Grape grower, cattle farmer and accountant Brian Halstead is concerned the proposed $82.5 million, 13.4m cubic metre Waimea dam in the Lee Valley exposes users and ratepayers to even greater financial risks than those underlying the $900m Ruataniwha proposal.
After five years and $20m of research and application costs the Ruataniwha proposal in Central Hawke’s Bay remained in the air.
Halstead represented a group of smaller irrigation users opposed to the project, the Waimea Irrigators and Water Users, consisting of about 15 landowners.
His group had proposed an alternative that while capable of holding less than half the Waimea proposal, they said was more suited to the scheme’s intention to augment rather than replace other water sources.
“What we have seen is the (Tasman District) Council, in their wisdom over the last four years, have produced some draconian plan changes that have shortened the odds in favour of rationing being employed in the district.”
He maintained that mades the project a self-fulfilling necessity as irrigators were forced to turn to the project to meet their needs.
Halstead maintained the council had put too much store on the Waimea River’s minimum allocatable flow of 1100litres/second while reduced water takes were pushing irrigators to take a greater proportion of water through a dam source.
Latest revisions in the council’s resource plan had grape growers like himself taking the biggest hit, with water allocations sliced back from 350 cubic meters a hectare a week to only 140/ha/week.
An unofficial survey by pro dam group Waimea Irrigators Ltd indicated the project would attract the minimum requirement of 3000ha should it go ahead. The project’s total intended irrigation area was about 7500ha and included a council share to augment urban supply.
“But this district has a lot of lifestyle block owners and grape growers, neither of whom really need much water. The greatest portion of demand is coming from pipfruit growers who are diminishing in the district and from market gardeners.”
Halstead suspected the scheme was the only one of its type intended to augment existing irrigation and rainfall supply and its conception in the early 2000s was driven by a bullish dairy sector at the time, which had since faded.
“There are only three dairy farmers left in the district now. The dam is basically going to be a very expensive insurance scheme for 10-12 weeks of the year.”
Work by agricultural consultant and economist Peter Fraser put the cost of the water from the scheme at five times the national average of 14c a cubic metre, at nearer 60c a cubic metre.
Halstead saw some concerning similarities between the Waimea project and Ruataniwha, including a council that was thinly divided over the validity of the project.
“Only a month ago the mayor had to use his casting vote to push through the extra funding required for the project. I believe they are placed right on the cusp of this going ahead or not.”
WIL viewed the community dam project as the best long-term and cost-effective supply to the region’s water supply shortages.
The project had been an on-again/off-again proposal over almost 40 years since a 1979 study looking at building a major dam in the Wairoa Gorge to cover 7000ha.
The latest version was intended to culminate in construction kicking off in 2012 amid rising cost concerns that pushed it out to $40m then ticking over $70m by late 2014.
Halstead said Environment Minister Nick Smith had allocated $7 from the national freshwater improvement fund to the dam project, despite the river not qualifying as a damaged waterway.
“It appears to be funding for a project that is likely to do more damage in the future, hardly what this fund was set up to do,” he said.
The funds were intended to allow the dam to hold a 30% surplus to maintain the river’s ecologically sustainable flow.
Numbers man doesn’t see dam stacking up
The Waimea dam risks ending up being too small to be economic but too big for what is needed, agricultural economist and consultant Peter Fraser says.
He supplied advice to the Waimea Irrigators and Water Users group that put the project’s water cost at nearly 60c a cubic metre, well up the cost list for existing and proposed water schemes around New Zealand.
“This project would have been economic back when it was priced at about $20 million but certainly not at $80m plus.”
For comparison the Opuha scheme that held 74m cubic metres cost $65m and based on an 8% return on capital cost about 8c a cubic metre.
“And given the ongoing increases in construction costs, we could be confident that final cost will be nearer $100m for the Waimea one which only holds 13.4m cumecs.”
Fraser said given the project’s ongoing cost rises in the past 20 years it was lamentable there had been no off–ramp to ensure it could be called off once past a clearly economic point of no return.
“You have a dam producing water that most farmers do not need and those that do only require it for a short period, depending on the weather given it is an augmentation scheme, not a sole source.”
If the dam was being built to mitigate dry weather risk, a better approach might be to adapt land use to those conditions, not the other way around.
Dam supporters are adamant on option
Waimea Irrigators Ltd project manager Natasha Berkett says the Waimea dam option remains the only plan on the table to deal with the region’s future water needs.
She acknowledged the project’s costs had been rising since its original conception and said determining any further cost increases on the project would be crystal ball gazing.
However, there was also a $13 million contingency allowance in the $80m project for further increases.
“We are working to a P95 standard that is where we are 95% certain about the cost of the project.”
She said the implications of the changes to the council’s resource plan and water take allowances were so severe the region did not have a do-nothing option.
“The implications of the plan are so severe on water uses we would always need to look for options.
“The effect on rural and urban users is significant.”
She said the cost overruns on the Lee Valley project were being considered now but other options were not being considered.
“Something smaller may well serve some parts, like supply urban water, but will not supply the water for rural users.
“They are only short-term solutions. This is a long-term, 100-year solution.”
She did not believe the project would result in greater dairying on the Waimea Plains, which now supported only three dairy farms.
“We are more likely to see greater horticultural development, particularly hops, kiwifruit and apples go ahead as a result of having certainty around water supply.”
