Waterlines Report series No. 79, March 2012

This paper is part of a series of works commissioned by the National Water Commission on key water issues. This work has been undertaken by Ecoseal, GHD, Geoscience Australia,
Kempsey Shire Council, NSW Department of Primary Industries – Office of Water and Arche
Consulting Pty Ltd on behalf of the National Water Commission.

© Commonwealth of Australia 2012
This work is copyright.
Apart from any use as permitted under the Copyright Act 1968 , no part may be reproduced by any process without prior written permission.
Requests and enquiries concerning reproduction and rights should be addressed to the
Communications Director, National Water Commission, 95 Northbourne Avenue, Canberra ACT
2600, or email bookshop@nwc.gov.au.
Online/print: ISBN: 978-1-921853-61-6
Sustainable management of coastal groundwater resources and opportunities for further development: executive summary , March 2012.
Authors: JF Punthakey, D Woolley, L Gow, R Brodie, R Green, C Rumpf, A Burke, J Madden,
C Cameron, P Dellow.
Published by the National Water Commission
95 Northbourne Avenue
Canberra ACT 2600
Tel: 02 6102 6000
Email: enquiries@nwc.gov.au
Date of publication: March 2012
Cover design by: Angelink
Front cover image courtesy of Jay F. Punthakey
An appropriate citation for this report is:
Punthakey, JF, Woolley, D, et al 2012, Sustainable management of coastal groundwater resources and opportunities for further development: executive summary , Waterlines report, National Water
Commission, Canberra.
This paper is presented by the National Water Commission for the purpose of informing discussion and does not necessarily reflect the views or opinions of the Commission.
NATIONAL WATER COMMISSION — WATERLINES III

1.
Introduction ................................................................................................................ 1
2.
Background to the project ......................................................................................... 2
2.1
Project objectives and deliverables ................................................................. 3
2.2
Project components and activities .................................................................. 3
3.
Key findings ............................................................................................................... 5
3.1
Hydrogeology, monitoring and hydrochemistry .............................................. 5
3.2
Development of a flow and transport model for the Macleay Sands aquifer .. 7
3.3
Groundwater dependent ecosystems —mapping and risk ............................ 13
3.4
The development and application of early warning indicators to assess the condition of groundwater resources .............................................................. 16
3.5
Socioeconomic assessment ......................................................................... 25
3.6
Discussion ..................................................................................................... 26
4.
Conclusions ............................................................................................................. 32
5.
References .............................................................................................................. 35
Figure 2-1 Overview map of the study area ........................................................................ 2
Figure 3-1 Conceptual model for the Macleay Sands dune aquifer system at
Hat Head (section through South West Rocks borefield) ............................... 6
Figure 3-2 Monitoring bores near Maguires borefield (photo) ............................................. 8
Figure 3-3 Cumulative change in net storage (ML) for pumping and zero pumping scenarios ......................................................................................................... 9
Figure 3-4 Cumulative net storage (ML) for the mid Macleay Sands (layer 3) for average, low and high rainfall scenarios. ................................................ 10
Figure 3-5 Cumulative net storage (ML) for the lower Macleay Sands (layer 5) for average, low and high rainfall scenarios. ................................................ 11
Figure 3-6 Cumulative net storage (ML) for the Macleay Sands aquifer for two pumping scenarios (816 and 2511 ML) for average rainfall. .................. 11
Figure 3-7 Potential risk map for Hat Head National Park under dry and wet (modelled) climatic conditions ................................................................ 15
Figure 3-8 Application of sustainability bands, MACD and volatility to simulated water levels in the lower Macleay aquifer (target Mg –P2) at
Maguires for the P50 –100 pumping scenario. .............................................. 19
Figure 3-9 Application of sustainability bands, and volatility to simulated water levels in the lower Macleay aquifer (MACD target 36873) at South West
Rocks for the P50 –100 pumping scenario. ................................................... 20
Figure 3-10 Comparison of simulated heads at MG –P2 at Maguires for climate and pumping scenarios. ....................................................................................... 21
Figure 3-11 comparison of simulated heads at 36873-3 at South West Rocks for climate and pumping scenarios. .............................................................. 22
Figure 3-12 ASI for the Lower Macleay aquifer for average rainfall with pumping at 50% and 100 % of allocation (P50 –100 scenario) in 2025 ....................... 24
Figure 3-13 ASI for the Lower Macleay aquifer for average rainfall with pumping at 50% and 100 % of allocation (P50 –100 scenario) in 2019 ....................... 24
Figure 3-14 Elements of total economic value ................................................................. 26
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Figure 3-15 Outline of future demand and supply scenarios ........................................... 27
Table 1 Overview of scenarios.........................................................................................27
Table 2 Outcomes under scenario 1................................................................................28
Table 3 Outcomes under scenario 2................................................................................29
Table 4 Outcomes under scenario 3................................................................................30
NATIONAL WATER COMMISSION — WATERLINES V

ASI
BCR
CBA
GDE’s
MACD
ML
NPV
NSW
NWC
NWI
WWAP
Aquifer Stress Index
Benefit-Cost Ratio
Cost-Benefit Analysis
Groundwater Dependent Ecosystems
Moving Average Convergence-Divergence
Megalitre
Net Present Value
New South Wales
National Water Commission
National Water Initiative
World Water Assessment Program
NATIONAL WATER COMMISSION — WATERLINES VI

The demands on many coastal surface water and groundwater resources have increased in recent decades as a result of communities experiencing population growth. Several communities around Australia depend on fresh groundwater from coastal aquifers to meet their potable water supplies. In addition, these aquifers often support a diverse range of ecosystems. One such area, and the focus of this project, is the coastal sand dunes along the
Mid North Coast of New South Wales, between Crescent Head in the south and South West
Rocks in the north.
This report provides a summary of the project and presents the key findings and conclusions against the following major components:
 hydrogeology, monitoring and hydrochemistry
 development of a flow and transport model for the Macleay Sands aquifer
 groundwater dependent ecosystems —mapping and risk
 development and application of early warning indicators to assess the condition of groundwater resources
 socioeconomic assessment and cost –benefit analysis.
The findings of this project and the tools developed will better enable the region’s water resource managers to manage the coastal dune aquifers sustainably so that these systems can continue to provide potable water for their communities while supporting the unique ecosystems that depend on them. Furthermore, many of the methodologies and tools developed for the project can be applied to similar coastal areas across Australia to ensure their groundwater resources are also managed sustainably.
Further information can be found in the five detailed reports prepared for this study:
1. Sustainable Management of Coastal Groundwater Resources and Opportunities for
Further Development: Hydrogeology, Monitoring and Hydrochemistry for the Macleay
Sands aquifer
2. Sustainable Management of Coastal Groundwater Resources and Opportunities for
Further Development: Development of a Flow & Transport Model for the Macleay Sands
Aquifer
3. Sustainable Management of Coastal Groundwater Resources – Final Groundwater
Dependent Ecosystems Report
4. Sustainable Management of Coastal Groundwater Resources and Opportunities for
Further Development: The Development and Application of Indicators to Assess the
Condition of Groundwater Resources – A New Approach for Groundwater Management
5. Sustainable Management of Coastal Groundwater Resources and Opportunities for
Further Development: Socio Economics Report.
NATIONAL WATER COMMISSION — WATERLINES 1

