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ADBT Update: The economic value of potential irrigation in Canterbury
23 January 2013

Aoraki Development Business & Tourism News 

An update on ADBT activities, key events and business opportunities



The economic value of potential irrigation in Canterbury

A report commissioned by CDC  (Canterbury Development Corporation)  “The economic value of potential irrigation in Canterbury”estimates the total benefits for Canterbury and New Zealand from irrigation scenarios under the implementation of the Canterbury Water Strategy.
[Link to full report.pdf]


Wendy Smith Chief Executive of Aoraki Development Business & Tourism says “ This report is hugely significant for South Canterbury as it continues to develop an understanding of the economic value of irrigating land and the benefits this can bring to the community as a whole.”

Three scenarios are modelled in the report:

  • The first scenario showing a total potential benefit of irrigation in Canterbury for New Zealand, In 2031 of $7.3 billion and over 20,000 Full time equivalent (FTEs) jobs.
  • The second, more realistic scenario, showing a 60 per cent uptake of potential additional irrigable land , netted $4.4 billion in revenue and over 12,000 FTEs.
  • Lastly the third scenario of projected demand from the CWMS gave an additional $3 billion in revenue and over 8,000 FTEs.


If this was translated to South Canterbury using just one of the irrigation schemes and a sample land area of 25,000ha, applying the most modest model this could translate into an additional $200 million in revenue for South Canterbury and a further $100 million for NZ and almost 800 new jobs in South Canterbury. With potential benefits of this scale the access to new water which is South Canterbury’s major challenge must remain at the forefront of economic growth discussions.

This report describes a series of assumptions which under pin a model for valuing irrigation allowing different prices, uptake rates, irrigated area and different land uses of irrigated land to be defined.
 The model provides outputs in total revenue and employment effects from 2014 to 2031 and includes the direct, indirect and induced effects by using the Canterbury Economic Development Model.  The results presented are based on a five year rate of uptake and predicted land uses of irrigated area as 58 per cent dairy, 18 per cent irrigated sheep and beef, 20 per cent arable and 3 per cent high-value arable.

 As with all economic modelling assumptions are drawn from the available data with a series of assumptions underpinning a model for valuing irrigation.

The exciting part of this work is that flexibilities in the model allow key assumptions to be changed and different scenarios to be valued.

The Canterbury region has enough water to meet its needs, but to cope with the seasonal water demand the region has to have additional water storage.

The report states that the region is strategically located with good transport infrastructure, to support ongoing growth in the agricultural sector, including the airport and the seaports, allowing trade both domestically and internationally at an affordable price. Lyttelton and Timaru Ports are the two container ports of the region and therefore important for Canterbury and for the South Island, especially for trade through the global transport network.

Further comment states that estimates of the current irrigated land in Canterbury are uncertain and therefore the potential irrigable land is also a contentious figure.

There have been numerous studies on the benefits of irrigation and key sources of information include the uptake rates over time for irrigation, the increased returns and value added from the change in land use, the changes in agricultural land use by type and the impact of this on the wider community .

From an economic development and community perspective the work from this report on the benefits of irrigation are not just on farm but encompass the wider community.

Regards

Wendy Smith
Chief Executive

    

Cnr Stafford St & Strathallan St | PO Box 560 | Timaru | New Zealand
ddi: 03 687 2735 | fax: 03 688 9913 |
email: wendy@southcanterbury.org.nz
 | website: www.southcanterbury.org.nz

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