The Mangatarere Stream, in the foothills of the Tararua Range, is one of five sites across the Wairarapa under consideration to be dammed to irrigate circa 40,000 hectares of land in the Wairarapa plain. The plan is being sold as having both pecuniary and environmental advantages but at this stage there are serious questions yet to be answered on its financial viability, who will pay for it (theoretically farmers but highly likely to include ratepayers), effects of loss of water flow in rivers, and the impact of fertiliser runoff from intensive dairy farming into waterways. This meeting at the Carterton Events Centre 24 February 2015 offers a valuable insight into the Wairarapa Water Use Project (WWUP) which includes the involvement of many Wairarapa organisations with an interest in the project but excludes residents of the Mangatarere Valley who may lose their homes and who have organised the Dam Free Mangatarere Valley Trust. (A video of the meeting is also available here.
Mike Bennett – Mike and Jenny Bennett have lived in the Mangatarere Valley for 25 years. If the Mangatarere dam goes ahead their home will be taken under the Public Works Act and their property flooded.
Michael Bassett-Foss – Project Director for the Wairarapa Water Use Project (WWUP), an investigation of the viability of establishing one or more schemes to provide water for irrigation and other uses in Wairarapa. WWUP is sponsored by the Greater Wellington Regional Council and the Ministry for Primary Industries.
Peter Fraser – economist with Ropere Consulting, specializing in micro-economics analysis.
Dr Mike Joy – senior lecturer in Ecology and Environmental Science at Massey University. He researches and teaches freshwater ecology, especially freshwater fish ecology and distribution, ecological modelling bioassessment and environmental science.
Good Evening, my name is Michael Woodcock. I’m the chairperson for Dam Free Mangaterere Society. It is us who have invited you here this evening. Welcome, it’s great to see such a good turnout. I was thinking call a meeting and they will come so thank you for arriving.
I have some apologies tonight from regional councillors Sue Kedgely and Chris Laidlaw and MPs Marama Fox and Alaistar Scott. Also from Don Farmer from the Times Age. I’d like to acknowledge Carterton’s Mayor here this evening along with some councillors and appreciate you coming.
As many of you know, there is a proposal currently being sponsored by the Greater Wellington Regional Council and the Ministry for Primary Industries under the umbrella of Wairarapa Water Use Project to create an irrigation scheme capable of irrigating up to an additional 32,000 hectares of land in this region.
In order to do that, it is proposed to dam up to five sites to store and distribute the water from. Basically an arc swinging up and around the valley from the Mangatarere up to Te Mara across to Tividale and around and down to White Rock.
As mentioned, one of those sites, possibly a front runner, is the Mangatarere Stream. Our group has been established with the sole aim of trying to stop any dam for any purpose on the stream. The purpose for tonight is to inform, to make sure the debate is far more public, and to continue to build a momentum towards a decision which means a dam on the Mangatarere will not go ahead.
We want to ensure the social and environmental impacts of such a plan are fully understood. As a group we believe that as the wider community becomes aware of the social and environmental impact, but also the economic cost of such a scheme – that the likelihood that those costs will either directly or indirectly fall on rate payers – will mean the scheme’s viability will be questioned and ultimately abandoned.
We challenge terms like “harvesting water” and the other created delusion of “safeguarding the river with minimum flows”, spin which is meant to give us the sense of the river being looked after, that water in flood and winter high flows are a waste, and the cycle of ebb and flow for millennia is a fault in nature and that a dam will fix it.
We do not accept that the Public Works Act should be used to take the properties of home owners in the valley, nor should it be used to ensure that the piping system that will be required to transport the water to end users can be forced on to the properties of others. Using the Public Works Act effectively says that the loss of one group of people is outweighed by the gain of those who take.
Mangatarere’s true value lies in its ability to not only sustain itself but also the multitude of indigenous and introduced life within and around it. The free flowing stream or river sustains humans not just because our bodies need the water but equally so our souls.
So if you came tonight thinking an evening with four Michaels was the launch of a new boy band, I’m sorry to disappoint. We have four speakers this evening. Let me welcome and introduce them in the order in which they will be speaking. First will be Mike Bennett. Mike and his partner Jenny have lived in the valley for 25 years. Their house will be under water at the top end of the lake if the dam is built. Mike and Jenny, by sheer necessity, have become extremely knowledgeable on all matters to do with irrigation schemes and the facts of the Wairarapa proposal to date.
Michael Bassett Foss is the Project Manager for the Wairarapa Water Use Project team. Peter Fraser is an Economist specializing in micro-economics analysis. His ability to crunch the numbers has been influential with similar proposals such as the Ruataniwha and Waimea schemes.
Dr Mike Joy is a Senior Lecturer in ecology and environmental science at Massy University, a fresh water scientist of standing and a champion for new Zealand waterways.
Tonights format. Very shortly we will hear from our four speakers. Each speaker will have 15 minutes to present. I will give us all a two minute break midway for a stretch or a chat. Then we will resume with the two remaining speakers.
Once Mike Joy has presented I will open up the floor for any questions you may have to any of the speakers and I am comfortable with a short debate between the speakers if the question or answer warrants it.
I also want to acknowledge the Mangaterere Restoration Society and the work they are doing. They accepted our offer to put up a display tonight but they have asked me to make it clear that as an incorporated society they are neutral on the matter of a dam on the Mangatarere. If you are interested in joining DFM, there are joining forms on the table over there and if you are able to contribute a gold coin donation towards tonight’s cost that would be much appreciated.
Just before we begin, I realize that there are different views here tonight about the pros and cons of irrigation, and pros and cons of a dam on the Mangatarere if it was to go ahead. I do ask you to treat each speaker with respect, that we get to hear them through what they want to present tonight and at question time treat each person with the courtesy we would expect of ourselves. So I invite Mike Bennett to start.
Hello all, I’m Mike Bennett and thank you for coming. What a fantastic turnout. Good to see you here. I’m just going to start with a quick overview of life in the valley, and the residents and their point of view. Now, I just need to stress that like every community there is a complete range of views across the whole spectrum, those for and those against, even in our own small community, and I acknowledge that.
There is one thing that is common to all and that is that we are all under the gun for this and it has been going on for a very long time with a long time to go. With that, I will start and then I will also move on to a vision of what the dam will do to the river as it passes Carterton.
We need to take a serious look at the way this irrigation project is proposing to treat our water resources which are a shared community resource. Like many people, I am appalled at seeing changes that have happened just over my lifetime to New Zealand’s waterways. The time that I have spent walking in rivers and exploring, there has been a serious lack of debate and discussion around how this irrigation scheme has been structured, hence tonight’s meeting, and the decisions that have been made about this scheme.
Within our local community, there has been a decision made that irrigating the bulk of the valley is a good idea. There has been a decision made that daming some of our rivers and siphoning off much of the water for irrigation is just the way to do it. There has been a decision made that using mechanisms like the Public Works Act to forceably take the land and resources required to do this is also a good idea.
How were these decisions arrived at? Were you included in that decision making? I want to do a very quick straw poll. Everyone here who feels that they have been part of that process, or involved in the making of these decisions, pop your hands up (few, if any, hands go up).
So looking at life in the valley as it is, Mangatarere residents have been walloped with the fact that their own community is prepared to take their property, force them to leave. The reason for this is that some people see this as a cheap option to benefit themselves.
They don’t want to use up any of their own precious land to build water storage. They are prepared to take someone else’s. For the two and a half years since we were informed of the plan to take our homes, we have been trying to get some representation on the project. This has been denied and we are banned from observing any meetings or attending any meetings.
At the same time, White Water New Zealand, Federated Farmers, Irrigation New Zealand, Fish & Game and so forth get to speak on our behalf at these groups but we have no voice there.
The residents have been given a single community meeting run by a hired community facilitator – that’s over two and a half years so far. This was one of the most disheartening things I’ve seen, where people were made to raise their hand to speak, just like at primary school. It is like living through the Christchurch earthquake, only very slowly, day in, day out. Like Christchurch, when the shaking finally stops our homes may be gone.
We’ve been encouraged to contact WWUP staff who are just paid employees with no mandate if we have any questions at all. From them we get one of two things in general. We either get ignored or answers that are copy and pastes from the website media releases.
We’ve never been approached or spoken too by any of the principles or decision makers – those that are planning to take our properties because that’s deemed a good idea. That is apart from a single visit from [Greater Wellington Regional Council Chair] Fran Wilde to our own back in 2013. A couple of things were discussed but that meeting has produced nothing tangible since. I could go on but I will leave the residents there for now and move on to the valley and river.
So the right hand photo is of the Opuha Dam very recently in South Canterbury. Very similar sort of irrigation scheme. And it should gives us indication of what the valley will look like. So I don’t think it will be that suitable for boating or recreation as is being suggested to us.
According to WWUP it is a place and a river that can be sacrificed in the name of producing more money. According to WWUP it is a water resource that is going to waste. I’ve seen in media releases and other sources, the irrigation project being promoted to the wider community as providing new roads, recreation, fishing and so on.
