Barrhill Chertsey Irrigation: A Case Study in Community Development
Large scale irrigation scheme proposals make great media headlines. They are either a dream or a nightmare depending upon your perspective.
This paper describes how one small farming community is dealing with the challenge of developing a large scale community irrigation project. The paper backgrounds the Barrhill Chertsey Irrigation (BCI) proposal, outlines where it is at now and previews future steps.
Where has BCI come from?
The Barrhill Chertsey area is some 40 000 ha to the immediate south of the Rakaia River in Canterbury. It is in the Ashburton District, about one hour south of Christchurch. Current land use is primarily arable cropping with livestock finishing. Soils range from the deep loess at Barrhill to shallow and stony silt loams away from the river. Summer soil moisture deficits consistently and significantly limit productivity in this otherwise versatile environment. Groundwater supplies are deep relative to the rest of Ashburton district and largely untested throughout much of our area.
The local community inherited considerable baggage from 60 plus years of attempts at developing irrigated agriculture. Most attempts were central government driven. The latest was in the 1980's and involved an acrimonious debate about the allocation of Rakaia River water, the obvious source for irrigation water in the Barrhill Chertsey area. This debate culminated in the imposition of the Rakaia River National Water Conservation Order, with restrictive minimum flows.
Following this outcome, the dryland farming families of the area had their tails well and truly between their legs as regards irrigated agriculture. High interest rates and a run of dry years in the late eighties didn't help.
Improved product prices and wetter seasons returned equity to our farming families in the early nineties. Interest in developing irrigated agriculture rekindled. We decided to try again, learning from the past.
A small group of committed farmers began in 1995 to develop plans and identify factors in our favour. These were:
- We saw an opportunity to design a modern and efficient irrigation scheme acceptable to farmers and other stakeholders.
- We viewed the Resource Management Act as an enabling piece of legislation with fewer hoops to jump through than in the past.
- The rules allowing takes of water from the Rakaia River were clear. There was still run of the river water available although with questionable reliability.
- There was strong if informal grassroots interest and support from the community.
A clear initial strategy was formulated, involving a modern and efficient scheme design, consultation with stakeholders, fostering of grassroots support, keeping out of the media, and being a part of district and regional solutions to water allocation issues.
We addressed environmental concerns first. In 1996 BCI case studied a major computer modeling exercise quantifying the adverse effects of irrigated agriculture upon the environment. This work showed that a rate limited, on demand system avoided these effects. It also quantified the seasonal water requirements of the Barrhill Chertsey scheme at 15 cumecs peak and 7-8 cumecs average.
The next step was to identify from where this water could be sourced. In 1997 BCI assessed the supply potential of the Rakaia River and Lake Coleridge. This work proved that by strategic releases of Coleridge water to supplement low flows in the Rakaia, BCI's water requirements could be reliably satisfied from the Rakaia/Coleridge catchment within existing management plans and consent conditions.
Having identified a satisfactory source of water, the next step for BCI was to secure access to that water. Accordingly in 1998 BCI applied to Environment Canterbury for resource consents to take 17 cumecs of water for the irrigation of up to 40 000ha and for electricity generation.
To this date BCI had commissioned only a minimal pre-feasibility study of its proposal's viability. The strategy from now until consents were granted was to invest all the company's financial resources into securing access to water. The rationale here was that the primary asset of any irrigation company is its resource consents. Without access to water, BCI's plans were a pipe-dream.
BCI's consent applications were publicly notified and attracted thirteen submitters opposing the development. These included both in-stream and out of stream interests.
Throughout 1999 and 2000, BCI invested considerable resources into consultation with all who submitted in opposition, by means of a facilitated pre-hearing forum and through direct discussion.
The consultation process took over eighteen months. The independent facilitator was critical to maintaining constructive dialogue during this process. By December 2000 virtually all concerns had been satisfied.
A formal hearing was held in February 2001. At the hearing there were no submitters in opposition to the consent applications. Environment Canterbury had no reason to not grant the consents. After over sixty years of attempts of various kinds, our community had finally secured access to Rakaia River water.
Where is BCI at now?
Having succeeded in being granted resource consents, BCI now faces the challenge of commercially developing those resource consents.
With the support of the community, BCI extended its pre-feasibility, refining design options and costs. Much of the cost of the scheme is tied up in its reticulation network. The preferred option at this stage is for a fully enclosed piped network which can deliver gravity pressurised water to each farm gate. Under this system, BCI would be delivering not only water but also energy. It means that the farmers will not have to invest in pumps or other energy sources to drive their irrigators, avoids losses, and has significant operational advantages relative to a canal type network.
