Water Journal June 1989

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ISSN 0310-0367

Vol. 16, No. 2, June, 1989.


CONTENTS My Point of View Association News 6 6 12 14

. President's Report .. It Seems to Me.. .

IAWPRC News .... . Industry News ... . Technical Note

Outline of AWRC Guidelines for Low Cost Water Supplies for Small Communities S. Samra ..

15 16 16

Australian Filter Media ..

BERT and the United Fire ... ACADS Watercomp '89 .. Risk and the Water Industry Risk Quantification for Work Injury and Public Liability R. M. Robinson ...

Water Quality for Recreation and Tourism ... Canal Estates Biota Study .. Plant, Products, Equipment...


Financial Risk in the Water Industry J. M. Wardell. .... Asset Aspects of Risk


D. Northwood ..


OUR COVER A risk foreseen . A major fire in a chemical war~house is extinguished by thousands of litres of water which then heads for the drains. BERT spring into immediate action to prevent major pollution of the adjacent river. Story - Page 16.

NSW Dept of Planning's Role in Land Use Safety Planning P S. Dryden and L. Treadwell ......................... .


Planning and Management of Water Resource Systems 31

G. Dandy .

FEDERAL SECRETARIAT P.O. Box 460. Chatswood NSW 2057 Facs1m1le (02) 410 9652 Telephone (02) 410 9653 Office Manager - Margaret Bates

BRANCH SECRETARIES Canberra , A.CT M. Sharpin, G.H. & D., P.O. Box 780, Canberra 2601 (062) 498 522

FEDERAL PRESID ENT Timothy Smyth, GHD Group Director, Telephone (02) 690 7070

EXECUTIVE DIRECTOR Peter Hughes. Telephone (02) 410 9653

FEDERAL SECRETARY Greg Cawston, Telephone (02) 29 0236

FEDERAL TREASURER John Molloy, Telephone (03) 615 5991

New South Wales Mrs S. Tonkin·Hill . Sinclair Kn ight & Part. 1 Chandos St. , St. Leonards, 2065

South Australia

E. A. Swinton,

State Water Laboratories,

4 Pleasant View Cres., Glen Waverley 3150 Ottice (03) 560 4752 Home (03) 560 9306 Fax Cl· 543 6613

E. & W.S. Private Mail Bag, Salisbury, 5108. (08) 259 0244

Western Australia A. Gale, Binnie & Part P/L, P.O. Box 7050, Cloisters Square, Perth 6000 (09) 322 7700

Tasmania Water Training Centre, P.O. Box 409, Werribee, 3030. (03) 741 5844

A. B. Denne P.O. Box 78A, Hobart 7001

D. Mackay, P.O. Box 412, West End 4102 . (07) 844 3766

(Advise per phone)

ADVERTISING Ann Sykes Appita 191 Royal Parade, Parkville 3052 (03) 347 2377 Fax (03) 3481206

(002) 30 5562

Northern Territory Queensland


R. Townsend ,

(02) 436 7166

Victoria J. Park.

33 37 38 40

P. Abbey, P.O. Box 37283 Winnellie, N.T. 5789 (089) 89 7290

PRODUCTION EDITOR J. Grainger Appita 191 Royal Parade, Parkville 3052 (03) 347 2377 Fax (03) 348 1206

WATER June, 1989


ably conventional sewerage systems and septic tanks. The principal objectives of the project are: I. To identify the nutrient characteristics of the effluent discharged from an A WTS and, if possible, formulate means of improving the final effluent quality; 2. To compare the volume and quality of both the surface and sub-surface runoff from a block serviced by an A WTS with blocks serviced by septic tank systems and conventional sewage disposal (ie main sewers); 3. To determine the degree of variation

in the nutrient status of a soil irrigated with the effluent from an A WTS and to compare this variation with soil-nutrient changes on blocks where septic systems and conventional sewage systems are used; and 4. To assess and compare the effects of urban runoff water quality in catchment areas dominated by (a) A WTS, (b) septic tank systems and (c) conventional sewage disposal. Note: This list of objectives will be subjected to change as additional issues are raised by concerned members of the community and both local and state govern2.

Technical Note

Designers often specify coal as well as sand as a filter media. If hard coal, which is very friable, can withstand the "rigours" of a filter system - backwashing and air scouring for the life of the filter media - then surely the AWWA B-100-80 spec. for the characteristics of sand is more than adequate.



SILICA SAND River Sands Pty Ltd has been a supplier of filter sand and gravel to the water treatment industry for 13 years. They have supplied thousands of tonnes of media to many users including William Boby, N. E. I. John Thompson, Permutit, Water Treatment, Water & Industrial Engineering, Wormald Engineering, Gold Coast City Council, Brisbane City Council, Port Moresby City Council, Redland Shire Council, Arrnidale City Council, Landsborough Shire Council, Dunlop I.B.C. and Degremont Warman to mention a few. Their products have been scrutinised and tested by many recognised laboratories such as Simmonds & Bristow Brisbane (perhaps the nation's leading Authority on water treatment systems), Coffey & Partners, Hunter District Water Board, Brisbane City Council, Gold Coast Assay Service and the Local Government Department of Queensland. The filter sand produced comes from sand won from the Brisbane River. The geology of the river system is 400 million years old, which ensures that the sand which remains is extremely hard - it has stood the test of time in an extremely vigorous environment. The Degremont Friability test is a very effective method of determining the friability or hardness of filter sand. Recent tests conducted by Simmonds & Bristow comparing the friability of Brisbane River sand with two samples of 950Jo silica sand showed that the Brisbane River material was considerably less friable.

Recently the company has installed a comprehensive coal crushing and screening plant at its Carbrook facility. The investment was made after a 5 year research and development program was completed. The objective of the program was to find and produce a substitute for the expensive imported Anthracite which has been traditional for many years. The company has a product "Filtracite" which is produced from coal won from a mine near Brisbane. With a Hardgrove Grindability Index of 35 it is considered to be the hardest coal in Australia. The Brisbane City Council who were partners in the R & D project conducted exhaustive backwash tests using water and airscour which showed that the friability of the coal was at least equal to that of the imported Welsh anthracite. Figure 2 compares the bed expansion of the Australian "Filtracite" with that of the imported material. A pilot plant at the North Pine Dam owned by the Brisbane City Council has been in operation for two years using the Filtracite. FILTRACITE TYPICNL ANALYSIS Effective Size: Uniformity Coefficient: Bulk Density: Specific Gravity: Moh Hardness Hardgrove Grindability Index: Acid Solubility

Table 1. Analysis of Friability Tests Degremont Methods of Analysis 502 Brisbane River Sand

Effective size Uniformity co-efficient •Friability OJo - 15 min . 30 min .

.89 1.3 I 2

Waterford Sand Brls.

.91 1.25

8 l'2

NSW Filter Sand

.92 1.3 2 5

ment authorities. The research project is part of a Teaching Company Scheme, established by the Commonwealth Department of Industry, Technology and Commerce and the NSW Department of Business and Consumer Affairs, and involves a team of three members: Ian Waite (Managing Director of Biocycle Pty Ltd), Assoc Prof Robin Warner (University of Sydney) and Mary Mikulandra (Research Associate, University of Sydney). The project, which at present is in its initial stages, is expected to be completed by March, 1991.


Degremont Spec. Very good Good

0.8 - I: 1.0 - 1.4: 1.4 - 1.8 mm 1.4 or less 720kg/ M ' 1.3 - 1.35 2.5 - 3.0 35 - 40 1.5% w/ w max (100JoHa/20 °c)



E g, 40




6-10 10-15

15-20 20-25





• The friab ility of a material is calculated by assessing the quantity which is lost after "milling" . Two measurements are necessary to access friability - firstly, after 15 minutes and then after 30 m inutes. The particle size distribution curve for the material is plotted after each milling. 1

The logic of specifying that filter sand and gravel must have a silica content of 95 % or more is difficult to understand for a number of reasons: I. The AWWA B-100-80 clearly states that the "Filter.sand shall consist of hard durable and dense grains of predominantly ·siliceous material that will resist degradation during handling and use".


0 0

5 8.9 1


10 17.9

15 26.8



20 35.7 A B

25 44.6

30 53.6





1.22 0.80

1.58 1.75

1.3 1.37

A.W.W.A. 13th Federal Convention 1989 PROCEEDINGS - 132 PAPERS Management/Administration : Distribution Technology : Treatment Technology : Science and Environment : Public Health

2 Volumes - 633 pages - plus abstracts $-50 (inclusive of postage in Australia) A.W.W.A . Federal Office

PO Box 460 Chatswood

NSW 2057 .

WATER June, 1989


A RISK FORESEEN BERT AND THE UNITED FIRE by IAN NEWMAN, Manager BERT Operations, MMBW At about 3 pm on 28 November 1988 a fire broke out in a warehouse occupied by United Transport Services in Footscray Road, Footscray, Vic. By the time it was extinguished several hours later two warehouses used for storage of chemicals and plastics had been totally destroyed.

cies; and to manage the clean-up and disposal of materials involved in such incidents. On arrival at the site BERT, in conjunction with MFB and EPA officers commandeered an excavator and operator who happened to be in the general area and con-

structed two tempor~ry earthern dams a the outlets of the drains most likely to receive the firewater run-off. BERT then proceeded to organise a sampling program to evaluate the toxicit y of the run-off and a tankering operation which saw the eventual removal of about 7 megalitres of run-off over a 7 day period until tests showed that the run-off was safe to enter the sewer. Run-off was then diverted to sewer for three weeks until the actual site-clean-up was completed whereupon the dams were removed and the site restored. The run-off removed from the dam was treated by seven of the State's licenced liquid waste treaters before being permitted to be discharged to the sewer. BERT was also contracted by United Transport Services to clear the actual fire site of waste chemicals. The total cost of this clean-up was $3 million . Due to the prompt action of BERT an others and the subsequent BERT-organi e tankering operation no contaminated runoff entered the Maribyrnong River and a potentially major environmental disaster was averted.

From the outset it was realised by the Metropolitan Fire Brigade (MFB) that chemical pollution of the nearby Maribyrnong River (less than 200 m from the fire site) by the contaminated firefighting water posed a major environmental threat. Both the Environment Protection Authority (EPA) and the Melbourne and Metropolitan Board of Works were called in to assist. Following a similar transport warehouse fire in 1985 the Board of Works had established a special group, the Board's Emergency Response Team or BERT, to co-ordinate its activities in response to incidents involving chemicals. BERT's role is to protect the Board's personnel, sewers and drains; provide advice on the containment of chemical emergen-

This conference, arranged jointly by ACADS, AWRC and LE.Aust started off well on May 29th, as this Journal· went to press. There were over 200 registrants, from all States of Australia and over 50 papers were presented. The theme was the potential for broader application of technical computing in the water field. A fuller report will be given in our next issue. The keynote speaker, Professor D. Peter Loucks, of Cornell University, USA, started the conference with an overview of the development of computing, from the past into the future, as he sees it in the North 16

WATER June, 1989

American context. He particularly stressed the development of interactive graphics. His stimulating talk ended with three "bon mots". "If a picture is worth a thousand words, then a megabyte of pixels is worth a gigabyte of text". "The desire of users for 'standards' which have half-lives of more than a few weeks is commendable, but Genesis 11, v 1-9 is somewhat pessimistic (referring to the Tower of Babel-Ed.) In any case, in such a fast-developing industry, standardisation too early tends to be restrictive".

'' In relation to practising engineer yet familar with computer technology...:· e longer you wait. ..within reason ... the eas ~ it will be to be retrained. This is be a :~ of the increased reliability and lower co_;_ of hardware, coupled with the 'u_e--friendliness' of newer software (albei increased cost)". As Peter Manoel, · -= Conference Chairman, said, "with all·potential, why do many Water Indus·. professionals pursue their craft in a m -ner little changed by the comp :_ revolution?'' The Conference aimed to addres '-"" question by bringing together the wa:_ authorities, consultants, academia, toge ':~ with some of the vendors of hardware a:: software. Preprints will be available for purcha;-~

RISK QUANTIFICATION FOR WORK INJURY AND PUBLIC LIABILITY by R. M. ROBINSON Richard Robinson gained his first degree in Mechanical Engineering in 1975, and started work in the field of Fire and Property protection, both in Australia and America. In 1985 he teamed with Derek Viner to form, eventually, Viner Robinson and Jarman, co sultants in Risk Engineering.

SUMMARY The successful long-term control of hazards is primarily one of optimisation of the physical environment. This is an engineering function, but in order to optimise engineers need to quantify both the hazards and the effects of various control options. Risk models coupled with probability estimates lead to such quantification and provide useful decision-making tools.

INTRODUCTION Rising insurance costs have focussed attention on management of work injury and public liability risks. Whilst successful shortterm 'fixes' can be provided by good rehabilitation and claims management, the long-term control of hazards rests with the ability to optimise the physical environment in the workplace. This is primarily an engineering function, but to succeed engineers need to be able to quantify the hazards, their effects and the costs of control and to be able to present them in an understandable way to those who are at risk, or even to the courts if 'all goes wrong'.