These benefits, as such, have nothing to do with irrigation. They are a community bribe to sweeten the deal. The providing of these dubious benefits will also require the taking of land.
So what is the Mangatarere? This is a view of the upper Mangatarere, the valley itself we are talking about. So its sizeable and a well established community. I’ve marked in with red arrows the existing homes and residences. I’ve also marked the extent of the reservoir which actually covers eight of those residences.
It is a river in two parts. The upper section is mostly regrown native bush. It was farmed 30 or 40 years ago and since then it has been left to regrow except for a single farm that’s still in the valley. And even that farm is quite well riparian planted and the river is reasonably well protected.
So there is very little [human] impact with what is living there now and the residents over the years have done a lot of work over the decades to help restore the health of the valley. This section of the river is documented in the Regional Council’s report as being of pristine water quality, even now. And the voluntary water quality testing work that I have helped with seems to confirm that at this stage.
It is also the main spawning route for the Ruamahanga River brown trout fishery. And we have both resident and migratory introduced and native species that require fast flowing clean water. Daming the mouth of this valley is going to destroy that.
The second part of the Mangatarere is the lower part. As it leaves the gorge, moves out on to the plains, most of the river moves through farmland. And it is also an important part of the Carterton sewage scheme as it moves on down past Carterton.
So for these reasons alone it needs as much flow as possible to be maintained. And I have to acknowledge the Mangatarere Restoration Society for the great work that they are doing in the lower part of the Mangatarere.
At the three bridges where water has been monitored for quite a few years the river is currently classed in the worst 25 percent of all new Zealand rivers for nitrogen, and dissolved reactive phosphorous, and it is in the lower 50 percent for bacteria eccoli. That’s approximately 10 kilometres from where it leaves the gorge and it’s pristine, to where it’s in New Zealand’s worst 50 percent.
This is just a brief overview of the project itself. Some of the key points: The area where it is to be irrigated, according to the documents I’ve read is 44 to 57 thousand hectares. That seems to change quite a bit as time goes by. Not quite sure how that is going to end out.
The scheme is for five dams. The reports that have been produced by consultants and the reports that have been signed off by the Leadership Group and those in charge are for five dams, even if there are only a couple being talked about at the moment.
So, the Wairarapa fault. In 1855 this fault ruptured, moved 18 metres further horizontally and displaced five metres vertically. It ruptured the surface for 150 kilometres. There are also other faults maped in the area as well. Durig the Eketahuna earthquake a few months ago the ground of the underlying rock vibrated, certainly at our place, for a while, then there was a single large lurch sideways and then back.
So if you can extrapolate from that and think of a five and a half kilometres long pond with 30 million tons of water in it, sloshing against a wet earth dam which has just experienced a period of vibration and liquefaction, this 30 million tons of water will be sitting only 10 kilometres from Carterton and 160 vertical metres above it.
We are going to have a quick look at the dam site itself. This view is looking downstream. The dam wall will be 60 metre high. To fill the dam, the blue line is the natural flow of the dam. I’ve picked a fairly average flow for the river. This is 2008. The orange line is the irrigation take and that is from WWUP’s demand model. The yellow line is what is left to flow down the river through the dam. The yellow line for most of it represents 160 litres a second. .16 cubic metres a second.
And the photo at the bottom was taken right at the measuring gauge when the river was flowing at 160 cubic metres a second. So that is the residual flow out of the dam which it will be for much of the year. The orange line represents 55 percent of the total volume of water from that watershed being siphoned off to irrigation.
The yellow line is what is left in the river. When the dam is full, during late winter when there is heavy rainfall it may go over the top. That’s where the yellow line extends up and matches the natural flows.
How is this water going to get distributed? Well according to the WWUP reports the maximum speed they are aiming for in the pipes is 1.8 metres per second. The demand modelling shows a maximum need for 619,000 cubic metres of water a day.
The maths is very simple. For an ideal pipe the maximum speed with no friction you come up with 2.25 metre diamond pipe. Add a bit to allow for friction and so forth and a three metre pipe is reasonable. That’s what is depicted in this large circle, to give you a sense of scale.
Now you might be able to see by Jenny’s knees a small red circle. If we apply the same formula to a 160 litres a second, that is about what size pipe we would be talking about. So that pipe will move something like seven cubic metres a second.
So how is this going to be moved? How is it going to be spread over the plains, either by pipes, canals or water races, but they will all have to be something like this size. And where will they go? I’ve got four of the five dams on here with the intended irrigated areas marked. The water is going to have to be moved from the start of those arrows where the dams are, to those irrigated areas using canals, pipes races of those sorts of sizes, so property is that going to be going over?
Are you being involved in this planning? Are you aware of this? Are you having any input into it? And will the Public Works Act possibly be used with you to put some of this infrastructure in place as well.
So I am just going to leave you with a couple of slides with some reasons why we think the dam should be stopped. And as you can see from the graph, I have a particular dislike of these claims of these irrigation schemes improving river flows.
Okay, if I’ve got 30 more seconds, I will just pop back to that graph because there was one thing I missed. The improved river flows occur where the yellow line is above the blue line. And I’ve tried to [point to] those with the three red arrows – just a few days of the year. Thank you for your time. Thank you for listening.
Michael Bassett Foss
Good evening everybody. Thank you very much for the opportunity to speak tonight. I understand that some of you have some concerns and questions, so I’m here tonight to listen to those concerns, to provide information, and where possible to answer the questions.
But also to try and get some direction on where we can resolve issues and concerns, and there were certainly some concerns in that last presentation. I do have one more apology and that’s from Bob Francis who is Chair of the Wairarapa Water Use Project Governance Group. He had a prior commitment and couldn’t make it tonight.
So I will briefly go over some of the background, the reasons for the project, where we are up to in the investigations, and I will also introduce some new information which has recently come to hand. I will answer questions but if we run out of time, we are always open to be contacted later and to answer them at some later point.
So just before I get into the presentation proper, I would like to update you with recently updated information. We’ve heard the concerns about minimum flows for Mangatarere. These concerns are based on information produced by the project in preliminary investigations some 18 months ago.
These investigations modelled the minimum flow at the base of the dam at 162 litres per second. This minimum flow that was assumed has been replaced by an allowance now of 304 litres per second. This is based on new criteria used in the region’s natural resources plan that was released late last year.
That means we have allowed for a release of stored water that would ensure minimum residual flow left in the stream would be 304 litres per second. This is greater than what naturally occurs in summer flows.
So there are two photos here. One was taken last Friday, the low flow which was 122 litres per second and the picture on the right was taken at 3.30pm this afternoon after last night’s rain, with the river running at 296 litres per second, just slightly under what is currently being modelled in the current set of investigations.
I understand why there were concerns about the initial criteria that were used. I just want to emphasis that the investigations do evolve. They start broad and that many times they are refined as new information comes to hand.
And we are looking for opportunities to improve the environment through this. We’ve got written information on these new flows, and some of those graphs that Mike put up and they address some other concerns as well. You are welcome to take those afterwards.
I’ll come back to environmental issues later. So what is the purpose of the project? There are two key reasons. Firstly economic which is to support the long term local and regional growth in productivity. Secondly, environmental. We will take opportunities to maintain and improve the environment.
Our vision is a multi-purpose water scheme for the Wairarapa to collect and store water and to distribute it for a variety of economic and community uses and this will be done in a way that promotes sustainable management of land and water and creates regional prosperity.
The idea of storing water from spring and winter flows for use in dry periods isn’t new to the Wairarapa. Studies have been pursued since the late 1990s and these were ramped up by the Wairarapa Irrigation Trust from 2007 to 2009.
Options have been identified by the communities and studies were done by experts. Greater Wellington Council became involved in 2009-2010 and they took the time to drive the project. They wanted things done thoroughly. They wanted to understand what the options were and come to quick decisions about what was viable and what wasn’t.
These projects can run into decades if they aren’t resourced properly so the aim was to do it once and do it properly. Importantly, with Greater Wellington Regional Council’s mandate to manage lands and water, the wider concept of water storage and distribution has both challenges and opportunities in that regard, so it fits well within Greater Wellington Regional Council’s mandate.
In a clean sheet approach the project came up with 243 sites which have been, through phases, reduced down to five preferred options which we have got at the moment. The Mangatarere option was first identified in 2012.
What has been identified are the five schemes. They store water obviously in winter and spring for a range of uses during the summer months. For each of these options we are looking at viability from the financial perspective, demand for water from farmers, environmental impacts and opportunities, cultural effects and opportunities, social effects and opportunities, certainly technical and engineering related studies, and water hydrology issues.
These are complex projects. The first purpose as I have mentioned is to start at a very broad level through preliminary phases and these become more refined through subsequent phases. We are currently in a pre-feasibility phase and then in future phases they will be specific to individual schemes.
They are based on these broad sets of assumptions that have gradually developed and evolved as the project matures and increase in detail. And I will just stipulate here that the Resource Management Act requires that we undertake a robust assessment of all options available.
