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In October, the Lowy Institute reported that fewer Australians regarded climate change as a first order priority, and now we’re told that more are seeing the drought as a bigger problem.

The Sydney Morning Herald reports that the recent heatwaves have made Australians more concerned about water shortages. A poll shows 89 per cent of Australians believe drought and water shortages are the most pressing environmental concerns, over pollution and damage to wildlife. And fewer are concerned about climate change.

Now we can argue, quite correctly, that water shortages and droughts are caused by climate change, but that’s not really the point here. Water is emerging as a key issue.

Most countries in the world do not have a water problem. What they have instead is a water allocation problem. This is particularly true of Australia. We have to remember that only about nine per cent of Australia's water is consumed by households. About three-quarters goes to agriculture, particularly rice, sugar, cotton and dairy products.

It’s a problem the world over, and it’s only going to get worse with climate change, population growth and rural to urban migration. The United Nations warns that two-thirds of the world’s population will face a water shortage by 2025.

Water is becoming the new oil and industries most at risk include high-tech companies, such as those using huge quantities of water to make silicon chips; power generators using large amounts of water for cooling; and agriculture, which uses 70 per cent of global freshwater.

More alarmingly, it’s going to result in wars. In Darfur, water shortages led to fighting and killing over water holes, livestock, arable land and a war. That’s just a sign of things to come. Overseas reports released reveal that there are 46 countries with a combined population of 2.7 billion people where fights over climate change and water will create the potential for climate wars.

So what should governments do? As scarcity drives up the cost of fresh water, more efficient use of water will play a huge role. Unfortunately, there are no easy answers. Some of the solutions include:

• Water tanks for every house and business. Not everyone can afford that, so this would inevitably require a bigger government subsidy on top of the $500 rebate now on offer.
• Super-efficient drip irrigation systems. Very expensive.
• Fixing ageing leaking water pipes which waste incredible amounts of water daily. It’s estimated that the cost to fix them could be $500 billion over the next 30 years.
• Desalination. But then, opponents say desalination plants produce carbon emissions and endanger the local wildlife, including whales. It's not cheap either. The one being built by the Brumby Government in Victoria will cost $3.5 billion.
• Privatisation. Economists say private for-profit companies would sell water at a price based on what it costs to produce it and that the higher price would curb water waste and water consumption. But then, critics would say private companies should not make money from a basic human right (access to fresh water). Still, based on that logic you wouldn’t have food and drink companies, not to mention supermarkets. Not an easy question to resolve.

Water is essential to life, and we believe everyone deserves the right of access to water. Does that mean water is free or should be provided free? Should it come at a cost, with subsidies for those who can least afford it? What should be done about the problem?