R. Robinson

• compliance with regulations and codes of practice is a starting point, not the goal • individual susceptibility needs to be considered. These tests of negligence cannot be decided by the adversarial arguments of lawyers, they require the evidence of experts in that particular field of operations.

RISK MANAGEMENT It is the author's experience that the management of risk can be defined in financial terms. It is the optimisation of 'the total

costs of the risk'. The total cost of a risk is the cost of prevention plus the probable cost of loss. For example, when designing a new installation, the real cost must not only include capital, maintenance and operation, but also an estimate of the damages which could ensue if it causes an accident, either to employees or the public. Experience has shown that no matter how much stress is laid on training and work practices, before the event, or rehabilitation and claims management after the event, a far better return is obtained from a 'safe' engineering design in the first place. In order to justify possible extra expense to attain 'safe' design an error must gain some estimate of the probability and possible costs of accident or failure. In this definition 'safe' is not an objective, but a constraint, used in its legal meaning of 'an acceptable level of risk'. In court, society's verdicts arise either from statute, or from common law after the event. In some States, work injury is now covered by statute, but 'duty of care' remains valid for all practical purposes (Creighton, 1986). Failure to exercise duty of care is negligence. There are four tests for negligence: 1. Causation: Did the injury occur because of the 'unsafe' matter on which the claim of negligence is based? 2. Foreseeability: Is it possible to foresee that this injury could happen? (as evidenced by prior injuries, advice, complaints or wide knowledge). 3. Preventability: Is there a practical alternative to doing the job this way or with this equipment? (That is, within management's control). 4. Reasonableness: The behaviour of a manager is judged in relation particularly to 2 and 3. This is done by the court considering: the balance of the significance of the risk versus the effort required to reduce it. • approved/common practice may or may not be reasonable • the employer must be practically able to undertake the change • expense alone is not a factor, nor is practical inconvenience • the creation of other risks by the change needs to be considered This paper has been abstracted from a more detailed paper to be presented to a Conference of the 5th National Conference of Local Goverment Engineers in September, 1988. 18 WATER June, 1989

RISK QUANTIFICATION The petrochemical and aerospace industries have led the way in quantification of risk, but in Australia wider applications into general engineering have been covered by publications of the Institution of Engineers of Australia (Viner, 1987a, 1987b). The (American), Society of Fire Protection Engineers Handbook (1988) provides a specific section on Probability Models. Applying what is termed Event Analysis and Fault Tree analysis enables, for example, an estimate to be made of the probable outcome of a fire in a commercial building. Figure 1 is a simplified model of an event, with four intermediate levels of control, which assumes that each level of detection or isolation has aJ 80% chance of success. The likelihood that all levels will fail is thus 0.2x 0.2x 0.2x 0.2 = .0016, ie 1.6 chances in 1000 ignitions for total destruction. The model can be expanded to take account of other possible options, and it then branches out into an 'Event Tree', in which each branching option is allotted an estimate of its probability. A 'Fault Tree' is the same type of logic, but in reverse, ie leading from a number of possibilities to the likelihood of a specific event occuring. An example relating to machine guarding is given in Figure 2.

RISK CRITERIA: ASSESSMENT OF RISK LEVELS The Occupational Health and Safety Policy of The Institution of Engineers, Australia recognises that the determination of the acceptable degree of risk is a technical and social process involving those affected by the risk . It is the responsibility of professional engineers to provide the best technical knowledge to assist in making such a determination. Although there are many proposed definitions for the term 'risk' it is now widely agreed that the risk posed by a situation refers to the combjned effect of the probabiJity of occurrence of an undesired event and the magnitude of the event. Some definitions of risk refer only to likelihood or probability, however where there is a range of possible outcomes, these must also be considered. Ignition



Smoke Thermal Detection Detection 80% Fires 80% Fires Controlled Controlled No damage Some damage A B

Fig. 1 -

Flash over



Automatic Sprinklers 80% Fires Controlled Serious damage C

Fire Walls and Doors 80% Fire Controlled Major damage D

Total Destruction E

Time Sequence Model for Fire.

T Amputation by sawblad~


G1 Human acuon to place hand m saw

Failure of guard to prevent contact

Guard removed by persons unknown

The likelihood of the top event T occurring is: T = G1 x G2 = (P1 + S1 + C1)(P2 + S2 + K1) Where: Pi = Primary Failure Modes (component fails under design conditions) Si = Secondary Failure Modes (external conditions cause failure, eg a flood) Ci = Command Failure Modes (component told to fail by insystem signals or forces) Ki = Kilroy Failure Modes (component fails due to covert act of unknown persons)

Fig 2. -

Fault Tree for a Machine Guard (from Browning, 1980).

Levels of individual risk considered to be appropriate for use as criteria have generally been set by studying and analysing existing risks which are familiar to and accepted by the public.

Table 1. Hazards and Individual Risk Levels Resulting from Voluntary and Involuntary Activities Type of Hawrd

Smoking (20 cigarettes/ day)• Motoring in NSW Motoring in Victoria Falls in Victoria Run over by a car in Victoria Rock climbing• Died of indeterminable causes in Victoria (mainly infants) Drowning in Victoria Fire in Victoria Train accidents in NSW Fire in houses in Victoria Accidental poisoning by medicine in Victoria Accidental suffocation by food in Victoria Struck by falling object in Victoria Electrocution in Victoria Aircraft accident in Victoria Unexpected reaction to medicine in Victoria Abnormal reaction during surgical and medical procedures Misadventure during surgical or medical care in Victoria Suffocation due to accidental ingestion of non-food objects (Victoria) Struck by lightning in Victoria •

The Australian Bureau of Statistics has prOJtided statistics on the risk of death from typical activities, which has been presented in Reports for the Goverments of Victoria and New South Wales (8). Hazards and individual risk levels resulting from voluntary and involuntary activities are presented in Table 2. The risk criteria for individual fatality risk of one chance in a million per year is a target which many authorities and organisations including the Health and Safety Executive, UK (1986) and The Warren Centre for Advanced Engineering, Sydney University 1986 have stated as being acceptable.. It is, in effect, one seventh of the risk of a person dying to house fire in Victoria, and this level is well accepted by barristers and the courts. Such criteria are regularly being used by Authorities for decision making. For example, the NSW Department of Planning and Environment (1985), and the Department of Labour in Victoria (Tecnica, 1987) have developed criteria to assess the risks involved with the development and expansion of hazardous industries. They base this on a fatality risk for residential areas of one per million per year.

CONCLUSIONS It appears that risk can be quantified and independent criteria applied to it to ensure that an acceptable·level of risk is achieved. If necessary, such a process should withstand judicial scrutiny. Whilst the techniques used are presently directed towards major hazards in the petrochemical and aerospace industries, they are being applied to lower technology situations such as fire buildings and machine guarding. Thus the methods appear realistic and available to be used legitimately by engineers. Indeed, the question of liability for failure to use such well-publicised methods may be a matter for concern. Such methods also provide a cornerston~ for engineers to sensibly include the cost-of-risk for new projects and existing facilities and clearly sign post to decision makers the benefits and drawbacks of various schemes.

Risk of Death chances in a million per year

S000 300 144 66 40 40

39 IS 12 10 7

7 7 4 4 3


o.s 0.2

Voluntary activities for which only the exposed population is considered (the entire population is used in calculating the risk of death from continuous exposure to all other activities).

REFERENCES Browning, R. L. (1980) - The Loss Rate Concept in Safety Engineering. Marcel Dekker, Inc. New York . Creighton, W. B. (1986) - Understandin/ Occupational Health and Safety Law in Victoria. CCH Australia Ltd (1986) . (Paras 621-623). Engineering Risk (1983). Report of the President's Task Committee on Professional Practice & Engineering Risk. The Institution of Professional Engineers, New Zealand Third Impression, June 1984. Department of Environment and Planning NSW (1985) . A Risk Assessment Study for the Botany/Randwick Industrial Complex and Port Botany. Health and Safety Executive UK (1986) - Risk A ssessments for To wn and Country Planning. Society of Fire Protection Engineers (1988) - Handbook of Fire Protection Engineering. National Fire Protection Association, Boston . Technica (1987) - Risk Assessment of the A ltona Petrochemical Complex and Environs. Report for the Government of Victoria . The Warren Centre for Advanced Engineering (1986) - Major Industria/f Hazards. Sydney University. Viner, D. B. L. (1987) - Occupational H ealth and Safety. Published by Programme Learning, Sydney, for The Institution of Engineers, Australia. Viner, D. B. L. (Editor) (1987) . Risk Engineering for Public, Product and Employee Safety. Victoria Division, The Institution of Engineers, Australia.

IWEM WPCF Asia-Pacific

Conference on



7th Regional Conference WATER NAGOYA '89

22-25 October, 1989 Honolulu, Hawaii

29th October - 2nd November, 1989 Nagoya, Japan

Information: AWWA Federal Ottice

Information: AWWA Federal Ottice

Technology Transfer in Water and Environmental Management CONFERENCE & EXHIBITION 12th-14th September, 1989 Birmingham , UK Information: IWEM 15 John Street, London WCIN 2EB WATER June, 1989


Financial Risk in .the Water Industry J. M. WARDELL

SUMMARY Servicing the huge debt portfolios which pay for the vast infrastructure of the water industry is in itself an art and a science. In the financial markets, new opportunities must be explored, but the liability risks have to be continually monitored. These risks principally emanate from the extremely long life of the assets which are being financed, and the "business risks" involved in forecasting demand and asset life over periods which can span two or more generations. This is in marked contrast to the situation in the commercial world. Government backing is vital, but this incurs complications in financial planning. Some of the functions of a treasurer in managing these risks are described.


At the time of writing Mike Wardell was an Executive Director of Dominguez Barry Samuel Montagu Funds Management Limited. While a financial advisor to the Melbourne & Metropolitan Board of Works he has since Joined the Hongkong Bank of Australia where he is specialising in providing Liability Management services to external clients. He has a wide experience of Australian Financial markets having worked as an Underwriter, an Intermediary and an Investor.

INTRODUCTION When invited to write a paper for this Journal I foolishly thought it would be quite easy. Unfortunately I found it to be more difficult than I had suspected. Being a financial market practitioner one thinks, talks and writes in "Jargonese", much of which is incomprehensible to laymen or engineers. I have tried to sterilise jargon from this document but apologise in advance for any examples which I may have overlooked. In writing about the Water Industry, I am assisted by my knowledge of the workings of the Melbourne and Metropolitan Board of Works, both as one of its financial advisers and as a consumer, but before embarking upon the topic I feel it is important to get ground rules set. To do this I must define what I understand by the term "Water Industry". The term would generally include the urban and rural water authorities, manufacturers and suppliers of equipment and services and related research, development and education institutions. However in the context of this paper I am focussing on the water industry assets, basically the water supply, sewerage and irrigation infrastructure, and the debt which has been accumulated to finance this. Such facilities in Australia have a current replacement value estimated to be approaching $100 billion. The 'Industry', as I see it, is in fact a 'service'. It provides me with my water, for which it must build dams and maintain catchment areas and pipelines. It disposes of most of the water I use, plus domestic and industrial waste. This requires sewers and purification plants. In total this is an enormous amount of infrastructure which requires a commensurate amount of finance. In Melbourne alone, we have assets which would cost approximately $10 billion to replace, and an accumulated funding cost which equates to a liability portfolio of slightly less than $3 billion.

FINANCIAL RISK When one looks at "Risk" in the water industry the most obvious example we see is that of a dam bursting, which brings with it the costs associated with mopping up the damage, the lack of supply from that source as a continuing business and the costs of rebuilding to re-establish that supply. These risks, whilst having a dramatic impact, can be insured against by catastrophe insurance and whilst having a short-term impact upon the balance sheet of the supply company, they do not have a dramatic financial impact. The object of this paper is to highlight the many financial risks that are hidden from sight in the industry. These risks principally emanate from the long life of the assets which are being built and financed . "Pure world" theory tells us that if we build an asset today which is going to operate for the next ten years, giving a return over that period, and we are able to lock in a funding mechanism which each year costs less than our income with no loan remaining at the end of the ten years then we are, in a business sense, totally insulated from the whims of the financial market. We also have a quantifiable cash flow which should give us a profit. This 'pure world' still has a risk in that there must be a continuing demand for our product and a quantifiable price into the future. One can quickly see that in a 'pure world' we still require a crystal ball; we must guess20

WATER Jun e, 1989

The likely demand for our product - dependent on numerous factors. The likely price for our product. The useful life of our asset. However, we could say that our liability, being the financing of our assets, has no financial risk. In financial jargon we would say that the business is "immunised" or "match-funded". When we look at an industry such as water supply and reticulation we see the absolute opposite from the 'pure world '. To illustrate this point I will use a few facts concerning the Melbourne and Metropolitan Board of Works. In Melbourne the oldest dam still in operation, Yan Yean, was built in 1857, one hundred and thirty two years ago. In a couple of years time a new outfall sewer to Werribee will be completed which will replace that built in 1897, ninety two years ago! What other business is operating in Australia with "capital equipment" of this age? 1 The provider of such a service must assess the demand one hundred years into the future while most businesses and Governments cannot even formulate a "five year plan". This leads me to state that the greatest "financial risk" in the "industry" of water supply and reticulation is that of being in the business in the first place. Such a business is really a social service being provided for the benefit of the community. It is not an enterprise which would be entered into lightly by private concerns. This also demonstrates why such a business can only be undertaken by something akin to a Statutory Authority. This concept is highlighted when we also consider the threat from technology. As a fanciful example, in ten years time we could have an atomic-powered disposal unit in every household and have no requirement for sewerage reticulation. Who, in such a situation, is going to foot the bill for the costs of this unused infra-structure? Obviously if the business is Government owned then that Government can influence the pricing of the alternative technology and ensure that it is not cost effective, or simply tax households to raise the revenue to pay for these unwanted assets. Government ownership is not the only way the operation can be protected from the financial impact of this horrendous business risk. In the USA, the home of free enterprise, we have Utilities which provide such services and these are in effect public companies, but they operate within the comfort of support from a State or Municipality. This gives much the same outcome and protects the operator from the financial risk associated with having his assets/ products life cycle shortened.

