There has been some criticism that the Ruataniwha Dam project will not be financially viable or sustainable and will suffer from lack of demand, despite the Hawke's Bay Regional Council (HBRC) providing convincing information about its merits.
Looking at a similar project in Timaru, Federated Farmers is confident HBRC has presented an achievable scenario which will provide huge benefits to farming and the people of Hawke's Bay. An irrigation ban issued last month for parts of the Ngaruroro, Waipawa and Tukituki rivers, affecting more than 200 consent holders, demonstrates the need for a reliable water supply.
The proposed Ruataniwha Dam will be on the Makaroro River and could supply water to irrigate 25,000ha of farmland and generate 6.5 megaWatts of electricity. Critics say uptake of irrigation would be low because costs to individual farmers would make joining the scheme uneconomic for all except dairy farmers, but HBRC's data and the experience of the Opuha Dam near Timaru suggest otherwise.
The HBRC's September 2012 Ruataniwha Plains Water Storage Project: Feasibility Report to Council reported distribution costs as between 20c and 30c per cubic metre of water. For farmers wanting to continue farming over summer, individual on-farm water storage was priced at about $3 to $5.80 for a cubic metre of water, compared to $2.91 per cubic metre for Ruataniwha dam storage.
These figures are based on the assumption of a dairy payout of $6.50 per kilo of milk solids and lamb and beef prices at $6 and $4.25 per kilogram, respectively, but dairying is not the only land use predicted to use water for irrigation.
Macfarlane Rural Business Ltd predicts conversion rates of irrigable land will be 37 per cent to dairy, with arable to 32 per cent and sheep and beef at 13 per cent.
This use of Ruataniwha water could translate to farm added value rising by $70 million a year, including an additional household income lift of $24m a year.
Significantly for the region, this is predicted to provide an extra 632 full-time on-farm jobs.
The flow-on of increased farm financial benefits would lift the GDP of Hawke's Bay by 4 per cent. This all adds up to more opportunities for farming and everyone else in Hawke's Bay's dry climate.
The Opuha Dam is an example of demand and on-farm affordability. Constructed in 1998, it has capacity to provide water to irrigate 16,000ha of farmland. It also supplies town supply, commercial use and generates electricity. An economic report states every thousand hectares of dry land only generated $0.71 million of added value a year, but the same area of irrigated properties generated $2m in 2003 and 2004. Direct farm output increased by $40m per year.
On-farm added value increased by $16.3m and household income increased by $7m per year. It generated 480 new jobs, 145 of which are full time on-farm.
The Opuha Dam paints an encouraging picture of how large-scale water storage projects benefit farmers and the wider community.