So where are we at? We are about half way or five years into a roughly ten year process and there are copies of the timeline available over there as well. We are still investigating five options with three reserve options. The intention is not to build five sites and no decision has been made in that regard.
There are no front runners and there are no decisions being made about which schemes will progress. The aim of the next few months of work is to bring together investigations, certainly over the last 12 months, but as well as over the last four years into a framework where we can assess the relative viability of each of the schemes.
This decision making process for selecting options in large scale infrastructure projects is well documented. We’ll use a multi criteria approach that considers each of the main criteria – financial, environmental, cultural and social. And some of these have sub-criterias such as acquatic ecology, and recreation opportunities and threats.
The schemes are graded across these criteria by relevant experts and knowledgeable people and information brought together for final decision making. The process is required to be thorough and we are certainly taking our time to do that.
The economic and broader social gains out of projects like this Wairarapa project are well-documented. What we don’t know are the environmental boundaries and whether the project can comply with them.
The world for water storage schemes and for farmers changed in 2011 with the government’s release of the national policy statement for fresh water management. It empowered regional councils to express the aspirations and values of communities as limits for water quality and water quantity by collaborative processes.
In our region, the community-lead catchment committee called the Whaitua Committee is going through this very process, and its recommendations will be developed in mid-2016 and inserted into the region’s natural resource plan or regional plan as it was is known.
It is not until this point that the project will know what environmental standards it will need to meet. Additionally, the project needs the underlying science developed so it can answer these questions about water storage and whether they fit in the wider catchment management regime.
And Greater Wellington Regional Council is right at this moment developing these models with assistance from experts around the country. So to sumarise, it’s not until we have the environmental standards set and the science developed that the project and the community decide whether the project progresses.
Additionally, I’ll mention to that farmers need to know what those environmental standards are so that they can assess whether they want to make farming changes, and the on-farm costs required to meet those standards. And likewise, any scheme will need to understand what those farm restraints and costs are so it can build economic viability models.
The project is taking a very considered approach and it is working with the community through our Stakeholder Advisory Group which was formed in December 2011. It has 19 member organisations from iwi, environmental, farming, business, local government, health and recreation and it has an independent Chair, provided early input into the project studies that were required.
And it receives and provides feedback on reports, inputs and issues and guidance. It is up to representatives from those respective groups to take information back to their groups and provide information back to the project.
In relation to landowners, we understand that it is difficult for land and home owners living in the proposed sites. They can’t plan ahead for large and small aspirations they have with regard to their properties and the project has every sympathy for their position. It is the same imposed by other large scale infrastructure projects around the country.
We have a different and prioritised relationship with affected land owners. We have direct contact, written material and discussions with all landowners and possible down footprint areas. We’ve phoned all of them, we have met with more than 70 percent of them. We are open to meeting with people at any time and have tried to make that clear.
We are happy to discuss concerns. We need to hear those. We talk to everyone of them about their different wants, their needs, and their circumstances.
For that reason, the discussions need to be individual, and where they require or ask for in groups, that’s what we have done. The project aim is to communicate, as we advance, and importantly stick to our time line so that we can provide certainty to landowners.
In relation to land acquisition, this is some years away if the projects that far, the schemes. Options are available. They include commercial negotiations, the use of the public works act, or a combination of that framework.
And these discussions will be had with landowners if schemes progress to that point, and any compensation will be based on fair value, certainly, and in addition a compensation package.
Projects like this are about whole catchments, not just the storage regional reservoir, and it does have two aims as I have alluded to – economic and environmental. And it is just getting the balance of this right in the catchment for everybody, and everybody’s benefit. And there has been other great work that has been done in the catchment already.
The previous speaker talked about that. The Mangatarere Wheel of Water Project was also about balancing economic, environmental, recreational values and interests. This was a government funded national pilot in the Mangaterere catchment.
This was driven by the community, involved residents, farmers, councillors, environmental groups, Fish & Game, and Mangatarere Restoration Society were local co-ordinators of this project.
Also in relation to the Mangatarere catchment and the environment, some members of the stake holder advisory group have presented to the group and these include Fish & Game, Federated Farmers, Sustainable Wairarapa, Grow Wellington, and in the Fish & Game presentation.
They alerted the group to the importance of the Mangatarere to trout spawning which certainly spurred some good conversation in that meeting and on the back of that, the project has pursued discussions with Fish & Game on how to back those concerns up with science, and the project team was keen to partner with Fish & Game to progress that science.
The scope of work to progress the science was subsequently developed by Fish & Game with input from the Cawthron Institute and from the project. The project offered to pay for this work. Fish & Game decided to proceed funded on their own basis. This is a good example of how to progress the science and to actually truly understand the impacts and challenges in the environment.
So if you want to stay in touch with the project, please visit the website. All our reports are put up there that aren’t commercially or personally sensitive in nature. Sign up and receive the newsletter. Or just make contact with the team if you have got questions because the project is changing all the time.
I invite you also to follow the Ruamanhanga Whaitua Committee as it goes through its journey to understand community values and where those limits might be set in relation to managing land and water quality and quantity.
In conclusion, the project would certainly provides a significant economic boost to the region, and has the potential also to benefit the environment. We recognise there are challenges around land ownership, environmental issues, social issues, more intensive land use and so on.
The time is needed to investigate this once and to investigate it thoroughly. Some people want a scheme built tomorrow. But there are short cuts to doing this sort of thing. We are happy to sit down and talk with you at any time as I have suggested and investigations are evolving and they are complex. The discussions that we need to have with the community are complex as well, so thank you again for the opportunity.
Kia ora tatou. I first want to have a little bit of a korero explanation. The last time I gave a presentation like this I was accused by Federated Farmers of coming in the wrong car. So I am going to be honest, I hitched a ride with Mike (Joy) tonight from the Hutt Valley so if anyone wants to know how I got here, I got a ride with Mike and it is a Massey car.
Secondly, I just want to say, I come from Wellington, I don’t come from this area. I don’t have a view of the dam, the river or anything like that from a local perspective. I’m not a local so I am not trying to come here and tell you what you should or should not do.
What I am here to do is basically apply some of the skills that I have developed through first looking at the Ruataniwha scheme in the Hawkes Bay which is a big scheme and then the Waimea Community scheme which is just outside of Richmond and is a small dam that is proposed to go into the Lee Valley.
So having looked at two of them, I was asked to have a look at a third one which is this one, which is why I am here tonight. I also want to assure you that I am not one of those consultants on a bandwagon, so I am not being paid. So I am not here to come up with an answer that somebody has already purchased. I just want to be pretty clear about that.
I want you to walk away tonight with three things. Because I have found out from teaching that any more than that is really hard to remember, so I am going to go with three.
First thing, the economics of dam building in New Zealand is tough. I’m not saying it’s impossible, I’m saying it’s tough. So my first take home point for you is that it is very hard to get the economics of water storage to work in New Zealand.
My second point is, and this is a stark contrast to what is happening at Ruataniwha, and what has happened in the Waimea Community Scheme, it’s what I call “off ramps”. When you have an [inaudible] you often have things like milestones where at certain points in time certain things happen.
And you check that they have happened and that means your project is on track. This is a perfectly sensible thing to have. What I am saying, though, is the reason you have off ramps is because you need to have some markers beforehand to let you know when you are going off track. At that point you can stop.
And that is the single biggest issue in my view with Ruataniwha at the moment. Because they have spent reputedly up to $20 million producing reports and having meetings and doing whatever they do and they have built precisely nothing.
A third point. Now if you think that I have gone from a big picture, to a slightly smaller picture, and I am now coming down to Carterton level. Not having a lot of data out, but having looked at two schemes before and looking at what we have got so far, I’ve got to be honest, it’s not looking good.
I’ve got one slide that will go very quickly through each of those points but I am quite happy to answer questions later. So please excuse me if I fly through some of this stuff but I am happy to stay afterwards and answer any questions.
Okay, first one. It’s hard work. You’ve got a challenge building a dam in New Zealand and it goes like this. Firstly, building anything in New Zealand is bloody expensive. Try to build a house, it’s really expensive. Try to build a dam, it’s really expensive. The cost of the dam leads to the price of the water which is what farmers can pay.
And what they will tell you is their costs are too high in New Zealand and it is no good and prices need to be lower. So there is a natural limit to what farmers can realistically pay for water and still have a viable farm. And that is determined by the third fact which is what they are actually growing.
Now in this case the assumption is there will be a large scale land use change to irrigated dairy. Now, I’m not saying everything is going to be irrigated dairy but there will be a large scale land use change to irrigated dairy.
So those are the three things you must do – the cost of the dam, the price of the water, and the value of the crop you are going to put the water on. Those are the three things you have got to correlate. It becomes really hard.
The first reason is, unlike some of the runner river schemes in the South Island, you can’t build half a dam. It’s like one of my dairy farmers in Morrinsville said, you can’t have a cow that’s half pregnant. It either is or it isn’t.