MATCHED FUNDING Our next significant risk comes from the concept we introduced earlier known as "matched funding". In our 'pure world' example we took an asset with a ten year life and locked in fixed-rate, principal-reducing financing. This type of debt is the same as a household mortgage except that the interest rate is fixed at the outset. For our Statutory Authority we have decided that we must build assets with an operating life of one hundred years with the com-

fort of a 'taxing' ability. We must then decide how to fund this . If we go back to our 'pure world' we would respond by 'locking in' fixed-rate funding on a reducing basis so that at the end of theone hundred year period we had paid off the loan . The cost of this would of course be charged to the new users who have made it necessary to increase the useful capacity. Theory is great but in practise it is "bunkum". We can't borrow for 100 years at a fixed rate to start with, let alone on a reducing basis. Twenty years ago it was possible to borrow in such a manner for terms of up to fifty years. Many Authorities are lucky still to have debt on their books issued at 4 to 5% interest rates maturing out to the year 2025 . A nasty bout of inflation made such borrowings very profitable to the Authority compared to the cost of new debt, but for the lender the opportunity cost has been enormous. We are now in an age of performance surveys in the investment field, bringing with it the need to revalue assets in line with new market values. Today we have very few institutions in Australia prepared to make such a long term investment. This contrasts dramatically with Financial Markets in the USA and UK where it is commonplace still to have lenders prepared to invest for up to thirty years. However, this is only to borrowers of the highest credit s~anding.

FWATING RATE FUNDS In the present environment we have a choice of floating-rate funds - a method whereby the interest rate is reset on a periodical basis, usually every three or six months, or fixed-rate funds out to approximately ten years on a non-reducing basis. The first of these methods works like a perpetual overdraft where the lender, being the bank, regularly changes the rate of interest he charges in line with market forces. The second is akin to a term deposit with a bank where the lender, being an individual, locks his money for a fixed term at a fixed rate and cannot get his money back early. I have come around to the belief that there is a strong argument for floating-rate funding of these assets on a "user pays" basis as this allows for the most efficient level of liability management. Today's consuming household is operating in the same economic environment as the provider of these services. Should interest rates fluctuate wildly causing the cost to the provider to do likewise, we can pass that increased cost back to the consumer. The outcome would be that the charges to the householder would fluctuate greatly in the same manner as the interest rates charged on deregulated housing loans.

POLITICAL INFLUENCE Generally the political environment would not allow for such volatility of charges. Although some authorities are moving towards a partial "user pays" system, as evidenced by the MMBW adopting water-by-measure billing, the reality is that the services provided are regarded as a social necessity. As such, when interest rates rise we are unlikely to see increases in the cost of these essential services being passed on to the consumer who would already be feeling the burden in other areas such as mortgage repayments. We have already established that this type of business can only operate within the comfort of the relevant government. Even the most market-oriented political party would baulk at adopting this user pays approach and we must accept that political influences dictate our business strategy.

OPTIMISING THE PORTFOLIO We are now getting to the crux of the problem: how do we suggest, in a real world, that these financial risks involved in funding our assets be overcome. The common solution is to build an averaging situation which in effect produces an insurance policy. This has the effect of smoothing out the volatility of the short term funding market. When we have a large proportion of our debt "locked in" at a particular interest rate level for a set period of time we can budget for a cost variability built on the probable volatility of interest rates on the portion of our debt not predetermined. We determine a debt portfolio which is required to fund our assets and then add a technique known as Liability Management. Again the crystal ball takes pride of place. Economic factors largely determine the course of interest rates, but this is very much in a macro rather than a micro sense. The object is to borrow long-term when interest rates are low, and s~ort-term when

interest rates are high. These borrowings over"'4ime produce the debt portfolio mentioned above. The existing debt portfolio can then be manipulated in the same way as Fund Managers deal with an asset portfolio, which is where the skill of our Liability Manager comes in. Through these techniques the hope is to add incremental value to the debt portfolio compared to having a static portfolio. These opportunities come about through the mis-pricing of debt securities in the secondary market due to investor preferences. These may be very important to a short term investor but a body with a one hundred year time frame often has a different perspective making it easy to produce small changes to gain financial benefit. An example of this is that there was a time when Savings Banks were quite prepared to lend on a long-term, fixed-rate, principalreducing basis. These are termed credit foncier loans. Today these loans are considered unattractive by the new generation of managers. Opportunities have arisen for this type of debt to be restructured and for the issuer to charge a "fee" for the trouble of providing the "latest" type of debt. Tomorrow a new debt security may be popular and once again an opportunity such as this will certainly arise. The importance of being market-reactive in managing this liability portfolio cannot be stressed enough. One does not just issue the debt and forget about it. A whole host of techniques can be added to optimise the performance. To measure how well we are going we must put in place performance measurement techniques which compare the actual performance of the Liability manager on the active portfolio with that of a theoretical, debt structure. We cannot assess the impact compared to our 'pure' 100 year debt and so must lean on our theory of a floatingrate benchmark as being the most desirable static funding. We have now passed from the macro view of the business venture to the micro aspect of the Treasury operation. Here again we find numerous risks which must be assessed in carrying out our day to day business. Treasury becomes a centre of Risk management for the business and is the body responsible for managing this debt portfolio. In today's financial market we have already seen that we can't fund 100 year assets on a fixed basis. The Treasury's goal is therefore to ensure that the business has a reasonable amount of working capital at a budgetable cost for the next few years. Obviously the budgeted and realised costs must always be as low as possible within a predetermined acceptable risk profile.


MONITORING THE MARKET Within this area the financial market is all important and is a very tricky animal. If we look one more time at our ' pure world' the borrower and lender have an equal and opposite need and financial accommodation is achieved. In our real world we have intermediaries whose whole reason for being is to make a profit by ironing out market distortions. The problem is that as soon as they iron out one distortion some new and complicated procedure is invented which creates another. These intermediaries have a team of "boffins" working for them to continuously find better techniques for both lenders and borrowers. The Treasury of the business is being bombarded with these ideas and is sometimes led into them like a lamb to slaughter. This in itself creates a financial risk out of trying to manage a financial risk! To combat this we must employ our own mathematician to investigate the proposals throughly. Such resources can be extremely difficult to recruit internally, often skills other than maths are required such as taxation and legal expertise. This role can often be best filled by employing an external advisor who then supplies the resources of a team of such professionals. Many of these proposals, be they commonplace transactions such as interest rate swaps or options, bring with them new risks and new challenges. As an example I will explain the technique known as an interest rate swap which gives us a cost of debt cheaper than a traditional floating-rate loan. This transaction is based upon a legal agreement whereby one party borrows fixed-rate funds and another borrows floating-rate funds. The "Statutory Authority", because of its higher credit ratings, has access to the fixed-rate supply at a far lower rate of interest than for the other party. It then enters into an agreement whereby it allows the other borrower to have some of this advantage and in return it gains access to the supply of floating-rate investment at a substantially lower cost than normal.

Continued on page 24. WATER June, 1989 21

_Asset Aspects of Risk by D. Northwood David Northwood is a Divisional Director of Sedgwick Risk Management Services. He has a degree in Chemical Engineering and a Graduate Diploma of Corporate Risk Management. He has worked as a Property Loss Control and Risk Management Consultant for 12 years.

SUMMARY Business risks can be either speculative or ''pure''. Speculative risks involves the potential for financial gain as well as the possibility of loss. "Pure risks", eg damage to assets, or to the property or health of others, can only result in loss. One function of risk management is to assure the financial solvency of an organisation against pure risks, and involves the concept of insurance at the various levels of risk. The paper summarises the critical steps in organising such a risk management program.

D. Northwood

DEFINING RISK MANAGEMENT Risk is a major aspect of our environment and permeates almost every facet of personal and business life. Methods of dealing with risk, or risk management therefore become of extreme importance in carrying out activities of both a personal and business nature. The discipline of risk management has been the subject of numerous discussions and articles in recent years. Despite this, it is often difficult to define precisely what is meant by risk m_anagement and how it may be used effectively in practice. The problem is exacerbated by the fact that within many organisations, the title of Risk Management is often bestowed on personnel with less than adequate skills in the area. Often an Insurance Manager, or even a Safety Officer may have the title of Risk Manager. This only serves to confuse the definition and function of risk management, particularly with company management who may not be aware of the distinctions between loss control, insurance and risk management. Before defining risk management, it would be appropriate to consider the nature of business risk. Basically, all situations involving business risks fall into one of two broad categories - speculative risk and pure risk. The main feature of speculative risk is that it involves the potential for financial gain as well as loss. The main feature of pure risk is that there is only the potential for loss, with no gain. The major sources of pure risk in a business arise from physical damage to assets, consequential losses because of property damage, losses through criminal acts, liability losses due to a company's responsibility for damage to others and loss of business resulting from the death or disability of employees. One definition of risk management is that it is a set of functions which deals generally with pure risks, and provides the most effective means of handing them. In other words, the Risk Manager is the individual responsible for ensuring that the profit or assets of the company are not unduly impaired by the occurrence of incidents outside the direct control of the company. The Risk Manager's basic job is to assure the financial solvency of the company against the consequences of pure risk, at the lowest possible cost.

UNDERSTANDING THE ORGANISATION It should be emphasized that there is no fixed risk management approach that can be applied to all organisations. Programs should vary depending on: • The attitude of management to new ideas • The size of the organisation and the diversity of risk encountered • The corporate attitute towards risk, ie whether conservative or risk takers. Considering the first point, many organisations are characterised by a high degree of autonomy within the individual facilities, which are often geographically isolated . Local management naturally tend to guard their autonomy and don't always welcome outsiders, however well-intentioned they might- be, and however good is their macro view of the total organisation. Since a risk management program cannot be inflicted on the facility, it is important to be sensitive to the attitutes of local management. Considering the second point, the size of the organisation does not necessarily increase the range or extent of risks. A small company producing, for example, a vital component in a motor vehicle or aircraft may have very serious product liability exposure. 22 WATER June, 1989

With respect to the third point, it is also necessary to consider the overall attitude of an organisation towards risk. For example, organisations in the water and waste water industry may have a strong engineering influence in management and engineers probably tend towards conservatism, at least in non-technical areas. Hence such organisations, attitutes towards risk may be conservative. Recognizing the character of the organisation is important in determining the overall direction of a risk management program. It is important not to attempt to change drastically the character of an organisation over a short period of time. It could be said that organisations, like people, have personalities and it is usually more productive to work within that personality, rather than attempt to change it.

THE RISK MANAGEMENT PROGRAM STEPS There are standard steps that can be taken to achieve a risk management program within any organisation. Stated simply, the steps are:i) Identify the risks. ii) Quantify the risks in terms of "cost of risk". iii) Treat the risk by a combination "t>f risk control and risk transfer or risk avoidance techniques.

Identification: The risk identification process can be simplified by breaking risks into five areas. These are:i) Physical risks (fire, explosion, etc). ii) Occupational health and safety risks (noise, toxic chemicals, etc). iii) Liability risks (product, public and professional liabilities). iv) Security risks (burglary, embezzlement, etc). Key personnel risks (incapacitation of key staff, kidnapping, v) etc). This break-up is somewhat arbitrary, and other areas could be included. For example, if speculative rather than just pure risk is considered then the financial risk associated with varying exchange rates should be included. The risks associated with a venture in an area that is environmentally sensitive is an example of one where political risks may be present. This stage involves an in-depth identification process within the boundaries of the above or other categories. This process may use a variety of sources. One of the best sources of information involves a series of guided interviews with company personnel. Company personnel often have a good appreciation of risks but their opinion has never been formally sought. On-site inspections are another important source of information, but it is generally necessary to have some anticipation of the type of risks to be expected. Prior to embarking on the risk identification process, a fairly clear idea of the questions that need to be asked and data that will be sought is required. Several checklists have been published which can assist in the process. Checklists are not completely satisfactory since they can result in restricted thinking, but can at least offer general lines of investigation. A means of collating the data on losses that have occurred previously is an important part of the investigative process. Computerised systems are available which can often form the basis of such collation and analysis.

