nsw have your say

36
Search by postcode or suburb Search Search 1.Name Jon-Maree Baker 2.Organisation Namoi Water 3.Address PO BOX 548 NARRABRI NSW 2390 4.Email [email protected] 5.Stakeholder Group Aboriginal/cultural heritage Community member Environment Fishing/recreation ▶ Irrigator/commercial Local government/utilities Local landholder State/Australian Government Other 6.Please specify 7.Water Sharing Plan Adelong Creek Water Source Alstonville Plateau Groundwater Sources Apsley River Water Source Castlereagh River above Binnaway Water Source Commissioners Waters Water Source Coopers Creek Water Source Dorrigo Plateau Surface Water Source and Dorrigo Basalt Groundwater Source Gwydir Regulated River Water Source Hunter Regulated River Water Source Jilliby Jilliby Creek Water Source Kangaroo River Water Source Karuah River Water Source Kulnura Mangrove Mountain Groundwater Sources Lachlan Regulated River Water Source Macquarie and Cudgegong Regulated Rivers Water Source Mandagery Creek Water Source Murrumbidgee Regulated River Water Source New South Wales Murray and Lower Darling Regulated Rivers Water Sources Ourimbah Creek Water Source Phillips Creek, Mooki River, Quirindi Creek and Warrah Creek Water Sources Rocky Creek, Cobbadah, Upper Horton and Lower Horton Water Sources Stuarts Point Groundwater Source Tarcutta Creek Water Source Tenterfield Creek Water Source Tomago Tomaree Stockton Groundwater Sources Toorumbee Creek Water Source Upper Billabong Water Source All Topics

Upload: others

Post on 14-May-2022

1 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: NSW Have Your Say

Search by postcode or suburb SearchSearch

1.Name

Jon-Maree Baker

2.Organisation

Namoi Water

3.Address

PO BOX 548 NARRABRI NSW 2390

4.Email

[email protected]

5.Stakeholder Group

Aboriginal/cultural heritageCommunity memberEnvironmentFishing/recreation▶ Irrigator/commercialLocal government/utilitiesLocal landholderState/Australian GovernmentOther

6.Please specify

7.Water Sharing Plan

Adelong Creek Water SourceAlstonville Plateau Groundwater SourcesApsley River Water SourceCastlereagh River above Binnaway Water SourceCommissioners Waters Water SourceCoopers Creek Water SourceDorrigo Plateau Surface Water Source and Dorrigo Basalt Groundwater SourceGwydir Regulated River Water SourceHunter Regulated River Water SourceJilliby Jilliby Creek Water SourceKangaroo River Water SourceKaruah River Water SourceKulnura Mangrove Mountain Groundwater SourcesLachlan Regulated River Water SourceMacquarie and Cudgegong Regulated Rivers Water SourceMandagery Creek Water SourceMurrumbidgee Regulated River Water SourceNew South Wales Murray and Lower Darling Regulated Rivers Water SourcesOurimbah Creek Water SourcePhillips Creek, Mooki River, Quirindi Creek and Warrah Creek Water SourcesRocky Creek, Cobbadah, Upper Horton and Lower Horton Water SourcesStuarts Point Groundwater SourceTarcutta Creek Water SourceTenterfield Creek Water SourceTomago Tomaree Stockton Groundwater SourcesToorumbee Creek Water SourceUpper Billabong Water Source

All Topics

Page 2: NSW Have Your Say

Upper Brunswick River Water Source▶ Upper Namoi and Lower Namoi Regulated River Water SourcesWadella Creek Water SourceWybong Creek Water SourceMore than one relevant plan

8.Please specify all relevant plans

9.Submission to the Natural Resources Commission

10.Submission to the Office of Water

11.If you would like to upload a file please select one of the following

Submission to Natural Resources CommissionSubmission to Office of Water▶ Submission to both Natural Resources Commission and Office of Water

12.Please upload file to the Natural Resources Commission

13.Please upload second file to the Natural Resources Commission

14.Please upload third file to the Natural Resources Commission

15.Please upload file to the Office of Water

16.Please upload second file to the Office of Water

17.Please upload third file to the Office of Water

18.Please upload file to both the Natural Resources Commission andOffice of Water

http://engage.haveyoursay.nsw.gov.au/survey_tool/download_file/61132 (fileattached).

19.Please upload second file to both the Natural Resources Commissionand Office of Water

http://engage.haveyoursay.nsw.gov.au/survey_tool/download_file/61137 (fileattached).

20.Please upload third file to both the Natural Resources Commission andOffice of Water

21.Submissions relevant to the NRC's review will be made publiclyavailable on the NRC's website. If you wish to have your submission keptconfidential, please check this box.

Page 3: NSW Have Your Say

Supporting Sustainable Water Use in the Namoi Catchment

Namoi Water  

Submission to National Resources Commission and NSW Office of Water

Namoi Regulated Water Source Water Sharing Plan

February 2013

 

 

Namoi Water  

Chairman : Jono Phelps  

Executive Officer : Jon‐Maree Baker 

PO Box 548 Narrabri NSW 2390 

PH: 02 67925222  FX: 02 67925225  MB: 0488 925222 

EM : [email protected] WEB: www.namoiwater.com.au  

Page 4: NSW Have Your Say

P2  Namoi Water Submission to NSW Office Water : Draft Water Sharing Plan for the Namoi Regulated Water Sources 20.1.2013 

Introduction  

Namoi Water is the peak industry group for irrigated agriculture in the Peel, Upper Namoi and 

Lower Namoi Valleys in the North West of NSW. We are a non‐profit, non‐political organisation 

supporting  our  members  to  achieve  a  sustainable  irrigation  industry  that  meets  the 

environmental, economic and social needs of our  local communities. Namoi Water makes this 

submission on behalf of our membership collectively, however each member reserves the right 

to independent view and submission on any issues they deem relevant. 

We welcome  the opportunity  to provide  comment  to  the  review by  the National Resources 

Commission and NSW Office of Water on the Namoi Regulated Water Sharing plan.  The release 

of the final Regulated Water Sharing plan in 2004 was extremely disappointing for water access 

licence holders who had  invested enormous  time, effort and  financial  resources  in  the water 

reform  process  over  a  lengthy  period  of  time  to  see  Ministerial  changes  made  without 

consultation.   We seek this review process as an opportunity to highlight the impacts of these 

changes and to bring about a more relevant WSP supported by the community.  

We seek replacement of  the Namoi Regulated Water Sharing plan on  the basis of  the review 

criteria, we suggest there are a number of issues that need to be address and have listed those 

of highest priority in our submission.  In particular wording changes made to the final plan that 

did not reflect agreement reached by the river management committee resulted  in significant 

socio‐economic  impacts.    There  are  a  number  of  rules  that  could  be  rewritten  to  improve 

implementation, understanding and for simplicity of management.  

As part of the review process we seek an update to the State Water Management Outcomes 

Plan which  is now well overdue for  its 5 year review and update.   The SWOMP sets the over‐

arching  policy  context,  targets  and  strategic  outcomes  for  the  development,  conservation, 

management and control of the State’s water sources. In developing the 2004 Namoi Regulated 

Water Sharing Plan the SWOMP targets were included to provide a benchmark as to the valleys 

performance  in sustainable water resource management.   Regardless of the decision to either 

replace  or  extend  the water  sharing  plans  now  due  to  expire,  an  update  of  the  SWOMP  is 

urgently overdue. 

