Emu Swamp Dam – Agricultural and industrial water demand assessment

The Issue

The proposed project is located in the Southern Downs region. Within the region, agriculture is one of the largest industries and contributes a significant proportion to the Gross Regional Product.

Approximately 245 horticulture producers grow a range of crops including tree crops, brassicas (i.e. cabbages and broccoli), wine grapes, tomatoes and capsicums, strawberries and strawberry runners, and other green vegetables (i.e. peas and beans, lettuce, celery). The viability and sufficient production of these crops depend on reliable and consistent water supply. Past assessments indicated strong support for more supply via the proposed Emu Swamp Dam based on the growth it would enable. In relation to industrial demand, past reports identified potential for improved water supply to provide opportunities to support and attract more diverse value adding businesses.

A feasibility study for the proposed dam was undertaken in 2016. However, the robustness of the analysis conducted, particularly in relation to the demand for irrigation water, was not sufficient to enable a decision to be made on whether to proceed with the construction of the dam (or pursue an alternative option), largely due to the absence of any detailed assessment of the on-farm return from the use of additional irrigation water. Various other demand assessments undertaken were based solely on survey responses and, whilst informative, were not sufficiently robust to enable a decision to be made on the feasibility of a water supply augmentation.

A robust demand assessment is an important step in the overall assessment of a bulk water project. Given the costs and effort associated with assessing the overall feasibility and benefit of a dam and the significant capital costs associated with building a dam, a robust analysis on the need for the project is essential.

The Solution

Synergies undertook a robust assessment of agricultural and industrial water demand within the dam supply footprint.

Agricultural demand

Agricultural demand was based on assessing the level of demand for additional irrigation water by conducting farm-level modelling for individual crops which enabled a more robust assessment of the level of demand for irrigation water compared to methodologies that are solely reliant on stakeholder input. For crops that are identified as likely sources of demand for additional volumes of irrigation water, we estimated the net financial return from the use of additional volumes of irrigation water ($ per ML). This value represented the upper bound of what producers would be willing (or have capacity) to pay for additional irrigation water entitlements. Demand was assessed in two ways: (1) the application of additional volumes of water to existing crops, either to increase yield or product quality or to protect against loss of product yield or quality during dry periods and (2) the use of additional water for the purpose of expanding (new) irrigated crop production. The key steps undertaken for the agricultural demand assessment were:

• Establish the current irrigation water supply-demand situation within the dam footprint;
• Review financial crop production information;
• Consultation with producers;
• Develop farm-level financial models; and
• Develop demand forecasts and scenarios for additional water.

Industrial demand

The focus of the industrial water demand assessment was to identify whether the lack of a new bulk water supply, of the magnitude of Emu Swamp Dam, is constraining new industrial activity from establishing in Stanthorpe. A two-stage process was undertaken for the industrial assessment:

• consultation with the Department of Energy and Water Supply (DEWS) on the 2016 Stanthorpe Regional Water Supply Security Assessment to gain a comprehensive understanding of the key drivers of the analysis of future industrial water demand; and
• targeted consultation with key stakeholders relevant to future industrial water demand in the region, as identified through discussions with DEWS and other stakeholders.

Based on our assessment, it was concluded that there was insufficient evidence to support a forecast that would have industrial demand outstripping residential demand over the next five years or exhibit a ‘step change’ in economic development if a new bulk water supply was developed.

The Benefits

Our report provided a robust assessment of agricultural and industrial water demand within the dam supply footprint which informed the Strategic Assessment of the proposed Emu Swamp Dam project.

For agricultural demand, we provided robust analysis of the following demand factors:

• the likelihood of irrigation water application to existing and potential crop areas for each identified potential crop, demonstrating likely demand sources.
• crop-by-crop (both existing and potential) analysis of the returns from increased availability of irrigation water within the dam supply footprint in terms of present value per ML.
• potential magnitude of existing and potential demand (ML) for additional irrigation water by crop type and use.
• crop-by-crop (both existing and potential) analysis of the returns from increased availability of irrigation water provided by the proposed project.

Regarding industrial demand, our assessment and consultation concluded that not only is there not substantial constraint on water supply to existing (or potential) industrial users, the additional water supply to be provided by the proposed dam is relatively small and would be unlikely to be of sufficient scale to underpin major industry.

The analysis was completed in accordance with Building Queensland’s Business Case Development Framework enabling it to sufficiently inform future assessments. The findings from the report, including the demand assessment, were accepted by the Southern Downs Regional Council and were presented to the community at a town hall meeting.