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Re-plumbing irrigation in the Murray Darling Basin; an analysis of five years of Australian Government investment Richard McLoughlin

Murray Darling Basin Plan

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Re-plumbing irrigation in the Murray Darling Basin; an analysis of five years of Australian Government investment Richard McLoughlin. Murray Darling Basin Plan. The Government has committed to implementing the Murray Darling Basin Plan on time and in full. - PowerPoint PPT Presentation

Text of Murray Darling Basin Plan

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Re-plumbing irrigation in the Murray Darling Basin; an analysis of five years of Australian Government investmentRichard McLoughlin

1The Government has committed to implementing the Murray Darling Basin Plan on time and in full.

This includes the commitment to bridge the gap by recovering 2750 GL LTAAY of water for the environment.

Murray Darling Basin Plan2On time and in full = 2,750GL by 30 June 2019

At end April 2014, we had recovered around 70% of the 2,750GL.Sustainable Rural Water Use and Infrastructure Program

The Governments vehicle for water recovery.

Over $10 billion

Water savings are recovered for the environment in order to bridge the gap to the sustainable diversion limits under the Murray Darling Basin Plan through three main components:

Three components: Irrigation infrastructure projects; Water purchase and Supply measures

Water reform has been ongoing government priority dating back to 2007.

Infrastructure biggest component (~$6b), followed by water purchase (~$3b) and supply measures (~$1b)

SRWUIP infrastructure program aims to achieve positive outcomes for industry, communities and the environment. It provides direct employment and environmental benefits to regional areas.

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Table predicts remaining water recovery effort in the Basin.

Based on projections of future water recovery from future infrastructure investment and supply measures.

Point out that performance of supply measures (Green) will dictate the size of the remaining recovery (Red) zone.

Supply measures based on default apportionment outlined in the IGA on Implementing Water Reform in the MDB.5SRWUIP Infrastructure

The majority of rural water infrastructure funds have been committed to projects in the Murray-Darling Basin for improving the operation of off-farm delivery systems and helping irrigators improve on-farm water use efficiency.

Water savings are shared between the Australian Government for environmental use and irrigators for consumptive use, supporting increased productivity and economic activity in regional communities.SRWUIP facts at end of March 2014

Approx 98% total funding committed to known programs or projects, ~80% of which is currently under contract. Of funding currently committed, 93% has been committed to activities in the MDB, of which around 88% relates to infrastructure upgrades.

The Government has committed to achieving at least 600GL from infrastructure under SRWUIP.

Key focus on MDB infrastructure, but some very significant activities outside of this

Infrastructure outside of Basin $140m to support more efficient irrigation in Tasmania $40m for system upgrades in the Harvey and Gascoyne Irrigation areas of WA

Non-infrastructure: Over 80% of water entitlements in MDB irrigation are now covered by irrigation system modernisation plans funded under SRWUIP Assessment of risks and opportunities for groundwater extraction in the Qld coal-seam gas industry. $100m Economic diversification program for local communities, which is managed by the Department of Regional Development CSIRO sustainable yields studies to predict future water trends in Tas and Southwest WA

6SRWUIP Infrastructure

SRWUIP Infrastructure

State Priority Projects (up to $3.2b)Other commitmentsinclude:State led projectsCommonwealth led projectsVictoria $1,103mSouth Australia $420mQueensland $160mNew South Wales $708mAustralian Capital Territory $85mNSW Private Irrigation Infrastructure Operators ProgramSouth Australia Private Irrigation Infrastructure Program Strengthening Basin Communities On-Farm Irrigation Efficiency $450mIrrigation in Tasmania SPPs agreed 7

8Designing rural water infrastructure programsConsultation with industry has helped ground programs in local/industry experience

Programs like NSW Private Irrigation Infrastructure Operators Program (PIIOP) see locally-driven design for major system refurbishmentFit for purpose and meeting local needsDesign built on good planningSound technical underpinningProperly costedCompetent project managementPositive cost benefit

Industry input into design very important to ensure uptake. OFIEP example: Industry used Round 1 to test waters, more interest from different delivery partners in Round 2, then Rounds 3 and 4 have been significantly over-subscribed at the application phase.