Page 5: NSW Have Your Say

P3  Namoi Water Submission to NSW Office Water : Draft Water Sharing Plan for the Namoi Regulated Water Sources 20.1.2013 

Assessments of socio‐economic impacts in the Namoi have been undertaken by Deloites Access 

Economics a copy of the final report “The Value of Water to the Namoi Catchment” is attached 

to this submission.   The report combines three models  (1) a water and  landuse model of the 

Namoi  Catchment;  (2)  a  Computable  General  Equilibrium  (CGE)  model  with  the  Namoi 

Catchment as a discrete region in the global economy and 3) a community level disaggregation 

resilience model.   Whilst  the purpose of  the  scenarios  run  for  this  report  is  to assess a drier 

climate scenario and the MDBA Basin Plan, the model can be rerun using scenarios to show the 

impact of the Water Sharing Plan in removing water from productive use via rule changes and 

reduced access.    

The accountability of environmental water provisions in the plan remains a key issue for water 

access  licence holders, with monitoring and reporting on the  linkage between flow provisions 

and  environmental  water  requirements  being  sought.  We  refer  to  the  National  Water 

Commission plan assessment as at 23rd  January 2012 which highlights a number of  issues  for 

consideration  in particular the monitoring of plan effectiveness  is not consistently reported  in 

publicly available documents.  Whilst some reports are available at this time including the Fish 

assemblages  and  spawning  in  the  northern  Murray  Darling  Basin,  of  which  we  noted  the 

concluding  statement  that  there  is  little  evidence  that  spawning  and  recruitment  of  fish  is 

related to river hydrology in the Namoi. Water users have long supported the management of 

invasive pest species that contribute significantly to the decline of river health.    

The department has two reports publicly available, the Environmental flow response and socio 

economic monitoring 2009 progress report and WSP Upper and Lower Namoi regulated rivers 

progress  report  2004‐2009.      The  Integrated Monitoring  and  Environmental  Flows  scientific 

program to assess ecological benefits has not resulted in publicly available information that we 

have  been  able  to  access.  As  per  the  above  reports  there  has  not  been  provision made  to 

directly  evaluate  the minimum  daily  end‐of‐system  flows  required  under  clause  15,  Namoi 

Water seeks  review of  this provision as  to  its environmental benefit  for  improved ecosystem 

function.  

 

Page 6: NSW Have Your Say

P4  Namoi Water Submission to NSW Office Water : Draft Water Sharing Plan for the Namoi Regulated Water Sources 20.1.2013 

Key Issues  

Water Year:  

The  change  to  move  the  water  year  to  a  financial  year  end  was  agreed  to  by  the  River 

Management committee on the basis that 150% be available for use in any one year. This was 

subsequently changed to 125% being available in any one year and 300% over 3 years without 

agreement by the committee.  The Namoi Irrigation area is predominantly focused on summer 

cropping program.   The bulk of  irrigation ends  in April, with  the current water year  irrigators 

will pump unused allocation into storage, it causes regulated water to be used rather than held 

in the most efficient storage at headwater dam, it results in reduction of low flow periods and 

results in unnecessary losses.  The 1 October to 30 September water year allows water users to 

more  efficiently manage  their  water  allocations  as  at  the  30th  September  they  know  their 

allocation and planting areas can be better planned.  

Accounting Rules :  

Account  limit  rules  for general  security access  licences have account  limits  set  that were not 

agreed to by the River Management committee, these rules can and have been an inhibitor to 

trade. It was agreed that collectively account limits should not total more than 200%, however 

the WSP rule was written in the context of the individual account limits could not be more than 

200% or  in  the account of High Security water 100%. This  subtle difference has  impacted on 

trade, whereas  the policy at  the  time of  the WSP and  through NWI principles  is  to promote 

trade so that water is available for transfer to the highest value use. 

 

Supplementary  Access:  Trigger  points  used  for  accessing  supplementary  events  are  being 

restricted by the interpretation of using volumetric and time for calculating access to the event 

where  it should  just be based on the volumetric calculation.   Namoi Water also requests that 

supplementary licences be granted in perpetuity.  

 

Page 7: NSW Have Your Say

P5  Namoi Water Submission to NSW Office Water : Draft Water Sharing Plan for the Namoi Regulated Water Sources 20.1.2013 

Supplementary Access Trigger Heights :   

The trigger heights for supplementary access need to be reviewed,  in particular the relevance 

of  the Narrabri  gauge  to  the  lower  section of  the  river  and  tributary  contributions  from  the 

below   this point. An example of the relevance of trigger points  is the Lower Pian   previously 

had a  trigger of 50 meg at Dundee or 20 meg at Waminda,  if  there were  flows  that weren’t 

regulated orders shared access was granted for the lower end of the system. Burren creek runs 

in as a tributary feeder as such can cause supplementary flow which is not able to be accessed 

as the trigger at Narrabri is not relevant.  

 

90:10 Rule :   

This rule is in place to limit supplementary access to 10% of a declared flow in the period 1st July 

till 31st October (4 months).   The purpose of this clause, which was  included  in the Minister’s 

plan  as  an  alteration  to  the  community  based  draft  plan,  has  never  been  clarified  to  those 

impacted by the plan.  We believe the public interest will be well served in repealing subsection 

(11)  (a)  and  extending  subsection  (11)  (b)  to  all  twelve  calendar months.   The  interests  of 

downstream users and the environment are well protected by the other clauses in section 49 of 

the water sharing plan.  

Section 49  subsection  (11)  (a)  clearly has a negative economic  impacts  in  the Namoi.  Other 

clauses  in section 49 protect downstream users and Namoi supports these measures, we seek 

review of the operation and  impacts of subsection  (11)  (a) the so called 90 / 10 rule. We are 

currently running a scenario through the Namoi Socio‐Economic Model to provide full detail on 

the broader  impacts of this rule on the valley.   We seek full  IQQM analysis of the scenario of 

50/50 during  the past 10 years  to show  the  impact of potential supplementary access during 

this time on environmental flow.   

 

 

Page 8: NSW Have Your Say

P6  Namoi Water Submission to NSW Office Water : Draft Water Sharing Plan for the Namoi Regulated Water Sources 20.1.2013 

End of System Flow :  

The insertion of the end of system flow was at the request of the Nature conservation council 

as a state wide requirement to meet 95 percentile flows in all rivers. The Namoi plan comments 

by  stating  that  this  flow  is  too  unusual  to model,  yet  this  flow  now  occurs  annually  in  the 

Namoi. The  flow has no stated environmental outcome and does not  represent good natural 

resource management. 

 

There  has  as  yet  to  be  examination  of  low  flow  requirements  in  the  Namoi  nor  have  key 

indicators been benchmarked. This request was made by Namoi Water at the beginning of the 

Water  Sharing  Plan  implementation  to  assess  the  above  and  other  planned  environmental 

water flow benefits for the system and to understand what could be considered best practice 

for natural resource management in the Namoi River system.  We request review of the end of 

system  flow  requirement and evidence of  linkages  to  the  improved environmental outcomes 

that result from this plan rule.  

 

 

Flood Plain Harvesting :  

Floodplain Harvesting  is  being  addressed  through  separate  policy  process  and  licencing  and 

validation is being undertaken now across the northern valleys.  Relevant to the WSP the issue 

of  CAP  is  crucial  to  the  licensing  of  floodplain  access  licence  being  conducted  in  a  fair  and 

reasonable manner that reflects the intent of the Water Sharing Plan for the Upper Namoi and 

Lower Namoi Regulated River Water Sources 2004.   

As  per  previous  meetings  with  NSW  Office  of  Water  there  is  agreement  that  the  Namoi 

regulated  plan makes  no  specific  recognition  of  the  floodplain  activity  and we  request  as  a 

matter of  review of  the water  sharing plan  that  schedule  F be updated  to  include  validated 

floodplain licensing in the Namoi in addition to the current CAP.    