The project study area encompassed the coastal sand dunes along the Mid North Coast of
New South Wales, between Crescent Head in the south and South West Rocks in the north
(see map overview in Figure 2-1).
Figure 2-1: Overview map of the study area. The management area is outlined in orange and the four borefields are indicated by the blue squares. Each of the smaller inset maps corresponds to a borefield.
The careful management and ongoing monitoring needed to ensure that the quality and quantity of the groundwater resource are not adversely affected are particularly important in
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the case of the Macleay Coastal Sands Aquifer, where the borefields are located within a national park.
The key objective was to develop an integrated approach for managing the availability and quality of coastal groundwater resources so that coastal aquifers do not become overallocated, depleted or degraded as a consequence of increasing demand from rapidly expanding urban centres such as South West Rocks.
The second objective was to combine groundwater and seawater intrusion modelling tools, assessment of groundwater dependent ecosystems (GDEs), and a framework for applying indicators and cost –benefit analysis to support the long-term management of coastal sand aquifers. These methodologies can then be applied to similar coastal sand dune aquifers along the North Coast of New South Wales and help ensure that any new groundwater sources are developed sustainably, with minimal impact on GDEs such as coastal dune vegetation communities. Hence the study will help improve management of groundwater resources in coastal dune aquifers in the Mid North Coast region and, potentially, other coastal communities reliant on coastal dune systems for water supplies.
The project has delivered:
 a comprehensive monitoring dataset on groundwater levels and water quality to enable robust analysis of coastal dune systems in northern New South Wales that will contribute to knowledge development on how to better manage fragile coastal systems faced with rising demand
 integration of water quantity and quality considerations with a risk management framework to evaluate sustainable extraction regimes for coastal groundwater systems and, in particular to consider the risk of saline upconing and seawater intrusion
 improved understanding of sustainable extraction regimes for the Macleay Coastal
Sands Aquifer, particularly during peak competing demand periods, and improved assessment of impacts on coastal GDEs
 improved management of aquifers for long-term sustainable use, providing pathways for minimising aquifer stress, and improved assessment of new opportunities for coastal groundwater development that is environmentally sustainable
 trade-offs between consumptive groundwater use and the requirements of dependent ecosystems in coastal regions by combining seawater intrusion models and applying indicators and socioeconomic analysis.
To achieve the objectives, a program of activities was developed and undertaken for each project component:
1. Hydrogeology, monitoring and hydrochemistry:
 shallow and deep drilling
 improve the understanding of the geology and hydrogeology of the Macleay
Sands coastal aquifer
 improve the conceptual model used as a basis for numerical modelling of the aquifer system
 monitor water levels and salinity:
 develop water-level and salinity-monitoring strategy for the Kempsey Shire
Council
NATIONAL WATER COMMISSION — WATERLINES 3

 record and examine water quality and hydrochemistry
 record and examine the behaviour of groundwater levels and salinity.
2. Development of a flow and transport model for the Macleay Sands aquifer:
 modelling the Macleay coastal aquifer
 develop a variable density groundwater flow and transport model —SEAWAT
 improve understanding of groundwater flow and salt transport to ensure long-term availability of low salinity groundwater from coastal aquifers
 assess climate risks and the risk of pumping at full allocation
 assess potential impacts on GDEs
 recommend groundwater management options.
3. Groundwater dependent ecosystems —mapping and risk:
 assess impacts on GDEs
 identify and map potential GDEs
 investigate remote-sensing techniques for monitoring vegetation health
 assess impact of pumping on GDEs
 GDE risk map.
4. Development and application of early warning indicators to assess the contribution of groundwater resources:
 development of indicators
 development of review and response triggers for benchmarking stress
 develop methodology to assess early warning indicators of the risks of groundwater level declines and potential impact on GDEs
 climate scenarios to improve understanding of stresses and management options
 groundwater pumping scenarios to evaluate the risk of excessive drawdowns that may impact on dependent ecosystems.
5. Socioeconomic assessment:
 benefit –cost analysis:
 costs and benefits for various management strategies
 risk analysis of climate scenarios, reduction in the sustainable yield of the aquifer, and costs of alternative supplies.
NATIONAL WATER COMMISSION — WATERLINES 4

Groundwater is an important resource for rural and regional communities and for sustaining regional economies. It is also an important resource for sustaining ecosystems that depend on groundwater. It is playing an increasingly important role in sustaining many coastal towns along the eastern coast of Australia, with population and demographic shifts during the past
10 years accelerating and resulting in rapid growth of coastal towns. Sustainable groundwater use is not only important for sustaining these communities but also for the continued prosperity of the coastal regions, which seasonally attract a large number of visitors to the pristine coastline and the natural environment. These coastal attributes provide vital ecosystem services leading directly to economic benefits.
The coastal dune aquifers along the NSW coast have several beneficial attributes:

They provide a major source of potable water for coastal communities, without which these communities would need to import water from a distant source, incurring large capital costs.

The stored groundwater is of low salinity and close to population centres.

The supply is replenished by rainfall during peak summer demand periods. However, the supply source needs careful management, especially as demand increases.

The coastal dune systems support important groundwater dependent ecosystems that need to be protected.

Groundwater supplied from coastal dune aquifers plays an important role in developing and maintaining coastal communities.
Data from the drilling and monitoring program has been used to develop a conceptual model that was used as a basis for the numerical groundwater and seawater intrusion models. The groundwater flow system for the Macleay coastal sands is conceptualised as a five-layer, unconfined to semiconfined aquifer of varying thickness, overlying Pleistocene marine clays or weathered Palaeozoic rocks shown in Figure 3-1. This number of layers is required to separate the various hydrogeological layers and to model flow and salinity transport with greater accuracy. The ‘basement’ units of marine and/or estuarine clay and, in some locations, weathered Palaeozoic metasediments, are assumed to form a no-flow boundary.
The conceptual model shown in Figure 3-1 consists of a complex system of aquifers and aquitards, with groundwater pumping and boundary flows. The major temporal stresses are rainfall recharge, evapotranspiration and groundwater pumping. Head-dependent flows are used to determine interaction with the estuarine plains along the western boundary. The eastern seaward boundaries are represented by constant head and constant concentration boundaries.
NATIONAL WATER COMMISSION — WATERLINES 5

Figure 3-1:Conceptual model for the Macleay Sands dune aquifer system at Hat Head (section through South West Rocks borefield)
The relatively few test bores in the study area are mostly clustered in small, well-separated areas around the production bores. Information from these bores has been used to derive the representation of the base of the sand bodies used in the model and discussed in detail in the modelling report for the project. The surface represented by the contours on the base of the aquifer represents the old land surface over which the sea transgressed and on which the coastal sand dunes were deposited. The sand bodies are terminated to the south by the rock outcrops of Crescent Head, and to the north by the rock outcrops at South West Rocks
(Smokey Cape). The two sand bodies coalesce and form a continuous but thinner zone around the western side of the rocky outcrops of Hat Head.
The pre-dune land surface shelved generally towards the east, i.e. towards the sea, but in some locations this pattern is disrupted by valley forms presumed to have been the location of small streams draining the hinterland before the start of the sea level rise that led to the deposition of the dunes.
The sand bodies are composed dominantly, but not completely, of fine and even-grained quartz sand. The homogeneity is disturbed by two separate conditions. Thin clay bands have been intersected in some of the bores, but do not appear to be continuous and are thought to be localised lenses. The second feature is the occurrence known as ‘coffee rock’, which is sand similar to that in other parts of the dunes in which an accumulation of humic material has been deposited. It was formed by precipitation of humic material near a past watertable, and hydraulic conductivity of the host sand is reduced to some extent where it occurs. It is generally found at a quite shallow depth and recent drilling has shown that occurrences are widespread and continuous.
The aquifers that are the focus of this study are essentially coincident with the main sand bodies within the dune system. The drilling carried out as part of the study has greatly improved the distribution of bores from which useful information can be obtained. However, there are still large areas with no information, as access to some areas within the national park is difficult. The bores tend to be concentrated in the vicinity of the four main borefields, which provides a useful concentration of data points. Despite this limitation, knowledge of the character of the dunal aquifer system is sufficient to develop a satisfactory conceptual model
(Woolley et al. 2011).
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A numerical groundwater flow and transport model has been developed on the basis of the conceptual model shown in Figure 3-1. Steps in the process are described in the following paragraphs.
Development of a numerical groundwater flow and transport model is an essential part of the investigation and will assist in the analysis of groundwater system and salinity impacts for present and increased pumping and recharge scenarios. The SEAWAT model was used to model potential impacts of seawater intrusion (Guo and Langevin 2002). The model combines the MODFLOW code (Harbaugh and McDonald 1996a; 1996b) for groundwater flow and
MT3DMS (Zheng and Wang 1999) for advective –dispersive transport. A 100 x 100 m grid was used to construct the model of the coastal aquifer covering the narrow strip along the coast from South West Rocks to Crescent Head. The gridded area is between 495 000 east and 508 200 m east and between 6548 500 m north and 6580 600 m north. The model consists of 321 rows and 132 columns and comprises five layers. In addition, the model requires the specification of active cells for each model layer to define the areal extent of the aquifers.
The SEAWAT model was developed and calibrated to model impacts on water levels and salinity to improve understanding of the flow and transport in coastal dune systems being used for water supply. Heads and salinity were measured half-hourly at selected monitoring bores within the three main borefields, South West Rocks, Hat Head and Maguires Crossing.
Thus reliability of the model is highest in the vicinity of the existing borefields, where useful available data is concentrated. Away from the borefields, aquifer parameters are less reliable due to the lack of monitoring data. The monitoring data collected for this study began in
July 2008. Thus there was only two years of data available for model calibration. Improving model calibration can be achieved after sufficient monitoring data has been collected.
Considerable pumping data is missing and for some years there is none. This has added a considerable degree of uncertainty to the model calibration. It is recommended that all production bores be individually metered so that accurate records are available for future modelling studies as well as for improved water accounting and management of the borefields.
Heads along the head-dependent western boundary were estimated as there are no observation bores along this boundary. Monitoring bores at selected locations along the boundary between the aquifer and the estuarine plains would be very useful for understanding flow exchange along the boundary as it has an impact on the South West
Rocks and Maguires Crossing borefields, which are located less than 800 m from the western boundary. There are also selected locations along this boundary that show saline migration into the model area with salinity values exceeding 1000 mg/L, such as between the South
West Rocks and Kinchela borefields and further south below Ryans Cut. Monitoring the water level and salinity along this boundary can provide better information for model calibration and improve reliability of model predictions to system stresses.
Usage was recorded as an aggregate volume for each of the coastal borefields. Pumped volumes were then distributed among production bores based on the estimated percentage for each production bore. This was then used as an input to the groundwater model. In its
NATIONAL WATER COMMISSION — WATERLINES 7

