Building the business case for desalination

Why a strong business case matters

A business case isn’t just a formality—it’s the foundation of any successful water industry solution. It is the mechanism to determine whether a project progresses or remains on paper. Governments don’t fund projects because they’re interesting; they fund them because they address critical challenges like water scarcity and long-term water scenario planning.

Failing to build a strong case can make smart water solutions seem like an expensive luxury rather than an essential investment. It’s like wanting a sports car. The idea is exciting—fast, powerful, and full of promise. But before buying, you have to consider whether you actually need it, whether you can afford it, and whether it makes sense compared to other priorities in your life. 

Governments make infrastructure decisions in much the same way—they won’t commit to desalination unless the costs, timing, and long-term value align within broader water scenario planning.

Too often, projects run into trouble because they haven’t clearly answered three fundamental questions:

•    Why now? – What makes this project urgent within Australia’s broader water management strategy?
•    What are the risks? – Do we understand what could go wrong, and how will those issues be managed?
•    How will it be funded? – What’s the most practical investment model to deliver?

Without these elements, desalination project approval will be at risk of not progressing. 

Core business case question: why now?

One of the biggest mistakes is assuming that the need for desalination is obvious. It’s not. Governments don’t fund projects simply because they’re a good idea—they fund them because the consequences of inaction outweigh the costs of investment.

Australia’s recent approach to water security could be seen as reactionary. Water projects often become priority during droughts, but by the time a project is delivered, the crisis has passed, and public support has waned. However, full dams today don’t guarantee full dams tomorrow. Extreme weather events are happening more frequently, and water scarcity is no longer a distant threat—it’s a growing reality.

History has already shown how misaligned public perception can undermine well-intended policy. The push for home rainwater tanks in a past drought, for example, was popular but ultimately flawed—when conditions remained dry, those tanks were empty. The public didn’t know the full story: that tanks alone wouldn’t secure water in a changing climate.

The lesson? Water scenario planning needs to happen years before a crisis hits, and the case for desalination must be clearly communicated.

Governments need a compelling reason to act. A strong business case must highlight:

•    Water security risks – With climate change impacting traditional water solutions, alternative supply is essential.
•    Future demand – Projections for population growth and rainfall variability must be factored in.
•    Comparative and real options – Demonstrating why desalination is the best choice compared to other water solutions.

Managing risks: avoiding costly mistakes

The people building these proposals are often visionary problem-solvers, focused on opportunities rather than obstacles. But enthusiasm alone doesn’t get water projects approved—risk mitigation does.

A strong business case must proactively address risks such as:

•    Cost blowouts – Large-scale water industry solutions almost always cost more than originally expected. Governments now need realistic, risk-adjusted budgets that factor in contingencies.
•    Regulatory roadblocks – Navigating water determination and environmental approvals takes time, and delays can add years to a project.
•    Stakeholder resistance – Concerns about energy use, carbon emissions, and environmental impact must be tackled early to avoid backlash.

As one industry expert put it, “You don’t get points for pretending everything will go right—assume the worst and plan for it.” 

Common pitfalls and mistakes of business case planning

One of the biggest mistakes in business case planning is presenting rigid, all-or-nothing solutions–forcing governments into expensive, politically sensitive commitments or doing nothing at all.

A better approach is to offer scalable solutions. Governments need flexibility—options that allow for phased implementation, alternative funding models, and adaptation to changing conditions. Options should factor in multiple pathways rather than a single fixed decision.

Another common mistake is short-term thinking. A business case that only addresses immediate concerns—such as a drought—ignores long-term climate shifts, resilience, infrastructure longevity, and population growth.

It’s like going for a health check-up with your GP. You may feel fine today, but doctors use preventative testing to flag issues before they become serious. The same applies to water planning—if you only build infrastructure once a crisis hits, it’s already too late.

Inadequate risk assessment is another pitfall. Many business cases underestimate delays, cost blowouts, and stakeholder resistance. A well-developed business case doesn’t just highlight benefits—it anticipates challenges and proves there’s a strategy in place to overcome them.

The need for a multidisciplinary team

In the past, infrastructure projects were often led by engineers and financial analysts, with decisions based largely on technical feasibility and cost models. But today, that’s not good enough. Water projects are long-term investments that must balance economic feasibility with sustainability and community expectations—which requires input from a much broader range of expertise.