Quantification: Quantifying the risks once they have been identi-

fied is often difficult and the "total cost of risk" concept can be useful. This "total cost of risk" is made up of expenditure in three distinct areas:i) Risk Control ii) Self-Insurance iii) Insurance The Risk control cost can usefully be thought of as being split over three broad headings as follows:i) Systems - Capital expenditure on, and maintenance of, risk control systems, for example, sprinkler systems. ii) Services - The cost of fire, medical, security, and other loss and accident prevention services. iii) Procedures and Administration - This comprises management, monitoring, and accounting costs. It is not enough to implement a risk control program. The program needs to be closely monitored to make certain that the benefits that have been promised are, in fact, achieved. Self-insurance: The obvious component of the self-insurance cost is the losses which will inevitably be incurred from a self-insurance program. In addition to this, however, there may be very significant costs relating to a loss event which are not immediately obvious or quantifiable. The results of many international research reports into these costs, have led to what has become known as the "iceberg principle". This principle suggests that, for every $1 that is seen in the official loss experience of the insurers, anything between $5 and $50 has been incurred by a corporation but is not recoverable from the insurers. It is therefore clear that the "bottom line" cost of a loss event can be vastly greater than that initially identified. Finally, in self-insurance the existence of a significant administration and management cost cannot be ignored. A self-insurance decision is not a decision that is taken for all time. It needs to be constantly re-evaluated in the light of changes in the corporation's circumstances, and changes in the insurance markets.

ConYentional Insurance: The principal cost component of conventional insurance is the insurance premium expenditure. Another less obvious cost component of conventional insurance is the "adverse cash flow" cost. Under a conventional insurance program, a premium is paid at inception. The " goods" which are being bought, which comprise the handling and ultimate settlement of claims, are not received until some considerable time after inception. Compare this with self insurance, where losses are paid for when they occur, not before. The difference between these two approaches has a very considerable cash flow impact upon a company, the cost of which is represented by additional interest payments. The analysis of the "total cost of risk" is one of the unifying principles of modern risk management. The logical implications of this approach are that a strategy which relies entirely on insurance and excludes considerations of self-insurance and risk control is more expensive than one which seeks to obtain a sensible mix of all three components. Theoretically there must exist some mix of these three components which results in the minimisation of the "total cost of risk". The objective of an organisation's management should be to allocate the expenditure in correct proportions across the three categories of cost so that the total cost is minimised. RISK TREATMENT The third general area in a risk management program is determining the best methods of treating the risks. Risk control or prevention techniques are obviously a starting point, but must be considered in terms of costs versus benefits, ie it is possible to spend too much on risk control. Simple computer programs for analysing returns on investment in risk control systems are available, and can be of assistance. For many people risk management is synonymous with physical risk control. Whilst many loss events have their origins in physical conditions, risks emanate from a far wider domain than simply physical conditions, for example, some companies have failed, not due to a catastrophic and avoidable fire, but beca~se of a flaw in

the terms of a major contract, a failure to ~entify and to remedy a foreign exchange exposure, or a prolonged strike at a supplier's premises. Since risk control activity is primarily concerned with the enhancement of the effectiveness of systems, emphasis should be placed upon: • Systems audit • Production of appropriate standards and procedures • lraining of employees

RISK TRANSFER Insurance has been the primary risk management method in the past. In this area, however, it is possible to apply more analytical techniques than have been generally accepted. An insurance program can be generally defined in terms of:• What to insure • How much to insure • The level of self insurance. What to Insure: The most common industrial insurance policy is the Industrial Special Risks, Public & Products Liability pol-

icies. There are several other policies that should be considered for most organisations. The risk identification exercise should assist the Risk Manager in determining which types of policies are appropriate. How Much to Insure: Considering how much to insure, or what the policy limits should be, often requires an engineering input. In the case of large corporations, it would be unusual to have an insurance policy limit up to the total asset value of the organisation, simply because it would be inconceivable that the total assets of the company would be lost in any one year. Engineering input is needed to determine what is the maximum foreseeable loss that could occur and this can then be used to help determine the policy limits. The Level of Self Insurance: Determining the optimum level of

self insurance can be demonstrated by the concept of the loss triangle. ' In designing an optimal program it is useful to think of losses falling into one of three distinct areas, or layers, of risk as follows:LAYER









- ----FREQUENCY - - --

Each layer characteristics .


very distinctive



and risk

The lower layer of risk is typified by a high frequency of low severity losses. Under such circumstances, the predictability of the aggregate losses for any one year is very high. Therefore, they can be budgeted with a high level of accuracy and the company is unlikely to suffer a large variance from the budgeted amount. This layer is often referred to as the "dollar swapping' ( layer, the implication of this being that insurance of such losses represents a "dollar swapping" exercise with insurers . This phrase is somewhat of a misnomer, since the insurers will return only a proportion of the premium as claims paid and absorb the rest in overheads and profit. Under normal circumstances, therefore it is not cost beneficial to insure this layer of risk. There is, however, much benefit to be derived from the input of risk control into this layer. If this layer is self-insured then, by definition, any reduction in loss frequency that results from the risk control effort, will directly improve the "bottom line" of the company. WATER June, 1989 23

In complete contrast, the upper layer of risk is typified by a very low frequency of extremely high severity events. This is known as the catastrophic layer . The predictability of losses within this¡ area of risk is very poor, and the financial impact of upper layer losses is very serious. There is only one conclusion for this area of risk, and that is that all potentially catastrophic events should be insured, if cover is available. Risk control has a vital part to play, not only in reducing the probability of loss but also in limiting the severity. Whilst lower and upper layers of risk are relatively easy to define, the middle layer of risk is much more complex . The frequency of events within this layer can best be described as moderate, as can the severity .

THE INSURANCE DECISION It is not immediately apparent whether the middle layer of risk should be insured or self-insured. The correct decision will be dependant upon a number of factors such as the financial strength of the corporation and its risk attitute. Of prime importance will be the state of insurance markets. Determining the optimum level of insurance and self insurance requires two considerations . ¡How much can the organisation afford to loose? Some companies use a "rule-of-thumb" of I o/o of gross sales as being the maximum self insurance level. There are other slightly more sophisticated techniques available which consider items such as liquidity, the asset backing of a company, and earnings. All these methods , however, are highly subjective and it is important to use them creatively, rather than dogmatically. What is the Optimum Self Insurance level? Once the maximum amount that a company can afford to self insure has been determined , the optimum level of deductible should be calculated. The Monte Carlo technique is useful in this respect. The technique uses past losses to predict future losses using varying deductible and aggregate deductible scenarios. By comparing the predicted losses with insurance premimums, the optimum deductible can be determined. In a "soft" insurance market, low deductibles will usually be most cost effective, whereas in a "hard" market, higher levels will be justified . Risk transfer by contractual agreement is another method of risk treatment. The major problem with this type of treatment is related to the vagaries of the legal system which may result in various interpretations of contracts.

THE FINANCING OF SELF-INSURED RETENTIONS There are several methods of the financial management of self-insured exposures, each of which has inherently different financial implications. The methods are:"Do Nothing": Under this mechanism losses are charged against profit in the year of occurrence, and they are met from cash flow . The principal problem with this mechanism is that there is a potentially serious distortion of profit and cash flow in the event of a serious loss. Consequently, whilst this method is very suitable for high frequency, low severity losses at the "dollar swapping" level, it may not be suitable for higher levels of selfinsurance where the outcome is less predictable. Creation of an Internal Insurance Reserve: To overcome fluctuations in profit resulting from the self-insurance program it is possible to obtain loss equali sation over time by charging the long-term expected average cost of losses against the Profit and Loss Account of each financial year , irrespective of the actual loss experience. Any surplus between the annual provision and the actual losses incurred during the year is carried forward in the Balance Sheet as a reserve. In the event that losses in a particular year exceed the accumulated reserve , the deficit will need to be charged against profit in that year. Nevertheless, this mechanism ac hieves a substantial degree of profit smoothing. However, it must be remembered that this is merely a bookkeeping exercise and will have no effect on cash flow . In practice, tax relief is normally allowed only on the actual losses as they occur. Use of an External Funding Company: Within the international insurance markets, there exist certain compan ies who, in return for a fee, will offer a program which will credit the investment income earned by the insurer back to the insured's program. 24

WATER Jun e, 1989

These companies are typically domiciled ~ n countries where there are low or zero rates of tax . Consequently, the investment income accrues to the fund, thus accelerating the growth of the fund. The fund can be protected by the purchase of appropriate reinsurance. It is this feature which has led to this option sometimes being referred to as a "rent-a-captive" since it provides most of the benefits of a captive insurance company but without the need to subscribe share capital. Formation of a Captive Insurance Company: A captive insurance company represents the most formalised self-insurance option. Unlike the "rent-a-captive" option, it requires the input of share capital and the active involvement of the management of the company. Consequently, particular attention has to be paid to the level of capitalisation, choice of domicile, and general management and administration. This option should not be considered except as a part of a long term risk financing strategy and pre-supposes the long term commitment of senior management. Before this option could be implemented a highly detailed feasibility study is essential.

CONCLUSIONS In summary , the critical steps in introducing or extending a risk management program in an organisation are: I. Understand the organisation . 2. Identify the risks, using primarily the existing knowledge within the organisation . 3. Quantify the risks for the purpose of determining how much should be invested in risk control and other risk treatment methods. 4. Decide on the best combination of risk treatments. In common with any management program, risk management requires the diverse skills of many people. Design engineers, risk control engineers, health and safety specialists, stastisticians, ergonomists, lawyers, security experts, and insurance experts are a few of the people that are required to contribute to an effective risk management program .

FINANCIAL RISK IN THE WATER INDUSTRY by J. M. Wardell Continued from page 21. The problem with such transactions is that we become reliant on a three-party arrangement where someone has to pay us money as well as us paying another party. If the party paying us defaults we still must make our payments, after all we have borrowed long-term fixed rate funds with the backing of our government guarantee! This new risk is categorised as a credit risk. We have put ourselves into a position of needing an ability to assess the likelihood of this other party being able to make all those payments to us, sometimes for up to ten years. Once we take a credit risk of this type it has to be monitored regularly; just because the party looks financial today we cannot assume he will be sound in two years time. Also we have to ensure that we do not undertake several transactions which accumulate our risk to one party to an extent greater than we judge is comfortable. This type of assessment and monitoring can by itself introduce costs greater than the initial financial advantage.

CONCWSION In order not to complicate this paper I have deliberately not covered the multitute of investment tools such as "caps", "collars" and "butterfly spreads". Such instruments are part of the everyday life of a Treasury Officer but would only distract from the main purpose of this paper. As I stated earlier, financial intermediaries will constantly invent new and useful tools, in fact the material above only skims the surface of the problems faced by, and alternative solutions available to, a Treasurer. All I highlight is that there is no such thing as a "free lunch". Once we are offered a "brilliant deal" we immediately need to assess the cost. If we do not do this we could create an added financial risk of which we may not even be aware! In conclusion I would have to say that the liability aspects of financial risk in the water industry are myriad. The main requirement of a Treasury operation is to be aware of them and to have systems in place to constantly monitor them. The major risk in the Water Industry is the business risk and this must be seen as part of the cost of this social service.

THE NSW DEPARTMENT OF PLANNING'S ROLE IN LAND USE SAFETY PLANNING P. S. DRYDEN, Leader and L. TREADWELL, Analyst, Major Hazards Policy Unit. INTRODUCTION The.handling, storage and distribution of hazardous goods, such as petroleum products, liquefield petroleum gases, chlorine gas and pesticides inevitably involves the potential for incidents which may result in death or injury to people, property damage or damage to the bio-physical environment through the effects of fire, explosion or toxicity. Although the potential for such incidents is generally low, the risk exists and cannot be totally eliminated. There has been a growing awareness in government, industry and the community at large of the potential for incidents involving such materials in process, in storage or while being transported. This has been given particular impetus by incidents around the world, some conspicuous examples being the Bhopal, Chernobyl Sandoz/Rhine River disasters and the recent oil tanker disaster off Alaska. Both the actual risks and the heightened awareness and perception of risk must be addressed. A rational basis is required for determining the level and types of restrictions. regulations and controls which should be exercised so that necessary or desirable activities can be carried out without compromising public and environmental safety. Historically, such control has relied on the application of regulations and engineering standards. There are, however, limitations to hazards control in technological and economic terms. A further key element is now recognised. The hazard from hazardous industries is a function not just of the materials handled and associated engineering and technical controls but also of the location of the activities handling the materials. The location of the activities in relation to people, property and particular environmental features determines the potential consequences of any hazardous incident. The potential for severe consequences lies largely in the offsets outside the immediate plant or storage site or in the effects on areas along transport routes. Land use/environmental planning must therefore be considered as an integral part of the overall control process. In New South Wales environmental planning is administered at State level by the NSW Department of Planning. The Department has a specialist unit which deals with the issues related to activities involving the use of hazardous materials, the Major Hazards Policy Unit. This paper outlines the role and activities of the Unit with particular reference to water and wastewater related issues.

Peter Dryden has Bachelor of Economics and Master of Economics degrees. He has been involved in environmental planning policy development and implementation with the Department of Planning for the past 8 years. He has worked in the hazards area since 1985 and is currently leader of the Department's Major Hazards Policy Unit. P. Dryden

Leanne Treadwell has a Chemical Engineering degree. She has worked in the steel industry for 8 years and is currently an analyst with the Major Hazards Policy unit of the Department of Planning.

