The threat of climate change is a serious concern for water-supply planners, but given the uncertainty surrounding climate forecasts, there is an opportunity for pessimistic interpretation of future climate to justify larger and earlier investment in desalination technology. While there is a lot of uncertainty surrounding climate-change science, one would expect that the body of knowledge that now exists could produce a more rigorous estimate of water-system yield than an arbitrary selection of recent years’ data. Since the desalination investments being made across the country are typically of the order of $1 billion per plant, the value of information regarding climate forecasts, and arguably the benefit of investing more research in this area, is high.

Given the unscientific manner being used by water-supply planners to predict the climate, the justification for investment is flimsy, especially when the other side of the probably distribution is taken into account. It was demonstrated here that the inclusion of the year 2000 in the time series used to calculate mean system yield can turn Hanrahan’s lament on its head. Inclusion of one more year in the time series presently used for planning completely removes the risk of a sprinkler ban and the justification for the proposed augmentation in 2011 and results in a significant risk that the government and water-supply planners could be embarrassed by the opposite problem of dams spilling shortly after a very expensive water-manufacturing plant has been constructed. Worse still, utilities may be committed to keep paying to operate the desalination plant if take-or-pay arrangements have been contracted under public-private-partnership arrangements.

There is good potential for reining in the temptation to overestimate the impact of climate change on system yield through effective economic management. If future system yield is really as dire as the water planners predict, the implications for long-run marginal cost on prices are likely to have significant impact on demand and on the need for investment in desalination. The example shown here demonstrates that if the Economic Regulatory Authority adopted the same water forecast as the Water Corporation in Western Australia and had enough power to force proper LRMC pricing, the current construction of the desalination plant in Western Australia could be at least postponed.