Granite Belt Irrigation Project

Background

The Granite Belt Irrigation Project comprises the building of the Emu Swamp Dam.  The proposed location of Emu Swamp dam is approximately 15 km south-west of Stanthorpe on the Severn River and it has a planned capacity of 12,074 ML that would provide an annual nominal entitlement of 3,900 ML that is 90% reliable. The project also included a 117 km network of pipelines to deliver the water to irrigation properties, primarily above the dam site. It was expected that the dam would service both pre-existing high value crops such as apples as well as an expansion in output.

Before construction of the dam and irrigation scheme could commence a number of preconditions needed to be met, including the securing a large portion of the required water allocation from the Queensland Government, at both an appropriate price and with a suitable level of long-term certainty.

Our role

NineSquared assisted the project proponent in assessing both the form of the water allocation and its price. The analysis examined the impact on project risks of different forms of the water allocation and different water allocation prices. This involved a desktop-analysis of benchmark water allocation prices in the region and an analysis of the factors that impact on these prices. Factors considered included how the value of water is impacted by the potential customers existing water distribution infrastructure and crops, the volume of water traded and available for trade, prevailing weather conditions. This assessment concluded that the traded water prices were not suitable benchmarks for the price of water to be charged to supply a new dam. We also looked at the relative merits of difference contracting frameworks including long term licences and water allocations. This analysis suggested that without long term licences represented a risk to the project funding because there was some uncertainty over whether the water would be available in the long term and therefore the dam was subject to regulatory uncertainty in addition to other project risks such as demand.

The analysis assisted the proponent understand the impacts of alternate forms of water allocation and prices on the project’s risks, which informed the proponent’s negotiations with the Queensland Government’s water allocation regulator.

Download