The economics of water use in the Levels Plains Irrigation scheme

This thesis reports the results of an economic study of an irrigation scheme in South Canterbury, New Zealand. This irrigation scheme is unique in State irrigation schemes in this country, for it is in danger of having a reduced allocation of water for operation. The right to the Scheme's original water allocation and requirement from the Opihi River has been threatened by a claim from Timaru city for additional water. Timaru city is the major service centre for the South Canterbury district. Its present water supply is fully extended, both from the viewpoint of adequate capacity and public health standards, and it is imperative that an additional source of water be developed if the urban and industrial growth of the city is to continue unimpaired. From the financial viewpoint it is in the interests of the city and its ratepayers to deliver water to the consumer at the least possible cost, and this clearly points to the Opihi River as the source of future additional water supply to the city. Since the run of river flow of this source cannot fully cater for all future requirements, this possible additional demand has led to a problem concerning allocation of available water between the four possible claimants - Ministry of Works for irrigation water, Levels County Council for stock water, Timaru City Council for city water supply, and the flow requirements for recreation purposes in the river. The Water and Soil Conservation Act 1967 states that the allocation of a water resource between alternative end uses must be made on the grounds of best advantage to the country and the region in which it exists, whilst also endeavouring to promote efficiency in public use of the natural water. This means that for irrigation to maintain its present allocation of this scarce water resource in the face of competing demands, it must demonstrate, firstly, that the benefits of the water in agriculture through irrigation are at least as great as the benefits which would be obtained from alternative use of the water. Secondly, it must show that the water is. Used in a technically efficient manner, with minimal wastage. In view of these questions, this economic study of the Levels Plains Irrigation Scheme was planned in an attempt to evaluate the economics of irrigation from the point of view of water utilisation. Inquiry was directed into the following topics: (i) The change in the physical production level of the Plains area which is solely due to the availability of irrigation water through the Irrigation Scheme. (ii) The value of the irrigation water in relation to this additional production, i.e. its total, average, and marginal product. (iii) The benefits that accrue to the farm, region, and nation by virtue of the Irrigation Scheme. (iv) The technical efficiency of water usage within the Scheme. This research also allowed discussion on the following aspects of the Irrigation Scheme: (i) The rate of uptake of irrigation in the area, (ii) The determinants of the level of production which can be achieved with irrigation water, and (iii) The factors determining technical efficiency of irrigation water use.