Page 9: NSW Have Your Say

P7  Namoi Water Submission to NSW Office Water : Draft Water Sharing Plan for the Namoi Regulated Water Sources 20.1.2013 

 

Gunidgera Pian System :  

The  previous  plan  stated  that  during  the  life  of  the  plan,  extraction  components  should  be 

amended in accordance with the mandatory conditions on the access licences.  It further stated 

that the Minister should take into account the water distribution arrangements existing prior to 

the commencement of the Plan and any other relevant matters.  This matter is still unresolved 

and in the review of this plan this issue must be addressed in full consultation with water users 

impacted.  Capacity constraints are an ongoing issue in this system.  

 

 

North West Unregulated Flow Plan :   

The policy to manage extractions from unregulated flows in the Darling Basin for the purpose of 

maintaining supply to Broken Hill was implemented in the previous decade. The impact of this 

was the restriction or prohibition of extractions from unregulated flow anywhere  in the basin 

specifically  for  the water  supply  for  Broken  Hill.  Extractions were managed  until  there was 

sufficient water  in storage to guarantee supply  for a period of 21 months. The  impact of this 

was the banning of extractions on several occasions until the storages recovered to the extent 

that  Broken  Hill’s  supply was  considered  secure.  Restrictions were  imposed  and  the  policy 

managed  access  in  the Namoi Valley  to unregulated  flows.  The Namoi  is  still  subject  to  the 

provisions of the North West Flow Plan via the regulated Water Sharing Plan.   We seek review 

of  these rules  to coincide with alternative solutions  to  the  long  term supply of reliable water 

resource for the community of Broken Hill.  

 

 

 

Page 10: NSW Have Your Say

P8  Namoi Water Submission to NSW Office Water : Draft Water Sharing Plan for the Namoi Regulated Water Sources 20.1.2013 

Conclusion:  

The  review of  the Namoi Regulated Water Sharing Plan at  this  time  is essential, water users 

have waited 10 years to have addressed the many varied and clearly inefficient functions of the 

plan  as  a  result  of  the  re‐wording  and  changes made  post  community  approved  plan.    The 

process  of  review must  have  the  same  functionality  as  the  previous  process which  includes 

open  and  transparent  discussions  with  all  stakeholders,  we  seek  representation  on  the 

Interagency Regional Panels for water users and environmental representatives as a matter of 

priority and due process.   

As we move  forward  to  the 2019  implementation date of  the Murray Darling Basin Plan we 

have clearly supported how NSW and the subsequent departments responsible for water have 

progressed  water  reform  in  partnership  with  communities  and  water  users.  It  would  be 

disappointing after the dismal failure of the federal process and recent state unregulated water 

sharing plan process  to see  this  repeated.     There  is adjustment  required  to  the engagement 

and final approval process that is planned for these water sharing plans.  

 

Namoi Water looks forward to working with the NSW Government to review the water sharing 

plans  and  improve  the water  resource management  to  ensure  a  sustainable  future  for  our 

communities.  

 

 

 

 

Page 11: NSW Have Your Say

The value of water to

Namoi Catchment

Namoi Councils

31 May 2012

Page 12: NSW Have Your Say

The value of water to Namoi Catchment

Liability limited by a scheme approved under Professional Standards Legislation.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network

of member firms, each of which is a legally separate and independent entity.

Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and

its member firms.

© 2011 Deloitte Access Economics Pty Ltd

Contents Glossary ...........................................................................................................................................i

Executive Summary.........................................................................................................................i

1 Forecast drier future........................................................................................................... 1

2 Scenarios............................................................................................................................. 8

2.1 Rainfall only............................................................................................................................ 8

2.2 Climate change .................................................................................................................... 10

2.3 Policy only ............................................................................................................................ 12

2.4 Comparison of scenarios...................................................................................................... 15

2.5 Sensitivity analysis ............................................................................................................... 16

Limitation of our work..................................................................................................................... 18

Charts Chart 1.1 : Impacts on agricultural output.................................................................................... 3

Chart 1.2 : Flow on impacts to other industries............................................................................ 4

Chart 2.1 : Impact on agricultural production – rainfall only scenario ......................................... 9

Chart 2.2 : Impact on agricultural production – climate change scenario.................................. 11

Chart 2.3 : Impact on agricultural production – policy scenario................................................. 13

Chart 2.4 : Impact on value of agriculture from policy scenario – Wee Waa ............................. 15

Chart 2.5 : Impact on value of agriculture from policy scenario – Moonbi ................................ 15

Chart 2.6 : Real GRP impacts, compared to BAU ........................................................................ 16

Tables Table 1.1 : Forecast drier future water assumptions.................................................................... 1

Table 1.2 : Scenario results ........................................................................................................... 2

Table 1.3 : Impact on the value of output at the town level – forecast drier future.................... 7

Table 2.1 : Water assumptions of rainfall only scenario............................................................... 8

Table 2.2 : Results from rainfall only scenario .............................................................................. 9

Table 2.3 : Impact on agricultural production at the town level – rainfall only scenario ........... 10

Table 2.4 : Water assumptions of climate change scenario ....................................................... 10

Table 2.5 : Results from climate change scenario....................................................................... 11

Page 13: NSW Have Your Say

Deloitte Access Economics Commercial-in-confidence

Table 2.6 : Impact on agricultural production at the town level – climate change scenario...... 12

Table 2.7 : Water assumptions of policy only scenario............................................................... 12

Table 2.8 : Results from policy only scenario.............................................................................. 13

Table 2.9 : Impact on agricultural production at the town level – policy scenario..................... 14

Table 2.10 : Water assumptions of sensitivity one ..................................................................... 16

Table 2.11 : Water assumptions of sensitivity two ..................................................................... 16

Table 2.12 : Sensitivity analysis ................................................................................................... 17

Page 14: NSW Have Your Say

The value of water to Namoi Catchment

Liability limited by a scheme approved under Professional Standards Legislation.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its

network of member firms, each of which is a legally separate and independent entity.

Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited

and its member firms.

© 2011 Deloitte Access Economics Pty Ltd

Glossary Business as usual (BAU) – a scenario of ‘normal’ development, where the variable of

interest (in this case water) does not change from some pre-determined concept of normal

(such as no deviation from the present, or from long term averages). It is against this

scenario that other modelled scenarios are compared, with the difference in outcomes

referred to as an ‘impact’,

Computable General Equilibrium (CGE) – a modelling framework built on an established

body of economic theory in which accounting identities used by statistical agencies

(including the Australian Bureau of Statistics) are explicitly met, and where the actions of

any agent in the economy (for example, changes to government taxation policy) has either

direct or indirect flow on impacts to all other agents.

DAE-RGEM – Deloitte Access Economic regional CGE model.

Employment – The number of Full Time Equivalent (FTE) jobs in a region or sector.

GDP/GSP/GRP -– Gross Domestic Product, Gross State Product or Gross Regional Product

respectively - a commonly used measure of economic activity. One method for constructing

this measure is to take the sum of all value-add that occurs within the region of interest.

Government expenditure – in the same way that households consume goods and services,

the government in each region also consumes goods and services for the purpose of

supplying public goods through government expenditure. Within DAE-RGEM the

government sector represents a combination of all the levels of government from local

council to federal government.

Household/representative household – Most CGE models (including DAE-RGEM) use a

single household agent/unit in the model to represent the total activity of all households in

a region – a so-called representative household. In each year the representative household

earns income which is allocated in part to consumption of goods and services (for example,

accommodation services and food products), and in part to savings which are then used for

investment in capital goods.

Investment – Investment in the model refers to the creation of new physical capital, either

to replace old depreciated capital (for example, an old computer replaced by a new

computer) or to increase the total capital stock (for example, to increase the number of

computers in a business).