present state this dataset is quite deficient as there are data gaps and, for some years, pumping data is not available. Metering each of the production bores would improve the accuracy of model predictions.
The heads in deeper layers are similar to those in the upper aquifer. However, there is a general downward gradient in head that allows freshwater to recharge the lower Macleay
Sands aquifer. The salinity levels in most parts of the deeper aquifer are below 100 mg/l and only along the seaward boundary does the model show very high salinities due to the constant concentration specified along the seaward boundary.
Loggers were installed in July 2008, so there is only two years of monitoring data, which is insufficient for robust calibration. In addition, the failure of several loggers in some cases resulted in loss of data. Because of the short record of monitoring data and the lack of data, as pumps were not individually metered, the model should be revisited after at least five years of water-level, salinity and pumping data has been collected. This would allow for improved calibration of the model.
Figure 3-2: Monitoring bores near Maguires borefield
Source: Ecoseal Pty Ltd
The water balance for the entire model shows that the major inflows are from rainfall recharge and inflows along the estuarine boundary. Major outflows are constant head boundaries along the seaward boundary to the east and along the estuarine plains.
The average pumping for the calibration period is 816 ML/yr, which is about 26% of the
Kempsey Shire Council’s allocation for these towns. There is a small quantity of pumping from layer 1 (shallowest layer) from production bores 7 and 9 at South West Rocks, which amounts to 15 ML/yr. Although this is a small amount, pumping should be restricted to deeper layers, as the ecosystem is dependent on access to groundwater from the upper Macleay
Sands aquifer (Gow 2011). These pumps should be relocated to areas where the aquifer yield is better and constructed preferably in the mid Macleay or lower Macleay Sands aquifer
(Punthakey and Woolley 2011).
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Most of the extraction is occurring from the mid Macleay Sands (layer 3) and the lower
Macleay Sands aquifer (layer 5). The cumulative change in net storage in Figure 3-3 shows a small difference of 205 ML/yr between pumping and zero pumping scenarios over the calibration period, from 2004 to 2010. This indicates that the current level of pumping, which is about 26% of the allocation, does not result in excessive long-term depletion, despite a period of low rainfall for the five years preceding 2010.
Figure 3-3: Cumulative change in net storage (ML) for pumping and zero pumping scenarios
The net storage term for the South West Rocks borefield in layer 3 and layer 5 is –15 ML/yr and –33 ML/yr respectively, indicating that current pumping from the borefield is not having a significant impact. However, localised drawdown impacts may still require close monitoring, especially during long-duration droughts or prolonged periods of below-average rainfall.
The water balance for Maguires borefield shows the net storage term has gained 2 ML/yr, which indicates that current pumping levels are not stressing the aquifer. Despite an extraction volume of 175 ML/yr there is a net gain in storage of 4 ML/yr in the mid Macleay and a gain of 3 ML/yr in the lower Macleay aquifer.
The outflows from the Maguires borefield for layer 5 show that flows along the eastern coastal boundary are 288 ML/yr, followed by head-dependent flows along the estuarine boundary, which are 183 ML/yr. In this location the dune aquifer system narrows considerably. Thus the extraction volumes should not cause material decrease in outflows, as this would enhance seawater intrusion into the coastal aquifer to the east of Maguires borefield.
By far the largest inflows to the deeper layers are by vertical leakage from the layer above, which indicates that the dune system is rainfall dependent. This also means that in order to ensure ecosystem maintenance one needs to balance extraction from the borefields by ensuring that the upper Macleay sand layer is not excessively depleted.
NATIONAL WATER COMMISSION — WATERLINES 9

Three continuous sequences of 15 years representing periods of average, low and high rainfall between 1900 and 2010 were used to assess the likely impact of current levels of pumping. The cumulative net storage for the mid Macleay Sands (layer 3) and the lower
Macleay Sands (layer 5) are shown in Figures 3-4 and 3-5 respectively for average, low and high rainfall scenarios. The key findings from the scenario runs using the calibrated model are that coastal dune systems are vulnerable to climatic risk such as long periods of belowaverage rainfall, long-duration droughts or future climate change impacts as a result of decreased rainfall.
The water balance for the low rainfall scenario indicates that the current level of pumping does not cause excessive depletion and the aquifer can cope with extractions of 816 ML/yr, but pumping at this rate may result in localised declines during long periods of low rainfall.
These areas would need enhanced monitoring and tighter management. It is further suggested that trigger levels be developed to control pumping to prevent excessive declines in water levels in the upper parts of the Macleay Sands aquifer as it is likely to impact on
GDEs. This is necessary to ensure that continued pumping during extended drought periods does not adversely impact on vegetation health. The setting of triggers and the use of indicators for sustainable management of groundwater resources are discussed in depth in
Punthakey and Woolley 2011. Additional guidance on ecosystem response is also provided in Gow et al (2011).
Figure 3-4: Cumulative net storage (ML) for the mid Macleay Sands (layer 3) for average, low and high rainfall scenarios
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Figure 3-5: Cumulative net storage (ML) for the lower Macleay Sands (layer 5) for average, low and high rainfall scenarios
The clear separation in the temporal response in net storage between the high and low rainfall scenarios, shown in Figures 3-4 and 3-5, suggests that rainfall recharge has a significant impact on the deeper layers. However, despite the long periods of low rainfall the net storage responds quickly to high rainfall events.
A comparison of current pumping (816 ML/yr) and increased pumping P
50 –100
scenarios is shown in Figure 3-6. When the model was simulated with pumping using a combination of
50% and 100% allocation ( P
50 –100
scenario) and average rainfall conditions, it resulted in dewatering parts of the upper aquifer, particularly for the borefields at South West Rocks,
Maguires Crossing and the emergency borefield at Kinchela. This would not be an acceptable outcome as it will have an undesirable impact on the vegetation within the Hat Head National
Park. Furthermore, the extent of the area affected is quite large in the South West Rocks area, which will likely cause vegetation to be water stressed if this level of pumping were to be pursued.
Figure 3-6: Cumulative net storage (ML) for the Macleay Sands aquifer for two pumping scenarios (816 and 2511 ML) for average rainfall
NATIONAL WATER COMMISSION — WATERLINES 11


The upper zone of the Macleay Sand aquifer is vulnerable to dewatering by some existing bores at South West Rocks and these should be replaced by bores drawing water from deeper parts of the aquifer.

