In one obvious sense, using either method is preferable to a future of potential water shortages, but is large-scale desalination really the solution? The energy consumed is so considerable that the resulting water is bothexpensive and highly carbon intensive.

According to a recent report by the WWF, RO is the best technology, emitting 1.78kg of CO2 per m3 of water compared to 23.41kg CO2 per m3 for MSF. But the comparatively 'green' reverse osmosis process is still only as green as the energy powering it. Sydney's proposed, 500,000m3/day RO plant would be coal-fired, producing nearly a million tonnes of CO2 per year, the equivalent of putting another 220,000 cars on the road.

Environmentalists want desalination to be a last resort once conservation measures have been rigorously implemented to cut consumption, while end consumers and politicians are wary of rapid price hikes implicit in high-tech solutions.

Rob Shore, a freshwater programme manager for the World Wildlife Fund (WWF) in Latin America, says: "The pinchpoints in the world are where there is a combination of three factors: high population, low natural water availability and poor water management." The greatest of those is often poor management, and while the WWF recognises that desalination is part of a range of measures to defeat water shortages, it notes that in many cases it can actually confuse the need for good management, becoming a technical bandage for an open sore that could be easily healed by other means.

A change in public habits wouldn't hurt either. According to the US Environmental Protection Agency (EPA), an average US household uses 100-150 gallons of water per day, Europeans use 74, Africans use 17 and the Chinese 23. The Swiss are the most water-conscious Europeans, cutting average consumption to 35 gallons daily.

The is already evidence of changes in consumer behaviour in the wealthy West, where there is is a backlash against the extravagance of expensively packaged water. It has become fashionable to insist on tap water in restaurants, with customers citing the environmental crimes of bottled water, which mainly revolve around unsustainable transportation and packaging practices resulting in a massive carbon footprint. Significantly, sales of Nestle's nine bottled water brands (of which one is Perrier) fell 9% in Europe and the US in the first quarter of the year.

But Nestle's travails are a mere drop in an ocean of problems mounting up around the one commodity whose commercial potential may resemble oil. Indeed, one massive stumbling block facing desalination advocates is actually the rocketing cost of fuel.

Global Water Intelligence estimates that the market is growing at 20% a year in the core markets of the US, China, India and Australia, but the central curb on growth will be the price of energy, according to the International Desalination Association, which notes that the rising price of fuel has made water production much more expensive.

Not surprisingly, then, the future lies with innovative corporations with the size and scale necessary to develop new technologies. Siemens' water division is currently working on technology that could halve energy consumption to 1.5kWh per m3.

Elsewhere, experimentation is proceeding apace; not all of it successful. The EU-backed project Sodesa, installed eight years ago on Gran Canaria, aimed to harness solar power to distill seawater into freshwater, but it was shelved due to cost.

Meanwhile, the WaterPyramid, designed by Martijn Nitzsche, founder of Dutch holding company Aqua-Aero WaterSystems, uses a tent structure to heat and distil seawater, but, once again, it is impeded by cost and longevity issues. Other start-ups examining the problem are Danish company AquaDania and dotcom millionaire Morten Lund.

In the larger scheme of things, no one is holding their breath. The barriers to entry are enormous and the direction the industry is now taking is towards big solutions for big populations, with steep energy costs underwritten by desperate governments at the taxpayer's expense.

What the smaller companies, inventors and entrepreneurs may offer, however, is portable technology addressing small scale, local needs. AquaDania claims to have made a breakthrough with its patented WaterStillar unit, which uses a solar collector measuring two square metres, enabling it to distil between 40 and 60 litres a day, five times more than conventional stills and enough for the daily requirements of a family.

Chief executive Tom Juul Andersen says: "We're not looking to challenge industrial-scale methods with this system. The point is that it's local, low tech and affordable. It eliminates the need to transport water."

This and other forms of rainwater harvesting represent a very large part of the solution for rural populations, who outnumber their urban counterparts by four to one according to a recent report by UNICEF.

In light of such needs, the traditional assumption of most people that water is both abundant and virtually free, is rapidly dying out. That means that even the utility end of the water business is set to become much, much more exciting to investors as bills rise inexorably and regulators roll over in the face of much-needed upgrades to existing infrastructure.