Labour supply – The count of the employed and the unemployed (but available for work)

population.

Real Wages – the wages received by employees adjusted for inflation.

Page 15: NSW Have Your Say

Deloitte Access Economics Commercial-in-confidence

Terms of Trade – a commonly used ratio measuring the difference between the price of a

region’s exports and the price of a region’s imports.

Value Added – the difference between the value of product sold in an industry and the

value of the intermediate inputs (that is, goods and services used for production) in an

industry. For example, if a factory purchases $10 of ingredients and produces $15 worth of

bread, the value added in providing the product is $5. Value added is distributed across

payments to the factors of production including labour, capital and land.

Page 16: NSW Have Your Say

i

Commercial-in-Confidence Deloitte Access Economics

Executive Summary This report presents the results of Deloitte Access Economics’ modelling of the economic

impacts of a drier future on the Namoi economy. The impacts of a drier future have been

modelled using three integrated models: (1) a water and landuse model of the Namoi

Catchment; (2) a Computable General Equilibrium (CGE) model with the Namoi Catchment

as a discrete region in the global economy and 3) a community level disaggregation

resilience model.

The water and landuse model determines the agricultural landuse and eventual agricultural

output of the Namoi Catchment under different water availability scenarios. Taking this

agricultural production data as an input, the CGE model estimates the effects of each water

availability scenario on the whole economy of the catchment, including the main economic

indicators of gross regional product (GRP), employment and wages. The community model

then disaggregates the catchment level results to the individual communities based on

their land and water use and industry profiles.

The following discussion presents the high level modelling results from several drier future

scenarios for the Namoi Catchment.

The value of water assessment reflects the combined outputs of the three models, when

used to model the effects of declining water availability in the Namoi Catchment. Key

results of this process are as follows:

• The best estimate water availability scenario is based on the proposed Murray Darling

Basin Plan, where rainfall is 0.4% lower by 2030 and there is 13.1% less water available

for irrigated agriculture (based on changes in allocations and entitlements). This

scenario leads to an average annual decline in agricultural production of $23.6 million

(in 2010 prices) by 2030, or 2% of the total value of agricultural production in the

Namoi Catchment.

• The losses are primarily experienced in irrigated agriculture (especially cotton) rather

than dryland agriculture. In the scenario, irrigated agriculture is affected by both

climate change (and its resulting effects on reduced allocations) and reduced

entitlements whereas dryland agriculture only experiences the impacts of reduced

rainfall from climate change.

• Overall, gross regional product in the catchment falls by $38 million, representing a fall

of 0.4%, and the economy supports almost 70 less jobs on a full time equivalent (FTE)

basis.

• For every additional dollar of agricultural production– of which approximately 60 cents

is value-added – Namoi’s GRP overall grows by $1.36. This is a value-added multiplier of

approximately 2.3. This means that, of the total value added to the economy of water

use in agriculture, 40% of it is realised in agriculture. The flow on effects of reduced

water availability is experienced across the wider economy, most notably in food

processing and construction.

• Of the two likely causes of reduced water in the future – climate change and the Basin

Plan – Namoi’s economy is more vulnerable to those relating to the Basin Plan, at least

out until 2030. Of course, any climate change is likely to continue to develop beyond

Page 17: NSW Have Your Say

ii

Commercial-in-Confidence Deloitte Access Economics

2030, in a way that is not modelled here. Similarly, the values associated with

environmental improvements from the Basin Plan are not modelled here.

• A scenario where climate change acts alone, without a policy based reduction in

entitlements, the losses are more modest. In this scenario, (with a 0.4% reduction in

rainfall and a 5% reduction in water allocations by 2030) agricultural production falls by

$5.2 million or 0.7%, while GRP falls by $12 million, or 0.1%. These losses are

experienced in both dryland and irrigated agriculture.

• A scenario where the only change is a reduction in irrigation entitlements of 8.5%, as a

consequence of the Basin Plan, leads to an $8.2 million or 1.1% loss in the value of

agricultural production and a loss in GRP of 22.1 million (0.2%). In this scenario, all

losses are experienced in irrigated agriculture. In fact, there is a slight gain to dryland

agricultural values, as more land is converted from irrigation to dryland.

• Far more economically destructive to the catchment than forecast climate change or

the Basin Plan would be a longer term continuation of the climatic conditions

experienced during the recent drought.

• The value of water – be it a millimetre of rainfall or a ML of irrigation water – varies

depending on how much water is already being used. At the margin (defined by long

term average conditions of 350 GL of water used and average catchment wide rainfall

of 578 mm), the following marginal values of water are observed:

• For each mm of rainfall lost to dryland agriculture, the size of the regional

economy declines by $519,000. (This is the value of rainfall to dryland

agriculture.) The link between rainfall and runoff, and hence allocations and

irrigated water use, ensures rainfall is even more valuable than this.

• For each ML of irrigation water lost the size of Namoi’s economy declines by

approximately $750.

• The value of water, and hence the impacts of less water, are not experienced uniformly

throughout the catchment. At a community level, the towns expected to be

proportionally hardest hit are either those that are most heavily dependent upon

irrigated agriculture (Wee Waa and Walgett), and/or lack the characteristics that allow

a community to be resilient to negative external change (Wee Waa, Walgett, Baradine

and Quirindi).

• Scenarios to adapt to this drier future have not been modelled here. Rather, the

modelling capacity to explore a wide range of adaptation responses has been provided

to Namoi Councils to assist in planning responses.

Deloitte Access Economics

Page 18: NSW Have Your Say

The value of water to Namoi Catchment

1

Commercial-in-Confidence Deloitte Access Economics

1 Forecast drier future Over the coming decades the Namoi Catchment’s economy is expected to be impacted by

both the effects of climate change and a reduction in irrigation entitlements held in the

region as a result of the Murray Darling Basin Plan. This section outlines the findings of

modelling on the economic impact on the region of the proposed Murray Darling Basin Plan

water buyback scenario.

Base case, or business as usual (BAU)

To model the impacts of a drier future, it is first necessary to develop a comparison ‘no

change’ world, against which the drier future scenario can be compared. This so called

‘Base Case’ scenario, models the future of the region without any changes to water

availability. In effect, this is a ‘business as usual’ water availability future for the Namoi

Catchment, where the climate does not change from long term averages and where there is

no reduction in entitlements out of the region. In other words, the volume of irrigated

water use does not decline. The economic outcomes of the water availability scenario are

then compared to the Base Case, with the differences called the ‘impact’ of less water.

Key assumptions of the historical baseline climate scenario for the Namoi Catchment are

summarised below:

• Average annual historical rainfall for the Namoi Catchment is 578 mm.

• The average variability in rainfall between years (coefficient of variation) is 27%.

• Average annual general security water allocations of 69% of total volume entitlement.

Forecast drier future scenario assumptions

The following assumptions were made in estimating the key water availability parameters

for the scenario:

Table 1.1: Forecast drier future water assumptions

Long term average 2019 2030Average annual rainfall mm 578 -0.2% -0.4%Average water extraction allocation volume 69% -2.5% -5.0%Total water extraction entitlements ML 497,000 -8.5% -8.5%Overall impacts on extractive water availability -10.8% -13.1%

Projections

Results

The impacts of reduced water from climate change and the purchase of an additional 2,750

GL/year for the environment on the key variables of the Namoi Catchment economy are

provided in Table 1.2.

By 2030, the value of agricultural production is modelled to decline by 2%, representing lost

agricultural production value of $23.6 million.

Page 19: NSW Have Your Say

The value of water to Namoi Catchment

2

Commercial-in-Confidence Deloitte Access Economics

After including the flow-on effects to the rest of Namoi’s economy, the reduction in water

availability resulting from the proposed Murray Darling Basin Plan causes a 0.4% decline in

real GRP, or a loss of $38.0 million from the regional economy. This reduction in production

corresponds to a decline in employment of approximately 60 full time employees in the

region, under normal labour market conditions.

