Media Release
7 June 2012
Namoi Water Model illustrates that the potential impacts of the MDB Plan are
greater than climate change
The Namoi community can now access a model to look at likely water availability scenarios
under both the proposed Murray Darling Basin Plan and climate change.
The model was developed by Deloitte Access Economics to examine the impacts of a drier
future based on climate change and cuts to entitlements. This modelling was developed
utilising funds from the Australian Government’s Sustaining Basin Communities Program.
Bruce Brown, Chair of the Namoi Councils Water Working Group (comprising local councils,
Namoi CMA, and representatives from Namoi Water and industry) said “the combination of
climate change and the Murray Darling Basin Plan make it likely that the Namoi Catchment
will be drier in the future and part of a drier Murray Darling Basin.
“A best estimate drier future for the Namoi Catchment (0.4% less rainfall and 13.1% less
irrigation water by 2030 (CSIRO, 2008)), reflecting both reduced runoff and reduced
irrigation water availability, would cost the Namoi Catchment economy $38m annually in
reduced Gross Regional Product (GRP). This is a fall in GRP of 0.4% and a reduction of 70
jobs (Full Time Equivalent).
Mr Brown said “for every dollar lost from agricultural production, of which $0.6 is value added
– the Namoi Catchment’s GRP falls by $1.36. This is a negative value-added multiplier of
approximately 2.3.
“For each millimetre of rainfall lost to dryland agriculture (from the long term average) the
cost to the Namoi Catchment economy is $519k in Gross Regional Product.
“For each megalitre of irrigation water lost (from the long term average) the cost to the
economy is $750 in GRP terms. Importantly, as the Namoi Catchment becomes
progressively drier, the value of each additional unit of water lost increases – so the
relationship is not linear.
“This model enables the user to carry out extensive sensitivity analysis of the impacts of
climate change and/or policy issues such as the Murray Darling Basin Plan,” Mr Brown said.
The Murray Darling Basin Plan proposes a reduction of 10gls (intra-valley) to the
Sustainable Diversion Limit (SDL) in the Namoi Catchment.
Mr Brown said “a further reduction in Namoi Catchment SDL of 70gls (Namoi’s potential
share of the 143gls shared Northern Basin component of the MDB Plan) would mean the
Catchment would be hit with an 80gls reduction in entitlements.
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“In economic terms this equates to a reduction in GRP of $55.3m, a decline of 0.6% in GRP
and a reduction in cotton production of 9%.
“Thus the potential impact of the MDB Plan is far greater in GRP terms than that flowing
from the climate change predictions,” Mr Brown said.
The value of water and thus the impacts of less water (caused by either climate change or
policy change) are not uniformly spread across the Namoi Catchment.
“At a community level, the towns expected to be hardest hit are those that are most heavily
dependent upon irrigated agriculture (Wee Waa and Walgett) and/or lack the characteristics
that allow a community to be resilient to negative external change (Wee Waa, Walgett,
Baradine and Quirindi). For example, in Wee Waa, agriculture comprises 90% of the town’s
economy and in Walgett, the figure is 40%.
“This modelling allows Catchment planners and government at all levels to see what
physical, economic and social impacts will occur given reduced water entitlements resulting
from the proposed Murray Darling Basin Plan.
Mr Brown indicated that the modelling could, with some additional work, also be utilised to
explore the economic impacts of mining and gas developments in the Namoi Catchment and
issues like fly in fly out, drive in drive out employment in the mining industry.
John Clements, a Namoi Councils Water Working Group Member and Narrabri Shire
Councillor, welcomed the modelling and said it would be an essential tool to interrogate the
proposed water reforms.
“We said from the start that decisions should be based on fact and now we have the tools to
predict social, environmental and economic impacts on our communities
“This will allow us to drive the discussions to try and get the best possible outcome for our
Catchment. I am particularly concerned about the impacts on Wee Waa which is struggling
to recover from the drought and deserves better than these scenarios from the proposed
MDB Plan,” he said.
Namoi Councils Executive Officer Steve Bartlett said the three models developed by
consultants Deloitte Access Economics on behalf of Namoi Councils will be an extremely
valuable tool for Councils in the region when planning for the future,” Mr Bartlett said.
“Namoi Catchment Councils - Narrabri, Gunnedah, Liverpool Plains, Tamworth and Walcha as from 1 July must have in place a 10 year Community Strategic Plan supported by 10 year
Long Term Financial Plans and 20 year Strategic Asset Management Plans for all
infrastructure under their control.
“Use of the socio economic models developed by Deloitte Access Economics and the
predictive impact data provided will give Councils the ability to better plan the delivery of
future works and services for their communities, be less vulnerable to climate change and be
more resilient within an overall drier future environment” Mr Bartlett said.
Ends…
Media Contact:
Namoi CMA Anne Ferguson- (02) 6742 9202 or 0429-048 867 or
anne.ferguson@cma.nsw.gov.au
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Background information
This study provides two major outputs:
1. Explores the impacts of less water on agriculture, the broader Namoi economy and
on individual communities.
2. Provides the analytic capacity to plan for a “drier” future.
The study provides three (3) models:
1. Land use - determines how land use will change over time given the assumption of a
drier future and/or lower water entitlements/allocations.
2. Computable General Equilibrium (CGE) - determines the total economic effects of
less water through the region, the rest of the Basin, Australia and the world.
3. Community model: determines the impact of reduced water on communities in the
Namoi Catchment based on land and water use, industry structure and socioeconomic resilience.
These three (3) models are informed in the following ways:
Landuse Model:
Extensive consultations with landowners in the Namoi Catchment on crop yields, effects of
efficiency measures and potential land use decisions from reduced water entitlements;
An in-depth review of climate change forecasts for the Namoi Catchment; and
Historical landuse, water allocation and production value of agriculture recorded across the
Namoi Catchment.
CGE Model:
Information on population migration and labour market outcomes during the drought to
estimate the Namoi Catchment’s labour supply elasticity.
ABS agricultural production data, ABS employment by region, TERM-Water, Cotton
Catchment Communities CRC (I-O tables), NSW DPI gross margin on agricultural
production.
Community Model:
ABS collector district data on socio-economic characteristics (employment by industry,
population, income, education, migration, etc).
ABS statistical local area data on land and water use.
Community consultations which were conducted to ground-truth the vulnerability index and
initial findings from the community model.
NB:
The key assumptions of the historical baseline climate scenarios for the Namoi
Catchment are summarised below:
Average annual historical rainfall for the Namoi Catchment is 578mm.
The average viability in rainfall between years (i.e. coefficient of variation) is 27%.
Average annual general security allocations of 69% of the total entitlement volume.
Ends…
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