Now if you have got to build a dam it means from day one you have put all your capital cost up front. So it’s not like you can stage it. It’s not like a housing development where you have stage one of 50 houses, then sell those off the plans and that gets you to stage two and so on and so forth.
You build the whole lot in one hit. So all your money is upfront. The second thing is, dams are a bit like ships, and they run what they call the square cube rule.
Now for those of you who aren’t so mathematically inclined, Mitre 10 sorted this out by saying “big is good”. Basically there’s scale of economics.
Let me illustrate that really simply. There’s the Lee Valley dam over there. There is 13.4 million cubic metres in it and the Richmond Regional Council says it will cost $75 million to build. So remember that 13.4 million cubic metres and $75 million.
Hawkes Bay are telling me that their Ruataniwha Dam, well that has different amounts of water depending on the different day of the week, but according to the website it’s got 96 million cubic metres.
But the cost of building the dam is only $150 million. So it is twice the cost but you get something like seven times the water. So this is the sort of issue that you get.
It’s not a linear relationship. It’s not like get half the dam the water is half the price. It doesn’t work like that because most of the costs are in the initial site work to build the thing and all your costs are up front.
The third thing which in the North Island they seem to have ignored completely and the South Island they didn’t get, is what we call the public sector discount rate.
Now this is something that for an ex-treasury analyst like me I get excited about this. I’m guessing no one in the room gets vaguely excited about it but I get really excited about it because basically for you as tax payers, this is the test that we have to make sure central government doesn’t spend money on stupid things.
And the way that we test that is to say that the project must earn at least an eight percent return. If it doesn’t earn an eight percent return, then we don’t build it or we don’t invest in it.
Now the reason that’s relevant is that if this project doesn’t get an eight percent return, it is going to be really hard to justify investment from Crown Irrigation [Investments].
Now I’m not from Crown Irrigation so I can’t talk on their behalf, but you have Treasury guidelines that says eight percent of the discount rate for water infrastructure including dam and irrigation purposes. It’s not exactly a confusing document and it’s not unclear.
So you either kind of meet it, or you kind of don’t. So these are the three key reasons why dam building is tough in New Zealand Off ramps – I want you to look at the picture first. I’m a big fan of picture says a thousand words.
I’m not anti-dam. I’m not anti construction. I’m not anti development. I own a concrete mixture. I like pouring concrete. My wife doesn’t like me pouring concrete, she gets angry with that. So I have quite a lot of sympathy with people who want to build dams because I kind of like that idea.
I find the engineering quite interesting but I am not here as an engineer, I’m here as an economist. And one of the things that we have looked at is what we call optionality.
So go along the main road and check how you are going with your milestones but also along the road, you have got to have, before you start, not after you start, some points to say if this happens we turn off at the off ramp, and you need to have those upfront.
One of the key governance messages and key governance control, because if you don’t have those upfront then you will find it very difficult to get them introduced later, because the pressure to build the thing and justify the milestones becomes almost impossible.
So let’s have a look at the lessons from the [inaudible] dam, the Forsyth Barr Stadium, the Mangawhai Sewerage Scheme, and the Ruataniwha Dam. All of those were controversial schemes, all of those were built with fierce public opposition, often local public option, and every single one of them apart from Ruataniwha which is looking like it is turning into zombie status, actually got built.
Now we can say in retrospect they should never have been built. But if you go back and look at the information that was available at the time, the information at the time was available that they shouldn’t have been built. But it was ignored because there were no off ramps.
So you need to have up front off ramps in addition to your milestones. The price of water to farmers is pretty important because this is what they found in Lee Valley.
What they found was if they built the dam, it produced water that was twice as expensive as the most expensive water on the Irrigation New Zealand website and no farmer could actually afford it. So if no one could afford it, no one would buy it.
If no one bought it, there was no land use change, and if there was no land use change, there was no economic development. So what you have there is what economists call a “stranded asset” and what normal folks just call a white elephant.
So water price to farmers, if you haven’t got a customer, you don’t have a company, you don’t have a product. You have then got to be able to pay the capital costs.
The farmers in the audience will know that capital doesn’t come for free. And in this case it doesn’t either, so if your scheme can’t pay its capital costs, it’s not a viable scheme.
And then finally, there is the issue about the public sector discount rate. And notice how I have split the servicing of the capital cost from the public sector discount rate.
Look, I’m quite happy that if you have a scheme that passes the public sector discount rate at eight percent. You may be able to fund it at six percent, seven percent. I don’t have a problem with that.
But the scheme itself needs to be able to meet the public sector discount rate. What you eventually fund it for is a secondary story.
Okay, now I want to come down to Carterton. To be honest, this is where economists get into what we call the creative industries which is a flash word for saying we just make stuff up.
And I’ll be quite honest, I am just making it up but I’ll explain where I got it from. Now, the first thing I’ve done, I’ve said let’s assume the water price is 25 cents a cubic metre. Now the reason I’ve picked that is twofold.
That’s pretty much the top of what Irrigation New Zealand say that water schemes are coming on [at in] New Zealand and we’ve got a scheme just up the road at Ruataniwha which is supplying water at 25 cents and very few people want to buy it.
So I think 25 cents is a reasonable sort of a stab. Now my guess is most farmers will actually want a price south of that. So it means if we have, in terms of adding risk to this, the risk is the price going down, the risk is not the price going up.
So if you are paying 25 cents on a scheme on a 30 million cubic metre dam, that comes out to $7.5 million. Let’s take five cents of that or $1.5 million and let’s say we can run the entire dam, because once it’s built someone has to [inaudible].
Let’s say they can do that for $1.5 million. I don’t know if they can. If it costs more than $1.5 million it looks worse, if it costs less than $1.5 million it looks good. But I just assume $1.5 million. So that means there is 20 cents available for servicing debt costs.
Whether that be debt or equity or some hybrid, I don’t care. It’s money. And it costs you something. So it means you have got $6 million. How much money can you service? Well, that’s pretty easy. Put it into a discount rate, you can pay eight percent.
You’ve got to be able to build this entire project for less than $75 million. If you can get it for 7.2 which is the cost of capital they had for Richmond District Council, its $83 million, get it at six percent it’s $100 million.
Now remember what I said at the beginning about the cost of dams. The Richmond Dam down in Lee Valley, 13.4 million cubic metre dam, $75 million to build. Now the proposal here, I understand, also has a distribution scheme, so the distribution scheme needs to be put on top of whatever the dam build cost is.
If you are a farmer that’s been given the hard word to sign up, there is a bit of a conversation there you need to think about. Now we then went and said for a farmer – and I’ve got to acknowledge my colleague Barry Riddler who did the modelling on this.
This is a question I gave to Barry. I said, imagine a farmer using Ruataniwha water, paying 25 cents a cubic metre, sprays that water on his or her paddocks, grows grass with it, gets a cow, and milks the cow.
What’s the cost of that feed because what I want to be able to do is compare it with for example going down and buying palm kernel, making silage, or off site grazing – look farmers have other options of what they can do there.
So he did the maths for the numbers and the short take home story was that in terms of the Ruataniwha water it came up at about 70 cents a kilogram dry matter. Now I don’t know the price of palm kernel at the moment but I don’t think it’s around 70 cents a kilo dry matter.
Here’s the story, we did the Ruataniwha based on the assumption of 869 mm of water every single year. So that affected our response rate to water that come from irrigation. You get around 970 odd millimitres around here so your response rate to irrigation water is going to be less than they got at Ruataniwha so your real cost is going to be even [inaudible].
So what you are looking at is the price of the water turning into very expensive feed. It probably says it is not viable. If it is not economic for dairy, given dairy is the major user of water, what are you going to do with water. It’s a white elephant story. Thanks for listening, and happy to answer questions later.
That’s going to be a tough act to follow. I’ve never seen Peter in action and am very impressed. I’m just going to talk mostly about the environmental stuff and my experience around the Ruataniwha Scheme and generally intensification of New Zealand [farming].
I wanted to do this myth busting approach. We’ve heard some of these things tonight and I going to [inaudible] reality.
“Dams will improve water quality.” I don’t know that anyone has said that tonight but others have.
“Water quality in the country or region is stable and improving.” Fran Wilde has said that. I want to talk about that.
“We need dams to mitigate climate change.” That’s the latest thing. Everyone’s talking about how the droughts are coming and we are getting more of them and we need dams to mitigate.
“Dams are good for the local regional economy.” We’ve heard that tonight.
“Irrigation is the answer.” We’ve heard that tonight.
“It’s unrealistic to want to have pristine waterways.” That is the latest kind of dig at people like me.
We will go through these: “Dams will improve water quality.” I would need hours, my students have to do a year long course to understand a lot of this stuff so I’m going to skim through.
To pay for a dam, we have already from Peter, it’s expensive, so you have to intensify, you have to convert land use from less intensive to a more intensive.
That inevitably will lead to a whole lot of other things. Intensification will mean intense nutrients and I will talk about the pathways, but inevitably if you have more cows you have more pollution of nitrogen, unless you put them in sheds or on pads.
