Waimea Dam: Do we really need 30% for Environmental Flow?

Details
10 November 2014
by MHRA

More thoughts on the Waimea Dam funding: extracts from a submission to Tasman District Council by Dr. Christopher R. Bennett, who has spent some time delving into the economic reports on the dam funding proposals. Chris says:

From the material I have reviewed it appears that the proposed funding model for the Lee Valley Dam is predicated on a several key decisions which result in a larger, more expensive dam than is required. These decisions have been made on what seem to be sound technical and environmental advice, but have been made in isolation from: (i) the ability and willingness to pay by those expected to fund the dam; and, (ii) the economic and social benefits arising from the decisions.

Chris is suggesting that TDC should:

  • undertake a study for ratepayer support for the project - thus determine affordability - and finally adjust he dam's design accordingly
  • reduce the design flow for 'environmental capacity' which would substantially reduce the cost of the dam
  • improve the management of water rights for future and potentially existing users

He points out that the dam is generally a good idea but the design and funding models need to be improved:

The 2014 NZIER economic analysis makes it clear that there are major economic benefits to all of TDC from the proposed dam. If the dam is not constructed it is estimated that: "The Nelson-Tasman economy would be smaller by $17.5 million and $33.3 million as water allocations cuts increase from 20% to 35%." All ratepayers need to recognise that they indirectly benefit from the economic vitality of the Waimea water users through the economic activity that they generate, the jobs created, and the taxes and rates that they pay. The proposed funding model reflects this, by having charges to the direct and indirect beneficiaries.

Here are his thoughts on the 'environmental flow' component of the dam's cost which is the main factor leading to the planned general rates increase:

The current funding model sees 30% of the cost assigned to ‘Environmental Capacity’. This is required to increase the flows in the lower Waimea from 800 litres/second to 1100 litres/second to enhance the habitat. However, the available information shows:

  • A minimum flow in the lower Waimea of 800 litres/second—outside of a year of extreme drought—will be met 98.6% of the time.
  • This 800 litres/second limit is sufficient to meet the needs of native fisheries, and 80% of the requirements for brown trout which are the habitat design species for the dam.
  • The increase from 800 to 1100 litres/second for the purposes of the dam design yields only a marginal ecological benefit and this accrues primarily to enhance the brown trout fishery.
  • This marginal benefit comes at a cost of 30% of the cost of the dam, or some $21 million.
  • It has proved impossible to quantify any economic benefits from investing $21 million in this increased capacity.

Adopting a design flow of 800 litres/second would reduce the dam cost and eliminate the district wide rate increase for environmental capacity.

On the allocation of available water, Chris concludes:

Given that there will be a need for TDC ratepayers to provide financial support to the dam, the TDC should also adopt the most economically efficient model for allocating the benefits that arise from such a support. This can best be achieved by creating a water market with a fully tradeable water permit system. All new allocations should be provided using a market based open tender system. Existing permits should be transitioned to such a model over a reasonable period of time.

Read Chris' full submission here.

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