The overall economic impacts of a drier future, especially the employment impacts, are

highly sensitive to assumptions around key labour market assumptions, particularly the

ability and willingness of workers of the Namoi Catchment to exit the labour force when

opportunities decline relative to elsewhere. The results identified above reflect a Namoi

labour market responding in a manner that has been calibrated on trends observed during

the recent drought. Impacts reported here will be magnified should the population

become more mobile than it was during the drought, and more people leave the region in

pursuit of relatively better economic opportunities elsewhere.

Table 1.2: Scenario results

Impact – compared to BAU 2020 2030

Value of agricultural production ($A,2010 prices) -$19.5 million -$23.6 million

Real GRP - % Change -0.4 -0.4

Employment - % Change -0.1 -0.1

Household cons - % Change -0.3 -0.3

Investment - % Change -0.4 -0.2

Govt. Exp - % Change -0.3 -0.3

Exports - % Change -1.0 -1.2

Imports - % Change -0.3 -0.3

Terms of Trade - % Change 0.2 0.3

Real wages - % Change -0.1 -0.1

Real GRP ($A, 2010 prices) -$26.0 million -$38.0 million

Real HH cons ($A, 2010 prices) -$12.1 million -$19.0 million

Employment (FTE) -49 -59

The higher relative fall in water allocation and entitlement volumes (than rainfall) sees

irrigated agriculture experiencing proportionately more of the impacts than dryland

agriculture. This is because, in the scenario, irrigated agriculture experiences the effects of

climate change (and its resulting effects on reduced allocations) and from reduced

entitlements, whereas dryland agriculture only experiences the impacts of reduced rainfall

from climate change. The relative effect of rainfall, climate change and policy on dryland

and irrigated agriculture is explored more in the next section.

The combination of reduced yields and land use substitutions sees the value of production

from cotton decline at an average annual rate of 8.7% by 2030 (compared to business as

usual). Falls in the value of production are also seen in other irrigation dependent

commodities such as vegetables (down 1.4%) and other fruits (down 2.0%).

Page 20: NSW Have Your Say

The value of water to Namoi Catchment

3

Commercial-in-Confidence Deloitte Access Economics

Chart 1.1: Impacts on agricultural output

-10.00 -8.00 -6.00 -4.00 -2.00 0.00 2.00

Other Cereals

Cotton

Other Broadacre

Livestock Dairy

Other Livestock

Vegetables

Grapes

Other Fruits

Hay Production

Other Agriculture

2020 2030

% change relative to BAU

The land that otherwise would have been used for irrigated agriculture – primarily cotton –

is transitioned into dryland crops such as other broadacre and other cereals.1 Even though

there is more land being used for dryland agriculture, there are small falls in the overall

value of dryland agriculture, because of the effect of lower yields from reduced rainfall. In

other words, even though the area of dryland agriculture goes up, the yield from that larger

area is lower.

Nevertheless, the higher relative fall in water allocation and entitlement volumes sees

irrigated agriculture experiencing proportionately far more of the impacts than dry land

agriculture. This is particularly true in the first five years, as irrigated agriculture suffers

most initially from the fall in water entitlements form the Basin Plan.

Flowing on from the direct shock to agriculture will be a decline in the value of output from

selected industries that source inputs directly from the local agricultural industry (dairy

products down 0.1% and processed food down 0.2%).

Construction provides a good representation of the general health of the region’s economy

as an increase in investment in physical assets reflects confidence in the local economy. By

2020, construction in the Namoi Catchment is expected to decline by 0.5%; however, as the

economy adjusts to the shock, and excess capital and labour are redeployed, the decline in

the value of construction output is expected to moderate to 0.3%.

Declines in other industries are primarily due to reduced expenditure in the region (from

lower employment and reduced farm incomes). This will be most important to service-

based industries such as finance and insurance, retail trade, recreation and government

services.

1 Refer to previous milestone reports for descriptions of each agricultural sector.

Page 21: NSW Have Your Say

The value of water to Namoi Catchment

4

Commercial-in-Confidence Deloitte Access Economics

The rise in manufacturing is likely due to the sector benefitting from the small fall in wages

in the region, as remaining businesses have a labour price advantage over competitors that

they otherwise do not have.

Chart 1.2: Flow on impacts to other industries

-0.5 -0.4 -0.3 -0.2 -0.1 0.0 0.1 0.2

Forestry

Fishing

Meat products

Vegetable oils and fats

Dairy products

Food products nec

Beverages and tob. products

Light Manufacturing

Manufacturing

Electricity

Construction

Trade

Transport

Communications

Finance and Insurance

Other Business Services

Recreation & Other Services

Govt Services

2020 2030

% change relative to BAU

Community level impacts

Table 1.3 provides a summary of the community level impacts of the forecast drier future

scenario. These include:

• the absolute $ impact to agriculture and the rest of the economy;

• the impact to agriculture (rest of economy) in terms of the size of each town’s

agriculture industry (economy);

• the impact to agriculture (rest of economy) in terms of the size of each town’s

agriculture industry (economy) adjusted for the relative vulnerability of each town; and

• the size of the agriculture industry in comparison to the rest of the economy.

Page 22: NSW Have Your Say

The value of water to Namoi Catchment

5

Commercial-in-Confidence Deloitte Access Economics

Impacts on agriculture

Across the catchment, Wee Waa, Walgett and Boggabri are expected to experience the

largest impacts to agriculture from the drier future scenario. This is because of two main

reasons:

• the agriculture industry dominates the local economy of these communities; plus

• they are expected to experience the largest decline in the value of agricultural

production (in terms of the size of their agriculture industry), because of the nature of

the irrigated production that occurs there.

For example, under this scenario the value of agricultural production in Wee Waa is

expected to decline by 5.8% (which is the strongest impact on any community in the Namoi

Catchment). This is particularly important given Wee Waa’s agricultural industry comprises

90% of the town’s economy.

Similarly, Boggabri’s agriculture industry represents over 20% of the region’s economy and

the drier future scenario results in a 1% decline in the value of agricultural output in the

community.

Walgett’s agriculture industry accounts for 40% of the community’s economy.

Consequently, the 0.3% decline in the value of agriculture will still result in noticeable

impact on the community’s economy.

There are, however, two notable exceptions to this general trend – Narrabri and Curlewis.

The impact of a 3.8% decline in the value of agriculture in Narrabri will be less significant

than, for example Wee Waa, as agriculture only (directly) accounts for 5.4% of Narrabri’s

economy.

While the agriculture industry accounts for almost 40% of Curlewis’ local economy, the

dominance of dryland agriculture ensures this community’s agriculture industry will fare

relatively well in the forecast drier future scenario.

Impacts on the rest of the economy

The flow-on impacts to the wider economy of reduced water availability are determined by

each town’s industry structure. While a town in the region may not be heavily dependent

on agriculture, it may be reliant on downstream agribusiness – such as food processing,

dairy processing and vegetable oils and fats – or expenditure from farmers in the

catchment more broadly.

Towns in close proximity to Tamworth (Nemingha, Kootingal, Kingswood, Moonbi, Attunga

and Bendemeer) experience declining economic activity despite minimal overall impacts on

their agricultural industries. This is primarily due to their dependence on service-based

industries that rely on total expenditure in the region such as business, recreation and

government services.

This is particularly evident for Tamworth itself. As the business and retail centre of the

Namoi Catchment, Tamworth is expected to experience a relatively larger share of the

decline in downstream industries – such as retail trade, recreation services and government

services – despite the minimal direct impact on the community’s agriculture industry.

