Advanced demographic modelling of water consumption patterns in Adelaide suggest that pricing models preferred by governments punish the poor and discourage water saving.

Australian company Intelligent Software Development claims that its modelling of water use data from more than 580,000 households has shown that a "flat rate per kilolitre" charge for water would encourage greater water savings than the current tiered system while earning a greater level of revenue. In a report called "A Fairer Water Pricing Policy for Adelaide Residents", Intelligent Software Development also condemns a three tier water pricing model that is proposed to replace the current two-tier system.

"With the current two-tier and proposed three-tier pricing policies, low income households unfairly pay a greater per kilolitre rate for water than high income households," says the report. "This is due to the supply charge added to the household water bill for all households. With the three-tier policy, low income households are forced to save a greater percentage of water (from current two-tier usage) due to financial constraints."

"Under a flat rate per kilolitre pricing policy, low water users and low income households would see a negligible increase in their water bill and high water users and high income households would see a larger increase in their water bill. Medium water users remain largely unaffected."

Intelligent Software's CEO Dr Don Perugini developed the water modelling system by pioneering the application of advanced software technology from Australia's defence industry, where it has been used for logistics and emergency response planning, to the water sector.

The technology comprises individual software programs that can mimic elements of a physical or social system, such as cities and human behaviour. The software also models the higher-level and intangible factors required for strategic planning and forecasting, including economic, political, environmental, human and social elements.

Intelligent Software applied its Artificial Intelligence software to model water consumption patterns for three alternative pricing policies

1. Current two-tier policy which has a supply charge of $160, $0.50 per kL up to 125kL, $1.16 per kL thereafter
2. A proposed three-tier policy, with a supply charge of $160, $0.71 per kL up to 120kL, $1.38 per kL from 120kL to 520kL, and $1.65 per kL thereafter
3. Alternative D10: Flat rate per kL of water. Water price is adjusted according to water scarcity. In D10, all users pay the same rate for water.

Dr. Perugini said governments and water utilities needed to examine broader policy options if they hoped to successfully manage the emerging water crisis in Australia. "Artificial Intelligence modelling offers the benefit of crystallising vast quantities of consumer behaviour data into a model that is readily understood and interpreted," he said.

Intelligent Software Development Pty Ltd has drawn on expertise from the defence industry to use Artificial Intelligence technologies to create realistic virtual models of cities for strategic planning and forecasting purposes.

As with the popular SimCity computer game, Intelligent Software's AI approach models elements of a city, such as households and their demographic characteristics. This simulation can be used to assist with strategic planning and demand forecasting by running "what-if" scenarios and analysing the impact that proposed strategic decisions, infrastructure and policy will have on the population's behaviour, including demand, spending and consumption.

For a copy of Intelligent Software's report or for more information, contact Dr Don Perugini on (08) 8343 8455, or visit www.intelligentsoftware.com.au. For media assistance, call John Harris at Impress Media Australia on 08 8431 4000 or email jharris@impress.com.au.