Peer Review of the Economic Analysis of the Nullinga Dam Preliminary Business Case

Background

The construction of Nullinga Dam has been under consideration for many decades, with the project first proposed in the 1950s. In July 2015, the Commonwealth Government allocated $5 million for the preparation of a business case for the project, with this funding secured from the National Water Infrastructure Development Fund (NWIDF) in August 2016. Building Queensland was subsequently appointed to deliver a business case for the project and completed the ‘Nullinga Dam and Other Options Preliminary Business Case’ in 2017. The report was publicly released in February 2018.

Issue

The draft Preliminary Business Case (PBC) identified an opportunity to expand irrigated agricultural production in the Atherton Tablelands, through the increased supply of medium priority water allocations from the proposed dam. Synergies was engaged by Building Queensland to undertake a peer review of the economic analysis and water demand assessment conducted as part of the PBC.

Analysis

In completing the peer review, Synergies evaluated the robustness of the water demand assessment, the characterisation of the service need, the options analysis undertaken, and the economic analysis of the shortlisted options.

Specifically, Synergies’ assessed:

• the soundness and appropriateness of methods used, assumptions adopted, and key inputs used in the analysis;
• the scope and depth of the analysis, particularly in relation to the consideration and treatment of key risks and uncertainties, validity of assumptions, and whether the conclusions made can be supported by the analysis;
• and the adequacy and consistency of documentation supporting the economic analysis.

The Outcome

The report presented to Building Queensland identified critical issues in relation to both the water demand assessment and economic analysis contained within the PBC. Synergies presented the findings of the peer review to the BQ Steering Committee and a number of our recommendations, particularly in relation to methodological issues around the estimation of economic benefits and costs, were incorporated into the final PBC.