Page 23: NSW Have Your Say

The value of water to Namoi Catchment

6

Commercial-in-Confidence Deloitte Access Economics

While the size of Narrabri’s agriculture industry is relatively small in comparison to some

communities in the catchment, the local economy is heavily dependent on agribusinesses

such as agriculture related R&D (private and government) enterprises and business services

that directly support agriculture (agronomists, accountants, farm management, livestock

officers, etc). This dependence on farm expenditure will exacerbate the 3.8% decline in the

value of agriculture beyond this one industry.

Vulnerability adjusted impacts

Vulnerability adjusted impacts present the expected community level impacts accounting

for each town’s resilience characteristics such as level of education, mining prospects,

general labour market opportunities, income levels, Indigenous status and distance to large

urban centres (see Appendix A for more details).

Communities with relatively low levels of resilience are expected to experience a larger

share of the impact than the mechanical disaggregation would suggest (as they are unable

to adapt and respond to the shock from less water). Tamworth is the most resilient

community in the catchment while Walgett and Barraba are the least resilient.

The resilient characteristics of Tamworth’s population and economy ensure the community

will experience a smaller impact than expected. In fact, after adjusting for the degree of

vulnerability, Tamworth shifts from being one of the communities most affected by

reduced water availability to a community that experiences a medium impact from reduced

water availability. In contrast, Quirindi is expected to see local economic activity decline by

more than what its industry profile would suggest.

Page 24: NSW Have Your Say

The value of water to Namoi Catchment

7

Commercial-in-Confidence Deloitte Access Economics

Table 1.3: Impact on the value of output at the town level – forecast drier future

Impact to ($,000):

Impact as a share of industry/

economy (%)

Impact as a share of industry/ economy, adjusted for relative

vulnerability (%)

Agriculture’s share of

economy (a)

Ag Economy Ag Economy Ag Economy

Attunga (L) -1 -637 -0.01 -0.21 -0.01 -0.20 3.4% Baradine (L) 22 -816 0.27 -0.27 0.27 -0.32 2.8% Barraba 267 -379 0.59 -0.19 0.61 -0.24 22.6% Bendemeer (L) -4 -398 -0.06 -0.19 -0.10 -0.20 3.6% Boggabri (L) -330 -201 -1.06 -0.13 -1.18 -0.17 20.8% Curlewis (L) -14 -356 -0.02 -0.18 -0.02 -0.20 37.5% Gunnedah -600 -3,163 -1.07 -0.20 -0.98 -0.21 3.6% Kingswood (L) 7 -1,542 0.05 -0.22 -0.01 -0.21 2.0% Kootingal 1 -1,204 0.02 -0.22 0.01 -0.21 0.7% Manilla -1 -762 0.00 -0.21 0.00 -0.24 10.8% Moonbi (L) -3 -849 -0.04 -0.23 -0.05 -0.21 2.1% Narrabri -2,379 -2,671 -3.83 -0.23 -3.52 -0.24 5.4% Nemingha (L) 0 -859 2.13 -0.22 2.24 -0.21 0.0% Nundle (L) -1 -331 0.00 -0.22 0.00 -0.24 14.3% Quirindi 8 -1,220 0.01 -0.21 0.01 -0.25 14.3% Tamworth -4 -15,807 -0.03 -0.23 -0.03 -0.22 0.2% Walgett -232 -511 -0.32 -0.28 -0.36 -0.35 39.6% Wee Waa -12,099 -587 -5.83 -0.25 -5.92 -0.30 90.0% Werris Creek 2 -552 0.01 -0.19 0.01 -0.18 5.3%

Note: Ag: agriculture; (a) Agriculture industry’s share of total economic output in each community (based on

mechanical disaggregation); coloured cells represent 5 largest impacts in each column.

Page 25: NSW Have Your Say

The value of water to Namoi Catchment

8

Commercial-in-Confidence Deloitte Access Economics

2 Scenarios This section decomposes the forecast drier future scenario into its components, namely:

• rainfall;

• climate change; and

• government policy (proposed Murray Darling Basin Plan).

A comparison of the scenarios is then provided to highlight the relative effect of each

scenario on the Namoi Catchment’s economy. The impact of the proposed Murray Darling

Basin Plan is larger than the other scenarios modelled because it is this scenario that, by far,

represents the biggest cut in water availability to the catchment (8.5% cut in water

available for irrigation). This is despite an increase in production of dryland agriculture.

The next most costly scenario is the water available to the Namoi Catchment under climate

change conditions. This consists of both a reduction in rainfall and a reduction in allocation

rates (with an overall reduction in water available for irrigation of 2.5% by 2019 and 5.0%

by 2030).

Finally, the rainfall only scenario is used to illustrate the decline in the value of agriculture

expected in the region following a 0.2% reduction in average rainfall. This scenario will

predominantly impact dryland agricultural production.

2.1 Rainfall only

The following assumptions were made in estimating the key water availability parameters

for the rainfall only scenario:

Table 2.4: Water assumptions of rainfall only scenario

Long term average 2019 2030Average annual rainfall mm 578 -0.2% -0.4%Average water extraction allocation volume 69% 0.0% 0.0%Total water extraction entitlements ML 497,000 0.0% 0.0%Overall impacts on extractive water availability 0.0% 0.0%

Projections

The impacts of reduced water from rainfall are provided in Table 2.5.

By 2030 the value of agricultural production is modelled to decline by less than 0.03%

which represents a loss in value of $0.9 million.

Page 26: NSW Have Your Say

The value of water to Namoi Catchment

9

Commercial-in-Confidence Deloitte Access Economics

Table 2.5: Results from rainfall only scenario

Impact – compared to BAU 2020 2030

Value of irrigated agricultural production ($A, 2010 prices) -$37,000 -$68,000

Value of dryland agricultural production ($A, 2010 prices) -$341,000 -$812,000

Value of total agricultural production ($A, 2010 prices) -$378,000 -$880,000

Real GRP ($A, 2010 prices) -$0.4 million -$1.2 million

The reduction in rainfall will have the greatest impact on dryland agricultural production –

particularly hay, other cereals, other broadacre and other livestock (see Chart 2.3).

However water intensive agricultural industries such as cotton and other fruits will also

experience a decline in the value of production as a result of less water.

Chart 2.3: Impact on agricultural production – rainfall only scenario

-0.25 -0.20 -0.15 -0.10 -0.05 0.00 0.05

Other Cereals

Cotton

Other Broadacre

Livestock Dairy

Other Livestock

Vegetables

Grapes

Other Fruits

Hay Production

Other Agriculture

2020 2030

% change relative to BAU

At the community level the communities most affected by reduced rainfall are those with

sizeable dryland agricultural production: Walgett, Curlewis, Barraba, Werris Creek and

Quirindi.

Wee Waa is expected to experience the largest absolute share of the impact at the

catchment level (approximately $125,000), but this represents less than 0.06% of the value

of agriculture in the community. This decline is primarily driven by Wee Waa’s other

cereals, other livestock and other broadacre sectors. However, the reduced rainfall will

also reduce the value of the region’s cotton production.

Accounting for almost 30% of the catchment’s decline in the value of broadacre production

and 20% of the decline in the value of production in other cereals it is unsurprising that

Walgett is expected to experience the largest impact in terms of the share of total value of

agriculture.

Page 27: NSW Have Your Say

The value of water to Namoi Catchment

10

Commercial-in-Confidence Deloitte Access Economics

The $100,000 decline in agricultural production in Quirindi and $110,000 decline in Curlewis

are due to the communities’ other cereals and other livestock sectors. While this is a small

decline, the impact is felt relatively harder in these two communities due to the relatively

small size of their agriculture industry (than, for example, Wee Waa or Boggabri).

