The possibility of a large water storage project on the Makaroro River offers huge opportunities for Hawke’s Bay.
This would be a 77 metre high storage dam, capable of holding 90 million cubic metres of water, creating a lake two and a half times the size of Lake Tutira, and potentially capable of producing up to 6.5 megawatts of electricity.
And this is all before we even consider the environmental, economic and social benefits, which are the main drivers behind this project. It’s a project that requires an investment of around $200 million to construct and up to a further $400 million for on-farm irrigation investment.
The economic benefits and the environmental pay-offs from such a large investment are equally great. It could see almost all irrigation consents taken off the Tukituki River, allowing it to revert to natural summer flows.
In a conventional sense the economics are marginal, given the significant up-front capital injection required to construct such a scheme. Long-term, the proposed scheme is enormously beneficial, with opportunities for increased on-farm employment, as well as off-farm employment in high wage jobs, such as precision engineering, plant servicing, marketing and processing of crops.
This project, in time, will lead to a more diverse community, additional employment opportunities, more wealth, better infrastructure and increased opportunities for recreation.
Driving from the top
We’re fortunate to live in a region with a high degree of social and economic cohesion, as well as having reasonable natural resources. We have a bold and visionary regional council with a strong balance sheet, and leadership that is prepared to make a difference for future generations.
Part of this leadership style includes strong and focused communication in this project through Leadership and Stakeholder Groups which ensures those most closely-affected are kept informed and encouraged to comment as the project progresses. I take my hat off to HBRC for this cohesive and inclusive approach, which I believe will pay dividends in the long run.
Putting water storage into context
In 1960 the globe required 0.44 of a hectare to feed one person. By 2050 this will reduce to just 0.15 of a hectare. By 2050 I predict that there will also be a much higher percentage of the global population demanding high quality food that is safe and produced in an environmentally and ethically responsible way. Our goal in New Zealand will be to sell to customers where price is not their first consideration.
New Zealand’s core business has always been food production and for that to continue we must invest in new and better ways of producing sophisticated high value food for the discerning global customer who can afford to pay.
To grow food you need soil, sun and water. In Hawke’s Bay we have good soils and plenty of sunshine. The limiting issue is water – not the amount, but its availability at critical times. The Ruataniwha Water Storage scheme is about harvesting the peaks to fill the troughs, returning both economic and environmental benefits.
This scheme gives irrigators water security; at the same time, taking those irrigators off the Tukituki River will allow it to resume its natural summer flows.
Let’s talk about the environment
Close to $5 million will be spent on the feasibility studies into this project, with a significant contribution from the Crown. By far the bulk of this expenditure has been vested in understanding the environmental impacts, as well as the economic and social impacts of this project.
These studies are a lot more than just where the dam will go and how big it will be. There are 118 separate streams of work underway within the feasibility study, including:
- Land intensification studies
- Work on both terrestrial and aquatic ecology
- Social impact assessments
- Recreation assessments
- A landscape study
- Cultural assessment
- Traffic and noise assessments
The environment is not being ignored in this process. There is a real determination to understand how this scheme will impact on the environment and to ensure that any detrimental effects are absolutely minimised and that any opportunity to enhance the environment is taken.
In fact this whole project is driven by HBRC’s desire to get irrigators off the Tukituki River and improve the state of the river. This scheme is a win-win situation for Hawke’s Bay’s economy and for the environment.
So what about land use…
Let’s be honest – the water produced from the proposed water storage project will be expensive. Therefore it is predicted the existing land use will have to change for the farms to remain economic.
High performance farming will be needed, with growers and farmers managing their inputs in a very sophisticated way, using high value crops, which will also provide more employment opportunities.
Given the cost of this water, growers and farmers will move to ‘just in time’ irrigating rather than ‘just in case’, and will still rely on rainfall when it’s there.
One of the benefits of this scheme compared to many others in New Zealand is that it is expected the water will be delivered to the farm gate under pressure in a pipe. That means significant saving in on-farm pumping costs, which in the case of extracting water from a 100m deep well can be around $400 a hectare per year.
The “d’ word
I am aware there are concerns we will end up with a 25,000 hectare dairy farm on the Ruataniwha Plains. Inevitably, there will be more dairy conversions. That’s understandable because the reality is that dairying is New Zealand’s only truly global business. It is a proven and reliable land-use.
The concern with dairying focuses on the detrimental environmental effect cows can have if they are not managed correctly. I believe there should be the opportunity to tie the right to water to certain environmental behaviours and standards. This would include:
- Good management
- Good intent
- Riparian strips
- Modern effluent control methods
- Nutrient budgets, etc.
- And finally, strong policing from the regulator
In the long run we can expect a mosaic of land use; however we may well transit through dairy cows to get there.
So what will secure irrigation achieve?
Any irrigation scheme when it’s installed is ALWAYS expensive; but in hindsight I have never met a farmer who EVER regretted it.
This is an inter-generational investment. If we don’t do it the next generation will, but it will be a lot more expensive.
Take as an example the Opuha Dam in South Canterbury. When it was first initiated shares were $60 a hectare – 25 years later they’re trading at $3,000 a hectare.
Secure irrigation will inevitably lead to more sophisticated, technically challenging and higher value crops. That is what’s happened in Canterbury where they’ve had irrigation for 40 to 50 years. That region now produces 50% of the world’s carrot seeds, and 40% of the world’s radish and red-beet seeds. The great thing about crops such as these is that not only do you get high returns for the farmer who grows them, but you get much more diverse employment beyond the farm gate.
There is still much more detailed economic analysis to be done as the Ruataniwha Storage scheme is prepared for possible consent application and marketing to investors. This is a very large project and you would expect that sort of rigour to occur. My plea to the analysts is to use a conservative (low) discount of future benefits – this potential asset will have a payback period of 100 years.
Who will own the water storage scheme?
Let’s make it clear – we are not talking about ownership of the water. This is ownership of the infrastructure and distribution network.
One would hope and expect that HBRC will be a foundation investor. This investment could be seen in two parts – partly facilitating the environmental benefits from taking existing irrigators off the Tukituki River to enable the restoration of natural summer flows, and partly facilitating the economic benefits for the entire region.
The second investor will likely be the Crown. It’s no secret the Government is keen on irrigation as a method of kick-starting New Zealand’s economy. When Primary Industries Minister David Carter visited the proposed site of the project earlier this year, he said the project “ticked all the boxes” and he and Prime Minister John Key were keen to see “some runs on the board” with irrigation projects.
HBRC and the Government may be transitory owners in the short to medium term before enabling their shares to be sold on to the farmers.
I see farmers as the third group of owners. They are the logical owners of the scheme and hopefully, after their initial 3-5 years of investing in on-farm irrigation infrastructure, they will be in a position to take over equity from the Crown and HBRC.
Next, I see other natural infrastructure investors such as Iwi, NZ Super, ACC and high net worth individuals. Finally there are also off-shore investors to consider.
This scheme can really boost the Hawke’s Bay economy. The economic benefit will obviously start in CHB, but it will logically and literally flow throughout the whole region.
As well as economic benefits, by taking irrigators off river there will be strong environmental benefits. The river will be able to revert to its natural summer flows. It is a win/win solution.
The only question in my mind is which generation will build the dam. We have a unique set of circumstances with both Regional and Central Government support and I hope the wider community take up the opportunity we now have.
Sam Robinson is Chairman of the Ruataniwha Water Storage Leadership Group