Production bores located near the estuarine boundary require close monitoring and should not have high extraction rates.

Pumping should be restricted to bores drawing from the deeper layers because the ecosystem is dependent on access to groundwater in the upper Macleay Sands aquifer.
Bores 7 and 9 at South West Rocks, which are pumping a small quantity (15 ML/yr), should be relocated to areas where the aquifer yield is better and preferably constructed with the main intake screen in the lower Macleay Sands aquifer.

Pumping using a combination of 50% and 100% allocation and average rainfall conditions will result in the dewatering of parts of the upper aquifer, particularly for the borefields at
South West Rocks, Maguires Crossing and the emergency borefield at Kinchela, and should not be pursued.

Establish an expanded monitoring network to improve model performance and prediction.
This has been undertaken in part by project funds, Kempsey Shire Council, and the NSW
Office of Water (NOW). However, additional monitoring bores along the western boundary and selected transects are required.

There is significant boundary inflow from the estuarine plains, which needs further investigation. The construction of monitoring bores along this boundary will provide data which may help to better understand these flow mechanisms and how they impact on the borefields. In some areas these boundary flows are also a source of salt influx, thus monitoring selected bores along the boundary would help improve the management of the borefields and minimise interaction with boundary fluxes.

There is considerable pumping data missing and for some years there is none. This has added a considerable degree of uncertainty to the model calibration. It is recommended that all production bores be individually metered so that accurate records are available for future modelling studies as well as for improved water accounting and management of the borefields.

Each of the monitoring bores should be surveyed so that water levels used as input in the model for calibration are accurate. Some bores had no surveyed elevation and this had to be approximated from digital elevation modelling data, which is not sufficiently accurate for model calibration. Additionally, the use of triggers developed for this project (Woolley et. al. 2011) requires accurate data on surveyed levels for each bore. Kempsey Shire
Council and NSW Office of Water are undertaking surveys of selected monitoring bores.

Future modelling should consider expanding the eastern model boundary into the ocean by at least a few kilometres. The lack of knowledge of the aquifer offshore is a severe constraint. However, this needs to be undertaken in future modelling efforts (Guo 2011 personal comm.).

Further work on adaptation to climate change (lower rainfall and higher sea levels) and impact analysis for coastal water supply areas needs to be undertaken. This can be done when additional data from the new monitoring regime becomes available to improve
NATIONAL WATER COMMISSION — WATERLINES 12

model calibration. Simulating impacts of climate change until 2100 by incorporating rainfall change and sea level rise will provide Kempsey Shire Council and water resource managers with better information on the risk, resilience and adaptability of coastal groundwater systems in the face of increasing uncertainty due to climate change.

A post-audit and review of the project outcomes in three to four years (2014 –15), after completion of the project, should be undertaken to identify strengths and areas for improvement, to address emerging risks and to identify opportunities for improving the project outcomes and benefits for stakeholders.
In summary, the model provides a useful tool for understanding the impact of pumping on the aquifer and to provide guidance on sustainable management outcomes. The central message here is that the current level of pumping is acceptable and does not have a significant impact on the ecosystem. As demand for water increases from coastal communities in response to population growth, it is possible to extract additional water, but this additional extraction will have to be balanced carefully, both spatially and temporally. Any new production bores will need to be accommodated by abandoning bores that are not producing sufficient water and should be located at a maximum possible distance from existing high-value production bores.
In addition, any increase in pumping should take into account localised drawdown impacts, as well as ensuring that the upper layer does not dry out, so that the ecosystem functions remain intact. In the longer run, as demand outstrips supply, Kempsey Shire Council will need to consider piping in water, or other schemes. The framework developed here is applicable to similar high-value sand aquifer systems on the Australian coastline and will be beneficial for councils and communities for sustainable management of coastal groundwater resources.
Groundwater dependent ecosystems (GDEs) are naturally occurring ecosystems that require access to groundwater to meet all or some of their water requirements, so as to maintain their communities of plants and animals, ecological processes and ecosystems services. Often the natural water regime of GDEs will depend on one or more of groundwater, surface water and soil moisture.
A methodology for mapping the potential groundwater dependence of ecosystems has been developed. It is based on a combination of datasets, including vegetation type, depth to watertable and soil landscape data. In any work of this nature, the output is only as accurate and reliable as the input data. Therefore, the work presented here demonstrates the methodology that can be applied to the study of groundwater dependence rather than an absolute GDE rating.
Groundwater dependence varies not only from community to community but also from tree to tree. Consequently, any groundwater dependent dataset produced on a community scale should only be used as a guide and not applied to individual trees. Many of the remotely sensed image pixels in dry sclerophyll areas are contained within a single vegetation community that has been assigned no apparent groundwater dependence. The time series
NATIONAL WATER COMMISSION — WATERLINES 13

profiles generated for several pixels within this community, however, would suggest some limited or opportunistic use of groundwater. This demonstrates the limitations of applying groundwater dependence ratings at a vegetation community level and emphasises the apparent spatial variation in groundwater use. The final GDE mapping product indicates that much of the vegetation within the Hat Head National Park is reliant on groundwater.
When combined with modelled watertable fluctuation data, a GDE map can be used to assess risk. A potential GDE risk map for Hat Head National Park under dry and wet
(modelled) climatic conditions is shown in Figure 3-7. This approach has looked at both climatic and extraction-related watertable fluctuations. An improved understanding of average and maximum rooting depths of the various vegetation communities within the study site would enable the preparation of a more accurate risk map. This could be done by substituting the information in the ‘if, then’ logic statements used to generate the map. These risk maps could then be used to assess the possible impacts of increased pumping on GDEs and identify potentially at-risk areas. Risk maps based on the currently available data are not thought to be sufficiently precise.
MODIS EVI time series profiles can be used in conjunction with watertable and rainfall data to identify trends in vegetation greenness (and inferred health) at particular locations. This tool is limited by the 250 m² spatial resolution of MODIS and the availability and reliability of watertable and rainfall data. Trends can also be disrupted by fire history, topography, soil, landscape and geology, not to mention variability in canopy cover, dominant species composing the canopy cover and the composition of the understorey. The time lag between changes in watertable depth and observed response in vegetation greenness is another possible limitation of this tool. Consequently, any derived monitoring tool would only function as a guide to ecosystem greenness (and inferred health). A declining trend should trigger further investigation, be it more detailed examination of watertable levels and rainfall rates, or field (vegetation) investigations to better understand the drivers behind observed trends.
The three active borefields situated in the Hat Head National Park —South West Rocks, Hat
Head and Maguires Crossing —pump groundwater from an average depth of 25 m. While a number of highly dependent GDEs have been identified, modelled watertable impacts (based on current pumping) result in only 2% or 0% of vegetation at high risk (under extended dry and wet conditions respectively). Hence it is unlikely that current pumping rates will affect the watertable and associated GDEs. This is also supported by the EVI time series data. Overall,
MODIS EVI pixels observed as part of this study indicate vegetation health was maintained for most of the 2000 –08 period. Where declines were observed, the trends were minor and reversed after large (> 150 mm) rainfall events.
Under a fairly modest pumping model (five years at 50% of allocation, five years 100% allocation, five years 50% allocation) both the South West Rocks and Kinchela borefields are detrimentally impacted. At both locations, head values of the shallow aquifer are predicted to drop below the bottom of the aquifer. The changes in watertable levels would have a detrimental effect on a large area of groundwater dependent vegetation in the South West
Rocks borefield. The modelling, in conjunction with GDE risk mapping, indicates that neither
NATIONAL WATER COMMISSION — WATERLINES 14

