An irrigation scheme unlocking high-value agriculture on the Ruataniwha Plains could increase regional income by $230 million a year and translate into 2250 extra jobs, not to mention the flow-on environmental and social benefits.
The construction costs of the Ruataniwha Water Storage Project, its distribution network and on-farm investments, were expected to total about $600 million, generating an additional 4500 "job years" of work spread over a number of years and an additional $210 million of household income.
Farming production as a result of the reservoir would almost entirely be for export, increasing shipping through the Port of Napier.
This would increase its revenue and profits back to its owners, the ratepayers of the Hawke's Bay Regional Council.
An additional 8000 containers of export cargo per year and possibly 1000 containers of inward cargo was expected.
The project would increase Hawke's Bay's regional GDP by 4 per cent and employment by 3.6 per cent across all sectors that benefit from the growth of farming and processing.
A plan shows how the crest of the dam on the Makaroro River could be developed.
The economic benefits of the water storage project were outlined in a feasibility study presented to the regional council this week.
The information will be used to help the council make a decision in October, on whether it should apply for a resource consent to begin building the project.
More than 100 people have worked on studies and plans for the past three years to come up with the best water-storage solution which could generate more agricultural activity on the Ruataniwha Plains.
The feasibility study is the latest work by a number of regional council staff and consultants tracking its economic viability of the Ruataniwha Water Storage Project, its potential impacts on the environment, and how those impacts could be mitigated.
The study uses a distribution price of 20 cents to 30 cents per m3 of water, which the consultants believed should generate enough financial returns to attract investors. It was also a price which was affordable for farmers to purchase water in order to convert farmland in the Ruataniwha Plains.
Hawke's Bay farmer and Federated Farmers president Bruce Wills said the success of the project would hinge on the "striking the right price" to distribute the water from the dam.
"If it's too expensive, there won't be uptake and the project will fail. If it's too cheap, the returns and funding won't be there and the only ones to benefit will be the people getting a cheaper price at the farm gate."
Mr Wills, who attended the regional council this week, said the 20 cents to 30 cents price per m3 to buy water was "a broad range" and people could look towards similar water projects in Canterbury and North Otago to compare costs.
"I think the bottom line is that it is expensive when you convert it back to a cost per hectare but Hawke's Bay farmers will adapt their farming practices or types.
"And we are all aware that may mean more dairy and cropping."
Mr Wills said he agreed with the regional council that it was not up to it to tell farmers what they should be producing on their land.
"But I think that decision will be made by farmers in terms of what the commodity prices are and what the market demands," he said.
" In the end, I think we will see more diversity on our land."
The reservoir could irrigate 25,000ha of farm land when the current area was 6000ha.
It led the feasibility study to suggest six examples of farm conversions or cases where farm production could be increased.
The strongest farm type likely to develop as a result of the irrigation scheme was arable, or cropping farms for vegetables for example.
It was followed by intensive sheep and beef farming, then dairy and finally mixed arable and dairy.
Regional councillors asked why horticulture (fruit) and viticulture (grapes) were not included in the list of those likely to connect to the project.
The two had been considered but currently "sit outside the price range" but both may have a future as trends and commodity prices change.
The project is to be funded through a private and public money.
Potential private equity partners included farmers, infrastructure investors, superannuation funds and Maori interests.
Public investment would come from the Hawke's Bay Regional Council which had earmarked $80 million in its long-term plan while government, through the Ministry of Primary Industries and its proposed Crown water investments scheme, could also be another partner.
The regional council would apply for a 35-year consent for the water storage project.
It would take about five years to build and would be under a private and public ownership model for the first decade of its life.
During this period of time, demand for the reservoir would be increased towards a time when it could be run under private ownership for the term of the consent.
It would then revert to the regional council with the possibility of minority Maori/farmer ownership.
The reservoir would be built in the upper Makaroro River, near the Ruahine Forest Park, about one kilometre east of Wakarara Rd and 6.6km upstream of the confluence of the Makaroro and Waipawa rivers.
It would be a concrete-faced rockfill dam design, about 83m tall at the river's deepest point. It would create a 6km-long reservoir with a storage volume of 90 million m3 of water.
An outlet could provide a peak irrigation release of 11.1m3 of water per second with the ability to release a flushing flow of up to 21m3 of water per second.
A single hydro electric power station at the base of the dam was proposed to provide 6.5 megawatts of electricity.
An irrigation intake on the Waipawa River, about 22km from the dam, would collect water released from the reservoir and distribute it via a headrace to a secondary distribution network.
A concept plan shows the extent of a reservoir on the Makaroro River.
The first network included an open canal of about 21km extending towards three irrigation zones.
The second included a 121km pipe network to provide water within 3km of all farm gates within the zones.
The regional council decided it should embark on the water storage project following a series of droughts on the East Coast that stretched back to 2006.
The Ministry of Agriculture and Forestry estimated the economic impact for the region was "in the order of hundreds of millions of dollars", the feasibility study said.
As a result, renewed consents to take underground water for irrigation had been reduced to a shorter duration of five years.
No new water consents had been granted since 2007.
Green Party MP Eugenie Sage, who had visited the site of the dam earlier in the year, presented to the regional council's meeting this week, asking for it to drop the major water storage project in favour of an earlier plan for a series of smaller dams.
In 2009, 18 potential water storage sites were identified to provide irrigation over the Ruataniwha Plains, narrowed down to 12 in 2010.
These short-listed options included 10 off-river dams and two on-river dams. Tonkin and Taylor, providing the Ruataniwha Water Storage project's technical expertise, found off-river dams were less economic than on-river dams due to the need for a refilling transfer system and the fact that storage volumes were generally smaller, resulting in lower economies of scale.
Regional council project manager Graeme Hansen said the project would aim to move existing groundwater and surface water takes into the storage project:
"... and allow the river to return to naturalised flows during summer months through the use of positive incentives, including provision of very secure water (19 in 20 year reliability) over a long time period.
"Whilst future regulation may reduce current water security from groundwater/surface water takes, use of regulation alone will not deliver naturalised flows during summer months in our view.
"The dam will be able to service 25,000-30,000ha, so could supply the needs of the Ruataniwha basin."
Project highlights
Recreation: Rowing, motorboat activities as well as fishing, swimming and lakeside activities could be provided for at the dam.
Maori: A number of Maori organisations have been involved in the project including Mataweka marae and Tapairu marae, Te Taiwhenua o Heretaunga (Heretaunga Plains), Te Taiwhenua o Tamatea (CHB) claimant group He Toa Takitini, Ngati Kahungunu Iwi Incorporated and the Aorangi Maori Trust Board.
Downstream: Regional councillors want water users downstream of the dam, along the Tukituki River towards the coast, included in future plans to develop the reservoir.
District revival: CHB mayor Peter Butler believes the water storage project, coupled with proposals for oil and gas drilling, could turn the economic fortunes of his district around.
Next step: Regional council meets in October to vote on whether to apply for a resource consent for the project.