Use PIIOP example: undergo IMPA, then Hotspots, then use this info to apply for funding under PIIOP.

3 activities funded under SRWUIP to ensure high-quality proposals and successful project implementation.

Fit-for purpose etc are key investment considerations for Cwth. This is the role of due diligence assessment to ensure that project investments represent value for money.

9Types of Infrastructure ProjectsPlanning, investigations and project designWorks on irrigation systems off farm - modernisation and rationalisationWorks on farm to improve water use efficiencyWorks to improve ecological health and restore natural flows Water saving municipal projects e.g. storm water harvesting

Ecological health: Works in SA Riverland wetlands and in the Coorong-Lower Lakes Region.

Municipal projects: SBC water planning and infrastructure works. 70% of local government authorities in the MDB have been involved in the Program.

Quite successful.10Who are delivering the projects?State government departments e.g. water, primary industry, environmentIrrigation infrastructure operators Irrigation industry associationsIndustry commodity bodiese.g. rice-growers, tomato growersIndividual irrigatorsCatchment management (resource management) authorities Local government Water utilitiesCSIRO (sustainable yields studies)

Commonwealth utilise local delivery partners to deliver projects. Local knowledge and improved engagement with local community.

DPs responsible for coordinating individual irrigators and consolidating water for the Commonwealth. Reduces transaction costs associated with water conveyancing.

Very rare that we work with individual irrigators. Generally only occurs in Queensland where water holdings of individual irrigators are generally much larger. 11Upgrading irrigation systems off farmWorks to improve efficiency and timeliness of irrigation water delivery , e.g.Fixing/replacing leaky old systemsLining channels or replacing channels with pipesAutomation to improve water deliveryMetering upgrades to meet modern efficiency standardsReconfiguring and rationalising channel systems and farm off-takes

Examples:Vic Goulburn-Murray Connections ProgramNSW Private Irrigation Infrastructure Operators Program

NVIRP stats

2000km redundant channel rationalised, Water delivery times to be reduced from up to a week to near on-demand expected to achieve system efficiency of around 88%, right up there for channel distribution systems.12Upgrading Irrigation Systems On farm Works on farm to deliver and use water more efficiently and increasing productivity, e.g.Improving on farm storage and tail water recirculation systemInstalling pipes and risersInstalling drip irrigation systems and centre pivot irrigation as an alternative to the traditional flood irrigation

Examples:On-Farm Irrigation Efficiency Program in the Southern BasinVictorian Farm Modernisation Program QLD Water Use Efficiency ProgramNSW Pilot - Farm Modernisation in Gwydir & Border Rivers

OFIEP a flagship Commonwealth infrastructure program.

Strong industry demand. Initially $300m over 3 rounds, recently announced another $150m in Round Four.

Overall market multiple of around 2.30 over life of the project.

Led by the Commonwealth. Key difference to Vic farm mod project.

Risk reward scenario. Full control over project assessment and can achieve better outcomes, but incurs considerably greater costs.

13Benefits from irrigation infrastructure investmentCommunity/industry support for irrigation infrastructure investment programs is generally strongcreates jobs during roll-outunderpins long-term viability and economic sustainability of irrigation industry and regional communities.

Completed projects have demonstrated improved productivity benefits:increased crop rotation abilityreduced labour costsincreased crop water use efficiencies improved soil management reduced maintenancereduced weed control requirementsfarmers share of water savings available for productionMajority of SRWUIP funding under contract, and some early projects have been completed.

Currently ramping up the monitoring and evaluation framework

Early findings.

Also evidence to date that actual water savings for some projects have been greater than expected, the benefit of which is retained by irrigators.Monitoring and Evaluation NSW PIIOP exampleRegular contact with grantees to discuss progress and issuesMilestone payments with evidence of completion of works and audited financial reportsFinancial reviews to ensure contract complianceWorkplace Health and Safety reviews to ensure implementation of legislated requirementsVisits by department staff to view worksAssisting grantees to provide detailed information on the programs key performance indicators Departmental staff are in regular contact with each of the grantees and also visit projects to view construction works

Every milestone payment involves evidence of progress with the project and particularly tender documentation and certificates of practical completion

Every milestone report must have an independently audited expenditure report. Final payments require an independent audit of all payments; and additional independent audits of any payments to farmers

