – suggested to me by an executive from a water utility – would be to use an option pricing argument for a wastewater technology. This is presumably characterised by increasing returns when there are probabilities of catastrophic flooding – I’ll think about this over the next few days.

On the incidentals. The golf at the Peter Thompson-designed Thurgoona was superb – huge wide fairways that accommodate my slice. This is one of my favourite golf courses in country NSW. The two courses at Cobram-Barooga are also across the border in NSW – a fact that got me lost as Cobram I knew was in Victoria – and are very good. The Old Course has been ranked one of the best country courses in Australia and the West Course is very tough particularly at the start.  Neither is particularly long but the fairways and greens particularly on the Old Course are very high quality.

Its a pleasant change to spend a few days in attractive country towns/cities. Albury has plenty of good recreational facilities and restaurants.  Cobram/Barooga is smaller but still a great place for a break and even closer to Melbourne than Albury.


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