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Mrs Liz
Lambert introduced the item, outlining the purpose of the report in informing
the decision making processes around the Ruataniwha Water Storage Scheme.
Mr Andrew
Newman, HBRIC Ltd CE, advised that the initial Butcher report was prepared
during the 2012 RWSS feasibility phase, and the farming landuse and
profitability input data for the updated assessment were provided to Mr
Butcher by Macfarlane Rural Business, Baker Ag and AgFirst Hastings, with the
AgFirst Hastings data having been reviewed by industry.
Mr Geoff
Butcher, Butcher Partners Ltd, introduced himself and outlined examples of
the ten other economic impact studies he developed for irrigation schemes,
including Opuha and two ex-post projects which achieved the results expected
from the impacts studies prepared before the projects started.
Queries and discussions covered:
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it was confirmed that this item is being audio
recorded by Councillor Belford and by HBRC
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logic for farmer includes – enables
wider range of land uses and reduces risks of farming under current landuses,
potential to make any given land use more profitable, range of market and
non-market costs and benefits, look at the difference in profitability
between irrigated and not irrigated
·
wider logic of irrigation - financial
viability not necessarily indicator of this being an efficient use of
resources, how it’s funded, were there subsidies, and social, economic
and environmental impacts
·
logic for the community beyond the farm gate –
expansion of employment opportunities, larger economy expands range of activities
and choices for all residents – expansion of economic activity in other
industries may also have benefits
·
difference between impacts and benefits
– cost and benefits include market and non market values included in a
financial Net Present Value calculation (Cost Benefit Analysis) while impacts
are not a financial measure and can indicate an
additional benefits in imperfect communities or regions, particularly where
there is Unemployment, Community Decline or slow growth
·
impacts need to be put into context of all
other costs and benefits
·
when unemployment is measured against growth, the
measurement should also address what the unemployment rate would be if the
economic growth had not been provided – to accurately reflect any corresponding
trend
·
economic models and multipliers – matrix
showing relationships between industries, base model
·
economic impacts calculated include
employment, earned household income and value added
·
Land use mix and proportions sensitivity tested
by industry members – figures provided by the experts were used in the
model, as ‘placeholders’ in a sense, as if the mix is different
the end result will be the same within +/- 5%
·
Commercial analysis - Farm budgets are a
commercial analysis from the farmer perspective – need to be modified
to reflect individual farm / farmer circumstance - farmer needs to weigh up
production benefits against the costs of obtaining water to the farm-gate
(included in farm budgets @ $0.27 / m3) and the additional on-farm capital
investment
·
Cost Benefit Analysis - ignores the
opportunity costs of water (i.e. value in other uses) - Ignores other social,
recreational & environmental costs and benefits - Impact Analysis adds some information
Cr Barker left the meeting at 10.57am
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impacts of on-farm and off-farm construction
– dam construction spread over 3 years and on farm will occur over a
period of 12 years leading up to 100% uptake
·
full benefits will be realised once 100%
uptake has been achieved
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processing costs from different types of land
use vary, i.e. sheep and beef finishing versus pipfruit orchards
Councillor Barker rejoined the meeting
at 11.04am
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uncertainties include individual farm budgets,
where inputs will be purchased, land use mix, where outputs will be
processed, value added, and spare capacity, particularly employment
Councillor Beaven left the meeting at
11.05am
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benefits include asset returned to community
ownership after 70 years, to potentially offset rates
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uptake of 40M m3 to be contracted
before scheme gets go-ahead
Councillor Beaven rejoined the meeting
at 11.10am
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expects that uptake will reach 60% within 3
years
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farm budgets prepared by ‘experts’
who have prepared thousands of budgets over time and huge databases of how
farms have performed over time, and have professional reputations to consider
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underlying land use assumptions and related profitability
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even least profitable land uses will still be
profitable, and change will be driven by farmers switching to more profitable
land uses
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both ex-post projects have had much better
returns and higher employment benefits than expected or projected
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forecasting uptake assumptions used were the
same as those provided to Council in the financial model 2015
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increases in costs of building the dam and
on-farm infrastructure misses the point, as it is an increase of inward capital
investment for the Region
Councillor Barker left the meeting at
11.42am
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community led schemes and how those are able
to proceed, or barriers to that scenario being successfully initiated
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two aspects to the project are the RWSS
infrastructure and the farming project
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increased profits are achievable by other
means than investment, such as productivity improvements, however
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mitigation measures are included in the total
project costs now, including a 35 year biodiversity/ecology enhancement
package, which were not included in initial cost estimates for the project
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