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Publication Date

4-2016

Series Number

4872

Abstract

Through the Royalties for Regions funded Southern Forests Water Futures Project, the Department of Agriculture and Food, Western Australia undertook a study to understand the economic benefits of developing new water resources in the Warren–Donnelly catchments in the south-west of Western Australia.

The Warren–Donnelly catchments have long been associated with intensive horticultural activities. The major perennial crops are pome fruit (apples and pears), avocados, stone fruit and wine grapes. The major annual crops are ware potatoes, seed potatoes, processing potatoes and brassica crops for the Perth Market over summer. There are emerging new industries including truffles, summer strawberry production, processing lettuce and export broccoli.

Expanding horticulture in the Warren–Donnelly catchments could be achieved through the development of a series of dams and an integrated distribution system. A system like this has the potential to harvest an additional 12 gigalitres (GL) of new water resources which could then be used for intensive horticultural production.

The overall construction costs, including setting up pipelines and building dams to harvest 6GL of water, are estimated to be about $40 million. Based on a discount rate of 6%, the benefit cost ratio for the project is 7:1, which means that for every $1 of the $40 million invested, $7 of income is generated over the 20-year life of the project.

The number of dams built and the size of the distribution pipework will be governed by the expression of interest from businesses interested in being part of the scheme. For the purpose of this report, developing 6GL of new water resources was seen as a practical starting point. If 6GL is developed, it is estimated that between $20.4 million and $27.6 million could be potentially added to the economy of the south-west every year.

There is potential for developing up to 12GL of additional water for irrigated agriculture using a commercial scheme, which could potentially add $40.8 million to $55.2 million of income to the economy of the south-west every year.

The gross margin analysis in this report is a guide to business feasibility. However, businesses will need to undertake their own due diligence suited to their individual circumstances.

Number of Pages

38

ISSN

1833-7236

Keywords

horticulture, water resources, gross margin analysis, Warren-Donnelly catchments, Southern Forests

Disciplines

Agricultural Economics | Water Resource Management

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Comparative assessment of crops to use potential additional water resources in the Warren–Donnelly catchments

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