Nathan Guy

14 November, 2013

Speech to the New Zealand Society of Large Dams (NZSOLD)

Good morning and thank you for the invitation to speak.

For over a century, dams and the infrastructure associated with them have been a vital but often overlooked part of the fabric of this country.

Back in the 1880s, gold dredgers dammed a tributary of the Shotover River to provide hydropower for the nearby mine.

Early freezing works and dairy factories ran on hydro and it even helped power early municipal lighting at Reefton on the West Coast.

Today we still tend to associate dams with generating electricity for the national grid.

We think of Benmore, Tekapo and Clyde in the South Island, and the massive Tongariro Power Development here in the North.

Dams – a variety of roles

In fact dams and reservoirs - large and small - contribute to our society in a variety of ways.

They supply and guarantee water to many of our towns and growing cities.

Dams have other uses as international class rowing venues, freshwater fisheries, and for sailing and boating.

Their role in wildlife and habitat preservation is also important.

In recent years, the critical role of dams in helping manage and use freshwater has brought them back into the spotlight

Increasingly we see their potential in the rural setting to ensure a reliable water supply for our booming primary sector.

My message today is that new dam structures will become an essential factor in helping deliver economic growth, especially through irrigated agriculture.

Export double

Our primary sector- and the water resources that drive it - is of crucial importance to our economy.

The primary sector is our largest export earner, and it underpins our national prosperity.

It is the powerhouse of the New Zealand economy, generating around $32 billion a year and making up 72 per cent of our exports.

The brutal drought earlier this year highlighted the need for irrigation development.

Increased productivity from the sector would contribute positively to the Government’s Business Growth Agenda (BGA).

The BGA includes an ambitious goal to lift the ratio of exports to GDP from 30 to 40 percent by 2025. Over the same time, we want to double our primary sector exports.

To do that, we need to do things differently. Business as usual won’t get us there.

New trade deals will play a big part, like the free trade deal with China which has already been a major success.

We were the first OECD member nation to sign such a deal with China, and since then our exports to them have tripled – going from $2b in 2007 to $6.9b in 2012. In April this year China overtook Australia to become our largest export market.

The rise of developing nations, particularly in Asia, represents a huge opportunity. As these populations grow and become wealthier their appetite for safe, high quality food products produced by New Zealand will continue to grow.

This is why we are working hard on the Trans Pacific Partnership which includes USA and Japan. We are negotiating separate free trade deals with India, Russia and Colombia.

The potential in Latin America is also huge, as I’ve seen on two trips this year.

To achieve the Export Double we will also need to use research and development to improve our productivity.

Farmers have made great use of science, technology and innovation over the years to become world leaders.

For example, we now produce the same amount of sheep meat today as we did in the early 1980s but with around half the number of sheep. This proves that farmers are innovators through using science and genetics.

The Government is now giving innovation a major kickstart with the Primary Growth Partnership (PGP).

A total of $684 million is being invested by Government and industry into 16 projects to boost productivity and sustainability in the primary sectors.

This is a major research boost, and the potential benefit to the wider economy from these projects is over $7 billion per year from 2025.

Some of the current projects include red meat sector collaboration, manuka honey trials, harvesting trees from steep land, improving the precision of seafood catches, and selective breeding of greenshell mussels.

Managing and using water better will be an important part in reaching the ‘Export Double.’

New Zealand is lucky to have a plentiful supply of freshwater.

It drives our economy in the same way that minerals do for Australia and oil does for Saudi Arabia.

Yet only two per cent of the rainfall in New Zealand is stored for irrigation use, with the rest running out to sea .

Clearly, we don’t have a shortage of water in this country.

We have a lack of water storage facilities.

Government investment

This is why the Government has signaled plans to invest up to $400 million to encourage third-party capital investment in irrigation.

Budget 2013 confirmed a first tranche of $80 million in funding for regional irrigation projects.

On 1 July, a new Crown company was established to act as a bridging investor for such projects.

This will involve short-term, minority investments to help kick-start regional irrigation schemes which otherwise might not get off the ground.

The area currently irrigated in New Zealand covers approximately 720,000 ha.