South West Rocks nor Kinchela borefields, in their present configuration, could be pumped at more than 50% of the current allocation without substantially increasing the risk to GDEs.
The likely impact of pumping on the groundwater system, under a number of scenarios assuming varying rainfall and climate conditions, has been determined by using the numerical models developed for this project. The consequent impact on GDEs might therefore be minimised by comparing the ongoing water-level observation data with the predicted impact on water levels and adopting appropriate management procedures. For example, if a prolonged decline in watertable levels is observed, a groundwater management strategy, such as reduced extraction (or short-term shut down) of the relevant bore, could be implemented. Water levels could then be monitored to observe the rate and level of recovery.
This could also be coupled with vegetation health observations, providing an additional monitoring parameter available to groundwater managers.
Figure 3-7: Potential risk map for Hat Head National Park under dry and wet (modelled) climatic conditions
Derived from the GDE map, modelled watertable depths and fluctuations, and vegetation subformation. No high risk areas were identified under wet conditions.
NATIONAL WATER COMMISSION — WATERLINES 15

Finally, another way to meet an increase in water demand would be to optimise the borefield.
This would entail retiring inefficient bores and/or bores at insufficient spacing and drilling new ones at better locations, consequently creating a more evenly spread stress on the shallow parts of the aquifer.
The development of indicators for managing water resources has been recognised as the cornerstone of the World Water Assessment Programme (UNESCO 2003). Although difficult to identify and develop, indicators are increasingly playing a significant role in the assessment of water resources. Indicators can be used to serve a variety of technical and policy goals, such as the improvement of water resource management policy, through better assessment of the water resource situation (Falkenmark and Widstrand 1992; Lawrence et al. 2002).
This aspect of the study demonstrates the application of indicators to provide early warning of the onset of stress on the groundwater system for the Macleay Sands coastal aquifer. The indicators developed, including sustainability bands, Moving Average Convergence –
Divergence (MACD) and volatility, were adapted from technical indicators used routinely in the financial markets by analysts and traders. To allow quantitative assessment of indicators, two new triggers have been introduced: a review trigger that signals the need for enhanced monitoring and surveillance, and a response trigger that signals the need for a management response to minimise an undesirable impact on the resource. In addition, an aquifer stress
NATIONAL WATER COMMISSION — WATERLINES 16

index has been developed to assess potential hot spots and to assess the level of stress being imposed on the aquifer in response to climatic or anthropogenic stresses.
Selecting suitable indicators for assessing groundwater management requires an understanding of key groundwater management issues. These include the use of groundwater, the demands on the aquifer, possible threats to the aquifer, and the impacts of intervention measures on the overall functioning of the aquifer systems under consideration.
For indicators to be useful they must be able to support sustainable management of groundwater resources. The indicators and the framework developed here can be applied to improve sustainable management of high-value dunal sand aquifer systems on the Australian coastline and will be beneficial for councils and communities that need to balance the groundwater take to meet community demand with environmental water needs. Such needs are equally important as they play an essential role in preserving vital ecosystems in coastal areas. High-value ecological assets such as the Hat Head National Park attract many visitors and tourists who provide much-needed economic stimulus for regional communities. Getting the balance right is the key to prosperous and sustainable coastal communities.
The use of indicators allows comparison of different management strategies and provides information on the system in an understandable way. They can therefore provide an important tool for policymakers, managers and the public. Indicators can also be used to evaluate the effect of policy actions and plans and help set new directions. The most common use of indicators is to describe the state of the resource and its response to management.
This study demonstrates the application of indicators for early warning of the onset of stress on the groundwater system in the Macleay Sands coastal aquifer. The methods and procedures developed demonstrate the application of these indicators. The indicators, including sustainability bands, MACD and volatility, were adapted from technical indicators used routinely in the financial markets by analysts and traders (Punthakey and Woolley
2011). To allow quantitative assessment of indicators two new triggers have been introduced: a review trigger that signals the need for enhanced monitoring and surveillance and a response trigger that signals the need for a management response to minimise an undesirable impact on the resource (Punthakey and Woolley 2011).
In addition, an aquifer stress index was developed to assess potential hot spots and assess the level of stress being imposed on the aquifer in response to climatic or anthropogenic stresses. These tools can be used in the context of a single bore or a model cell, or a region to improve groundwater management. They were tested by using monitoring bore records and modelled responses for various climate and pumping scenarios. Detailed explanations on the development and application of indicators, the review and response triggers and the
Aquifer Stress Index can be found in Punthakey (2005); Punthakey (2007a; 2007b); and
Punthakey and Woolley (2011).
The application of sustainability bands, MACD and volatility, together with the review and response triggers, identified a number of locations in the South West Rocks and Maguires borefield that require close monitoring, and in some of these cases the need for a management response is indicated. The following section uses two examples, a monitoring
NATIONAL WATER COMMISSION — WATERLINES 17

bore in the Maguires Crossing borefield (MG –P2) and at South West Rocks borefield near production bore P12 (36873), to illustrate the application of these new concepts. Additional analyses for other locations in the Hat Head National Park are presented in Punthakey and
Woolley (2011).
The pumping scenario, which involved simulating pumping at 50% of allocation for five years, followed by pumping at 100% of allocation for five years, and subsequently followed by five years of pumping at 50% of allocation (hereafter referred as P
50
–
100 scenario) is simulated with average rainfall conditions. The heads simulated at various targets corresponding to monitoring bores are also used to demonstrate the application of indicators and the review and response triggers. For a discussion of modelled scenarios see Punthakey et al. (2011).
During long periods of below-average rainfall, as experienced from 2002 to 2007, the observation bore MG –P2 in the Maguires Crossing borefield breaches the review trigger and, for a short period, the response trigger is also breached. Thus continued monitoring is required at current levels of pumping.
The response for the P
50
–
100
pumping scenario in Figure 3-8 shows a rapid drop in water levels to below the response trigger, indicating pumping at a combined 50% and 100% of allocation will significantly deplete water levels in the aquifer and this is likely to impact on the shallow aquifer. There is an increase in water-level decline between 2015 and 2020 when pumping is increased to simulate 100% of allocation and the subsequent recovery in water levels as pumping rates are eased back to 50% of allocation. The water-level decline below the response trigger from 2016 to 2020 indicates to the resource manager that a management action, such as a reduction in pumping rates, is required. Thus pumping at
100% of allocation is not recommended.
A higher pumping rate is not recommended at this location as it is likely to result in significant declines in the shallow water table, which will in turn impact on water availability for significant stands of groundwater dependent terrestrial vegetation. Any increase in pumping should not only be accompanied by monitoring at multiple levels in the aquifer but should also be spread out to reduce the impact in any one location. The Maguires Crossing borefield area has significant groundwater dependent terrestrial vegetation, which is likely to be impacted if high rates of production were to be allowed
Figure 3-9 shows the response for bore 36873, which is close to the production bore R12 in the South West Rocks borefield. The P
50 –100
pumping scenario shows a rapid drop in water levels to below the response trigger, indicating pumping at a combined 50% and 100% of allocation will significantly deplete water levels in the aquifer and this is likely to impact on the shallow aquifer. Figure 6-11 shows a clear acceleration of water-level decline between 2015 and 2020 when rates are increased to simulate pumping at 100% of allocation and the subsequent recovery in water levels as rates are eased back to 50% of allocation. The waterlevel decline below the response trigger from 2016 to 2020 is similar to the response observed for the Maguires bore in Figure 3-9. Both bores show a clear demarcation of impacts between pumping at 50% allocation versus 100% allocation. Thus pumping at 100% of allocation is not recommended at this site. This is particularly important for South West
Rocks where there is a concentration of production bores.
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Figure 3-8: Application of sustainability bands, MACD and volatility to simulated water levels in the lower Macleay aquifer (target Mg –P2) at Maguires for the P50–100 pumping scenario
NATIONAL WATER COMMISSION — WATERLINES 19