Hazard identification involves the systematic identification of the materials handled and their properties such as toxicity, flammability and volatility and of possible incidents and their potential causes. Consequence analysis is the estimation of consequences of possible incidents in terms of the physical effects such as heat flux, explosion overpressure and toxic concentration at various points and the impact of those physical effects on residents, sensitive environments and other receptors. Probability/ frequency estimation in'volves the estimation both of the likelihood of a particular incident occurring and the likelihood of outcomes if those events occur. The consequence and probability estimations are combined to give a quantified ¡risk result. Results can be derived as individual risk or societal (or group) risk. Addition of all individual results gives the cumulative risk for any given point for a particular effect. Societal risk incorporates the numbers of people likely to be killed in given incidents. The most common expression is in terms of


APPROACH ADOPTED BY THE NSW DEPARTMENT OF PLANNING The approach adopted by the Department is based on the concept of acceptable risk, and the methodology of hazard analysis and quantified risk, and the methodology of hazard analysis and quantified risk assessment. This method provides a systematic and rational basis for determining the appropriate level of control measures, an effective basis for determining the distribution of residual risk costs and can be flexible to meet specific cases and circumstances. It also provides a sound basis for determining the most cost effective measures. The acceptable risk concept simply stated is that all activities involve a degree of risk, either voluntary or imposed, and that people clearly demonstrate that some risk is acceptable in return for benefits. The classic example of this is the choice to use motor vehicles: there is clearly a significant and well known risk of death or injury but people judge that taking this risk is justified by the benefits of such use. The basic methodology of hazards analysis and quantified risk assessment is illustrated in Figure 1. Four elements are involved: hazard identification, consequence analysis, probability/ frequency estimation and quantified risk assessment. Disclaimer: The views expressed in this paper are those of the authors and do not necessarily represent the views or policies of the NSW Department of Planning. 26 WATER June, 1989

L. Treadwell




Fig. 1 -

Quantified Risk Assessment Methodology

human fatality risk, usually on an annual basis. Without loss of validity, .however, the results can be expressed in other terms such as levels of injury, property damage, environmental damage, or physical levels such as concentrations in the air or water. The quantified risk result can be used for comparative purposes or judged against adopted criteria. There can be debate as to any acceptable risk criteria but such debate does not invalidate the approach. On the basis of the hazard and risk analysis, risk management strategies are developed which integrate: land use and environmental planning controls, physical design measures, and organisational and institutional measures.

APPLICATIONS The Department applies this approach in four areas: • assessment of new development proposals; • assessment of risk in areas with existing or new concentrations of hazardous industries; • transportations studies; and, • development of guidelines for activities where full hazard analysis and risk assessment and/or direct involvement by the Department in development consent is not appropriate.

New Development In the case of hazadous industry development proposals, the Department applies a 'seven stage approval process'. The process is shown in Figure 2. The process does not stop at the Environmental Impact Assessment/development application stage, but continues through conditions attached to consent, to address the safety of the plant or operation as a whole through the final design, construction and operational phases - the latter through requirements for annual hazard auditing to ensure that initial operating safety standards are maintained. PRELIMINARY HAZARD ANALYSIS

Developmenl Appl~at,on Stage ~ - - - - - - Risk levels quantrhed

- - - - - - - - ---, SPECIALISED FIRE STUDIES

The wastewater disposal and treatment syst'tms are also routinely examined in assessment of development proposals and through the use of the hazard analysis and risk assessment approach where appropriate. Major wastewater facilities and water treatment plant may also be examined as hazardous proposals in their own right. This is due to the potential for serious impacts if waste materials were to be released, particularly in inland streams and water catchments, or the use of hazardous chemicals such as chlorine gas.

Area Studies The area study process is shown in Figure 3. Studies to date include those carried out for the Botany/Randwick Industrial Complex and Port Botany (1), the Kurnell area (2) and the Western Reclamation Area in Auckland (11). The principal objective of the area studies is the development of overall land use safety/ risk management strategies. These strategies, as set out in the recommendations of the studies, emphasise: • plant safety improvement; • incident and site-specific emergency planning for individual sites and the area as a whole; and, • controls on future development of hazardous industry and of other land uses, particularly residential and special uses such as hospitals and schools, and environmentally sensitive areas such as wetlands and water catchment areas. Transportation Applications of hazard analysis and quantified risk assessment in assessing land use safety implications for potentially hazardous installations such as chemical/petro-chemical complexes and related storage facilities are relatively well established. The application to transport raises challenges due to the dynamic nature of transportation systems and the extent to which factors outside the control of the particular operation are involved. The transport studies are particularly important, however, as it is often during transportation that the risk of incidents is at its highest and where control or containment is at its most difficult. The Department has developed techniques to overcome these problems and study results have been used for the development of

-~-~ I EMERGENCY N. Design Stage PROCEDURES I(Pnor to Operation) J


_ _ _ _ _ _ _ _ _ .J~I





_ _ ~O~~n Sta~_

Fig. 2 -




Seven Stage Approval Process

The first stage of the seven stage approval process is the preliminary hazard analysis. In this analysis the hazards associated ·with a site are identified, the prevention and protection measures, incident scenarios and consequences analysed, and some degree of risk quantification undertaken. Both atypical events such as spills, fire and explosions and the impacts of normal operations can be considered in this analysis. The preliminary hazard analysis provides basic input for the next four 'stages' of the process. These stages are • hazard and operability study; • updated hazard analysis; • specialised fire safety study; and, • emergency plan preparation. These four stages are ideally completed concurrently and interactingly at the design stage of the development. The approval process addresses locational, land use and environmental planning measures. Locational and zoning policies and strategies are also applied in overall risk management. Throughout these approval processes water and wastewater issues are addressed. The hazard identification and analysis, for example, should address where relevant, the potential impacts on people and the environment due to the contamination of water bodies through atypical events and continuous emission to air and water. A particular issue here is contaminated stormwater and fire fighting water. This is discussed more fully later in this article.









Fig. 3 -

Area Study Process WATER June, 1989


policy measures covering such aspects as route designation, packaging and containment of loads, load limitations and road upgrading contribution calculations (3 ,4,9,12). Waste transportation provides an interesting illustration here of the problems and trade offs necessary in decision making based on assessed and perceived risks. Waste disposal operations are generally perceived as undesirable neighbours, particularly in the case of intractable wastes. Because of this perception storage and long distance transport of the waste are seen as preferable to disposal. Assessment of actual risk in such cases shows that decisions based on risk perceptions do not produce least risk outcomes.

Policies and Guidelines Where developments involving hazardous materials are not of such scale to warrant full risk assessment processes, but still have significant scope for risk impact outside the site, the Department's approach is to develop guidelines so that the approving authorities, mainly local government, should have a sound basis for decision making. These 'locational' guidelines incorporate technical and operational controls. An important example of this is the case of retail outlets for automotive LPG (6). The hazard and risk analysis approach is also applied in the ¡development of the various policies and guidelines developed to facilitate the planning process and set the policy context. Current work includes the preparation of: policy guidelines on the location of hazardous industry; an overall policy document on the hazardous industry development approval process; and, specific guidelines on each of the studies and reports required in the process. Guidelines on the preparation of site emergency plans were released in 1988(5) and guidelines on the preparation of fire safety studies have been completed and will be released in June 1989(13).

APPROACH AS APPLIED TO A CONTAMINATED WATER SYSTEMS On any site where hazardous materials are handled the potential for their spillage and direct flow (if liquid) or wash down (if solid) into a water course needs to be considered. The possibility of the entrainment of materials in fire fighting water should also be considered. This problem has traditionally been dealt with only through standard engineering design requirements for state drainage and catchpit/ retention ponds. Through the use of the hazard analysis and quantified risk assessment approach the adequacy of such arrangements can be assessed and appropriate and cost effective systems designed. The specific characteristics and requirements of each particular site and activity, and of potentially effected water bodies can be taken into account. The need for this approach was dramatically demonstrated in the Sandoz warehouse fire in Basel, Switzerland in November 1986. In that incident a fire occurred in a warehouse used for the storage of pesticides, dyestuff and other chemicals on the banks of the Rhine River. The fire fighting operation resulted in substantial volumes of heavily contaminated firefighting water flowing in to the Rhine with serious impacts on plant and animal life and disruptions of water supplies downstream. The facility had some runoff retention capacity, but in the event it was clearly inadequate to meet the demand. Other features which were apparently unsatisfactory included inadequate fire detection, prevention and suppression systems and an apparent absence of specific emergency planning. In the period leading up to and including the Sandoz incident the Department was involved in the consideration of a pesticide formulation and distribution facility in the Kurnell area in Sydney. The proposal involved many of the same types of substances involved in the Sandoz incident and the site was adjacent to a wetland of international significance. The Department assessed the proposal and recommended approval subject to stringent conditions covering, inter alia, the design requirements to ensure that the likelihood of any significant release to the wetland of seriously contaminated water was very low. The recommendations developed through the application of the hazard analysis and risk assessment methodology addressed the Sandoz deficiencies before that event. Specific features included compartmentalising the storage areas, the use of automatic high expansion foams to minimise water use, comprehensive fire detection systems. Most important however, was the runoff containment, testing and disposal system.

The final stage in the analysis was the hazard identification. In this case the materials included biocides - materials designed to have high levels of toxicity for target organisms. These materials could have serious impacts on the wetland and marine ecosystems in very small quantities. Scenarios for the release of these materials to the water bodies were identified including direct run-off of spilled liquids, emissions of dust direct to the water bodies, wash down of deposited dusts, spillage of solids and liquids on site subsequently washed down by rain, accidents involving trucks transporting materials to and from the site and contaminated fire fighting water runoff. Consequence analysis was carried out based on the various scenarios including cool fires of long duration and the impact of tidal states and movements etc. Probability and frequency analysis covered spills, rain events, vehicle accidents, containment loss, fires etc. Recommendations included road improvements, packaging and transport controls, dust emission controls and the range of fire protection prevention measures mentioned above. The analysis showed run-off containment to be a critical factor. The initial runoff control design proposed was based on a retention pond sized to retain a given rainfall over the relevant site area. This proposal was found to be inadequate as contaminated water could overflow or bypass the system at an unacceptably high frequency. Redesign of the system on a probabilistic basis was therefore recommended. The redesign was to take into account the time it could take contaminated runoff to reach the system. It is necessary to ensure that the amount of rain required to flush clean contaminated areas is caught from all relevant areas. Simple drainage volume-based calculations could result in rainfall on distant parts of the site, that may be contaminated, bypassing the already full retention basin. The availability of this full flush capacity, and capacity to retain relevant volumes of fire fighting water also had to be addressed. This requires rain events to be considered together with the length of time for testing and treatment and disposal of any contaminated water. Operating procedures formed a part of this. In order to achieve an acceptable low level of probability of release, a system involving more than one retention pond was ,required with transfer arrangements and operating procedures which ensured cessation of operations whenever one full flush capacity was not available. The particular development was not proceeded with for other reasons. The Sandoz incident, however demonstrated the desirability of using this approach. The Department is currently producing a technical paper on the probabilistic design of contaminated water systems.

BENEFITS, LIMITATION AND FUTURE DIRECTIONS Experience has shown that the use of hazard analysis and risk assessment optimises resource allocation in hazard control and management; enables efficient and relevant public participation and debate in the decision-making process; and, provides the basis for integrating the hazard management considerations into broader location and environmental planning considerations. The approach has resulted in 'safer' plants at 'safer' locations and contributed to increased public awareness. Industry experience has also shown many direct benefits from the application of the overall approach and its constituent parts. It has proved to be particularly useful in the development of cost effective risk management strategies and also to be cost effective in terms of Departmental resources. There are uncertainties and limitations in its application but there does not appear to be any better alternative to this systematic and rational approach which integrates technical economic and social factors into the planning system. The benefits are optimised with sensitive application and use of qualitative as well as quantitative analysis. It is important that the approach not be used to justify developments rather than assess their safety. One principle applied throughout the Department 's risk assessment work is that where risk, however low, is avoidable without significant economic penalty, the measures to avoid that risk should be in place. This principle should underly all risk management decisions.