The declining value of Werris Creek’s other cereals production accounts for the relatively

stronger impact of reduced rainfall on this town (0.14% decline in the value of agricultural

production).

Table 2.6: Impact on agricultural production at the town level – rainfall only scenario

Impacts Total ($,000) Share of

Agriculture Total (%) Attunga (L) -10 -0.10 Baradine (L) -7 -0.08 Barraba -64 -0.14 Bendemeer (L) -4 -0.05 Boggabri (L) -35 -0.11 Curlewis (L) -112 -0.15 Gunnedah -65 -0.12 Kingswood (L) -15 -0.11 Kootingal -1 -0.03 Manilla -29 -0.07 Moonbi (L) -5 -0.06 Narrabri -37 -0.06 Nemingha (L) 1 6.39 Nundle (L) -15 -0.07 Quirindi -102 -0.12 Tamworth -1 -0.01 Walgett -106 -0.15 Wee Waa -126 -0.06 Werris Creek -22 -0.14

2.2 Climate change

The following assumptions were made in estimating the key water availability parameters

for the climate change scenario:

Table 2.7: Water assumptions of climate change scenario

Long term average 2019 2030Average annual rainfall mm 578 -0.2% -0.4%Average water extraction allocation volume 69% -2.5% -5.0%Total water extraction entitlements ML 497,000Overall impacts on extractive water availability -2.5% -5.0%

Projections

Page 28: NSW Have Your Say

The value of water to Namoi Catchment

11

Commercial-in-Confidence Deloitte Access Economics

The impacts of reduced water from climate change are provided in Table 2.8.

By 2030 the value of agricultural production is modelled to decline by approximately 0.7%

which represents a loss in value of $5.2 million.

After including the flow-on effects to the rest of the Namoi Catchment’s economy, the

reduction in water from climate change (rainfall and allocation volumes) results in a 0.1%

decline in real GRP, or a loss of $12.0 million from the regional economy.

Table 2.8: Results from climate change scenario

Impact – compared to BAU 2020 2030

Value of irrigated agricultural production ($A, 2010 prices) -$2.4 million -$4.4 million

Value of dryland agricultural production ($A, 2010 prices) -$0.3 million -$0.7 million

Value of total agricultural production ($A, 2010 prices) -$2.6 million -$5.2 million

Real GRP ($A, 2010 prices) -$5.0 million -$12.0 million

While the rainfall scenario primarily affected dryland cropping and grazing, the climate

change scenario also affects the amount of water available for irrigation through the

reduction in allocation volume. This can be seen in Chart 2.4. Cotton, as the region’s

biggest water user, experiences the largest decline in the value of production but there is

also a decline in production values across some dryland sectors such as other cereals and

other livestock.

Chart 2.4: Impact on agricultural production – climate change scenario

-3.00 -2.50 -2.00 -1.50 -1.00 -0.50 0.00 0.50

Other Cereals

Cotton

Other Broadacre

Livestock Dairy

Other Livestock

Vegetables

Grapes

Other Fruits

Hay Production

Other Agriculture

2020 2030

% change relative to BAU

At the community level, communities with a large proportion of cotton production are the

hardest hit – particularly Wee Waa, Narrabri, Walgett, Gunnedah and Boggabri. Wee Waa

alone accounts for almost 80% of the catchment’s decline in the value of cotton production

under the climate change scenario.

Page 29: NSW Have Your Say

The value of water to Namoi Catchment

12

Commercial-in-Confidence Deloitte Access Economics

Walgett, Gunnedah and Boggabri also experience declines in the value of production from

other cereals – these three communities represent over one third of the catchment-wide

decline in other cereals.

Table 2.9: Impact on agricultural production at the town level – climate change scenario

Impacts Total ($,000) Share of

Agriculture Total (%) Attunga (L) -9 -0.09 Baradine (L) -1 -0.01 Barraba 30 0.07 Bendemeer (L) -3 -0.03 Boggabri (L) -98 -0.31 Curlewis (L) -77 -0.10 Gunnedah -208 -0.37 Kingswood (L) -7 -0.05 Kootingal -1 -0.03 Manilla -23 -0.06 Moonbi (L) -4 -0.05 Narrabri -644 -1.04 Nemingha (L) 0 1.64 Nundle (L) -12 -0.05 Quirindi -73 -0.09 Tamworth -4 -0.04 Walgett -140 -0.19 Wee Waa -3,699 -1.78 Werris Creek -14 -0.09

2.3 Policy only

The following assumptions were made in estimating the key water availability parameters

for the policy only scenario:

Table 2.10: Water assumptions of policy only scenario

Long term average 2019 2030Average annual rainfall mm 578 0.0% 0.0%Average water extraction allocation volume 69% 0.0% 0.0%Total water extraction entitlements ML 497,000 -8.5% -8.5%Overall impacts on extractive water availability -8.5% -8.5%

Projections

The policy only scenario represents an 8.5% cut in entitlements in the Namoi Catchment as

a result of the proposed Murray Darling Basin Plan. This scenario shifts production out of

irrigated agriculture and into dryland production as the cost of water increases. However,

the increase in the value of dryland production is insufficient to cover the loss from

irrigated agriculture. As Table 2.11 summarises, the value of agricultural production in the

catchment is expected to decline by $8.2 million by 2030 under this scenario.

Page 30: NSW Have Your Say

The value of water to Namoi Catchment

13

Commercial-in-Confidence Deloitte Access Economics

The results also illustrate the responsiveness of the agricultural industry versus the wider

economy to a shock. The largest impact to the agricultural sector is felt soon after the

policy comes into effect (2020), but by 2030 the sector has begun to adjust and the size of

the impact moderates. On the other hand, the wider economy takes time to adjust –

particularly the capital stock – and this is reflected in the larger impact on real GRP in 2030

than 2020.

Table 2.11: Results from policy only scenario

Impact – compared to BAU 2020 2030

Value of irrigated agricultural production ($A, 2010 prices) -$9.0 million -$8.4 million

Value of dryland agricultural production ($A, 2010 prices) $0.2 million $0.2 million

Value of total agricultural production ($A, 2010 prices) -$8.7 million -$8.2 million

Real GRP ($A, 2010 prices) -$18.6 million -$22.1 million

The cut to entitlements affects irrigation-intensive industries such as cotton, vegetables and

fruits. The shift towards dryland cropping is reflected in the increase in other broadacre,

other cereals and hay production.

Chart 2.5: Impact on agricultural production – policy scenario

-6.00 -5.00 -4.00 -3.00 -2.00 -1.00 0.00 1.00 2.00

Other Cereals

Cotton

Other Broadacre

Livestock Dairy

Other Livestock

Vegetables

Grapes

Other Fruits

Hay Production

Other Agriculture

2020 2030

% change relative to BAU

At the community level, irrigation dependent communities such as Wee Waa, Narrabri,

Gunnedah and Boggabri will experience the largest declines in the value of agricultural

production. Within the agricultural industry in these communities, dryland crops and

grazing will increase in production value but not enough to mitigate the decline in irrigated

agriculture.

The policy scenario is expected to result in a 3.5% decline in agricultural production in

Werris Creek and a 2.5% decline in Narrabri.

Page 31: NSW Have Your Say

The value of water to Namoi Catchment

14

Commercial-in-Confidence Deloitte Access Economics

Taking advantage of increases in available land and water, dryland dominant communities

such as Barraba, Quirindi and Curlewis will see the value of production improve under the

policy scenario.

While the value of agricultural production in Walgett is expected to decline by 0.1% this

masks the change in landuses within the community – the value of cotton production will

decline by $180,000 but $100,000 of this is offset by increases in the value of other cereals,

other broadacre, hay and other livestock.