You inevitably end up with more in the rivers, you end up with [inaudible] or algael growth or plants. It’s like putting fertiliser on your lawn, you put more stuff in and the faster the grass grows.
That is a problem. The excess nutrients can be toxic but don’t be trapped into this one. What happens long before nutrient levels in water become toxic to life is you get algael growth which leads to oxygen depletion.
Plants photosynthesis algae plants. They pump out oxygen during the day, and they suck it up at night. You get a situation like the Manawatu River and places where you get really high levels of nutrients, you get lots of sunlight, you get lots of algael growth, you start getting massive fluctuations in oxygen levels from 30 percent dissolved oxygen in the early morning to 160 percent supersaturated in the afternoon.
And a healthy river will flatline, just like the oxygen we use is relatively constant and we are fine with that. It’s when it starts to fluctuate that we start to have big problems.
That’s the consequence of too much nutrients in the river. That kills the fish, that kills the life in the river. [inaudible] contamination is a side issue that we are going to have to face in this country.
Again I don’t have time to go through it all but we started off with a heap of superphosphate from Nauru that had really high levels of cadmium and we now have really high levels of cadmium in our soils in New Zealand to the point where in the latest Ministry Primary Industries-Ministry of Health study on total weekly intake, our children in this country after 17 years of age exceed the European union standard for cadmium intake.
This is an issue for the future, it doesn’t hurt dairy farming because it doesn’t go in the milk. It builds up in the liver and kidneys, otherwise we would have been kicked out of [overseas] markets ages ago. It builds up in livers and kidneys.
They are not allowed to be sold for human consumption. It ends up in pet food actually, mostly, but that’s a whole other story you can ask me about later on. It’s an issue for the future in that you can’t, if you want to grow food, you can grow trees or you can grow milk, but if you want to eat what grows on that land then it is going to take up that cadium and we are already at the point of exceeding that European standard, we have a more slack WHO one so we are not breaking those laws.
What happens with dams is we have reduced flushing. They make it sound like it is good to have a constant flow in the river. It is not good. The river has evolved. The life has evolved. What makes our rivers and our fish different from everywhere else in the world is that they have evolved to very unstable flows.
We don’t have steady set seasons like they do in continents and all that kind of thing. Everything is our rivers has adjusted, the shape of our rivers, the animals in them, everything about them, the movement of sediment, is adapted to this variability in flow.
So altering that variability is not good for rivers, despite what some say. It also has a downstream effect on coastal closure of river mouths and things like that, when you change sediment movement through rivers there is loss of interstitial space.
Interstitial spaces are the gaps between the rocks and the boulders where our native fish lie. We’ve done lots of work tagging native fish. They live down in those spaces. If you think of it, the best way I can describe it is like an apartment building.
You have a five story high apartment building. When the fine sediment builds up, because it can’t get transported because the flows have changed, the sediment builds up until it comes up to the surface and you can just see rocks and a substrata of fine sediment.
Then it’s like the apartment building has been destroyed and you can only go on the roof from there on. And that is part of the reason why we have 74 percent of our native fish on the threatened species list.
As far as I can find, we have the highest proportion of threatened native fresh water fish of any country in the world and that is due to a whole lot of things including that.
But all around the intensification idea, what we are doing on the land, how that affects it, we have all these impacts here on fish migration. Obviously the main effect of putting a big dam in there is that fish can’t get up or down past it.
There are ways around it but they tend to be just a bit of a have, fish passes and that kind of thing. The reality is that they become mortality points, they become places where fish get predated. All sorts of issues with just that physical barrier.
But it is not simply just the physical barrier. So with a natural fluctuating flow, when we do get algael buildup and we get those problems with oxygen fluctuations, and the fish have no oxygen, and you can’t go fishing because it is full of all that slimy stuff, you have a flood comes down and it shifts it all. You can reset and start again.
If you start regulating the flow then you lose that ability to flush those things out. Then you have even more algael build up. You get all the growth that comes with it. You get to the point where it is so high the stock can’t drink out of it anymore and you also get the heavy metal stuff happening in the water supply.
Just quickly, the pathways. We have got the dairy cows here, we’ve got, the main issue and I want to make it clear that everyone understands this, is it’s the urine patches, it’s the cow pee in a very small area.
That concentrated nitrogen can’t get taken up by the plant. It sits down in the soil layer somewhere. Either immediately or the next rainfall or some over time, it makes its way through the arrows here showing the pathway for the nutrients.
On average, a dairy farm [puts down] around 30 kilograms of nitrogen per hectare per year, maybe 10 or 15 on a beef and maybe two to five on a sheep farm, so this is the difference between them. From this to this you are looking at maybe ten times more nitrogen making its way than beef.
All these things run into the waterway, overland flow, through the ground, eventually making its way into our lakes and rivers. Under our present legislation, and it is not like it will change soon, the only thing that requires consent is what comes out of the pipes, from the waste water treatment plants or dairy shed discharge. [This] is the only thing we control.
That simply is why we have the issue with fresh water that we have now and this is where I come to this thing about the quality [of New Zealand water being] stable or improving in New Zealand. According to the Ministry for the Environment it is stable and improving, according to Fran Wilde it is stable or improving.
Here’s New Zealand, this is using the insects. This is a really developed totally scientific robust way of measuring because [you don’t miss] the fluctuations you get when you measure things in snapshots. These things are continuous because the animals have to live in there.
Here’s the scale so anything that is red or orange is either moderate or severe pollution. This is our New Zealand. This is clean green New Zealand. Look at all the lowland areas, all the pretty much intensively farmed areas of New Zealand, moderately or severely polluted.
This is NIWA’s work, not mine. This is nitrates. The same pattern there. The same places, everything orange or red is past that trigger point. That is the point where the nitrogen has built up to the level where the algae will grow to become nuisance, where it starts to affect all that [inaudible].
Stable or improving – the last ten years we have data from about 900 sites around new Zealand. There’s the pasture sites, there’s the native sites. This is how many sites exceed the ANZAC limit there, about 40 percent back in the 1990s up to about 60 or 70 percent exceed that level now and it keeps on going up.
Native forests [catchment] keep on cruising along there, native catchments cruising along there, not changing over time. Pathogens. This is the pathogens from crap getting into the river, whether it’s from a town [sewage] or from cows or livestock, or deer or possums or whatever.
Here’s the Ministry of Health limit. Again, oranges and reds are the places that exceed that, where it is unsafe to swim. The modelling shows clearly that 62 percent of the length of all the rivers of New Zealand exceed that Ministry of Health guideline for swimming.
Again, clean green New Zealand, 62 percent of the length of all our rivers. Here’s the summary that is on the Ministry of the Environment website of the last ten years with the trends, the regional councils are getting into this same game as well.
What they are saying here is that the grey bits are stable, the green bits are improving, the reds are deteriorating. So you would look at that graph and go yep, they are pretty bang on, aren’t they. They are saying stable or improving mostly. There’s only one bit flaw in that.
By taking only, I don’t have time to explain statistical significance, but some of you will know this. It’s a bit like when you are polling for an election, if you reduce the number of people you poll, your confidence in it becomes a lot less. In the same way our statisticasl analysis would say, no, it’s not significant. It’s not significant because you reduce the numbers.
They went from 21 years down to ten years, so the number of data points shrunk so much that, as you can see, most of them are grey, they are not significant. That does not mean stable. They could be going up or down, and they are, it’s just that they don’t meet that criteria.
What it actually should say is that we don’t know. We can only look at the red and green to see if it is more or less. And most of the sites, when you look at the important things, the bacteria and the nitrates, aren’t getting better. They are getting worse.
So it is rubbish, and if you hear them say I went to the Ministry of the Environment, they admitted that this is wrong, that they had told us in 2013 that it was stable and improving, put it on their website.
They admitted they got it wrong. I said “are you going to tell New Zealand,” no. Are you going to change it on your website, “Oh we are going to in a month or so when we change over to our new webpage.” So they have taken the word stable out now, and they have got something like “not significant.” But they never told you they have been lying to you for two years.
And I couldn’t believe that they would have the gall to do that but I am not arguing with the scientists at the Ministry of the Environment. I am arguing with the comms person because they do’t have scientists. They have replaced them all with comms people.
And those are the ones I have to deal with. It’s like banging your head against a brick wall. So why do they tell us it’s good when it’s not? Well, because they might have vested interests in it and because they have this thing called the export double agenda where they are telling us we have to double our agricultural exports.
How can you do that when you are already breaching the limits at all those sites around the country? You saw that nitrate thing, they are already breaching it. Michael talked about the National Policy Statement for Fresh Water, how we [have a] fresh start for fresh water.
What they have done is they have gone from that guideline level which is the ANZAC guideline, been around since 2000, agreed between Australia and New Zealand, that’s what ANZAC stands for, the level is just over .5 of a milligram per litre of water, that’s the limit.
The limit for the Ruataniwha scheme is .8 so it is about here somewhere. Under our new scheme, anything up to 1 scores an A. So the whole country scores an A.