Continued on page 32. WATER Jun e, 1989


Planning and M~nagement of Water Resource Systems RISK AND RELIABILITY A report by Graeme Dandy, University of Adelaide A national workshop was held in Adelaide in November 1988, co-sponsored by the Australian Water Resources Council, Institution of Engineers Australia and the major Urban Water and Sewerage Authorities of Australia. Since rainfall variability is a strong feature of Australia's climate, it is both physically and economically unrealistic for water supply to be maintained to all customers at all times under any conditions. The aims of the workshop were towards achieving increasingly .refined management of risk in water resource systems, and resulted in recommendations to the AWRC relating to major urban, country town and irrigation supplies. A total of 82 people attended. The matters discussed were: • techniques for estimating yields of headworks • suitable levels of reliability to be used for design • acceptable frequency and severity of water restrictions • options beyond restrictions • further studies and methodology. The major water authorities in Australia prepared pos1t1on papers on their current practice in relation to yield estimation, levels of reliability and their experience with water restrictions. These papers (13 in all) were circulated in advance to all registrants. Rather than present all of these papers at the works hop, three summary papers were prepared and presented. A paper by Barry Sheedy, and Narayan Kesari (Melbourne and Metropolitan Board of Works) summarised the position in relation to major urban headworks; Sam Samra (NSW Public Works Department) provided the summary for country town supplies and Jim Uhlmann (Queensland Water Resources Commission) prepared the summary for major irrigation headworks. Eleven other papers were presented on topics related to the theme of the workshop. The first two days were devoted to presentation and discussion on the prepared papers. On the third day, the participants were divided into five groups, each asked to come up with recommendations pertaining to the aims of the workshop. In the final event these recommendations covered a wider scope than had been envisaged originally. In this report, a summary is provided of some of the papers and the recommendations of the workshop. The detailed proceedings of the workshop are to be published as a volume in the AWRC Conference Series.

OPENING AND KEYNOTE ADDRESS The workshop was opened by the South Australian Minister for Water Resources, Hon Susan Lenehan. Ms Lenehan spoke of the need to adopt a more business-like approach in the water industry. She emphasised that water planners must seek, and be responsive to, the needs and expectations of customers. The keynote address entitled "Risk, Reliability and Political Realities" was presented by John Paterson (Director-General of the Department of Water Resources, Victoria,he pointed out that, in the past, water authorities had been mainly concerned with planning and construction of facilities providing large increments in supply at very high levels of reliability. Today more emphasis is being placed on the careful management of our Water Resources. Water pricing can, and should , be used as a signal to the consumer of the real cost of providing a specified level or security of supply. In the future, Dr Paterson forsees increasing adoption of the capacity sharing system, transferable water entitlements and more sophisticated water tariffs. With capacity sharing, each user has control of a slice of the storage capacity of the reservoir. He

can therefore make his own operational decisions and chose his own security of supply. In the case of town supplies, the water supply authority acts as a bulk consumer and makes the operational decisions. Capacity sharing was also discussed in more detail in a paper by Warren Musgrave, Chris Naouze (both University of New England) and Norm Dudley (University of New South Wales).

SURVEY PAPERS Barry Sheedy and Narayan Kesari, in, reviewing planning and operational policies and procedures for major urban headworks, note that the annual reliabilities used in major cities vary from 90% to 99070. However, the lack of consistent definitions for terms such as yield and reliability, and the use of design droughts of differing severities make it impossible to carry out a straight forward comparison between authorities. The use of historic streamflow data for yield estimation is common, although, in many cases, this is being supplemented or replaced by long recordes of synthetically generated data. Sheedy and Kesari highlighted the•need to consider performance measures such as resilence and vulnerability in addition to reliability in analysing the security of supply. Sam Samra, in his review of security of supply criteria for country towns, emphasised the need to consider operational issues when sizing water supply headworks, ie can the system be operated adequately during a drought? He identified the need to consider three factors in assessing security of supply. These are the frequency, duration and severity of water restrictions. He also made the point that consumers could decide on the level of security of supply for their system.1-This can be achieved by providing the consumers with a number of options with varying levels of security and annual costs, and allowing them to choose the most suitable scheme. Jim Uhlmann's paper highlights differing practices between states in relation to yield estimation and storage operation for major irrigation headworks. Computer simulation is widely used for yield analysis with the use of synthetic streamflow data becoming more common. The different operational practices and system reliabilities between states results, to some extent, from different cropping patterns and expectations of irrigators. Factors such as transferability of water rights, the use of unregulated flows and demand management could have a significant impact on security of supply of headworks systems in the future.

DEMAND MANAGEMENT Several papers discussed the effectiveness of demand management measures, including water restrictions policies, in times of drought. Geoff Syme, K. Williams and B. Nancarrow (CSIRO Division of Water Resources, Perth) report on the results of consumer surveys which they have carried out in Western Australia. They found that consumers were surprisingly receptive to the concept of regular water restrictions. The most preferred policy was annual restrictions on sprinklers during daylight hours, and only a third of the population were willing to pay to avoid restrictions. Paul Broad and Dick Holroyde of the Hunter District Water Board pointed out the advantages of using pricing as a demand management strategy. They suggest that pricing and public education should take the place of the traditional use of water restrictions during droughts, this having the advantage of achieving economic efficiency and consumer sovereignty.

EFFECTS OF CLIMATIC CHANGE Other papers of interest include a review of the long term effect of climatic change on water resources by Barrie Pitlock (CSIRO WATER June, 1989


Division of Atmospheric Research). There appears to be clear evidence of an increase in surface temperature of the earth due to the Greenhouse effect. Although the effect on rainfall is uncertain, the changes in evapotranspiration and soil moisture are likely to cause a significant reduction in runoff. Studies in the USA indicate that a 3 °C rise in mean annual temperature would cause a decrease in runoff of 250Jo in areas with a mean annual rainfall of 1000 mm. This would have a dramatic impact on the reliability of our existing headworks. Tom McMahon, P. Nathan, B. Finlayson and A. Haines (University of Melbourne) report on a statistical study of rainfall data from 12 stations around Australia. The results are consistent with the expected change in rainfall due to the Greenhouse effect ie stations in areas of summer dominant rainfalls (ie northern areas) have an increasing trend in rainfall while those in winter dominant rainfall areas (ie the south coast) have a decreasing trend .

RECOMMENDATIONS A number of recommendations for consideration by AWRC and the water authorities was prepared by a working group and the Planning Committee of the AWRC. They have since been endorsed by the Standing Committee and will be published in the AWRC Conference Series. The following is an edited summary of these recommendations.

Definitions The risk to the security of supply in a water resource system at any point in time should be described in terms of the probability, degree, and duration of restrictive measures where: • probability is the probability that restrictions of a specified degree will be imposed in any particular year; • degree of restriction describes the nature of restrictive measures and the amount by which consumption is expected to fall below unrestricted demand; • duration characterises the length of periods during which unrestricted demands cannot be met. Thereliability of supply is the probability that restrictions of any given degree will not be imposed in a particular year. This basis should be used by Australian water authorities in developing definitions of supply risk and reliability in particular water systems. Other parameters, such as water quality or price, will require clarification if significantly changed during drought periods.

Community Involvement Public water authorities should publish and actively advise their customers of the adopted level of risk in the design of their water supply. This advice should include an explanation of the associated water issues and the basic reasons for the adopted risk level. Risk management decisions of water authorities should be made with a level of community input appropriate to the risk situation. Water authorities should decide on risk by offering, to the extent that is practical, a range of alternatives in security of supply and associated water prices so that consumers are in a better position to advise/select the reliability they are prepared to pay for. Since there are wide differences throughout the continent of Australia rather than adopting standard levels of supply reliability, decisions on risk should be specifically related to the economic, social and environmental circumstances and objectives of the particular supply region.

Options, Other Than Restrictions Public water authorities should develop well in advance and publicise risk management programs for their water supply systems, including any associated drought management plans. Progressively, water authorities should consider the potential contribution of a wide range of measures in risk management programs with the aim of giving improved choice to the customer. Variable pricing should be considered as a possible mechanism for adjusting demand between normal and drought periods with price variations being related to differences in security of supply required by different consumers or classes of consumers Further study and development of capacity-sharing techniques as an optional measure for giving greater customer choice in management of supply to multiple users from irrigation or multi32

WATER June, /989

purpose storages. This study should be set il'I a wide context which includes such contemporary developments as transferable water entitlements.

Studies Studies should be undertaken of attitudes and response of customers to the implementation of risk management practices including: • pricing; • restrictions; and • information programs; during normal supply conditions and times when drought management programs are operating. These studies should include customer reaction to various probabilities, durations and degrees of water restrictions. Studies should be undertaken into how long-term water conservation programs interact with risk management and how different risk management strategies perform in times of drought.

Methodology Water authorities should use computer simulation when estimating risk and reliability. The associated use of statisticallygenerated hydrologic data is preferable to the use of purely historical data in most cases. (Progressively, such data should take account of possible long-term trends due to the Greenhouse Effect. ed) . In circumstances where limited accuracy is acceptable other methods may be adequate. AWRC should support an investigation into the potential for selecting or developing a standard multi-reservoir simulation package which could serve the analytical needs of most water authorities and minimise the problems and costs of program maintenance.

NSW DEPT OF PLANNING'S ROLE by P. S. Dryden and L. Treadwell Continued from page 29.


Further development of the methodologies and applications is required . Technical development and extension of the work in respect of toxicity, addressing data base reliability and modelling uncertainties, new technology and human factor issues etc is necessary. As important, however, is education and communication of information between government, industry and the community.


2. 3. 4. 5. 6. 7. 8. 9. 10.


12. 13.

NSW Department of Planning (1985) A Risk Assessment Study for the Botany/ Randwick Industrial Complex and Port Botany. NSW Department of Planning (1986) A Risk Assessment Study for the Kurne/1 Peninsula. NSW Department of Planning (1986) Kurne/1 Transportation Study. NSW Department of Planning, Dangerous Goods Truck Routes in the surrounds of Port Botany (Unpublished) NSW Department of Planning (1988) Industry Emergency Planning Guidelines. NSW Department of Planning (1984) Liquified Petroleum Gas Automotive Retail Outlet Draft Locational Guidelines. Dryden, P. S., Risk and Uncertainty and the Land Use Safety Planning Process in NSW, National Environmental Engineering Conference, March 1989. Dryden, P. S., Haddad, S. G., Planning for Major Industrial Hazards: The NSW Perspective, Paper to the ANZAAS Centenary Congress, May 1988. Dryden, P. S., Haddad, S. G., Risks Associated with the Transport of Hazardous Wastes, Second National Haza rdous Waste Management Co nference, November 1987. Haddad, S. G., Corran, E. R., and Dryden, P. S., Area Risk Assessment and Risk Management: An Australian Perspective, paper for the IAEA/ UNEP/ UNIDO/ WHO Workshop on Hazard Identification Assessment and Emergency Planning for Risk management in Large Industralised Areas, (forthcoming) April 1989. NSW Department of Planning (1989), Western Reclamation Area Risk Assessment Study Auckland, New Zealand. Dryden, P. S. & Gawecki, L. J. The Transport of Hazardous Goods -A n Approach to Identifying and Apportioning Costs, for the 12th Austra lian Transport Research Forum, 8-10 July, 1987, Brisbane. NSW Department of Planning and NSW Board of Fire Commiss ioners, Fire Safety Study Guidelines (forthcoming June 1989).


Mr S. Samra, BE, M Eng Sc, is Inspecting Engineer Water Supply in the NSW Public Works Department. His extensive experience includes <:onception and development of the Gosford-Wyong Water Supply and preparation of the Public Works Water Supply Investigation Manual.

Provision of a safe and reliable water supply is essential for community health and for increasing standards of living. However, the diseconomies of scale have put conventional systems beyonJ the financial reach of many small communities. This paper discusses the need for low-cost water supplies, and provides an outline of the AWRC Guidelines.

INTRODUCTION The Water Technology Committee of the Australian Water resources Council (AWRC) has published "Guidelines for Low Cost Water Supplies for Small Communities". The Guidelines draw freely on the work of Australian Water Authorities and review current technology and practices to provide a co-ordinated approach across Australia. The author was the convenor of the Steering Committee responsible for directing development of the Guidelines. This paper discusses the need for low-cost water supplies and provides an outline of the AWRC Guidelines and their relevance to Australian communities. Application of the Guidelines in developing and comparing low-cost options are discussed. Proposed low-cost pilot projects are outlined.

NEED FOR WW COST WATER SUPPLIES Investigations by the NSW P.W.D. has shown the diseconomies of scale of small water supply schemes for serving towns on a regulated river and points up the high cost of providing a conventional supply to communities of between 300 and 1000 people. The cost of providing such a supply to communities of fewer than 300 is likely to be prohibitive. The following conclusions (Ref. 1) can be drawn from information available on databases compiled by Public Works on behalf of the Australian Water Resources Council: • There are some 154 000 people in Australia living in communities of between 30 and 1000 who are without a reticulated water supply. • There are some 281 000 people in Australia who are supplied by water supply schemes serving fewer than 1000 people. • There are some 35 000 people served by schemes with severe capacity problems and a further 44 000 people served by schemes with insufficent capacity to meet peak day water needs. • There are some 29 000 people served by schemes with severe physical (turbidity, colour, iron or manganese) problems and a further 82 000 people served by schemes needing treatment for physical problems in order to meet the 1987 National Health and Medical Research Council (NHMRC) Guidelines. It is important to note that the above capacity results refer to adequacy of the peak day capacity of the water supply schemes. Information on the annual water demands and on drought security of the schemes is not included in the water quality database and could not be provided in the time available for this study. The key objective in regard to low-cost water supplies for small communities is to reverse the present perception that supplies to the communities now without a water supply are uneconomic and therefore that a supply can't be provided to these communities and to replace it with the concept that an affordable water supply can be provided to give these communities adequate public health protection and a reasonable amenity for a satisfactory standard of living. This requires consideration of appropriate reductions to urban levels of supply and standards of service to obtain an affordable supply. Table 1 shows the annual water charges required to service various costs per house and that, assuming a grant of 500Jo to 670Jo of the capital costs, the capital cost/ house needs to be contained to about $7000 to $10 000 for the scheme to be affordable. The

S. Samra

annual water charges required per assessment would be $400 to $800 cf average total annual water charges for country towns in Australia of $200 to $250 (Ref. 2 and 3). The relevance of the Low Cost Water Supply Guidelines is that they provide a basis for halving the cost of providing reticulated water supplies while providing an adequate level of supply. They make provision of a water supply for small communities affordable to greatly improve the standard of living and public health protection available to these communities.