Table 2.12: Impact on agricultural production at the town level – policy scenario

Impacts Total ($,000) Share of

Agriculture Total (%) Attunga (L) 5 0.0 Baradine (L) 19 0.2 Barraba 218 0.5 Bendemeer (L) 2 0.0 Boggabri (L) -218 -0.7 Curlewis (L) 38 0.1 Gunnedah -355 -0.6 Kingswood (L) 18 0.1 Kootingal 1 0.0 Manilla 14 0.0 Moonbi (L) 2 0.0 Narrabri -1,541 -2.5 Nemingha (L) 0 -0.7 Nundle (L) 7 0.0 Quirindi 57 0.1 Tamworth -2 0.0 Walgett -89 -0.1 Wee Waa -7,189 -3.5 Werris Creek 10 0.1

To illustrate the diversity of the effect of the policy scenario across communities in the

Namoi Catchment Chart 2.6 and Chart 2.7 provide the impact on the value of agriculture in

Wee Waa and Moonbi. As the table above shows, Wee Waa will experience a decline in the

value of agriculture while Moonbi will experience a slight increase in the value of

agriculture.

Wee Waa’s decline of over $7 million (or 3.5% of the total value of agricultural production)

is almost entirely driven by a shock to the irrigation intensive cotton sector. This decline

represents almost three-quarters of the decline in cotton at the whole of catchment level.

While Moonbi’s vegetable sector will decline under the policy scenario, this will be more

than offset by rising production values in other livestock, other broadacre and hay.

Page 32: NSW Have Your Say

The value of water to Namoi Catchment

15

Commercial-in-Confidence Deloitte Access Economics

Chart 2.6: Impact on value of agriculture from policy

scenario – Wee Waa

-$8,000 -$6,000 -$4,000 -$2,000 $0

Other Cereals

Cotton

Other Broad Acre

Hay Production

Livestock Dairy

Other Livestock

Vegetables

Grapes

Other Fruits

Other Agriculture

($,000)

Chart 2.7: Impact on value of agriculture from policy

scenario – Moonbi

-$6 -$4 -$2 $0 $2 $4

Other Cereals

Cotton

Other Broad Acre

Hay Production

Livestock Dairy

Other Livestock

Vegetables

Grapes

Other Fruits

Other Agriculture

($,000)

2.4 Comparison of scenarios

As illustrated in Chart 2.8, the timing of the impact of the policy scenario is non-linear while

the rainfall and climate change scenarios have relatively linear impacts. As a consequence,

the forecast drier future scenario (which combines the impacts of climate change with the

proposed Murray Darling Basin plan impacts) is non-linear in its impacts.

Real GRP impacts are greatest under the policy scenario, although the impacts moderate

beyond 2020 as landuse becomes more optimised to the drier conditions and the economy

adjusts. Conversely, the rainfall and climate change impacts are more gradual; however,

despite the linear loss in water over time in these scenarios, the impacts accelerate slightly

reflecting the increased cost of each unit of water lost over time.

Page 33: NSW Have Your Say

The value of water to Namoi Catchment

16

Commercial-in-Confidence Deloitte Access Economics

Chart 2.8: Real GRP impacts, compared to BAU

2.5 Sensitivity analysis

The impact of the water availability scenarios is expected to be non-linear, in terms of costs

per unit of water lost. That is, the impacts of a 20% decline in water available for irrigation

are more than double the impacts of a 10% decline. This occurs both in:

• agriculture, where the least efficient water uses are assumed to go first, meaning that

the cost of each additional unit of water lost is greater as more water is lost; and

• the broader economy, where the flow-on impacts from a decline in agriculture become

harder to adjust to as the decline increases in magnitude.

In other words, the multiplier effect on the rest of the economy from each dollar of

production lost in agriculture becomes larger as the losses become larger.

The following assumptions were made in estimating the key water availability parameters

for the two sensitivity analyses:

Table 2.13: Water assumptions of sensitivity one

Long term average 2019 2030Average annual rainfall mm 578 -0.7% -1.6%Average water extraction allocation volume 69% -43.2% -52.4%Total water extraction entitlements ML 497,000Overall impacts on extractive water availability -43.2% -52.4%

Projections

Table 2.14: Water assumptions of sensitivity two

Long term average 2019 2030Average annual rainfall mm 578 -0.7% -1.6%Average water extraction allocation volume 69% -21.6% -26.2%Total water extraction entitlements ML 497,000Overall impacts on extractive water availability -21.6% -26.2%

Page 34: NSW Have Your Say

The value of water to Namoi Catchment

17

Commercial-in-Confidence Deloitte Access Economics

As shown in Table 2.15, doubling the cut to water available for irrigation – from a 26.2% cut

to a 52.4% cut – by 2030 more than doubled the reduction in both the value of agricultural

production and GRP.

Table 2.15: Sensitivity analysis

Impact – compared to BAU 2020 2030

Sensitivity One:

Value of irrigated agricultural production ($A, 2010 prices) -$64.4 million -$80.7 million

Value of dryland agricultural production ($A, 2010 prices) $0.1 million -$0.1 million

Value of total agricultural production ($A, 2010 prices) -$63.7 million -$80.8 million

Real GRP ($A, 2010 prices) -$131.8 million -$195.4 million

Sensitivity Two:

Value of irrigated agricultural production ($A, 2010 prices) -$28.1 million -$34.6 million

Value of dryland agricultural production ($A, 2010 prices) -$0.4 million -$1.4 million

Value of total agricultural production ($A, 2010 prices) -$28.5 million -$36.0 million

Real GRP ($A, 2010 prices) -$60.0 million -$87.6 million

Page 35: NSW Have Your Say

Limitation of our work

General use restriction

This report is prepared solely for the internal use of Namoi Councils. This report is not intended to and should not be used or relied upon by anyone else and we accept no duty of care to any other person or entity. You should not refer to or use our name or the advice for any other purpose.

Page 36: NSW Have Your Say

Contact us

Deloitte Access Economics

ACN: 49 633 116

Level 1

9 Sydney Avenue

Barton ACT 2600

PO Box 6334

Kingston ACT 2604 Australia

Tel: +61 2 6175 2000

Fax: +61 2 6175 2001

www.deloitte.com/au/economics

Deloitte Access Economics is Australia’s pre-

eminent economics advisory practice and a

member of Deloitte's global economics

group. The Directors and staff of Access

Economics joined Deloitte in early 2011.

Deloitte refers to one or more of Deloitte Touche

Tohmatsu Limited, a UK private company limited

by guarantee, and its network of member firms,

each of which is a legally separate and

independent entity. Please see

www.deloitte.com/au/about for a detailed

description of the legal structure of Deloitte

Touche Tohmatsu Limited and its member firms.

About Deloitte

Deloitte provides audit, tax, consulting, and

financial advisory services to public and private

clients spanning multiple industries. With a

globally connected network of member firms in

more than 150 countries, Deloitte brings world-

class capabilities and deep local expertise to help

clients succeed wherever they operate. Deloitte's

approximately 170,000 professionals are

committed to becoming the standard of

excellence.

About Deloitte Australia

In Australia, the member firm is the Australian

partnership of Deloitte Touche Tohmatsu. As one

of Australia’s leading professional services firms.

Deloitte Touche Tohmatsu and its affiliates provide

audit, tax, consulting, and financial advisory

services through approximately 5,400 people

across the country. Focused on the creation of

value and growth, and known as an employer of

choice for innovative human resources programs,

we are dedicated to helping our clients and our

people excel. For more information, please visit

our web site at www.deloitte.com.au.

Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Touche Tohmatsu Limited

© 2011 Deloitte Access Economics Pty Ltd