Our new limit is 690, so if you put it into road talk, we have gone from a 50 kph limit to a 690 kilometre limit and they are saying that is going to improve road safety.
What they have done is, obviously they couldn’t expand farming and still have those limits, so let’s just extend the limit. And when they did that, all of New Zealand pretty much comes out as an A for pathogen and for nitrogen. Guess what gets a B or C under our new scheme, the Yangtze River in China, the Mississippi River in the United States scores a B or C under our new system, and the Thames still doesn’t meet our bottom line of 690.
That is our new National Policy Statement for Fresh Water that is going to make it better for things in this country.
I’m running out of time. “We need dams for climate change mitigation.” All you have to do is look all around, you put a dam in, you have two or three more cows as you had before because you have got to have that many to pay for the dam, the drought comes along, you haven’t got better, you haven’t mitigated it, you have made it three times worse than what it was before. How’s that mitigating it? It’s the opposite.
“They are good for the economy.” I don’t want to get into that, but I want to talk quickly about externalities. It’s easy to talk about the economics but what about the externalities. What about the cost for the public to clean up those rivers? So I did some sums on how much it would cost.
I was at a meeting down in Canterbury and the really neat farmer who won the supreme Balance Farm Environment Award on his farm, he leeches 48 kilograms per hectare year of nitrogen, we know that if you add one kilogram of nitrogen to water, it will make 88.5 thousand litres of water exceed the drinking water standard in New Zealand.
And we know how much it cost to clean it up, to get it back to drinking water standard, so for his farm alone it cost $2 million to clean up that water to get it back to drinking standard. For the whole the country $2.4 billion a year.
That’s an externality that is being placed on all of us that is not being paid by the industry. A better example to show you would be Lake Rotorua where the cost to get the nitrogen out of the lake is about $240 thousand a ton to get it out.
Go to the farm, and don’t put a ton of nitrogen on and it is $6600 worth of loss of revenue on that farm not to put it on. So it is 37 times cheaper to not do it, than it is to do it.
And I really don’t believe in community collaboration. I’ve seen and been involved in it. I’m not saying it wouldn’t ever work but in my experience is it doesn’t work. The industry has all the money, they have all the lawyers, the all of everything. the public is rushing around, they have to get their kids to school blah blah blah.
They have got their whole lives to live and they get worn down by the process, and if the government believes community collaboration is the answer, then why did they sack the Canterbury Regional Council. If that is not the opposite of community collaboration, then I don’t know what is.
I don’t believe we should have pristine waterways, we want healthy functioning waterways. I never said we wanted to have pristine, it’s just a way to have a crack at us.
The idea that we can’t feed the world without irrigation is a scam, because the reality is we are not feeding the world as it is at the moment because of the way we do it.
You have to match your land use to the land and the climate that is available. The solution is small scale, on farm water retention schemes, Doug Avery’s approach, he’s shown the way.
The reality is just think about the future, think about the planet, about how many people are on it. We can’t keep doing animal based agriculture. More than 50 percent of our greenhouse gas emissions come from animal based agriculture. Animals are going have to come out of our diet and they are going to have to come out of it quickly.
And my last message and it’s probably what Peter has covered already, but we should be farming for profit, not for extra volume, which is pretty much what we are doing at the moment. So thanks very much.
Question: The second Michael [Bassett Foss]. You talked about a robust review of all potential options and you talked about extraction or harvesting, you’ve talked about delivery of water, you’ve talked about storage points. Have you done a robust analysis of having end users store water on their own properties instead of storing it for them?
Answer from Michael Bassett Foss : Yes, we have indeed. There are a couple of reports on our website which you can peruse. Peter spoke around scale being important to reduce the cost of stored water. We have two examples with the Lee Valley and Ruataniwha scheme. The cost of water [using] small scale storage is three or four times more expensive than larger storage.
But having said that, the project considers there’s a place for it, and it is likely to be used in combination with community storage if community storage goes through. Typically in the South Island, on-farm storage is used to supplement existing takes from rivers. For example, they can take water from the river at the moment but when the low flow drops they can’t take any more so they need an emergency supply of ten days or three weeks or whatever it is. So they are not having to provide water on farm to totally irrigate the farm, but as a back up.
Also down south, when schemes evolved many years ago there were a lot of water dyke schemes with canals that just ran past the farms and if they didn’t take the water and put it on their farms, then it was lost. So by introducing a little bit of on farm storage they could capture some of that to extend to some irrigated area and provide water when the low flows came on. So certainly there is a use for it. But yes, we are certainly considering small scale storage as well, and it will stay on the radar for sure.
Question: Do you have any off ramps?
Answer from Michael Bassett Foss: Yeah, we do indeed and I enjoyed Peter’s presentation on off ramps. Certainly financial viability is front and foremost in our minds. All of the points Peter raised I commend him for because they are front and foremost in our mind. In 15 minutes or so peter couldn’t cover all areas and there are large gaps which [inaudible] as well.
We are still in the early stages of the project and I can assure you that the project is meeting those financial hurdles. And they are published on the Irrigation New Zealand website for distribution of water in other parts of the country. We are coming up to another off ramp point over the next three months. We will put together the latest lot of the investigations and we will take another look at that.
The current phase at work was staged so that if there were any fatal flaws, including financial flaws that were discovered, then project schemes options would have been dropped at any of those points. Certainly is the short answer.
Question: Environmental ones?
Answer from Michael Bassett Foss: The environmental ones. We don’t know at this moment what those environmental standards will be for the scheme to meet.
There are eight members of the Whaitua Committee around this room which will play a large part in setting those standards. As they become apparent over the next year as our investigations unfold as well, and as the science and modelling evolves we will be able to assess where we stack up to those standards.
Question: At the moment the public owns the waterways. They are managed by the Wellington Regional Council. I was wondering what the ownership model was going to be under the dam scheme?
Answer from Michael Bassett Foss: The scheme doesn’t propose to own the water. It is considering storing it for a while and then letting it loose for users. The second point is the commercial model hasn’t been decided upon. It is far too early in the process.
There are a number of options from farmer based co-ops that are widely used in the South Island to mutual structured entities like Ruataniwha. So all of those are on the table and until we progress a bit further to understand how the project will evolve we will consider that in due course.
Question: I’m sure my question is going to sound very naïve but I would like Michael [Joy] to speak. You are a professor, is that correct? It’s just that we are all conditioned to put our faith in people who are qualified and he seems very good at what he does and with all the money that is being spent on the investigations that your organisation [inaudible], who are the qualified scientists giving your [advice], I don’t see why they could be so different.
Answer from Mike Joy: Peter made it clear and I didn’t, I’m not paid to be here. I had to pay for the car. It’s Massy’s car but I had to pay for it out of my slush fund as well, so if any of you think that Massy paid for me to be here, I can assure you that many of my collegues at Massey probably aren’t excited that I am here.
I’m an indepedent scientist. I’m quite a rare animal because, we had the same problem with the Ruataniwha scheme, the scientists that work for the council, and I asked this question at a public meeting over there. How does anyone expect that the council scientists are going to speak up against a scheme that their council is putting forward? I don’t want anyone to answer that. I just don’t think they should be put in a position of having to answer that.
So I think that is really important. Any issue where you are not sure about who’s speaking with a forked tongue is to think about where’s their income coming from.
Answer from Michael Bassett Foss: I agree entirely. We need experts on this. I’m not an hydrologist or an expert in science and so I’m not here to answer those questions, suffice to say the project team does have a range of consultants.
We’re quite early in the stage of investigations and it hires consultants on an as needs basis, and all sorts of experts in relation to the science and modelling.
Greater Wellington Regional Council does have some employees but they also use a large range of experts and without speaking on behalf of the team, I know that they are undertaking a large scale process involving a wide range of experts to bring all of that knowledge to the table so that they can assess the current state and intra\states the Ruamanhanga so please be rest assured that it is a serious topic and we take it seriously.
Question: Kia ora Mike Joy. just on the last topic. You didn’t get much time to talk about it and I think I know what you are talking about there but I am just going to ask if you can explain that a little bit more. The one in terms of farmer profit, not volume.
Answer form Mike Joy: I haven’t got my slide here tonight but there is some work that some collegues have been doing, farm agriculture business people looking at the intensity of farming.
The model that I use is a farm that is currently running 620 cows and you look at the profit, the return on capital, you get rid of 100 cows and increase the profit, get rid of another 100 cows and you still increase the profit. You actually get back on that farm to 390 cows on a farm that is running 620 to get back to that profit because all of your costs come back down.
And many of my collegues who are experts in this field, more so than me because I’m looking at the environmental effects of this, because in that model when you go from 620 cows back to 390 cows then the pollution didn’t just drop by a half, it dropped by way more than a half because the increased pollution is exponential as you ramp up the system.
All of the drivers that the farmers have are pushing them to increase production because of capital gain, because of the banks, because of the fertiliser companies, because everybody is pushing them to maximise the size of their farming, especially if they have debt on that farm.