THE AWRC WW COST WATER SUPPLY GUIDELINES General The AWRC Low Cost Water Supply Guidelines are summarised in this section . Using the available water resources, they aim to develop cost-effective water supplies that are affordable and accept.,. able to the community served . The Guidelines provide a co-ordinated approach across the nation an~ are a sound basis for formulating affordable schemes for supplym~ sm_all communites. They complement existing water supply mvest1gat1on manuals (Refs 4, and 5).

Levels of Supply The level of supply to be provided depends on the climate financial resources and cultural background of the community 'and on the quantity, quality and reliability of available water resources. The three supply levels shown in Table 2 are essentially convenient reference points on a continuum and the level of supply to be provided should depend on the local circumstances. Table three will assist in formulation of schemes where two or more sources of supply are used to meet water needs. It may be seen from this table while drinking amounts to 200Jo of peak day needs at Minimum Supply Level, it amounts to only 50Jo of the Desirable Supply Level. Similarly while drinking and laundry amount to 460Jo of the Minimum Supply Level, they amount to only 140Jo of the Desirable Supply Level. Demand management - is an integral part of any low cost water supply scheme to reduce wastage and limit growth in consumption (Refs 4, 6, 7) and involves the following : • communication between the authority and its consumers to achieve efficient water use through consumer education campaigns Table I. Capital Costs/Annual Water Charges Capital cost/ house

Annual operating

Annual charge/

Annual charge/

Ann ual charge/

cost/ house*

house with no

house after SOOJo

capital grant

capital grant

house after 670Jo capital grant

2700 1400 1050 700

1500 800 600 400

1100 600 400 300


20 000 10 000 7 000 5 000 •

300 200 150 100



The above annual charges are based on meeting the full operating cost per house

WATER June, 1989


Table 2. Supply Level Guidelines* A

Minimum Supply Level (w here water reso urces a re very limited)


Basic Supply Level


Desirable Supply Level (where increased supply can be provided at reasonable cos t) Level

Water Use A

Domestic usage (L / d person) Drinking/cooking ) minimum potable Dishwashing ) uses Laundry, cleaning Bathroom Shower Bath Hand basin Toilet Others incl. car washing Garden u sage Leakage Total Average Day Usaget Lid/house Average Annual Usage kL/a / house Total Peak Day Usage Lid / house •



Average Usage 8 8 10 12 18 20 23 30 40 35 22 30 15 20 7 7 10 25 35 50 3 7 15 200 400 30 65 100 330

'11 5








The three supply levels shown are essentiall y only co nvenient reference levels on a continuum . Except for arid areas or where water reso urces are ve ry lim ited, whe re a supply level between

A and B wi ll need to suffice, supply levels higher than B should be provided. Where financial / wate r resources permit, suppl y leve ls higher than C should be pro vided. In other circumstances supp ly leve ls between 8 and C would be appropriate.

Based on occupancy rat io of 3.

Table 3. Water Use for Various Purposes (Percentage of Peak Day Usage) Leve l





20 26

8 12


29 25

16 11 53 20 36

10 8 60 14 24

Drinking (includes cooking & dishwashing Laundry (includes other uses) Shower (includes bath & handbasin) Toilet Garden Drinking & Laundry Drinking & Laundr y & Shower Drinking & Laundry & Shower & Toilet








Peak Day Usage - A 500

• • • • • •

46 75

(Li d/ house) - B 1500


- C 3000

suitable water pricing structure to enable consumers to make informed choices on water usage use of water-efficient household appliances use of appropriate garden designs and garden plants leakage detection and repair peak demand management where restrictions are imposed on garden watering when predicted temperatures reach a predetermined level adoption of drought management plans and accepting more frequent water restrictions

Water Quality Potable water - quality should not be compromised and should follow the 1987 NHMRC Guidelines except in the case of rainwater tanks where the guidelines cannot be met but nevertheless, the protective measures indicated later in · this Section should be taken. Non-potable water - could be used for bathing, laundry, toilet, garden and/or fire fighting. Consideration of community health is paramount in developing guidelines for use of non-potable water. The community may be exposed to such water through accidental ingestion, body contact with irrigated lawns and breathing mist from garden sprays and inadvertent cross connections.

Security of Supply and Sizing of Components The level of drought security appropriate for sizing of water supply headworks will vary with the size of the community, and the cost of providing that security. In general, where finances permit, a reasonable security of supply basis for sizing of water supply headworks for small communities is: • restrictions on supply should not be necessary for more than once every 3 years on average and should not last, in total, for more than 10% of the time. With regard to peak day supply, restrictions for about 10 days per year on the use of sprinklers is considered reasonable. 34

WATER June, 1989

Service reservoir storage should be desigrl\'!d in conjunction with pumping capacities to provide the selected level of security of supply. One peak day's supply or less could be considered where the supply is by gravity or alternative supplies are available. Elevated storages are costly and should be designed with as small a capacity as practicable, generally not exceeding 15 OJo of peak day demand. For constant flow systems household storage tanks with a minimum capacity of two peak days would be appropriate. Rainwater tanks should be sized according to the average annual rainfall and its distribution throughout the year and variation from year to year, the available roof area, the level of security and the level of supply required (Ref. 8). The tanks should be roofed and should include an effective means of keeping out leaves, vermin etc and a device to discard the first fun-off after a dry period eg an entry sump. Public health protection provided is considered moderate and the water might need to be boiled before drinking. Possible health hazards arise from insufficient maintenance of tanks and dirty runoff from the roof including contaminants from bird droppings and aerial spraying. Reticulation pressures - systems should be capable of supplying the design peak instantaneous demand while maintaining the following minimum heads throughout the system: System with peak design flows - 10 m; Constant flow system - 5 m. If it is possible to do so without large additional costs, a minimum pressure of about 20 m should be provided. Maximum pressures should not exceed 50 m. Firefighting - a fire supply should be provided where it is costeffective and resources permit. Otherwise, fire tankers and quickfill tanks should provided.

DESIGN OF LOW COST WATER SUPPLY COMPONENTS General Service Reservoirs - Precast concrete tanlcs, ferro-cement tanks, tanks made of precast concrete sections and prefabricated steel tanks can provide low cost storage. Pumping Station Buildings - avoid building and provide weatherproof pumping unts and switchgbr instead. Pressure Reduction by keeping design pressures close to the desirable minimum pressure of 20 m reduces pipe class, consumption and leakage. Pipe Laying Techn iques - a wheel excavator and trench backfilling by grader allows economical construction of UPVC pipe up to 200 mm diameter. Ploughing in of HDPE pipe can achieve very low construction costs in open country. Dual Service Connections comprising a service pipe from the main to the common boundry of two properties significantly reduces the cost of service connections and should be !used wherever practicable. Water Treatment The aim in designing water treatment plants for small communities is to reduce costs to an affordable level while maintaining an acceptable standard of treatment. The selection and design of appropriate water treatment plants for small communities may require relaxation of normally accepted design parameters. Such plants should ideally be: • very basic in design • highly reliable requiring little labour input • simple in operation and maintenance with spare parts and repair capabilities readily available. The plants should be kept simple and reliable because of the lack of skilled personnel in small communities. Generally the recurring costs of small water treatment facilities exceed the amortisation costs. Emphasis must therefore be placed on minimising operating costs. Cost reductions in Water Treatment Plant Designs - the following factors should be considered in design: • desired treated water quality • degree of automation and reliability as labour costs for operation and maintenance comprise the bulk of overall water production costs for small plants

• amount of funds available for construction and operation usually very limited • costs of construction related to different designs and costs of package units for the same projects • other factors including calibre of personnel available for operation, useful operating life and the use of staging options for future expansion in both capability and level of treatment. The cost of building a treatment plant to perform with excellence under all conditions will almost certainly be much greater than the cost of a plant which performs well most of the time. The additional real benefits may be only marginal. Target water quality should comply with the 1987 NHMRC guidelines rather than the common practice of designing to produce water with 1 NTU turbidity and 5 HU colour. Occasional higher levels of turbidity and colour might be accepted during peak demand or other extreme conditions. However health related parameters must not be compromised. Upgrading of Existing Treatment Facilities can often be successfully carried out at a fraction of the cost of providing a new plant by converting filters to high rate operation and using polelectrolytes. Considerable cost reductions can be made in civil works by pro· Viding only essential facilities: • Reduce or eliminate buildings • Use Precast or Off-shelf Components • Replace Structures by E:arthworks -Ho (Ref. 9) has reported that in many cases the waterworks sludge from alum addition does not putrify - in such cases, large cost savings are available as the sludge lagoon can double as a large clarifier with a low surface loading rate. Package Treatment Plants are a commercial approach by equipment suppliers to reduce the cost of small water treatment units by reducing design engineering costs per plant, and reducing production costs by using standard components and developing workshop experience to speed up construction. A recent survey by Public Works of 16 package plants marketed in Australia found that many of the plants are not widely used for treatment of town water supplies in Australia, only limited information is available on their performance, reliability and durability and that the capital cost of a fully operational package treatment plant has been found to be about three times the budget price quoted . Point-of-use water treatment - a recent review by the Engineering and Water Supply Department of South Australia found that point-of-use treatment was both uneconomic and unreliable. With the exception of use by informed and well motivated individuals, it is considered that the use of point-of-use water treatment devices should not be encouraged.

DEVELOPING AND COMPARING LOW COST WATER SUPPLY OPTIONS The aim in developing low-cost water supply options is to develop a cost-effective water supply using available water resources, i.e. a supply which is affordable and acceptable to the community. The key factors to be considered are as follows: • the present population of the community and future growth projections • water requirements - a typical approach may be to consider the minimum acceptable water requirements, "reasonable" or desirable water requirements and perhaps water requirements on the basis of urban water supply standards • assessment of water resources - list all water sources in the general vicinity of the community and rank these in terms of quality, quantity, reliability and proximity to the community. The potential of the most highly ranked sources to meet the quality and quantity requirements of the various components of usage should then be assessed. The availability of funds for construction of new works and the ability of the community to pay tariffs which could meet debt servicing and operation and maintenance cost should then be assessed. • Distribution options - options to be examined could include: - Fully potable reticulated supply - Constant flow reticulated supply - Dual supply i.e. potable supply for drinking and laundry and a non-potable supply used for all other uses; or, a potable supply for internal household uses and a non-potable supply for external uses only - Non-potable reticulated supply with rainwater ranks for cooking, drinking and laundry requirements 36

WATER June, 1989

- Rainwater tanks only - this could-.be an appropriate option for very small communities, e.g. about 30 persons. On the basis of three different demand levels to be examined for each distribution option, this would give a total of 15 options to be examined. It is considered that a limited number (say five)of the most promising options should be selected for detailed investigation with only a brief assessment made of the remaining options for comparison. After initial selection of the options for detailed investigation, the water authority should be consulted to confirm its agreement to study of these options. A draft report should then be prepared on this study for consideration by the water authority and the local community. If considered appropriate, evaluation of a further option could be included in this study following consideration of the draft report by the water authority and the local community. The report should provide an evaluation of the selected ooptions in regard to: - Capital costs - Operation and maintenance costs - Present worth costs - Level of public health protection - Cost for the community in terms of rates - Advantages and disadvantages. As the low cost options represent a reduced standard of service compared to a normal urban water supply, the options should be clearly presented to the community to enable them to see the costs and benefits of each option and to determine the most appropriate scheme to serve the community. It is important to recognise that water supply investigations on the basis of the low-cost Guidelines are significantly more complex than "normal" investigations as consideration would ne!;!d to be given to a number of supply levels and a number of distribution system options. However, the cost of this additional work is minor in relation to the large cost savings which can be effected through the use of the low-cost options as these would involve about half the cost of schemes to conventional, urban water supply standards.

PH.ill PROJECTS The Guidelines recommend impl1mentation and evaluation of a number of pilot projects to confirm the potential of the Guidelines for providing affordable and adequate water supplies for small communities. These projects would serve as prototypes and successful examples for widespread application of the Guidelines for the benefit of small communities. Systems which should be given particular attention are: • constant flow systems • non-potable reticulation with potable supply obtained from rainwater tanks. A number of investigations for pilot projects are under way and it will be of interest to see the outcome of the investigations, the results of community consultation and the performance of the projects after construction and commissioning. It is noted that Public Works (Ref. 10) has prepared a questionnaire asking NSW councils whether they wished to consider use of low cost options for supplying their consumers. Of the 40 responses received to date (October 1988), use of low-cost options for serving communities fewer than 500 people was considered acceptable by 70% of Councils, whilst 60% found them acceptable for communities of between 500 and 1000.

