pressures on the water sector to close the water cycle, i.e. to ensure that used water is fully recycled. This could add considerably to the cost borne by water utilities, a cost that should logically be reflected in higher water prices. In any case, higher water prices are likely to be increasingly considered as desirable per se by environmentalists, if only because of the substantial environmental benefit they can bring about, simply by curbing the demand for water. Indeed, simulation results suggest that higher water prices induce a dramatic reduction in the ratio of withdrawals to total water availability and a significant improvement in water quality as the re-use of water declines, and the reduction in water withdrawals provides a major increase in environmental flows (Rosengrant et al., 2002, p. 153). Environmental policy will also affect the demand for land transport. This includes for instance sustainability-inspired measures to shift traffic from road to rail for urban and inter-city use, although Stambrook does emphasise here the limited margin of manoeuvre available. The creation of markets for carbon emission permit trading will also have a bearing on future infrastructure development, notably in the energy sector. A case in point is the European Union Emissions Trading Scheme (ETS) established in January 2005, which affects the activities of 3000 factories and power stations in five different industries in Europe. Up to now, there is no sign that the permit regime has brought about a switch to cleaner fuels; indeed the reverse has been happening. Part of the reason is that gas has become SO much more expensive than coal that power stations have chosen to pay higher permit prices and switched to coal; moreover, it seems that too many permits have been issued. Another factor is the uncertainty that exists regarding the future evolution of the market. However, these teething problems are likely to be ironed out in the future and the use of carbon trading extended to other sectors of the economy. This c