Independent financial experts conduct a review of each grantees compliance with the financial requirements of the contract during the projects implementation

Independent WHS experts conduct a review of the systems in place for compliance with the relevant WHS legislation, and review how well those systems are actually implemented, with any issues identified used to strengthen compliance

The final project report for each project will address the PIIOP key performance indicators among other things, and departmental staff are working with grantees on the KPI outcomes as projects near completion

Analysis of SRWUIP investment in Centre PivotsStatePivots fundedAverage Area Irrigated (Ha)Total Area Irrigated (Ha)Capital Cost (GST excl)Cost/Ha IrrigatedQld HHW969618$1,574,388$2,546NSW PIIOP955499$1,858,640$3,722Vic Farm Mod1351667$2,650,155$3,973OFIEP Rd 135501,760$5,555,172$3,157OFIEP Rd 264452,892$9,791,606$3,386Total130506,437$21,429,911$3,329Initial analysis of 130 centre pivot irrigators funded under SRWUIP.In general, costs decrease with increased area under irrigation. Qld HHWVic Farm ModAverage cost per hectare irrigated (RED DOT) fits well with majority of pivots funded under SRWUIP.

Costs generally consistent between projects, but can see considerable variation of cost within projects.

Vic Farm Mod example. 20Ha difference in area under irrigation, but larger irrigator costs almost one third more per Ha. Bucks general trend.

Closely watching outliers!Liebich Estates PIIPSA Wine grape and citrus in the SA Riverland

Included upgrades to existing infrastructure, new pumps, automation and soil monitoring

On-farm water use reduced from 10ML/Ha to 6ML/Ha.

Replaced existing irrigation mainline, installed new, variable speed pumps, converted 46Ha of crop from overhead sprinkler to drip irrigation, and installed probes to better monitor soil moisture.

Project benefits include 15% increase to crop production, reduced pumping costs through off-peak watering, and reduced carbon footprint through reduced diesel consumption.

Saving 4ML/Ha. After returning water to the Commonwealth as a condition of project investment, there is still around 2ML/Ha available that was previously not able to be used.18Trangie-Nevertire Irrigation SchemeIrrigation cooperative in NSW Macquarie River catchment

Targeted whole of system approach to channel distribution system and on-farm water loss.

Returned water savings to the Commonwealth of nearly 30GL.

Reduced boom or bust extremes of water supply

Works involved channel lining, channel rationalisation, system automation, improved telemetry and real-time metering, and installation of stock and domestic pipelines for every landholder in the cooperative.

The channel lining material was a durable rubber (EPDM) used to line dams in USA and Europe, but interestingly the Trangie order is apparently the largest order that the company has ever received.

Before the project, the cooperative reduced water losses through block watering to all customers at the same time, which meant that the same crops were grown by each farmer. The new system allows for watering on demand, which provides greater opportunity for crop diversification.19Lachlan Catchment Management Authority

Regional delivery partner coordinating irrigators around Parkes NSW

Implemented a water storage and reuse scheme utilising lateral move irrigators

Reduced water use by 3.7ML/Ha

Enables consistent production level and increased financial sustainability

One of the early adopters under SRWUIP. On-farm Pilot, rounds 1 and 2 of the OFIEP.

Capturing water for re-use has reduced soil saturation, reduced runoff into local waterways.

Different business decision by individual irrigator. Mixed venture farming; half cropping, half beef cattle. Rather than increase irrigated production with water savings, savings used as security for dry years.

Designed to maximise capacity for production in dry periods or years with low water allocation.

20Where to next?Release of the Water Recovery Strategy

Government priority for future recovery of water through infrastructure investment.

Work with Basin States to develop proposed projects, such as environmental works and measures, that can deliver Basin Plan environmental outcomes with less water, thus leaving more water available for consumptive use. Government has committed to achieving at least 600GL of the 2,750GL from infrastructure under SRWUIP.

At end March, we have project agreements in place to return 543GL to the Commonwealth towards this target.

For future project commitments not yet in contract, is a case of maximising bang for buck. Aim to maximise water savings and targeting areas that still require water recovery.

Every extra ML saved through infrastructure investment is one that does not have to be purchased from irrigators.

21Questions & Discussion

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