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Most of Melbourne’s drinking water comes from forested catchments which are largely closed to the public to minimise water quality risks. Potential disruptions to maintaining high quality and low cost drinking water include a growing population and a changing and variable climate. The expected introduction of Health Based Targets (HBTs) in the Australian Drinking Water Guidelines provides an important driver to deliver public health outcomes and provides a consistent framework to show best practice is being used to manage microbial risks at the source. Melbourne’s most important and protected water catchments feed into Silvan Reservoir. This study investigated the benefits and costs of integrated catchment management as a treatment process for drinking water supplied by the Silvan system. A facilitated participatory approach combined with benefit cost analysis (BCA) using the Investment Framework for Environmental Resources (INFFER) was used. This included an innovative approach to quantifying the risk of bushfire to Melbourne’s water supply within a BCA framework. Benefits and costs were assessed for nine options, two focussing on managing microbial risk to meet HBTs and seven to address bushfire risks. Protecting the Silvan Reservoir had the highest adjusted benefit cost ratio (BCR = 2.14) over 30 years. Protecting the whole system (including Upper Yarra and Thomson catchments) was marginally uneconomic (adjusted BCR = 0.93), but would be economically viable with some minor efforts to reduce project-based risks. Enhanced catchment management to protect against bushfire impacts was also close to being economically viable (BCR = 0.96). Innovative measures to reduce debris flow impacts was also promising (BCR = 1.30) whereas investment in filtration plants was poor (BCRs range 0.06 to 0.45).


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