Economics of supply reliability of irrigation water

In this study, we have assessed the economic impact of potential increase in supply reliability of irrigation water in the Hinds Plains Area in the Ashburton district. The Hinds catchment has a number of irrigation schemes namely, Rangitata Diversion Race (provides water for Mayfield Hinds and Valetta Schemes), Barrhill Chertsey, Eiffelton and Lynford Schemes. All these schemes have varying supply reliability which ranges from 40% to 80% approximately. First, we estimated the relationship between water availability and pasture growth using experimental data. We then employed this relationship to estimate the potential incremental pasture growth with assumed increased supply reliability (95%) at farm level. We estimated the farm level benefit of increased pasture production in terms of saved costs in supplementary feed. These farm level estimates were used to assess the catchment level farm income gain. The catchment level income gain was then employed to assess the regional level economic gain (GDP and employment) by the socio-accounting matrix input-output model (SAMI-O) simulation. Income gain at catchment level is estimated to vary from $16 to $17million. This implies an additional gain in regional level income (GDP) of $85 to $91million and additional employment of 137 FTE to 207 FTE. The study indicates the importance of an increase in irrigation efficiency at farm level for the local and regional economy and also discusses the potential environmental impacts of increase irrigation efficiency at catchment level.