10 May, 2022
Industries
Client
• Flinders Shire Council
Disciplines
Tools
While significant dam proposals such as Hells Gates Dam and Urannah Dam capture a great deal of public attention, a review of recent history in the Australian rural water sector shows that smaller scale projects can present more economically and financial propositions for government while delivering significant benefits to regional communities.
Synergies was engaged by Flinders Shire Council to undertake the economic and financial analysis of the Hughenden Water Bank project as part of the development of a Detailed Business Case by GHD. The project, which involved the development of a 7,000 ML capacity offstream storage and distribution infrastructure, involved supplying highly reliable water for the expansion of table grape production in the region and to facilitate the establishment of an abattoir and co-located feedlot to service the cattle industry throughout the Gulf region.
The analysis demonstrated the significant economic pay-off that can be achieved when small-scale projects target high-value industrial and agricultural water demands, noting this benefit could be achieved with significantly lower cost to the State and Commonwealth Governments compared to some other bulk water projects in the region.
The absence of water supply infrastructure in the Hughenden region means that agricultural and industrial users are reliant upon unsupplemented water from the Flinders River and groundwater from shallow alluvial aquifers and the Great Artesian Basin (GAB).
While the 15 Mile Irrigated Agricultural Development – a bulk water storage of 2,250 ML completed in 2020 – has enabled the establishment of a highly productive table grape enterprise in the region, the lack of access to highly reliable water represents a constraint on further industrial development in the region, particularly high-value agricultural industries such as horticulture and intensive animal production.
The Hughenden Water Bank project was identified as a potential solution to facilitate the expansion of the table grape enterprise and the establishment of a meatworks and co-located feedlot at Hughenden. The project involves the construction of an offstream storage with a capacity of 7,000 ML, drawing upon a combination of surface water entitlements and groundwater resources to provide a highly reliable product to users.
Flinders Shire Council obtained funding for a Detailed Business Case to demonstrate the economic and financial viability of the project to the Commonwealth Government.
Synergies was engaged, in partnership with GHD, to undertake the economic and financial analysis of the Hughenden Water Bank project. This included:
The quantification of the economic benefits from facilitating the establishment of the meatworks involved modelling the cost savings attributable to the avoidance of the long-haul transportation of live cattle from the North West to feedlots and meatworks in the South West region. This included direct and indirect transport costs and the avoidance of productivity loss due to weight loss during transportation.
For the benefits from increased table grape production, Synergies worked with the grower in the region to develop a region-specific farm-level financial model for table grape production to estimate the additional economic value to be derived from the expansion of the enterprise by 160 hectares.
In addition to conducting the economic and financial analysis, Synergies also advised GHD on the available funding options with respect to the net financial cost. This affordability analysis identified the limitations of user-pay pathways and the eligibility for state and federal grants.
Synergies’ report provided Flinders Shire Council with a robust economic and financial analysis of the Hughenden Water Bank project. The robust definition of the base case and detailed modelling of economic benefits provided a strong basis for the economic feasibility of the project.
The outputs from the analysis were directly used in the Council’s funding application to the Federal Government. The analysis was assessed as being consistent with government requirements, including Infrastructure Australia’s Assessment Framework.
To find out more about this project and how Synergies can assist you, send an email to: contactus@synergies.com.au