•    Financial specialists ensure the investment model is viable and sustainable.
•    Stakeholder engagement teams work with communities and regulators to secure public and political buy-in.
•    Environmental and policy advisors help navigate regulatory approvals and mitigate environmental risks.

Without this multidisciplinary approach, projects risk becoming disconnected from community needs and long-term water security goals.

A prime example of this is Melbourne’s desalination experience. During the Millennium Drought, desalination was seen as a critical necessity, and planning moved forward quickly. But by the time the plant was operational, water storages had recovered, and public sentiment had shifted. Today, government hasn’t needed to purchase desalinated water for several years, leading to public debate about whether the investment was worthwhile.

But this is exactly why water scenario planning is so critical. Water security decisions can’t be based on current opinion or conditions alone—they must factor in long-term climate patterns, future demand, and risk mitigation strategies. Right now, dams may be 85% full—but what happens when the next drought cycle begins?

A well-developed business case doesn’t just justify desalination for today—it must prove its strategic value over the next 20, 30, and 50 years.

The importance of stakeholder engagement and storytelling

Too many projects fail due to lack of stakeholder engagement. Desalination comes with concerns about cost, environmental impact, and carbon footprint—and if those concerns aren’t addressed early, they can derail a project entirely.

Public perception isn’t just a communications issue—it’s a make-or-break factor for approvals and funding. A project can be technically perfect, but if the community isn’t on board, it won’t get built.

A business case must prove that the project is wanted, not just needed. Without public trust, even the most technically sound project can fail.

This is where clear messaging and storytelling is crucial.

This highlights a crucial lesson for desalination projects: if communities don’t understand why a water solution is needed, they won’t support it. Messaging must be clear, transparent, and focused on long-term security, not just short-term fixes.

Effective storytelling in a business case should:

•    Clearly define the problem – Why is desalination needed now?
•    Showcase long-term benefits – How will it secure water for future generations?
•    Address public concerns – What are the environmental and financial safeguards?

Bringing desalination projects to life

Desalination plants aren’t built overnight. From business case development to full-scale operation, these projects can take a decade or more to deliver.

The Victorian desalination plant, for example, started its business case in 2008, with construction completed in 2012—but full operational readiness took even longer. That’s nearly a decade from concept to delivery.

That’s why business cases must be forward-thinking. If you’re planning based on today’s water security challenges, you’re already years behind.

This is where smart water delivery systems, modular design, and staged investment models offer an advantage. Instead of committing to a single multi-billion-dollar upfront cost, a staged approach allows for incremental expansion based on demand, making desalination a more flexible and financially sustainable water solution.

Funding desalination: who pays, and how?

A desalination plant isn’t something you pick up from the hardware store—it’s a major investment. A solid business case must outline the most viable funding model, whether that’s:

•    Government investment – Ensuring desalination aligns with national water industry solutions can help secure public funding. 
•    Public-private partnerships (PPPs) – Sharing the cost with the private sector can speed up project delivery. 
•    User-pays models – Spreading costs over time makes projects more financially sustainable.

Governments prioritise cost certainty. No one wants to approve a $5 billion project only to be told later it’ll cost $10 billion. That is why staged investment models and modular expansion are becoming more common—allowing desalination capacity to scale based on demand.

Poorly structured funding models have led to cost overruns and public backlash in past projects. A well-developed business case must ensure that financing is sustainable, politically viable, and adaptable to changing needs.

The future of desalination in Australia

Desalination is no longer just an emergency response—it is becoming a core pillar of Australia’s total water strategy. Future business cases must:

•    Integrate renewable energy – To reduce desalination’s carbon footprint.
•    Leverage AI and smart water networks – Smart water management market solutions can enhance efficiency.
•    Plan for scalability – Water projects in Australia must be adaptable to changing demand.

Lessons from past desalination projects
One major lesson from past desalination projects is the importance of long-term planning. Many projects have faced cost overruns, delays, and operational challenges due to inadequate forecasting of demand and water pricing fluctuations.

Additionally, business cases must consider labour market conditions. If multiple states launch large-scale desalination projects at once, a shortage of skilled workers and materials can drive up costs significantly—similar to what happened during the infrastructure boom following the global financial crisis.