So some rationalisation around those marginal cows to farm for profit would be far less cows and therefore far less pollution without farmers losing money.
Answer from Peter Fraser: I’d just like to add a couple of points. I would like to pick up on Mike’s point, what we call “the marginal cow”.
For those of you who have sat through economic lessons at varsity or where I’ve taught them, what micro-economics is worried about is what we call “the last one.” I’ll give you a rugby analogy. We don’t care what the average score in an All Blacks game is. What we care is that at Ellis Park who does the last drop kick. so it is the last one that is important. I will give you a little bit of the maths behind this first. Where you profit maximise, you have got to match the last dollar earned with the last dollar spent.
Now for the dairy farmers out there, if you use Farmax or one of those programmes, that doesn’t do that. What it does is effectively look at total cost and total revenue. Now for those of you who remember fifth form or sixth form maths, if you take the first derivative, first derivative of total cost is marginal cost, first derivative of total revenue is marginal revenue.
I’ve lost you so I will give you another example. Air New Zealand has bought a very sexy airplane called the Dreamliner and they sit exactly 302 passengers. And for dairy farmers in the audience, they even paint them black and white so there is something you have got to like about them.
What I say to dairy farmers who generally don’t have a great amount of time to talk about a first derivative, and fifth form was quite a long time ago, is I say to them “okay, we’ve got the aeroplane, we’ve sold 290 tickets, how do we make a profit?,” They say “that’s simple sunshine, you sell more tickets.” “Okay how many do you sell?” and they say “that’s easy, Peter it’s 12.” Why do you do that? “Because you fill the airplane. “What’s the maths behind that?” “I don’t know but I think you are going to tell me.” “Okay, I’ll tell you.” “Because the cost of flying the extra 12 people, if they are just carrying a grab on bag, is actually nothing when the plane is almost full.So the extra cost or the marginal cost of carrying those people is in highly scientific terms bugger all.”
Now if you compare that to your marginal revenue, let’s say those marketing people have sold those last 12 on Grab A Seat at $29.95 each. You’ve made 29.95 times 12. You are doing pretty well. Everyone has got that so far.
Now I want to add one more ticket and we sell 13 tickets and all 303 people turn up, I ask the farmers what do you do? And they say “well that’s easy, you tell the last one to bugger off.” I say “no, this is a service business and we have done our Kiwi Host, you can’t do that.”
Here’s the problem.My mates in the airforce tell me that every single time they fly an airplane it costs half a million bucks so for you to go and get that extra person your marginal revenue is $29.95, your marginal cost is half a million dollars.
And farmers say “that is great but I don’t run an airline. I start at 4am in the morning with [inaudible]. how is that important to me?” And the answer to their question is “because take away the airplanes, use the word farm, take away the word seats and put in the word cows, and I’ve described your farm or your neighbour’s farm, and more than likely both, because most farms in new Zealand are systemically overstocked.”
Effectively you have the equivilant of the 303, 304 or 305 cow on your farm. The problem is when they are walking past you at 4am in the morning they all look the same. This is where your modelling of your farms is really important because what you actually find is if you drop your production you will find where the tipping point is in your particular farm.
And what we have found in modelling farm after farm including the Lincoln University dairy farm is exactly the same story. So what do you do? Do you get rid of the marginal cows – that lowers your cost structure. You then go and feed the cows you have got with the cheap tucker which is called grass, you then go and increase your per cow production.
So you have two things going on here. You have got an increase in revenue and you have got a decrease in cost and the profitability goes up. What most people get confused with is are the words production, turnover, profitability. they all get mixed around.
So what most people think is, if I produce more, I will earn more, but not if you have a tipping point because it is the same as saying if instead of selling 300 tickets we will sell 400 tickets we must make more money.
Question: Peter, have you looked at the Greater Wellington Regional Council proposal?
Answer from Peter Fraser:The short answer is no. I’ve looked at it fairly quickly, and the extent of the analysis I did you saw up there. But what I basically did is what I call a helicopter view.
I basically said how much water is in the dam because that will tell me how much product I have got to sell. I then went and said how much can I sell it for and times one by the other and that gives me a gross revenue figure.
And then I said if that gross revenue figure had to service an amount of capital to build something, how much capital could I service? And then I basically said how much does the dam cost? And you notice the way I started off was with what a farmer can pay.
Does this make sense, rather than assuming it all works, so therefore if all this stuff happens you get net economic gains of $2 million every single year in return. This is the same problem that NZIR had and this is not a criticism of my collegues at NZIER because they did the model for Lee Valley.
They basically assumed that the farmers would pay for water. And on that basis they had a project that was hugely beneficial for the region. It’s almost like saying you can open a taxi company and you can get petrol at about a dollar a litre versus 20 a litre.
At a dollar a litre it is actually pretty good, especially with what you are paying at the pump at the moment. That is a good business to be in. One thing that I got taught pretty early by some pretty canny investors is everything is a good investment if you buy it at the right price and everything is a dog if you don’t.
So what I was doing was like my AA check, was this a dog or a lemon. And it is a question of water in the dam, how much can I charge, how much can I service, do those maths.
Question: Where would those off ramps be?
Answer from Peter Fraser: First thing I would do now is, you should be able to get an estimate of how much will this project cost, because there seems to be two key components of it. There is the building of the dam and the building of the distribution network.
Given that we have had dams to the north, dams to the south, a lot of stuff going into the South Island it should be pretty easy to put together. This is not a quantity surveying type price but an indicative price of if you were to build an earth dam of 62 metres by some sort of distance, what is that cost, and if you are put in a distrubition network of 16.5 thousand hectares how much will that cost.
Then you can say that will come up to a figure X. And then you basically say how much water is in there, how much do we have to sell the water for, to pay for the dam. Notice that all I have done is almost like a cashflow type of analysis. If we were to add in Mike’s story about $6000 here and $200,0000 zillion over there and arrows going somewhere else, that becomes a lot more complicated.
That’s not to say that’s not a reason to do it. I think you can get a simple answer quite quickly so that’s the first off ramp, what is the dam going to cost versus what farmers can realistically pay. Once you have an answer to that, that then goes into an economic analysis to say look, will you actually get affordable economic land use change of 23 percent dairy to 40 percent dairy.
Will you get that, because if farmers can’t pay, they won’t. That would be my first one. My second one would be, and I think two is probably be enough, and this is the one where I have belted the Ruataniwha Scheme because to be honest they have paid enough money to actually know this and to know better.
Question: Hi I’m a poet and touring cyclist from the States and I’m just passing through so this is not my context, not my place, but I’m collecting stories around the world from different people – “tell me about the water, and climate change.
And I just want to say that I have had opportunity to be in and out of different protests starting with the people’s climate movement on September 21th in New York City, attended the Fergusson protests in the United States and talked to some anti-fracking activitist in Taranaki.
All of the issues are similar and if production with this goes forward and it’s not something you guys want collectively, that you have the power to stop that, [to be] strong and act together.
My heart is beating so fast right now because it is terrifying but being a person from the outside I have the least to lose in saying that [inaudible] so have the courage, use this opportunity to make connections. We are all in this room together and always be critical.
Question: Kia ora. This is a question for the second Mike [Bassett Foss]. Where are you going to get the extra flow in a drought? Where’s the water coming from. I come from the bottom of the Mangatarere we are Ngati kahukura. Our people have been here for generations. We are already seeing the effects, when the tests are right, I have the results at home.
We are hurting over this. They have already killed our Mangatarere. My tipuna used to walk up there. You know there is wahi tapu and things through there. Please respect our cultural values. So the question is how are you going to keep the flow at 304 litres a second. Kia ora.
Answer from Michael Bassett Foss: Kia ora and I really appreciate that question. The information that you have is based on assumptions done 18 months ago. Please take one of these reports because it does talk about the inflows and the outflows and the modelling including how it is kept at 304 litres per second and flushing flows
I am happy to have another conversation after this, and I think the aspirations of the project don’t differ too differently from the other presenters here so we need to do work to make sure we can achieve that.
Question: Why are none of the affected land owners in any of the committees?
Answer from Michael Bassett Foss: I answered that as part of the presentation. With landowners we have a much more direct and intimate relationship. We talk one-on-one with them and in that we have spoken with a range of landowners with differing needs and circumstances so in that regard their relationship is prioritised [inaudible] organisation which is the stake holders advisory group that you refer to.
Answer from Mike Bennett: Thank you, I will make this as brief as I can. Two and a half years since receiving a letter, all form letters, mail merge letters, mostly with information of the website. One meeting for the Mangatarere residents which was very strictly controlled, and one visit at Fran Wilde’s instigation to our own home for a half hour discussion around the kitchen table in early 2013.
Question: I would just like to thank the organisers for organising this meeting and to you Michael Bennett. I would just like to say that it doesn’t matter how much compensation you get, for two and a half years you have been living with a sword above your head. It must be awful, so I really feel for you for that and I hope that that can be something that can be resolved and that this process can be repeated in other places.