CONCLUSION The study for the AWRC Guidelines for Low Cost Water Supplies for Small Communities has found that there are some 440 000 Australians living in small communities which are not served by a water supply scheme supplying at least 1000 people. It was also found that 154 000 of these people do not have a reticulated water supply, 79 000 have a reticulated supply of insufficient capacity to meet peak day water needs and 111 000 have a reticulated supply needing treatment for physical problems to meet the 1987 NHMRC Guidelines. The total estimated cost to provide adequate supplies to these communities is some $600 M. Continued on page 38.

WATER QUALITY FOR RECREATION AND TOURISM THE WORKSHOPS A Report by Mike I.ever This conference, co-sponsored by IAWPRC and AWWA, was held in Brisbane in July 1988. Many of the papers presented in the technical sessions are in process of publication by the IAWPRC in "Water Science and Technology'' (Permagon Press) . In addition, five Workshop sessions were run, and a selection of material from these is being published in editions of Water.

Chemical Analysis ¡ Mr Bill Solly chaired the workshop on analysis. Dr Barry Chiswell of the University of Queensland concentrated on the analysis of chlorinated nitrogen species in pool and spa waters (these compounds are suspected of contributing to eye irritation of swimmers). Analysis of chlorine levels is usually restricted to total chlorine residuals and less frequently includes free chlorine residual. Chlorinated ammonia species though the are rarely determined "breakpoint" chemistry is well understood. The presence of other nitrogen compounds also affects the chlorine breakpoint. Chlorinated nitrogen species in recreational waters apparently derive their nitrogen source from the sweat or urine of bathers. The question of how much of this "organic" nitrogen reacts with chlorine raises interesting problems related to the chemical reation mechanism of urea and the method of analysis. For instance, the titrimetric method for determining the different species, differentiation is affected by the amounts of reagents used, the time taken in titration and interference by organic nitrogen sources and tri-halomethanes. Gas chromatography with spectrometry seemed to be the most appropriate technique to be pursued but further work on the identification of unknown peaks in the GC plot will be required. Mr Robert Gray of Simmonds and Bristow Pty Ltd outlined the use of ion chrom¡atography with particular reference to the determination of anions. This technique has been used to measure the concentration of a wide range of anions in samples of potable water, sewage, trade wastes, seepage and soil water extracts. Equipment costs range from $30 000 to $80 000 depending on sophistication, degree of automation etc. The method is generally quick (15 minutes) following a preliminary filtration stage and requires only 1-2 ml of sample. The column is packed with either silica or resin. There are three options for sample injection and the apparatus also includes a high pressure pulse-free pump (0.1-0.2 ml/min). The advantages and disadvantages of different detectors, refractive index, conductivity and UV/visible spectrophotometer, were discussed. Representation of data may be by chart recorder, dedicated integrator or PC based software. HPLC clean-up may be re-

quired and dilution to avoid "swamping" of peaks may also be necessary. Limits of detection and linearity were just two topics mentioned in the discussion. Mr Glen Shaw of the Queensland Government Chemical Laboratory described some of the complex analytical methods used to determine specific organic micropollutants in water and concluded by outlining the various quality assurance techniques used in the laboratory. Carbamate pesticides have historically been difficult to analyse with various improvements made to the traditional GC method. The forensic chemical laboratory uses HPLC with a post-column derivitization reactor. Pesticide extracts are separated on an analytical column and then hydrolysed with sodium hydroxide into a phenolic component and methylamine. The latter is reacted with a reagent to convert it into a fluorescent derivative which can be quantitatively measured. Non-ionic detergents are complex compounds eg polyalkylphenylethoxalate. They are used in lubricating oils and pesticide formulations. Analysis involves chloroform extraction followed by clean up using an alumina column and a dichloromethane wash. The non-ionic detergents are then determined by reversed phase HPLC using a diode array detector which can be "fine tuned" to give a high degree of specificity. Coprostanol is a faecal steroid and could be used to indicate sewage pollution. Sediment and sludge samples are freeze dried and extracted with a hexane/ isopropanol mixture, cleaned up using an alumina column and determined by bonded phase GC/MS. Polychlorinated biphenyls can be separated by taking advantage of their different physico-chemical properties. There are 210 PCB isomers and the following techniques have been used to isolate groups and individual isomers. a) Vapour pressure or boiling point - isotropic phase GC column. b) Shape of the molecule (particularly its length) - nematic liquid crystal phase GC column. c) Lipophilicity (n-octyl/water partition coefficient) - reverse phase HPLC. d) Degree of planarity of the aromatic molecular bonds - carbon column HPLC. Professor Gregor Junk of the Ames Laboratory, Iowa State University, provided an overview of trace organic analysis including instruments used and possible future directions. Historically organic pollution was measured by non-specific analyses eg BOD, COD, me. The determination of individual organic compounds is a fairly recent activity - in 1970, only 35 organic compounds had been identified in drinking water in the United States, by 1974 the number was 170 and currently over 2000 different organic compounds have been

specifically identified. Gas chromatography has been used routinely for the past 30 years and is a powerful separation technique based on column retention times. Mass spectrometry is a very powerful identification tool utilizing the unique mass and intensity of each organic compound. Tandem use of GC and MS in conjunction with a computer to process the data has led to the impressive advances in reliable detection and measurement of trace organic compounds in water. However, Professor Junk reminded his audience that these sophisticated instrumentation techniques are preceded by two equally important steps - collection of a valid water sample and solvent extraction of the organic compounds from that sample. Professor Junk predicted that solvent extraction would be replaced by solid phase extraction (SPE). This technique has a number of advantages - lower costs, smaller sample size and no refrigeration required as the sample is secured in a micro-cartridge. An enormous area for sorption is provided by the packing media. Particle size, pore size and column shape are critical factors for SPE. It was noted that some results are now expressed in concentration units of picograms per millilitre (parts per trillion) which is much more precise than the criteria available for assessing effects. The ability to determine trace amounts of specific organic compounds in much smaller samples of water needs to be placed in perspective with a balanced assessment of what these results mean.

Public Health Considerations The chairman for this workshop was Mr E H Fergusbn, Senior Microbiologist with the Brisbane City Council and there were three selected discussion leaders each of whom considered that more epidemiological studies should be conducted in relation to the risks of illness associated with swimming. Professor Victor Cabelli of the University of Rhode Island, USA, focused on the limitations of recreational water quality criteria based on faecal indicator levels. Although there is a risk of infection from sewage contamination of bathing waters, faecal indicators do not pertain to diseases whose causative agents are autochthanous to aquatic environments or to the individual himself. Risks are not predictable from indicator levels - they may overstate the risk - for instance in waters where coliforms, including E coli, are derived solely from the faeces of lower animals. On the other hand the danger may be understated where recreational waters are contaminated by sew- ¡ age effluents which have been chlorinated. Viruses are generally more resistant to chlorination and the causative agent of most prevalent swimming associated illness are the Norwalk-like viruses. Andrew Bernard of the NSW Department of Health addressed the issues to be considered in the microbiological assessment of natural recreational waters and surveys of spa-pools or hot tubs. These included sampling techniques, sampling sites, sample storage and the delay before testing. WATER June, 1989


The consistency of survey techniques and, for natural waters, parameters such as tide, prevailing wind, rainfall and temperature are also important. Andrew also discussed the major factors in reducing the infection risk from spa-pools. These related to design, operation, disinfection practices and advice for bathers.

Bruce Gray of the Queensland State Health Department broadened the risk assessment picture and posed the question of whether food might be more of a risk than water in recreational areas. Tourism per se raises specific problems - a higher proportion of susceptible individuals, ignorance of local hazards and more frequent and extended contact with recreational waters. He

explained the simil~ities and differences in the mechanism of disease transmission as between food and water, the incidence of infection and aspects of control, and stated his preference for guidelines for water quality rather than legal standards. He commented on the paucity of epidemiological data.


by S. Samra Continued from page 36. It is concluded that sensibly engineered low-cost options are available to offer small communities a more affordable alternative to a full conventional water supply. Making use of these options is a more socially responsible alternative than continuing to deny Australians access to a safe and secure water supply. The Guidelines allow a co-ordinated approach across Australia to the provision of affordable public water supplies to the great majority of small communities without an adequate system. The Guidelines provide for adequate levels of public health protection and levels of supply which will improve community health and general living standards.

ACKNOWLEDGEMENTS The success of this national study was dependent on the considerable efforts and the close co-operation provided by the water supply authorities of all Australian States and the Northern Territory in compiling the necessary data on their small communities and water supply systems to enable an Australia-wide 'picture' to emerge. The very significant contributions of all Steering Committee members and their organisations were also essential to this study and these are acknowledged.

REFERENCES I. Australian Water Resources Council Guidelines for Low Cost Water Supplies/or Small Communities, Aust Gov Printer, Canberra, 1989. 2. Australian Centre for Water Treatment and Water Quality Research Survey of Water Supplies/or Country Towns in Australia, Draft Report, Adelaide, September 1988. 3. Public Works Department Report on Statewide Results from 1986 Annual Water Supply and Sewerage Reports, Sydney, January 1988. 4. Public Works Department, NSW Water Supply investigation Manual, Sydney, September 1986. 5. Water Authority of Western Australia Assumptions and Design Criteria for Water Scheme Planning, Perth, 1986. 6. Samra, S. Water Pricing for NSW Country Towns, IE Aust Water Pricing Symposium, Brisbane, October 1987. 7. Samra, S. Demand Management for Town Water Supplies, Water Supply and Resources Conference, Local Government and Shires Associations, Sydney, 24-25 November 1988, 8. Engineering and Water Supply Department Water Supply Design Handbook (Draft), Adelaide, November 1986. 9. Ho, W. Water Treatment, Seminar on Water Supply Engineering Update 1987 Cootamundra 5-6 Nov 1987 (Public Works Department, NSW) pp.91-98. 10. Public Works Department, NSW Review of Standards for Water Supply and Sewerage Projects Questionnaire, Sydney, August 1988.

CANAL ESTATES BIOTA STUDY A report by Phillip Cosser The results of a major study of the water quality and biota of residential canal estates in south-east Queensland have recently been published by Cosser (1989) and Morton (1989). The study, conducted jointly by the Division of Environment and the Fisheries Management Branch, describes the fish and invertebrate fauna of a number of Gold Coast canals and relates the distributions of the different species and communities to water quality and other environmental variables. By identifying those environmental variables determining distribution patterns and relating these variables to features of canal design, it was possible to identify those designs which are most likely to support a diverse and healthy ecosystem. A total of 17 189 fishes representing at least 44 species was recorded during the 14 month study. Five species accounted for 89.70Jo of the total number of individuals. The average number of fish taken at each site was greatest at two river sites (224 and 261 fish per sample), with four of the six canal sites recording only 70 to 82 fish per sample. Essentially the same species were found at the different sites, although the relative numbers of each differed. Most notable was the decline in the number of macroinvertebrate feeders in the canals, a result consistent with the low density of bottom dwelling invertebrates found. Comparisons between the fish fauna of the Nerang river estuary and adjoining canals and the fauna of undeveloped estuaries indicated significant differences. A pronounced decrease in the relative abundance of commercially important species (Bream, Mullet, Flathead) was evident in the intensively developed study estuary. This was attributed to the loss of mangrove and saltmarsh habitats. With respect to the invertebrate fauna, a total of 4195 organisms representing 65 taxa were collected. The number of species recorded was lowest at dead-end sites; and both dead-end and connecting (flow-through) canals exhibited the same general trend of a decline in species richness with increasing distance from source water (the river or ocean). Two major community types were identified in the canal systems; one characteristic of dead-end locations, and the 38

WATER June, /989

other characteristic of connecting canals. Statistical analysis indicated that the distributions of the different species and community types were explained largely by three factors: I) The dissolved oxygen concentration of the water column; 2) the variability in the dissolved oxygen concentration, and 3) the sulphur content of the sediment. The latter relates to the effects of toxic sulphides generated under anaerobic conditions. In combination these variables can be considered as indicative of the quality of the dissolved oxygen environment. The dissolved oxygen regime exhibited a progressive deterioration with increasing distance from source waters, and was particularly severe in terminal canals. It would seem that as a result of poor flushing in dead-end and distant canals, fine, organic, oxygen-demanding sediments accumulate causing a deterioration in dissolved oxygen concentrations. Intermittent periods of severe oxygen depletion, which occur in such locations during neap tides or periods of stratification, appear to be particularly detrimental to the invertebrate and fish fauna. The studies recommend that if a fish and invertebrate fauna is to be supported which is similar to that of the parent water body, canals should be as short as possible, should not have dead-ends (looped systems would eliminate stagnant terminal canals), and should be built in open bays rather than tidal estuaries. For further information contact Phillip Cosser, Division of Environment, Department of Environment and Conservation, PO Box 155, North Quay, Qld. 4002.

References Cosser, P. R. (1989). Water quality, sediments and the macroinvertebrate community of residential canal estates in south-east Queensland: A multivariate analysis. Water Research 23. Morton, R. (1989). Hydrology and fish fauna of canal developments in an intensively modified Australian estuary. Estuarine, Coastal and Shelf Science 28, 43-58 .