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of Agriculture and Forestry Te Manatu Ahuwhenua, Ngaherehere |
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Issue 9 April 2002
From the EditorWater is essential for many farming operations in New Zealand. About 77 percent of all water allocated in New Zealand is for irrigation. It is estimated that 500,000 hectares in New Zealand are irrigated, earning about $1 billion over what would be earned from dryland operations. Water allocation and water quality are becoming majors factor in New Zealand due to increasing demand, greater public awareness of the issues, and overseas markets demanding produce from clean, green production systems. The following MAF RM Update discusses water quality and quantity issues in New Zealand. Duane Redward, Editor |
| In this Issue: |
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The Effect of Changes in Land Use on Irrigation Demand
Nearly all farming sectors have enjoyed increasing prices and profitability over the past three years. The value of pastoral dry matter has increased from approximately six cents per kilogram to at least 10 cents for a typical sheep breeding property. Growing more grass is now very profitable and has increased the potential value and demand for irrigation. Chris Ward reports on a study that investigated the effect of changes in land use on irrigation demand.
In 2001 MAF Policy commissioned a report by consultant Nimmo-Bell & Company Ltd entitled “Water Allocation Issues and Land use Change in New Zealand Agriculture and Forestry to 2010”. This report forecasts likely demand for water resources by simulating a vision of New Zealand agriculture and forestry land use to 2010. Using projected sector profitability, Nimmo Bell forecasts New Zealand land use for 2010 as shown in the following table.
New Zealand Land Use (ha) |
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1990 |
2000 |
2010 |
% increase 2000-2010 |
|
Viticulture |
5,800 |
13,300 |
24,000 |
81% |
Deer |
79,000 |
170,000 |
320,000 |
88% |
Dairying |
1,050,800 |
1,640,400 |
1,906,000 |
16% |
Forestry |
1,305,000 |
1,747,100 |
1,997,100 |
14% |
Horticulture |
82,400 |
102,800 |
110,900 |
8% |
Other pastoral |
12,285,200 |
10,563,800 |
9,901,000 |
-6% |
Arable |
316,000 |
208,500 |
186,800 |
-10% |
According to these estimates, land use for viticulture and deer is forecast to continue rapid growth. While growth in dairying land is expected to decrease from 56 percent between 1990 and 2000 to 16 percent between 2000 and 2010, dairying is still forecast to experience the largest increase in land area at 265,600 ha.
Rapid changes in dairying area have seen the impact of dairy farming on water availability become the focus of considerable public and media interest. The following table shows the regional distribution of forecast dairying growth in New Zealand.
Change in Dairying Area (ha) |
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Region |
1990 |
2000 |
2010 |
Area change |
% change |
2000-2010 |
2000-2010 |
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Waikato |
420,585 |
516,183 |
554,897 |
38,714 |
8% |
Hawkes Bay |
9,627 |
14,456 |
20,238 |
5,782 |
40% |
Taranaki |
151,236 |
209,572 |
234,301 |
24,729 |
12% |
Manawatu |
75,790 |
129,494 |
161,868 |
32,374 |
25% |
Canterbury |
23,207 |
134,529 |
195,067 |
60,538 |
45% |
Otago |
11,159 |
59,960 |
89,940 |
29,980 |
50% |
Southland |
12,708 |
89,955 |
134,933 |
44,498 |
50% |
New Zealand |
1,050,799 |
1,640,444 |
1,906,035 |
265,591 |
16% |
The table shows that dairying is forecast to increase rapidly in the South Island, with Canterbury, Otago and Southland contributing 50 percent of the forecast growth in dairy area. There are very good reasons for this growth, mostly pertaining to profitability expectations. MAF’s Farm Monitoring models calculate that during 2000/01, Canterbury dairy farms generated a 14.5 percent return on assets. This is significantly higher than Canterbury sheep and cattle breeding and finishing farms and arable properties, which generated a 5.6 percent and 4.4 percent return on assets respectively.
The Nimmo Bell report uses the above figures on forecast land use changes combined with information on land suitability (e.g. soil type) and offsets these against the cost and availability of water to establish future irrigation demand. This data is combined with potential irrigable land in the following table.
Projected Irrigation Demand (ha) |
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Region |
Agricultural land |
Estimated |
Potentially |
irrigated |
irrigation |
irrigable land |
|
in 2000 |
demand in 2010 |
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Auckland |
4,000 |
8,700 |
81,900 |
Waikato/King Country |
4,500 |
13,600 |
348,600 |
Bay of Plenty |
9,300 |
14,500 |
105,100 |
Hawkes Bay |
23,200 |
31,200 |
149,700 |
Manawatu/Wanganui |
8,000 |
12,900 |
241,700 |
Wellington/Wairarapa |
9,300 |
14,600 |
67,000 |
Marlborough |
12,100 |
18,300 |
65,800 |
Canterbury |
347,000 |
404,000 |
693,100 * |
Otago |
65,100 |
101,400 |
343,300 |
New Zealand |
505,500 |
649,500 |
2,031,000 |
* A more detailed regional analysis using different parameters has calculated there are 1,002,000 ha of irrigable land in Canterbury.
