Northern Territory irrigated agriculture feasibility study - Preliminary business case for investment

Open Access

Abstract

This preliminary business case is the final stage of the Northern Territory Irrigated Agriculture Feasibility Study (NTIAFS). The NTIAFS was developed to assess the feasibility of using managed aquifer recharge (MAR) in small to medium sized irrigated agriculture developments at selected sites. MAR is the broad term used for all types of artificial recharge (such as recharge weirs, injection bores, infiltration ponds). MAR has the potential to increase recharge to the groundwater system during the wet season to support additional groundwater extraction or environmental flow objectives during the dry season. Irrigated agriculture represents an important opportunity for the Northern Territory (NT) to reach its economic and social potential. The NT constitutes one-sixth of Australia's landmass, but only accounts for about 1% of Australia's population. More intensive and profitable agriculture, supported by irrigation, could create employment, output and population growth in the NT. Irrigated agriculture in the NT Agriculture is currently a relatively low value industry in the NT due to the dominance of low value grazing beef cattle on unimproved native vegetation. Beef cattle production in the NT produced $569 million of gross value in 2015-16, equating to $1,000 per square kilometre of grazing land ($10 per hectare) (ABS, 2017). In contrast, the remaining agricultural production in the NT is predominantly high value horticulture, particularly of mangoes and melons. The estimated horticulture income per square kilometre in 2015-16 was $633,500 ($6,335 per hectare) (ABS, 2017; ABARES, 2017). Growing horticulture (and some grains) without irrigation is not possible due to the low rainfall and very high evapotranspiration rates during the dry season. According to ABARES (2017), there are 14,200 hectares of irrigated agriculture in the NT, comprised mostly of irrigated horticulture (83%). The key regions for irrigation in the NT are the Greater Darwin region (3,000 hectares) and the Daly catchment/Katherine Douglas Daly Area (2,200 hectares) (Australian Government, 2015; Grice et al, 2013; Ash et al, 2017). There are suitable soils and water resources available for the expansion of irrigated agriculture in the NT. The Daly and Roper Rivers are known to have soils suitable for irrigation. Groundwater potential has been identified in the Victoria, Daly and Roper catchments. The surface water catchments Van Diemen, Arafura, Ord-Bonaparte and Daly have relatively consistent surface water flow. This preliminary business case addresses the following specific opportunity: There is potential to increase the value of agriculture production in irrigation districts of the Northern Territory where groundwater is fully allocated1 by increasing the availability of reliable water for irrigation. There is growing global demand for food, particularly from Asia, which could support increased sales of higher value agricultural products grown in the NT. Global food demand is increasing with growing a world population and rising incomes in emerging economies (OECD-FAO, 2016). By 2030 Asia will grow to represent approximately two thirds of global middle class consumption, including food (Australian Government, 2015). Addressing this opportunity provides a number of benefits including: · Greater sustainable returns to agricultural landowners in the NT irrigation areas · Greater sustainable investment and employment in the NT. Investing in irrigation in the NT aligns with Commonwealth and state government visions and policies. Investing in irrigation aligns with the Commonwealth Government's vision for developing Northern Australia. It also aligns with the NT Government's strategic focus on promoting and facilitating the development of its primary industries and resources. The main options for increasing the supply of water for irrigation in the NT are: · Surface water dams (given surface water flows are highly seasonal); · Groundwater; and · Managed Aquifer Recharge