Water shortages brought on by the Millennium Drought in Southeast Australia forced greater Melbourne, a city of 4.3 million people, to find innovative ways of increasing water supply and decreasing water demand. This article explores how water managers in Melbourne reacted to the crisis and evaluates the short-and long-term impacts of their decisions. Reduced water demand occurred primarily through residential and industrial water conservation programs, restrictions , together with emergency reductions in the environmental release of water to streams. The city also experimented with using recycled water, in place of surface water, to support agriculture in the Werribee Irrigation District. Water pricing was not strengthened during the drought, and thus not regarded as a drought demand management tool, primarily because Melbourne water companies lacked independent price setting powers. Today, 5 years after the end of the Millennium Drought, gains in water conservation appear to be holding steady, but recycled water for irrigation has declined for various reasons. We contend that the Millennium Drought provided Melbourne with the opportunity to develop and implement a more integrated approach to water management. Many of the innovations it forged (e.g., distributed harvesting and use of stormwater) will continue to enhance the city's resilience to drought and reduce its vulnerability to climate variability for years to come. Nevertheless, a challenge going forward is how to sustain these achievements in light of anticipated population growth and continued climatic change. This challenge—coupled with Melbourne's successes—hold important lessons for water-stressed cities around the world.
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