Figure 3-9: Application of sustainability bands, MACD and volatility to simulated water levels in the lower Macleay aquifer (target 36873) at South West Rocks for the P50
–100 pumping scenario.
Figure 3-10 summarises the simulated heads for MG –P2 at Maguires Crossing for three climate scenarios and one pumping scenario, along with the review and response triggers.
Heads for the average and high rainfall scenarios are above the review trigger, indicating the current level of pumping is not impacting aquifer adversely. For the low rainfall scenario the heads at times briefly breach the review trigger but do not breach the response trigger, which indicates that the current level of pumping could be sustained during long periods of belowaverage rainfall. For the P
50 –100
pumping scenario the extraction rates, particularly from 2015 to 2020 when the production bores are operating at 100% of allocation, show a rapid decline and breach of the response trigger. This indicates that pumping at these levels is likely to adversely impact on the aquifer and is not recommended. For instance, the upper Macleay
Sands in the vicinity of this bore will dry out, causing adverse impacts on groundwater dependent terrestrial vegetation.
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Figure 3-10: Comparison of simulated heads at MG
–P2 at Maguires for climate and pumping scenarios
Figure 3-11 shows that modelled heads for the three rainfall scenarios are above the review target, indicating that the existing pumping is not affecting the aquifer adversely. However, pumping at 100% of allocation results in simulated heads falling below the review trigger in a few months, and subsequently falling below the response trigger from 2021 to 2025. This indicates that pumping rates are too high and will likely result in excessive lowering of water levels in the upper Macleay aquifer and drying out of the aquifer in the vicinity of production bore P12. Thus pumping at 100% of allocation is not recommended. Any increase in pumping should not only be accompanied by monitoring at multiple levels in the aquifer but should also be spread out to reduce the impact in any one location. The South West Rocks borefield area has significant groundwater dependent terrestrial vegetation that is likely to be impacted if high rates of production were to be allowed. Given the location of the nearby production bore
R12, it would be advisable to install loggers in the upper, mid and lower aquifers (layers 1, 3 and 5) to monitor water levels and salinity changes in bore 36873.
High rates of pumping have a significant impact in the vicinity of the production bores and a minimal impact at a distance from the borefields. However, local drawdown impacts are significant for the high-pumping scenario ( P
50 –100
), which could result in dewatering parts of the upper Macleay Sands aquifer and impact ecological assets within the Hat Head National
Park. High rates of pumping can have a severe impact on some locations where there is a combination of aquifer properties and concentration of production bores. This is evidenced from the water level response at bore 81075, which shows that for both the low rainfall ( C
LR
) and the P
50 –100
scenarios the water levels are below the response trigger (i.e. the trigger level is breached). Any attempt to increase pumping in this location will result in a significant decline in water levels. The P
50 –100 scenario shows that, when the bores are pumped at 100% of allocation between 2015 and 2020, the drawdown at this site is up to 25 m, resulting in dewatering of multiple layers. Clearly, this type of impact would result in severe loss of vegetation in the vicinity of this bore.
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Figure 3-11: Comparison of simulated heads at 36873-3 at South West Rocks for climate and pumping scenarios
At current pumping rates of 816 ML/yr the water level response to variability in rainfall is significant. In this case the low rainfall scenario has a greater impact than pumping, as shown in bore 81096 located 1.4 km south of the Hat Head borefield and 5.7 km northeast of
Maguires borefield. Comparing the water-level response for bore 81096 for the low rainfall scenario C
LR
(pumping at 816 ML) with the average rainfall scenario P
50 –100
(pumping at 50% and 100% of allocation) shows that the water levels for C
LR
breach the review trigger, whereas for P
50 –100
the water levels are above the review trigger, indicating there is minimal impact from pumping at Hat Head and Maguires at this location. It is important that Kempsey
Shire Council monitor the impact of climatic variability, such as extended droughts and future climate change, as the latter is projected to result in decreased rainfall for the Mid North
Coast, putting greater stress on the groundwater dependent ecosystems in the Hat Head
National Park.
It is noteworthy that the review and response triggers derived from the use of monitoring data and model results from an average rainfall scenario show remarkable agreement with the
MACD, which is purely a trend indicator. The use of the review and response triggers is a simple and elegant mechanism to alert resource managers that a management action is required.
The Aquifer Stress Index (ASI) is a useful tool for identifying the spatial response of climate or pumping induced stress on the groundwater system. The ASI gives a snapshot of the condition of the aquifer for a specified planning period relative to the base scenario
(Punthakey 2005; Punthakey and Woolley 2011).
The spatial distribution of the ASI, generated from the numerical model, at the end of 15 years in 2025 for the low rainfall ( C
LR
) and high rainfall ( C
HR
) shows large areas of the model with blue cells for the C
HR
scenario compared with the C
LR
scenario. Thus there is a lower ASI or lower levels of stress. This is consistent with the conclusion that rainfall is important for recharging the lower Macleay Sands aquifer.
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In Figure 3-12, the ASI for the P
50 –100
scenario is shown at the end of 15 years, in 2025. There are a significant number of cells where the ASI has exceeded 1, and these areas are potential hot spots. Most of the cells are concentrated in the South West Rocks borefield and towards the northeast along the boundary with the headland at South West Rocks. It is recommended that a monitoring bore be situated in this area to better understand the flow regime there.
There is also a large increase in the area showing ASI values in the 0.3 to 0.8, range, indicating increased stress surrounding the borefield.
In Figure 3-13 the ASI for the P
50 –100
scenario for January 2019 shows a significant adverse impact with very high stress on the aquifer, as shown by the large number of ASI cells exceeding 1.5. These areas are potential hot spots and there is a high risk of drying out the top layers, and also a few cells, in the deeper layers. There are also a significant number of cells with an ASI in the 1 to 1.5 range, indicating these areas are potential hot spots. The very high stress observed in January 2019 is due to the impact of the production bores operating at 100% of allocation for the preceding four years, from 2016 to 2019.
For the two ASI periods, in 2019 and 2025, the total area of cells exceeding 1 is 220 cells in
January 2019 —i.e. 3.1% of the area is at risk of very high stress if the system is pumped at these levels. If the pumping is reduced to 50% of allocation from 2021 to 2025 the number of
ASI cells exceeding 1 drops to 75, indicating that only 1.1% of the area is at high risk of stress.
The ASI offers a quick snapshot of the spatial stress response of stress on the aquifer and the impact of high-pumping stresses. Future increase in pumping from this aquifer should pay special attention to high risk cells to ensure that the ASI does not exceed 1.
A range of options can be explored to manage hot spots. They may include reduced pumping, varying the timing of operation if feasible and/or relocating pumping to areas that offer potential for further groundwater development such as the areas between Hat Head and
Maguires identified by bore 81096-3.
Indicators help improve water resource management through better assessment of the water resource situation in a given hydrological, hydrogeological or spatial unit by identifying critical problems and their causes and by providing a basis for comparison. This in turn leads to improved reporting on monitoring of progress against set targets and improved evaluation of water policy strategy and actions. Indicators also provide a basis for setting more appropriate national targets linked to policy goals and national legislation reforms and may provide for better mobilisation of resources.
The impact of three climate scenarios —for average, low and high rainfall conditions—showed that during periods of low rainfall or drought conditions the water levels in many of the bores within the influence of the production bores showed declines that breached the review trigger and, for short periods, the response trigger, requiring continued monitoring of the borefields. If pumping is kept at current levels the dune aquifers will continue to supply the freshwater needs of the coastal communities. However, the groundwater system is likely to be impacted by periodic droughts. At these times the extraction of the groundwater needs careful management to ensure that ecosystem functions are maintained and remain healthy. Thus it is important that Kempsey Shire Council monitor the impact of climatic risk such as extended droughts and future climate change that is projected to result in decreased rainfall for the
NATIONAL WATER COMMISSION — WATERLINES 23

Mid North Coast. This would result in reduced water availability and place greater stress on the groundwater dependent ecosystems in the Hat Head National Park.
Figure 3-12: ASI for the lower Macleay aquifer for average rainfall with pumping at
50% and 100 % of allocation (P50
–100 scenario) in 2025
Figure 3-13: ASI for the lower Macleay aquifer for average rainfall with pumping at
50% and 100 % of allocation (P50
–100 scenario) in 2019
The ASI offers a quick snapshot of the spatial response of stress on the aquifer and the impact of high-pumping stresses. Future increase in pumping from this aquifer should pay special attention to high risk cells to ensure that the ASI does not exceed 1. Although the
Macleay Sands aquifer offers an excellent renewable resource, it is a fragile system supporting high-value groundwater dependent ecosystems. The nature of these systems is quite different from systems with large storages, which can withstand prolong periods of high rates of extraction. The hot spots with an ASI > 1 can be subject to scrutiny and changed management strategies. To manage hot spots or hot zones, a range of options can be explored. These may include reduced pumping, varying the timing of operation if feasible, and/or relocating pumping out of the affected area to areas that offer potential for further groundwater development.
NATIONAL WATER COMMISSION — WATERLINES 24