This is made up of a combination of individual irrigators and local community-based irrigation schemes.

The water is sourced mainly from run-of-river and groundwater resources.

Most areas with major irrigation potential have reached or are reaching the limits of available water.

Irrigation potential

The Government sees major potential for further irrigation.

Schemes are therefore in development across New Zealand.

If all of these proceed they would deliver new irrigation to 347,000ha nationwide over the next 15 years.

This figure includes 270,000 ha in Canterbury.

This development will require a lot more than just water harvesting.

It will involve storage and distribution networks far larger in scale, cost and complexity than existing local schemes.

But we are confident that the economic benefits will be considerable.

Economic modelling suggests that this additional irrigation has the potential to increase our agricultural exports by over $4 billion annually by 2026.

The modelling also suggests that by 2035 GDP would be 0.8 percent a year above what it would have been without this development.

Environmental issues

We are increasingly aware that irrigation development has environmental impacts.

Direct impacts include changes in river flows and ground water levels.

Changes in land use and more intensive farming can have adverse effects on water quality.

This is why it’s so important to carefully manage projects.

Any new irrigation projects will have to show they are sustainable, balancing economic and environmental outcomes.

It is vital that we put in place high standards of infrastructure design, construction and operation.

This needs to be backed up with the best possible land management practices.

Development opportunities and Multiple Use

Current proposals for irrigation development involve infrastructure that is generally larger and more complex than seen in a generation.

The proposed Ruataniwha Water Storage Project in Hawkes Bay is a good example.

If the scheme proceeds, it will represent the largest dam built in decades.

The Manuherikea Catchment Feasibility Study in Central Otago will meanwhile consider an increase in storage in Falls Dam.

These proposals - and others like them - are laying the ground for a new era in the design and function of irrigation storage.

As I mentioned at the start, these proposals also create opportunities for multiple uses.

Among them are recreational activity and values, flows designed to support summer flows, and flushing flows to help manage nuisance weeds and algal growth.

The Government strongly supports development of this kind.

It is why we have put the Irrigation Acceleration Fund (to date $18.5 m in grants provided to 13 projects), and more recently Crown Irrigation Investments Ltd in place.

But our underlying philosophy is by no means irrigation at any cost.

It is all about sensible development that provides for societies’ wider aspirations for the sustainable use and management of water.

Dam safety issues

It is important to remember that from an environmental and safety standpoint, dams can be emotive subjects for the average New Zealander.

Any dam or storage proposal, large or small, can raise concerns and questions.

It is vital that these are addressed at the technical development stage.

The potential for contention and debate around environmental and ecological effects will be familiar to many of you.

Navigating the planning process and the Environment Court to reach your final development plans is rarely straightforward.

Issues around dam safety are also challenging.

Communities downstream of these dam structures have a real and legitimate interest in their personal safety.

This audience will appreciate that dam break analysis is a standard step in the assessment process.

The results of this analysis determine the design parameters required to protect life and property.

Catastrophic worst-case situations are modeled to assess the potential impact. This work is completed using international experience with risk assessment directed by The Building (Dam Safety) Regulations 2008.

The NZ Dam Safety Guildelines, 2000 also apply.

But when placed before the general public, responsible modeling of this kind can be highly controversial.

That’s why it is important to engage with communities and provide as much information as possible.

Seismic activity in recent years is another challenge. The recent experience of earthquake damage to a dam wall upstream of Seddon in Marlborough underlines these concerns.

Therefore I’m pleased to see your programme has a major focus on advances of the assessment of seismic risk, and matching improvements in design.

There is a collective challenge to communicate openly with those living downstream - and to the wider public.

Conclusion

Can I finish by reinforcing that smart, well designed water storage projects can and will make a huge difference to New Zealand.

By promoting efficient water use and improving the reliability of water supply, they can help us generate more value from the land in a sustainable way.

Irrigation can help us in meeting the challenges of low flows, poor water availability and drought.

It won’t be easy at times, and getting it right will take a lot of hard work and engaging with the wider community. But as a government we believe they will play a vital role in New Zealand’s future prosperity.

Thank you and all the best for what looks like a very informative conference.

ENDS

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