An analysis of the community benefits and costs of improved irrigation pricing
Summary | According to ASMC analysis, a 25% reduction in the price of irrigated water could deliver significant regional development benefits with up to $220 million in additional industry and broader outputs over the period 2020/21-2023/24.
Background | On 31 January 2020, the Queensland Competition Authority (QCA) recommended increases to the price of irrigation water over the 4 year period 2020/21 – 2023/24.
The Queensland Government has now announced a one year price freeze. It has also stated that it will absorb safety costs for dam upgrades over the next four years. However, ASMC members remain concerned about medium-term price uncertainty and its effects on the sugar industry and local communities.
Irrigation costs make up a significant percentage of costs on an irrigated cane farm, Price increases for the water supply schemes* that service Queensland’s cane fields will further discourage optimal crop irrigation. The Australian sugar industry is under considerable pressure at present. Global prices for sugar are at decade lows and an increasing and unaffordable domestic regulatory burden that prevents improvements in cane yield and cane acreage will threaten mill viability.
In April 2020, ASMC has prepared a report: Irrigation Prices in the Queensland Sugarcane Regions: an analysis of the community benefits and costs of improved irrigation pricing. The report outlines the social, economic and environmental benefits of improved water pricing. The analysis demonstrates that the benefits are likely to outweigh the costs under both 15% and 25% irrigation price reduction scenarios.
Moreover, ASMC’s report concludes that a 25% reduction in the price of irrigated water could deliver significant regional development benefits with up to $220 million in additional industry and broader outputs over the period 2020/21-2023/24. The regional development benefits were calculated by independent experts, Lawrence Consulting (Economic Impact of Improved Irrigation Pricing on the Queensland Sugar Manufacturing Industry).
Improved water pricing would also improve the sustainability of sugar mills, lower the government’s water stranded asset risk and achieve improved environmental outcomes.
- Sugarcane regions are serviced by the Mareeba-Dimbulah, Burdekin-Haughton, Pioneer River, Eton, Bundaberg and the Lower Mary River Water Supply Schemes (WSSs) See profiles for each WSS