Finally, it should be noted that application and analysis of ASI can also be undertaken for a cell or group of cells representing a zone, or for an entire layer. Moreover, the impact of a changing ASI during the planning period can also be analysed. This is particularly important in groundwater systems with large storage where the objective may be to increase pumping for a specified time to manage the aquifer at a different equilibrium. In any such undertaking the selection of target drawdown that has been agreed with stakeholders and resource management agencies is essential.
The application of indicators and indices alerts resource managers when to institute a management response that can limit the amount of stress on the aquifer. Moreover, the setting of triggers can help water users decide on pumping levels relative to other users of the resource and to set allocation limits on aquifer zones as well as on individual licences. In the not too distant future this approach will find applications in real time or near real time assessment of aquifer response to stress by providing early warning signals to mark the onset of stress. This in turn will allow resource managers and water users to improve sustainable management of groundwater systems
In practice, the selection of appropriate trigger levels will involve managers of the resource and water users. The key point to remember though is that these triggers are derived using the framework proposed here and are not permanently fixed. Triggers can and should be reset in response to changing circumstances such as to adapt to the impacts of climate change or to maintain the health of vital ecosystems. The application of indicators and triggers extends beyond just better management of water resources; it heralds a new approach that helps managers to account for ecosystem needs and encourages an management framework that can adapt to changing circumstances such as prolonged droughts and climate change impacts. Healthy food production systems and ecosystems are a vital component of building resilience for food and water security.
The main aim of an economic evaluation is to provide information that will assist decision makers to make efficient use of available resources to maximise the wellbeing or welfare of the community. Economic assessment aims to account for a range of values, including financial, environmental and social issues.
The accepted technique for assessing changes in the economic wellbeing of a community is cost –benefit analysis (CBA), which assesses the ongoing benefits to society. For some assessments it may be necessary to provide additional information as an adjunct to the economic efficiency analysis such as the financial aspects of the proposal, including the pricing of outputs or services supplied.
Figure 3-14 provides an overview of the economic considerations that are taken into account
when assessing a project such as the utilisation of groundwater resources to meet demands for urban water supplies. Use values include the consumption of water for drinking and domestic purposes. There may also be assets such as the national park that are negatively affected by overuse. The value that society places on the characteristics can be derived by use values and non-use values in that an individual does not have to directly visit a park to place a value on its existence and health.
NATIONAL WATER COMMISSION — WATERLINES 25

Figure 3-14: Elements of total economic value
The socioeconomic assessment included the following tasks:

Identification of options and impacts —the results from other components of this study were used to assess options that incorporated groundwater.

Regional demand profiling —a regional profile was produced that outlined some of the significant social, economic and environmental characteristics of the area.

Quantitative assessment of the economic costs and benefits —a CBA was conducted to value the costs and benefits associated with the potential options. The benefits associated with options are predominantly related to improved water security and/or avoidance of alternative infrastructure development costs. Costs are generally associated with the groundwater infrastructure development and the avoidance of environmental impacts.

Outline of qualitative analysis —costs and benefits that cannot be quantified were discussed qualitatively. This included equity benefits, which cannot be assigned a monetary value, and other benefits, which cannot be quantified due to limited information or a high degree of uncertainty. Any social impacts were also considered in this section.
This project required the modelling to consider extraction rate scenarios to test the potential impacts. These then inform the assessment of the costs and benefits of various management scenarios based around the pumping regime for the next 15 years.
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The operating environment includes a range of variables, including:
 pumping levels (current, and 50% and 100% of allocation)
 climate (specified, using historical records)
 demand (driven by population growth).
Three broad scenarios have been outlined and informed by the groundwater model:
 baseline –scenario 1: current pumping levels with average rainfall and steady demand
 scenario 2: current pumping levels with average rainfall and increasing demand
 scenario 3: 50% of allocation, with average rainfall with increasing demand.
The groundwater model was run to test the impacts of 100% allocation for five years.
However, this is not reported as it is an unlikely scenario. The scenarios aim to test the sustainable yield of the groundwater resource, i.e. are there situations which will lead to depletion and environmental damage?
Table 1: Overview of scenarios
Scenario Pumping
(ML/yr)
816
Climate Demand
Baseline — current
Scenario 2
Scenario 3
816
1583
Average
Average
Average
772 ML/yr
Increasing —3.0%/yr
Increasing —3.0%/yr
Figure 3-15 provides an overview of the demand and supply assumptions over the next
15 years. An increase in the maximum extraction under scenario 3, which would require additional capital expenditure, would meet estimated demand increasing at 3% per year.
Figure 3-15: Outline of future demand and supply scenarios
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The current situation and management strategy would have fixed pumping at current rates, which is below the current licence volume. The groundwater modelling indicates that stress caused by current levels of pumping for average, low and high rainfall conditions are not resulting in long-term declines. The water levels respond rapidly to rainfall recharge
(Punthakey and Woolley 2011).
Pumping at these rates will result in lowering of water levels in the upper Macleay aquifer and, in certain areas, the drying out of the aquifer in the vicinity of major production bores. These high rates of pumping had minimal impact at a distance from the borefields.
The three active borefields situated in the Hat Head National Park —South West Rocks, Hat
Head and Maguires Crossing —pump groundwater from an average depth of 25 m. While a number of highly dependent GDEs have been identified, modelled watertable impacts (based on current pumping) result in only 2% or 0% of vegetation at high risk (under extended dry and wet conditions respectively). Hence it is unlikely that current pumping rates will affect the watertable and associated GDEs.
Table 2: Outcomes under scenario 1
Outcome
Number of households Y1
Average household usage
Number of households Y15
Estimate
2465
313 kl
2465
Estimated demand Y15(ML) 772
Comment
Based on population figures
If no change in household consumption levels
Lost revenue from shortfall over 15 years
Based on current outcomes
Demand greater than supply NA
Loss in income ($ million) 0
Effect on environment (ha) 0
At current pumping rates of 816 ML/yr the water levels response to variability in rainfall is significant. In this case the low rainfall scenario has a greater impact than pumping.
The Sustainable management of coastal groundwater resources report (Gow 2011) identified a number of highly dependent GDEs. The modelled watertable impacts, based on current pumping rates, result in 2% or 0% of vegetation at high risk (under dry and wet conditions respectively). It is unlikely that current pumping rates will affect the watertable and associated
GDEs.
Under scenario 2 the groundwater management strategy involves a fixed pumping equivalent to the current extraction rates, which is a volume below the current licence volume. With an increase in population of 3% per year demand will exceed the average volume pumped of
816 ML per year in year 3 (Table 3).
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Table 3: Outcomes under scenario 2
Outcome
Number of households Y1
Average household usage
Number of households Y15
Estimate
2465
313 kl
4562
Estimated demand Y15(ML) 1168
Comment
Based on population figures
If no change in household consumption levels
Lost revenue from shortfall over 15 years
Demand greater than supply Year 3
Loss in income ($ million)
Total over 15 years
Average loss per year
Effect on environment
4.38
0.29
0 ha Based on current outcomes
The discounted lost revenue under this scenario, based on current pricing structures, is
$2.06 million ($4.38 million undiscounted).
This analysis provides an indication of the costs of not meeting demand. Grafton and Ward
(2007) have estimated the costs of restrictions in Sydney and found that the welfare costs of permanent and high-level mandatory water restrictions can be very large. They found that using mandatory water restrictions for the period 1 June 2004 to 1 June 2005, on a per capita basis the loss in surplus was approximately $55 per person or about $150 per household —a little less than half the average Sydney household water bill in 2005.
These findings concur with those of Brennan et al. (2007), who estimated the welfare costs of mandatory water restrictions per household in Perth. The welfare loss of a twice per week limit on the use of sprinklers costs about $100 per summer, while the cost of a complete ban on sprinklers ranges from $347 to $870. In their study, they found bans on the use of sprinklers can be substituted by household labour through the use of hand-held hoses or watering from buckets. This work is based on a household production function and experimental studies on time-for-leisure activities that can be priced.
The modelled watertable impacts on the environment and the GDE risk mapping indicates that either South West Rocks or the Kinchella borefields could not achieve pumping at greater than 50% allocation without substantially increasing the risk to GDEs.
Under scenario 3 extraction rates would increase to a level that represents 50% of the licensed volume across the three borefields. Under a pumping model (five years at 50% of allocation, five years at 100% allocation and five years at 50% allocation) both the South
West Rocks and Kinchela borefields are detrimentally impacted. The water balance results in an increased risk of migration of saline water into the aquifer.
NATIONAL WATER COMMISSION — WATERLINES 29