The intake design involves a diversion race, a broad crested weir with vertical slot fish by-pass channels, and an intake through fish screens into a sediment settling pond. We are currently negotiating with Trustpower, the owners of Highbank power station to use their plant as a summertime pump station to lift our water 90m from the riverbed to the Rangitata Diversion Race. This existing head race can then act as the head race for BCI's piped reticulation network. Part of the package of this negotiation is evaluating access to Coleridge water, which is also managed by Trustpower.
The extended pre-feasibility estimated off-farm costs for the scheme at some $70-90M. This capital cost, plus operating costs, meant the farmers would be charged $750/ha for joining the scheme, plus an annual charge of $190-250/ha. On farm costs for 40 000 ha of irrigation development are in the $40-60M range.
In November 2001 BCI issued a prospectus seeking funds to conduct a full feasibility study. This step was in essence the commercialisation of BCI.
The capital raising was successful. Local farming families exercised their first option and fully subscribed for the $600 000 sought. Via the prospectus, BCI also converted unsecured debts it owed to farming families into shares with preferential rights when the scheme is built.
The business of BCI is now to conduct a full feasibility study into its proposal. It has employed a project manager to conduct this activity, and a company secretary to oversee its affairs. The successful capital raising has enabled the company to evolve from being a club type organisation to being a professionally run corporate.
The feasibility study is composed of a number of different components. These include design of the intake, delivery and reticulation systems, financial modeling of the development, analysis of on farm economics, land access issues, water contract development, development logistics, and peer review.
Probably the most important though is marketing. Two factors combine to ensure that the company needs to invest considerable resources into marketing its water.
- A lapsing condition attached to BCI's consents and the cost of bridging finance while the scheme develops means the company will not be able to sit on unused (i.e. non income generating) water for very long.
- The change in mindset from dryland farming to irrigated agriculture involves a significant paradigm shift for each individual farming family involved. It is a major investment decision with a large amount of capital at risk. The time constraints described above, as well as competition for BCI's water, imply that there may be no second bite at this cake.
The objective of BCI's marketing strategy is to ensure that all potential investors, especially farming families, are fully informed regarding the merits of further investment in the development.
What are the next steps for BCI?
BCI anticipates that its feasibility study will be fully complete by April 2003. Commercial development of the project can then occur if the feasibility study results are positive. This development will involve a full capital raising, possibly in the autumn - winter of 2003. It is anticipated that at least 25% of the equity of the scheme will have to be raised directly from farming families who contract for water from the scheme. Further finance will be sought from banks.
The company considers that under a best case scenario, the first water could be delivered in the 2004/05 season. Complete construction of the reticulation network and full delivery of water will take up to another two years.
WHY DO THIS?
I think there are three reasons as to why some of us local farmers have voluntarily devoted thousands of hours and tens of thousands of dollars to this project to date.
- Socio-economic. The best measure of BCI's likely economic impact is comparison with developments that have actually occurred elsewhere. Waimakariri Irrigation Limited has for two years operated an 11 000ha scheme utilising 5 cumecs of water just north of Christchurch. In those two years it has been responsible for the creation of 105 full time jobs on farm and 300-350 off farm. It has generated $123-150m increased goods and services annually throughout the local economy. BCI is well over three times the size of Waimakariri Irrigation. When it develops, multiplying those numbers up accordingly, we can expect to see an annual economic contribution to the nation from BCI's little corner of Canterbury that exceeds that of the published one off economic impact of Lord of the Rings, a comparison many here in Wellington may be more familiar with.
- Personal growth. Promoting BCI's development is very rewarding at a personal and professional level for those involved. We don't get paid but we have experiences unavailable to those who sit on the sidelines. As I tell my fellow directors, we are the luckiest generation of farmers ever. An efficient and sustainable community irrigation scheme is a huge legacy to leave for future generations on our land. It is a privilege to be part of its development.
- Amenity value. Access to irrigation water is increasingly differentiating those rural communities that are progressive from those which merely survive. Irrigation provides much more that just an insurance policy for farmers. It is an essential tool in many areas for high quality, consistent production. Irrigated agriculture empowers rural communities to grow socially, economically and environmentally. It engenders confidence and well being. This amenity value is clearly discernable in irrigated as opposed to dryland areas of Ashburton District. It is a value I want my family, and indeed all dryland rural communities, to experience.
Contact for Enquiries
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