The above table indicates that the national irrigated area is estimated to increase by 28 percent by 2010, with nearly 40 percent of the increase occurring in Canterbury. In addition, the combined Canterbury (62 percent) and Otago (16 percent) regions will account for almost 78 percent of the irrigated area (down from 81 percent in 2000).
Relative to many other provinces, Canterbury is estimated to have a higher proportion of irrigated land in 2010, at 58 percent of potential irrigable land. But Canterbury still has the greatest potential for further irrigation development with its large flat land area, community schemes, and the availability of ground water. Most new irrigation will be developed in Canterbury, followed by Otago. Currently the water allocated for irrigation in Canterbury is greater than the rest of New Zealand combined. Of the 249 cubic metres per second allocated for irrigation in Canterbury, 67 percent is from surface water and 33 percent from groundwater. Very little is from artificial storage. Pre-feasibility studies that might change this are underway within communities at present, but it may be 10 years before farmers are using water from artificial lakes collecting winter rainfall.
Nimmo Bell combined information from regional councils with forecast irrigation demand to produce regional water supply and demand profiles for six regions. Demand takes into account estimates of both non-irrigation and irrigation uses in line with sector profitability projections expressed in hectare equivalents. Supply was calculated using data on surface water mean flow and allocation policies combined with groundwater recharge rates to establish projected supply in hectare equivalents.
Regional Demand and Supply Profiles |
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Region |
Current |
Future |
Projected |
Waikato |
17,800 |
32,600 |
184,500 |
Hawke’s Bay |
29,000 |
37,900 |
29,900 |
Wairarapa |
8,600 |
14,500 |
36,800 |
Marlborough |
14,200 |
20,900 |
46,200 |
Canterbury |
432,000 |
495,900 |
650,600 |
Otago |
155,700 |
194,500 |
252,300 |
The above table shows that demand for irrigation is forecast to increase in all six regions. Hawkes Bay is the only region where demand projection is expected to exceed the potentially available water supply. Canterbury and Otago are forecast to demand 76 percent and 77 percent of projected supply.
In reality, there are significant areas/districts within each region where deficit situations exist. For example the Otago and Marlborough regions have a potentially available supply that exceeds current and expected future demand. However when this is broken down to a catchment basis, there are large areas where a deficit situation exists due to the difficulty in accessing the water supply. More work is needed on forecasting supply and demand on a catchment level to more clearly identify water surplus/deficit situations. Indeed, a much more detailed analysis of the projected water demand and supply situation for Canterbury on a catchment basis is nearing completion.
Despite this, and the inherent difficulties of forecasting changes in land use 10 years out, the Nimmo Bell report provides us with useful information on a likely future scenario. This report highlights that an estimated 28 percent increase in demand for irrigation water will drive an increase in demand for water in New Zealand. This will increase pressure on the environment and may restrict on-farm economic development in those areas where demand for water is increasing beyond acceptable levels. Work is needed to identify particular catchments where water supply will become an issue (as opposed to broader regional analysis) and to provide efficient and effective means of allocating a limited resource, including storage schemes.
A lot of the “ability” to issue further water permits hinges on achieving more efficient water use by all current users and matching more closely the water allocated with the actual or potential use. With the value of water becoming more explicitly recognised, and likely drying of the East Coast of both Islands as a result of climate change, current users are naturally anxious to retain the water allocations they have. Managing these two conflicting desires will not be an easy task.
I believe we have only just started to see the jostle to secure water supply. The current system of issuing water permits on the basis of “first in first served” is not a good rationing technique in many situations. Councils rightly say they are not in the business of picking winners but a better allocation and rationing system is needed and is inevitable if we are to achieve the most sustainable outcome for both the use and conservation of water.
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Chris Ward Senior Policy Analyst, Chris has a background in farm advisory work, the meat industry and rural property management. He founded the National Preferred Medicines Centre which helped General Practitioners in making more consistent, rational and appropriate prescribing decisions. Chris is especially interested in farm economics, emerging rural industries, and in the revitalisation of rural communities. He has several investments in rural industries. |
Contact for Enquiries
Amber Duncalfe
Editor - RM Update
Ministry of Agriculture and Forestry
PO Box 2526
Wellington
NEW ZEALAND
Tel: +64 4 894 0710
Fax: +64 4 894 0745
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