At both locations, head values of the shallow aquifer are predicted to drop below the bottom of the aquifer. The changes in watertable levels would have a detrimental effect on quite an extent of groundwater dependent vegetation in the South West Rocks borefield specifically.
The modelling, in conjunction with GDE risk mapping, indicates that neither South West
Rocks nor Kinchela borefields, as they currently exist, could be pumped at greater than 50% allocation without substantially increasing the risk to GDEs.
Table 4: Outcomes under scenario 3
Outcome
Number of households Y1
Average usage Y1
Estimate
2465
313 kl
Comment
Based on population figures
Number of households Y15
Estimated demand Y15 (ML)
4562
1168
Demand greater than supply Year 3
Loss in income ($ million)
Total over 15 years year
Average loss per
Effect on environment
Loss in value ($ million)
0.6
145 ha
If no change in household consumption levels
Lost revenue from shortfall over
15 years
$0.22 million Using a value of $1500 per ha
Modelling was carried out to show that when the production bores were operating at 100% of allocation for five years, there was a significant decline in the watertable.
The dewatering of the upper aquifer in response to pumping at full allocation for five years has a negative impact on the vegetation within the Hat Head National Park. The extent of the area affected is quite large in the South West Rocks area, which will likely cause large areas of vegetation to be water stressed at this level of pumping.
The strategic situation for meeting the demand for water in the region has a high degree of uncertainty. The key points of uncertainty are:
 future demand for water, and
 future supply from groundwater.
There are other future options to supply water. As a medium-term strategy the groundwater model provides an indication of the length of time that the groundwater source can meet projected demand.
It may be worth considering the option to activate an alternative source such as a pipeline to a surface water source. It is important to estimate the lead time for the commissioning of the asset.
The indicative assessment of development costs and the high capital costs of building a pipeline have implications for the development of the groundwater. An appropriate monitoring regime that allows the extraction of 50% of the allocation may be worthwhile if it allows a delay in the construction of a high-cost alternative such as a pipeline.
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The right or option to access an alternative supply is valuable because it allows an investor to delay a final decision on purchasing a relatively more expensive option until there is greater certainty about the future risks.
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The modelling highlights that current levels of pumping for average, low and high rainfall conditions have shown that pumping stresses are not resulting in long-term declines and the water levels respond rapidly to rainfall recharge (Punthakey and Woolley 2011).
An important observation is that rainfall recharge has a significant impact on net storage.
Despite the long periods of low rainfall the net storage responds quickly to high rainfall events.
Punthakey and Woolley (2011) also noted that high rates of pumping have a significant impact in the vicinity of the production bores and have a minimal impact at a distance from the borefields.
The groundwater modelling has been used to identify a potential new location for the installation of a new borefield between Hat Head and Maguires Crossing. This location is located far from existing borefields and development at this site would have minimal impact on the upper aquifer and on the GDE vegetation in that area. Development at this location could be considered if a trade-off with existing bores were to occur in order to stay within existing allocations.
To manage hot spots, the following options could be explored:
 reduced pumping
 varying the timing of operation if feasible, and/or
 relocating pumping out of the affected area to areas that offer potential for further groundwater development.
Localised drawdown impacts resulting from increased pumping will need to be taken into consideration to ensure that ecosystem functions remain intact and the upper layer does not dry out. In the longer term, as demand increases, Kempsey Shire Council will need to discuss other management options.
The groundwater modelling indicated that an extraction rate of 50% of allocation was possible. This would entail capital expenditure and meet future demand for the next 15 years if there were an increase in demand of 3% per year.
The modelling also showed that when the production bores were operating at 100% of allocation there was a significant decline in the watertable. Pumping at these rates will result in lowering of water levels in the upper Macleay aquifer and, in certain areas, the drying out of the aquifer in the vicinity of major production bores. These high rates of pumping had minimal impact at a distance from the borefields.
The Groundwater dependent ecosystems report identified a number of highly dependent
GDEs in the area. The modelled watertable impacts (based on current pumping) result in only
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2% or 0% of vegetation at high risk (under dry and wet conditions respectively) (Gow 2011). It is unlikely that current pumping rates will affect the watertable and associated GDEs.
The environmental impacts were also modelled taking into account the various proposed pumping scenarios. Under the pumping model with five years at 50% allocation, five years at
100% allocation and five years at 50% allocation, both the South West Rocks and Kinchella borefields would be detrimentally impacted. Furthermore, the modelling and GDE risk mapping indicates that either South West Rocks or the Kinchella borefields could not achieve pumping at greater than 50% allocation without substantially increasing the risk to GDEs.
When informing decisions in an adaptive management framework, the value of managing future uncertainty is important.
When managing the groundwater resource in the region, information from the groundwater modelling and monitoring, climate records and population growth will all reduce uncertainty.
The development of an appropriate strategy in response to population growth and/or climate change is often based on a worst-case scenario. If dealing with a worst-case scenario involves high costs and a different strategy to other scenarios, then the uncertainty can generate high costs.
Options-based methods involve outlining strategies that are flexible and adapting them as information emerges.
In this case, the worst-case scenario involves an increase in water restrictions. This study does not recommend an optimal strategy as this requires significant work to specify and cost supply options. Water supply and the role of groundwater in a portfolio of supply options are important to fully understand the value of groundwater in the region.
Creating access to options such as temporary increases in extraction from groundwater or the pre-approvals for a pipeline can be very cost effective in meeting the demand for water.
Using this type of approach is less likely to result in the early commitment to very large projects but likely to favour investments in water sources that provide significant flexibility.
A number of key uncertainties have been partly addressed by modelling. The collection of information though monitoring and future development will reduce key uncertainties. These include:
 increase in demand
 future sustainable extraction rate
 effect of climate change on extraction rate, and
 least-cost alternative supply.
The use of groundwater for meeting the demand for urban supplies is likely to become increasingly important in the coastal areas of eastern Australia as the pressure from population continues to grow.
These resources may involve a relatively low cost of development. However, their utilisation may require a significant investment in investigations and monitoring regimes.
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The valuation of the extractive and in situ services of groundwater requires an understanding of the hydrology and ecology of the groundwater source.
However, to make an informed decision a range of biophysical information is required. This may include factors such as rainfall, runoff, infiltration and water-balance data; depth to groundwater; confined or unconfined; groundwater flow rates and direction; and in some cases saline water intrusion. The contribution of groundwater to stream flow and the relationships between groundwater and wetland and ecosystems are also important.
The modelling outcomes and the response rates of the groundwater have implications for management. Some groundwater aquifers may be viewed as non-renewable because of the long timeframe required to replenish them. The extraction from shallow aquifers in this region showed a rapid response to rainfall.
The real-options approach should be considered in a situation where there is a range of viable alternative supplies. This approach explicitly recognises that future decisions will be conditional on new information —such as changes in demand and costs. This information can only be acquired over time and with some exploratory investment.
The value of groundwater systems in coastal groundwater aquifers may be in deferring highcost capital expenditure. The investment in understanding groundwater systems and monitoring to allow the maximum sustainable development of these resources may well have a high return if these expenditures can be delayed.
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