Economist's warning over dam water deals

Farm economist Barrie Ridler claims for the Ruataniwha Water Storage Scheme to be profitable, water must be sold at full price. Photo / File

If regional ratepayers want to keep their Ruataniwha spend at $80 million, vigilance must be exercised when assessing deals being made with farmers and investors.

Farm economist Barrie Ridler claims the crucial point in the debate for ratepayers is that if all the water is not sold at the full price, the Ruataniwha Water Storage Scheme (RWSS) will run at an increasing loss.

He claims much of the water on offer is being discounted which would play havoc with the original Net Present Value calculations used to justify the scheme.

Hawke's Bay Regional Investment Company (HBRIC) chief executive Andrew Newman had not responded to requests for comment last night.

Mr Ridler said: "If HBRC ratepayers wish to keep their losses to only the $80 million promised, they should be vigilant about just what deals are required to get the dubious farmers and eager investors signed up."

This forced the economist to question whether the Hawke's Bay Regional Council (HBRC) is ensuring it will be the investors which take the shortfall.

"Or will the increased cost of construction plus assured investor returns ensure ratepayers suffer into the future with both increasing debt and reducing water quality?" he asked.

Mr Ridler said no irrigation scheme in the world had been built at original costings, "indeed most exceed them by over 80 per cent".

HBRC chairman Fenton Wilson said no more than $80 million of ratepayers' money would be invested in the scheme.

Mr Wilson said investors saw everything up front and the conversation between HBRIC and potential investors was ongoing.

Other issues raised by Mr Ridler included what he terms "the much quoted example of irrigation" Opuha.

"It ran out of irrigation water last season, despite releasing less water for river health than originally agreed," he said.

"Another dry summer is predicted and irrigation will likely cease again this season. A problem for non-average seasons and 'drought proofing' when full uptakes are achieved."

In terms of water reliability, he said Tonkin and Taylor produced figures for 17,200ha that provided less reliability than the Amuri scheme in North Canterbury.

"The RWSS has now extended the area to 25-30,000ha irrigated but the Makaroro River has not suddenly increased its flow," Mr Ridler said.

"HBRIC predict that in fact, future flows will decrease with global warming. This will not be an issue if farmer commonsense and correct on-farm analysis is applied, as far less than the 104 million cubic metres of water will ever be used."

Mr Wilson said the filling of the dam had been well documented. "The figures over the last 40-odd years show us that it will fill," he said.