With all the noise recently about the economics of building new electricity generation capacity, the Govt’s National Infrastructure Plan is notable for saying the biggest immediate priority for energy infrastructure is Transpower’s grid investment plan. The absence of any serious concern about a shortage of electricity generation capacity boils down to the fact history shows power stations do get built, more or less on time. Where the report gets more interesting is in its discussion of water issues generally, and rural water infrastructure particularly, as the Govt prepares to restructure Canterbury’s ailing water resource governance and to support the construction of increased rural water storage.

One immediate problem: despite involving around $33bn in assets and its importance to national well-being, there is no national collection of information about the country’s water infrastructure, creating a “potential risk” to understanding future needs. The report expects water infrastructure investment will soak up around 25% of the total forecast capital spend by councils over the next 10 years - ie around $1.5bn a year, although many smaller councils will struggle to meet international drinking water standards because of the high cost of plant to eliminate protozoa (giardia and cryptosporidium). The report notes 77% of all water extracted in NZ goes to irrigation while Canterbury accounts for 360,000 hectares of the 550,000 hectares currently irrigated nationally, but an explosion in new irrigation needs is coming.

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By 2012, catchments in most of Canterbury, Waikato, Marlborough, and Northland will be fully allocated on current projections, and 22 irrigation schemes are in planning for Canterbury, Otago, Tasman, Marlborough, Hawke’s Bay and the Bay of Plenty. The report shows irrigation schemes have continued to be built by private investors ever since Govt stopped subsidy schemes in the mid-1990s, suggesting they have been commercially attractive. However, greater demand on water resources and the fact the most easily exploited sites are already in use mean future water storage will be more challenging. A “range of strategies” will be required to meet demand, especially as several feasible schemes have recently failed to reach construction thanks to both market and regulatory difficulties.

The infrastructure plan says new approaches will need to include better use and capture of water already being taken, freeing up existing allocations to allow water to be used where its value is greatest, and may require some reconfiguration of existing schemes, including “ground and surface water swaps.” Among central Govt options to help overcome emerging barriers are “supporting local Govt with their planning responsibilities,” and exploring how market barriers could be reduced. The report still expects the July 31 report of the Land and Water Forum to be a vital input into this process.

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