of groundwater. This preliminary business case focuses on the potential for increased agricultural production in existing irrigation regions in the NT where groundwater is fully allocated. As aquifers are fully allocated, issuing new or expanded groundwater licenses is not possible. In these regions, the key challenges with increasing reliable water for irrigation are: · Unreliable surface and groundwater allocations, given variability in annual rainfall, surface river flows and minimum environmental flow requirements; · The seasonality of surface water flows and high rates of surface water evaporation; and · The cost-effectiveness of surface water dams and Managed Aquifer Recharge. ; Executive Summary -- 1. Background -- 1.1 The Northern Territory Irrigated Agriculture Feasibility Study (NTIAFS) -- 1.2 Climate, water availability and agriculture in the Northern Territory -- 1.2.1 Region -- 1.2.2 Climate -- 1.2.3 Agriculture in the Northern Territory -- 1.2.4 Water and soil availability for irrigation in the Northern Territory -- 1.2.4.1 Total water supply -- 1.2.4.2 Water extraction and allocation policy -- 1.2.4.3 Surface water availability -- 1.2.4.4 Groundwater availability -- 1.2.4.5 Soil availability -- 1.2.5 Irrigation developments in the Northern Territory -- 2. Opportunity -- 2.1 Definition of the opportunity -- 2.1.1 The potential for greater value from irrigated agriculture -- 2.1.2 Increasing the availability of reliable water for irrigation in regions -- 2.2 Evidence of the opportunity -- 2.2.1 Demand for licences for irrigation -- 2.2.2 Aquifers fully allocated -- 2.2.3 Unreliable surface and groundwater allocations -- 2.2.4 High rate of surface water evaporation -- 2.2.5 Cost-effectiveness of surface water storage and Managed Aquifer Recharge -- 2.3 Timing considerations -- 2.4 Consideration of the broader context -- 3. Benefits -- 3.1 Benefits to be delivered from the opportunity -- 3.2 Alignment of the benefits to Government objectives -- 3.2.1 Federal Government -- 3.2.2 State Government -- 3.3 High level economic, social and environmental benefits and costs of the initiative -- 3.4 Evidence of benefit delivery -- 3.5 Interdependencies -- 4. Strategic response -- 4.1 Strategic options analysis -- 4.1.1 Assessment -- 4.2 Recommended strategic options -- 5. Solution -- 5.1 Solution options development -- 5.2 Testing the technical feasibility of MAR options -- 5.2.1 Phase 1: Short-listing of sites for testing MAR -- 5.2.2 Phase 2: Detailed technical analysis of options -- 5.2.2.1 Initial sites modelled -- 5.2.2.2 Upper King River site -- 5.2.2.3 Technical feasibility findings -- 5.2.3 MAR scheme designs for Upper King River -- 5.3 Solution options modelled -- 5.3.1 Land use and irrigation infrastructure for each solution option -- 5.3.2 Groundwater extraction bores for irrigation supply -- 5.4 Cost-benefit analysis of solution options -- 5.4.1 Approach -- 5.4.2 MAR Costs – for Options 2A, 2B and 2C -- 5.4.3 On-farm costs – for all solution options -- 5.4.4 Benefits -- 5.4.5 Comparison of costs and benefits -- 5.4.6 Sensitivity analysis -- 5.5 Feasibility of MAR to support irrigation development throughout the NT -- 5.5.1 Key criteria for a successful MAR scheme -- 5.5.2 MAR Potential at other sites in the NT -- 6. Risk management -- 7. Conclusions and Recommendations -- 7.1 Conclusions -- 7.2 Recommendations -- 8. References -- Appendix A. Site assessment in Phase 1 -- Appendix B. Full cost-benefit analysis -- B.1 Approach -- B.2 Costs (off-farm) -- B.2.1 Capital costs for MAR -- B.2.2 Maintenance costs for MAR -- B.2.3 Operating costs for MAR -- B.3 Levelised costs for MAR -- B.4 Costs (on-farm) -- B.4.1 Capital costs (on-farm) -- B.4.2 Annual operation and maintenance costs (on-farm) -- B.5 Benefits -- B.5.1 Melons -- B.5.2 Mango -- B.5.3 Okra -- B.5.4 Fodder -- B.6 Comparison of costs and benefits -- B.6.1 Sensitivity analysis -- B.6.2 Conclusion ; This study is supported by funding from the Australian Government National Water Infrastructure Development Fund, an initiative of the Northern Australia and Agricultural Competitiveness White Papers