Kimberley Appropriate Economics Interim Report - Australian ...

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3e. Physical Barrier
The damming of the Ord River has restricted certain species from following their usual migration
path, such as the barramundi and freshwater crayfish or cherabin (Volkman & Watson 2002). This
can result in genetic isolation, and in extreme droughts, the localised loss of species in a reach
upstream from a migratory barrier (Storey et al 2001). This barrier effect and loss of habitat is also
likely to have resulted in a reduction of other aquatic species (WRM 2003, unpub.).
3f. Agriculture
There are a number of ecological impacts on the river system as a consequence of farming in the
Ord River Irrigation Area (ORIA). Current environmental problems within the ORIA, in addition
to those relating to changed hydrology from the dams, include rising groundwater and salinity, and
decreased water and air quality (WRM 2003, unpub). The ORD, KDD, and construction of the M1
channel have resulted in rising groundwater levels and changed flows (Salma et al 2002). Salinity
problems have already begun in the Packsaddle area, and other areas are predicted to follow (Salma
et al 2002).
The sensitivity of fish populations to irrigation practices in the Ord is highlighted by periodical fish
deaths in the proximity of irrigation drains, with pesticides strongly implicated as the cause (mainly
DDT in the 1960s and 1970s and Endosulfan in 1997) (OBP 2001, Doupé et al 1998). Studies on
the Ord have also shown that irrigation increases the loads of phosphorus and total oxidized nitrogen
entering the river, raising the nutrient concentrations (Lund & McCrea 2001, Doupé et al 1998).
Ecological summary
The damming of the Ord River has changed the hydrological regime of both the river and the surrounding
floodplains, significantly impacting ecosystem processes such as flooding, sedimentation, maintenance
of floodplain habitat, vegetation, composition and distribution of aquatic fauna and control of weed
infestations.
4. Economic
The validity of the economic rationale supporting construction of the Ord River Dam has been seriously
questioned since it was first proposed (Davidson 1972, Davidson 1982). For the past 30 years, the dam
has been heavily subsidised in the expectation that it will eventually provide a significant benefit to the
community. Up until 1991 the Dam had cost the public over $500 million ($330M discounted) and the
project did not provide a positive cash flow until 1989 (Hassall & Associates 1993). It is estimated that
a positive return on the original investment will never be obtained (WWF-Australia 2003 unpublished).
Extrapolating the model used in Hassall analysis, it is likely that the project has only contributed an
additional $33 million in Net Present Value between 1991 and 2002.
As discussed above in the social aspects of the dam construction, the economic viability of the project
was not assessed, and the money was spent on creating the dams for political purposes rather than sound
financial decisions (Davidson 1982). The grant for the ORD was available, so construction began with
no evaluation of the KDD and the initial farms, although the original aim was to continue to the ORD
if the KDD had proved successful (Davidson 1972, 1982). Problems encountered early in the project,
and extra costs unforeseen included the distance to markets, waterlogged crops, leaking channels,
overflowing drains, low yields, pests and diseases. Environmental impacts were not costed in or included
at all.
The Joint Commonwealth and Western Australian Ord River Irrigation Area Review Committee (1979)
concluded that the project had failed ‘as a result of it’s own inherent high cost structure’ and ‘incomplete
understanding of the basic Ord agronomy’ (cited in Graham-Taylor 1982). A view that has been repeated
many times since (e.g. Davidson 1982). The reasons why the second phase was accepted appear to be
economical, so much money had already been invested that it seemed appropriate to continue investing.
Graham-Taylor (1982) summarises this view by suggesting that “early low cost decisions created
precedents making the later, high cost decisions to proceed with Stage II a seemingly inescapable
commitment – despite failures and increasing problems.”