Economic analysis of new dam infrastructure in Australia

Andrew Buckwell

Andrew is an environmental economist, business strategist and digital developer. He writes on greening business, sustainable communities, climate change, coral reef conservation and ecosystem services markets.

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Posted on: 20 June 2020
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Urannah creek

Photo credit: Jeff Tan - https://urannah.com.au/about/

Client: Mackay Conservation Group | June-July 2020

Mackey Conservation Group

Challenge

The proposed Urannah Dam in regional north Queensland in Australia will flood the Country of the Wiri and Birri peoples of the Birri Gaba Nation. The broader impacts of the dam include enabling expansion of the region's coal mining industry and increase agricultural activities in Great Barrier Reef catchments.

Bulk water investments are politically popular in regional electorates in Australia, but generally do not represent good value for money, which is a requirement of dam infrastructure in Australia. New dams need to achieve full cost recovery from the users of the water.

The push to construct new dams for subsidised irrigation water will likely lead to an expansion of agricultural activities in catchments that flow in the Great Barrier Reef. The reef is already under existential threat from poor water quality and climate change.

Construction of new dams also has broader environmental impacts, such as interrupting environmental flow regimes, which can affect breeding habits of aquatic animals, blocking fish migration routes, loss of habitat from inundation and greenhouse gas emissions from rotting vegetation in the flooded area.

Alternatively, similar levels of government investments in schemes to help farmers invest in improved agricultural practices have historically led to much greater returns on investment.

Actions

The Mackay Conservation Group (MCG) has engaged Altus Impact to undertake an economic analysis of the preliminary business case for the Urannah Dam, particularly to incorporate the social costs of its construction and operations in a reassessment of business case's benefit cost analysis. The MCG is concerned that political motivations will override the poor business case and the dam will be developed, inundating Aboriginal Country under Native Title, important habitats, and add to agricultural pollution flowing into the Great Barrier Reef.

We undertook a literature review to determine key data points for social costs and incorporated these into the original benefit cost analysis. We also interrogated a number of key policy documents and infrastructure investment frameworks to highlight further risks of pursuing the project and highlighted where the proponent's business case did not adhere to stringent guidelines from the Queensland Government on undertaking benefit cost analysis.

We also presented the results to the MCg via a webinar.

Impact

The report will be used by the MCG to challenge the assumptions on the proponent's future detailed business case that has recently been funded by the Australian Government. It is hoped that the report will place additional pressure on the proponents to either improve the proposition or encourage a rethink on the economic viability of the Urannah Dam investment.

The report was presented to the MCG in early November 2020. (Youtube video below.)

Economic Assessment of Urannah Dam:
An evaluation and reassessment of the preliminary business case and benefit cost analysis

The Guardian logo

The report findings were also featured on The Guardian Australia.