Governance, Funding, Design, Socio-Economic Impacts

Water Enhancement ProjectsFriday Forum #814 March 2008

Terry Heiler

INVESTMENT IN CONTEXT

• Investment Opportunity

• 400,000 ha on the books

• Annual contribution to GDP -- $2 billion ++

• This is 1.6 percent of GDP

• NZ’s Comparative Advantage

DEFINING WATER ENHANCEMENT PROJECTS

• needs a community of interest

• multi purpose but dominated by irrigation

• large scale water infrastructure

• costs high -- private capital needed

• high social and environmental impacts

WHO IS INTERESTED AND WHY ?

• 10 large proposals on the go

• Central to Wairarapa

• 400,000 ha

• investigations to date $6 million

• off farm costs $2,000 million

• on farm costs $1,500 million

• changing agricultural industry

WHY ARE THESE INVESTMENTS DIFFERENT ?

• High up-front capital requirements

• Long-term -- inter-generational in time scale

• limited customer base

• high social and economic impact

• need access to private land

• large RMA and user coordination issues

DEVELOPMENT PATHWAYS

• Genesis and Initial Planning

• Pre-feasibility and Feasibility

• Resource consents

• Marketing, Pre-sale and Funding

• Final design and Implementation

• Operation and Maintenance

BIG ISSUES FOR PROMOTERS

• Resource Quantification

• Funding the Early Stages

• Governance Structures

• Funding Models

• Sources of Funding

• Resource Consents

• Land Access

MAF-SPONSORED STUDIES

• Corporate and Financial Structures

• Equity and Funding Options

• Role of Central Government

• Role of Local Government

• International Experiences

• Socio-Economic Impacts

CONCLUDING REMARKS

• The strong interest in large-scale water enhancement projects is a reality

• Development of proposals has identified common problems

• The current policy environment may not be promoter or investor-friendly

• Interventions are called for

“ (do we)..attempt to cast reality into the mould of policy

or do we do the opposite…..policy must match

reality…”

ANY QUESTIONS?