The key question that I would like to just pose is about the crux of this matter. It’s not about whether we are going to build a dam, it’s not about how much water we need. It’s about what we do on our land and Mike Joy has touched on this. The pigeon I want to throw into the cats, if you like, is it possible that we could do activities that would actually support our native resources. Can we use land in a way that is both profitable but also bolsters ecological values and improves the amount of water and hopefully the quality of our water as well.
And I think it is something that we all need to recognise as a community. I don’t know if I have answered my own question but I like to think that it is possible and I would like to do what I can to contribute to that and if you are interested, to try and work with you guys. So kia kaha, thank you.
Answer from Mike Joy: If I can just quickly say that yeah, there are much better ways, dairy is not one of them. If it is, then it has to be much more diverse. We have to get away from mono-culturalism, mono herbs, there’s flaxes, there’s a whole lot of things that we could do that work with nature, rather than against nature.
The way we are going at the moment, we are bringing in palm kernel, we are the biggest importers of palm kernel in the world. The way we are going with nitrogen fertiliser, which I hope you all realise the problem here is the nitrogen, nitrogen fertiliser comes from fossil fuels, a third of it from [inaudible] the rest from Middle East.
We are totally dependent now on bringing nitrogen in here that’s made from fossil fuels. Just the ultimate unsustainable way of farming. We have got to move away from that. I think you are bang on and I would like to work with you.
Answer from Michael Bassett Foss: I would just like to concur with some of the concerns around land use change which has occurred in the past, and for those places around the country that have had access to water access to cheap water without boundaries imposed by the national policy statement for freshwater management, there has been large scale change toward dairying.
Our assumptions that were provided in our scheme isn’t for those large scale rampant dairy conversions firstly. And secondly, I applaud the opportunity to try and promote better practice farming systems around the country and there is a really good body of knowledge that is being built up both here in the Wairarapa and around the country, for example, reduced stocking rates and just recently the project has had confirmed additional funding to do work in this area and it will be beneficial work, whether the project proceeds or not.
And it is to set a number of case studies around some good practice farming systems, and perhaps low intensity cow operations may be one. But importantly, alternative land uses that try and find production that is better for our environment will be part of that and there are discussions with Plant & Food Research and the Foundations for Arable Research to ensure we assess alternative land uses and they be made aware to farmers. So I just want to clarify that in terms of the project we are very aware of that and trying to deal with that as well.
Question: I just want to say thank you very much for informing and educating us all tonight. The questions are to Peter and Mike. Do you have footage of you guys speaking passionately about what you know obviously really well. And how do we get that to our young people. Because to me probably everyone in the room is convinced that it is not a good idea, we just need to convince the rest of the country.
Answer from Mike Joy: My stuff is on Youtube and I will come to your school or whatever, no problems.
Answer from Peter Fraser: I don’t have anything but I am more than happy to, same as Mike. If you send me an invite if I can make it I will come along. If you want a video I am quite happy to do that.
Answer from Michael Woodcock: We have some websites, one of them is Stop The Dam on Facebook. If we upload stuff we will let people know through that or sign up and join the organisation if you wish.
Question: I am a Mangatarere [inaudible] property owner. I wrote to Fran Wilde requesting some reponses to questions in march last year. I got them in September, two days prior to the general election. I felt personally that the situation was being managed for politics, not for objective information flow so I am a little bit disappointed in the tenor of some of the remarks here because they haven’t been matched by the reality of what I have experienced and the responses I had. [inaudible].
Having said that, what I would like to say is what is the discount rate and does Mangaterere meet the eight percent for the anticipated rate of return and if it is starting to make any money what is the anticipated rate of offering on the land which is to be acquired. Two questions, eight percent and price paid for land.
Answer from Michael Bassett Fox: Those road diversions that Peter spoke to, the first two that he would put in place have been considered by the project. Firstly is the water affordable from the command areas to the farmers, and as I said earlier, they do match other schemes that are existing around the country.
And secondly, in term of the rates of return, that has been assessed as well, and will be assessed again at the next review point which is in three, four months time. Question: Was it eight percent?
Answer from Michael Bassett Foss: Yes, the eight percent was reached, absolutely. And in the second point in relation to land purchases, we don’t know which scheme if any is going to progress, so at this early stage we have placed our assessment on some broad scale market values plus compensation, but again they have been very broad scale because we are unsure about which schemes and the inundation levels.
Question: My question is to the second Michael [Bassett Foss] again. Thanks to the Mangatarere Valley residents for letting us know this is happening. I live on the Mangatarere and have heard nothing. My worry now is distribution and when will the affected land owners that will be in the distribution part of this scheme be notified, or is this the landscape plan again from the regional council and hidden until someone really stands up and gets going like these residents have.
Answer from Michael Bassett Foss: We applaud opportunites like this to get in front of the communities. We are applaud this event. We are distraught that there are people out there who haven’t heard about the project. We have tried really hard to get as much information out there, specifically to those land owners that might be impacted by the distribution area.
At the moment we don’t know which command area is going to go forward, and we don’t know where the pipes are going to run. What we do know is that we create a scenario that we can base some broad based costings on but those will change again. So it is very difficult for a project like ours where there is so much uncertainty to approach literally hundreds of land owners and try and keep them informed.
But it will be a priority when that becomes a whole lot more clearer, command areas are selected, and the distribution networks can become a whole lot clearer. The other thing about distribution networks is we can vary them, particularly landowners. If there are certain issues then we can go round potentially.
Question: I’ve just an observation to make. My understanding was that the Mangatarere Restoration Society was an initiative that came out of concerns of the regional council about the state of the Mangatarere Stream, about the health of that river. I am really interested to see that the same council is actually driving this initiative around the water scheme because it seems in conflict to me. I don’t understand that.
I would also like to know why those figures that Mike Joy shared with us around the cost of cleaning up after some farming activities, why the environmental cost would not be entering the economic equation that is being sold to us in terms of the value of the water.
Answer from Michael Bassett Foss: I can’t comment about the Mangatarere Restoration Society and origins or its aspirations. There might be other people who are able to talk about that. There has been a lot of science done on the Mangatarere and as a regional council we are mindfully aware of the current state of that and the total catchment as well.
But as I have said during my presentation, we don’t know what environmental standards are going to be met by this scheme and the Whaitua process will make that a whole lot clearer. And also we need the science to catch up to understand the impacts of any scheme that may go ahead in any of the command areas.
So until we have those set which will evolve over the next 18 months then we will have a much clearer idea and can make a decision on whether [inaudible].
Answer from Mike Joy: If I can say something about the externalities. It’s a reality that it is a big conversation that this country has to have about what we are doing with farming in this country. Because farming is not paying for its externalities, not by a very, very long shot. I only talked about one thing and that is nitrogen.
In relation to what Michael just said, if you look at the Ruataniwha as the example, communities don’t set levels. If everybody in the world decided that we all agree that the limit of CO2 in the atmosphere was going to be 500pbm that would all be good. Climate change will happen, two or three degrees will happen and we will be history, whether or not we agree on the level.
In the same way, you can’t get a bunch of people who agree on what is a safe level of nitrogen. The river decides. When the nitrogen gets past a certain point algae grows, whether we agree to it or not. We don’t have the opportunity to set the level, nature sets the level and we have to work with that and that was the clear understanding of the Board of Inquiry into the Ruataniwha which came up with .8 of a milligram of nitrogen per litre which is already exceeded in the Mangatarere. Same with the Ruataniwha.
How can you say when you have got a system that is already exceeding that, that somehow you are going to intensify land use and make it better. They just do not fit together.
Question: I’m a bit of a earthquake phobe and I heard what you said Mike [Bennett] about the fault lines and I’m well aware of the fault lines and that there are even more. I am just wondering where does the risk fit in to the plan. And does Carterton Council have a risk plan when all that water pours down the valley.
Answer from Michael Woodhouse: We’ll leave that as a question that needs to be answered in another forum. So firstly, thank you very much for coming. I hope you have appreciated it. I’ve certainly appreciated you as an audience. I think you have been extremely respectful and patient.
We have had four great speakers. I do have to acknowledge, firstly Mike Bennent doesn’t have a choice to come for free, but I do want to acknowledge the other three who have given them time willingly to be engaged in the process tonight. And I suppose as a Carterton resident, even the issues around the super city, politics is alive and well, we are becoming, maybe we have always been, a political people, and we are interested in what is happening in our communities.
And tonight’s meeting is a good example of that so thank you very much for wanting to be engaged and contributing to wherever we end as a society. So thanks for coming, it’s been a great night, and we will probably hold others.
I can tell you Dam Free Mangatarere is not going away until such time as we have heard there is no dam on the Mangatarere. When that happens we will wind up and probably give any money we do have, which you can tell we haven’t got much at all, we will probably give it to someone like the Mangatarere Restroration Society. So there’s a promise in advance.
Note: You visit the official Wairarapa Water Use Project website here – http://www.wairarapawater.org.nz/