Benefits And Costs Of Building Giant Dams In Northern Australia

Idea behind building giant dams in northern Australia

In order to provide a detailed discussion on a proposed project of excavation of new reservoir firstly it is essential to identify such a project. With the objective of supporting year around irrigation in northern Australia the Government of Australia has proposed giants dams in this part of the country. In this document a detailed discussion on the ideas, model of revenue, cost of different components of the proposed project and the impact of cost concept on the decision making process shall be made.

Australia is a huge country with huge potential of agricultural growth despite having a well-developed agricultural scenario at present. There is potential to build dams indifferent parts of the country to turn these areas into major agricultural hubs in the country. In order to turn parts of north Queensland and other parts in Northern Territory into major agricultural hubs and food bowls. The giant dams will contribute to the economic benefits of the country with parts of north Queensland and Northern Territory expected to be turned into major agricultural hubs in the country. The giant dams once complete will provide year around irrigation facilities to these parts of the country to turn these parts into major agricultural food bowls within the country (Petts, 2018).

The giants dams proposed to be built in northern Australia will provide irrigation facilities all around the year in the agricultural lands in this part of the country. As a result the food production in this part of the country will improved significantly. The food production in northern Australia is expected to receive a huge boost subsequent to the building of proposed dams in this part of the country. As per the CSIRO report the food production will be revolutionized in parts of north Queensland and northern Australia once the dams are completely operational (Cooke et. al. 2016).

The dams will be extremely important for the rural areas which are affected by drought in northern Australia. With round the year irrigation facilities possible subsequent to building the giant dams the rural areas that are affected due to drought will have huge boost in its agricultural operations (Kondolf et. al. 2014).

The proposed giant dams are expected to provide irrigation facilities round the year to 400,000 hectares areas in north Queensland and other parts of northern Australia. As per CSIRO report it can be expected that the benefits of irrigation facilities can be extended to almost 400,000 hectares areas in northern Australia subsequent to the building of the giant proposed dams in this part of the country (Canter, 2018).    

The catchment areas are shown in the map below. The dams shall have huge impact on the catchment areas as can be seen in the following map.

Dams in Queensland:

There are four dams which have been proposed in north Queensland. Out of the four proposed dams in north Queensland the largest one will be Pinnacles dam that is expected to cost $775 million. The dams to be built in north Queensland are expected to provide irrigation facilities to 140,000 hectares land in this part of the country. The following map shows the dams to be built in north Queensland (Chen et. al. 2016).

Improvement in food production

In addition 160,000 hectares land can be provided with round the year irrigation facilities by building dams in Western Australia’s Fitzroy catchment area. The expected benefits to these dams can be understood from the fact that most of these areas are effected by drought and with the dams, the agricultural lands in these areas shall have irrigation facilities round the year. As per the report the expected economic benefits from the proposed dams is huge. It is expected that $5.3 billion in annual activities shall be generated with additional corps of 387,000 hectares from the proposed dams in northern Australia (Kerzner and Kerzner, 2017).

The giant dams in northern Australia as already mentioned will provide irrigation facilities in rural areas which are affected by drought. The expected benefits of building a total of six dams in northern Australia is huge. As per the report the annual economic benefit of $5.3 billion shall be generated from 387,000 additional hectares crops. On the other hand the expected costs of building 4 dams in different parts of north Queensland is expected to be $2.8 billion with additional $1.6 billion to cost the other two dams in northern Australia. The revenue model of building these dams can be further illustrated with the help of the following table (Lock, 2017).

Catchment areas	Fitzroy	Darwin	Mitchell
Expected areas to be affected	94,000 Sq. Km.	30,000 Sq. Km.	72,000 Sq. km.
Annual average rain fall	552 mm.	1423 mm.	996 mm.
Potential areas to be  irrigated under the plan	180,000 hectares areas	60,000 hectares areas	140,000 hectares areas
Expected new jobs to be created	5260 new jobs	2845 new jobs	7250 new jobs
Boost in economy	$1.2 billion	$2.62 billion	$1.5 billion

Source: Prepared by author from the information available about the proposed dams ‘The Australian” website.

As can be seen in the above table that it is expected that more than 15,300 new jobs shall be created subsequent to the giants dams to be built in northern Australia. The total expected land to be irrigated under the plan is 380,000 hectares. The expected economic boosts in total is expected to be almost $5.3 billion per annum. Thus, the expected benefits from the proposed dams in northern Australia is far exceeding the expected cost of building these dams (Kaiser, El Arbi and Ahlemann, 2015). Economic benefits are not only in terms of monetary value but also the expected impact on the economy of the country with number of new employment opportunities to be created by the development of these dams. In total more than 15000 jobs expected to be created with additional 387,000 hectares crop and additional economic benefit of $5.3 billion (Turner, 2016).

Fitzroy catchment area:

With 94,000 sq. km area to be covered with the proposed dams the irrigation facilities expected to be provided in 180,000 hectares of land. It is also expected that in total 5260 jobs shall be created in the area to total an economic boost of $1.2 billion (Nicholas and Steyn, 2017).

Darwin catchment area:     

In Darwin catchment area the proposed dams are expected to cover 30,000 sq. km. to provide round the year irrigation facilities in 60,000 hectares. It is expected that 2845 new jobs will be created in Darwin catchment area due to the proposed dams with total boost of $2.62 billion in economic activity in the area (Muller, 2017).

Mitchell catchment area:    

The proposed dams expected to cover 72,000 sq. km in Mitchell catchment area to create 7250 new jobs with irrigation facilities stretching to 140,000 hectares land in this part of the country. The overall boost to the economic activity in Mitchell catchment area is expected to be $1.5 billion (Mir and Pinnington, 2014).    

Huge relief to drought-hit rural areas

Potential key costs items in the proposed dams in northern Australia are mainly the cost of research that took place over a period of two and half years with scientists looking to evaluate the possible impact of proposed dams on irrigation and economic activity in this part of the country. The potential key costs items can mainly divided into six different dams that have been proposed in northern Australia. Out of the six dams in northern Australia four dams have been proposed in different parts of north Queensland. The catchment areas have been primarily divided into Fitzroy, Darwin and Mitchell (Burtonshaw-Gunn, 2017).

The four dams proposed to be built in different parts of north Queensland are expected to cost $ 2.8 billion in total. It is important to note that the cost of research of scientists over the last two and half years have not been considered in calculating the cost of developing the proposed dams in the above figure of $2.8 billion (Zietlow et. al. 2018).

As per the report the expected cost of building the remaining two dams in northern Australia, apart from the four dams to be built in north Queensland, will costs around $1.3 billion in total without considering the cost of research.  Thus, apart from the above key items of costs in building and developing proposed giant dams in northern Australia, the costs incurred by the Government of Australia is mainly the cost on research conducted by the scientists over the two and half years to evaluate the impact of proposed dams on irrigation and economic activities of the country.

The relevant cost concept has significant impact on the operational decision making by the management of a project. The financial implications of a project is not possible to be measured without ascertaining the costs of different items developing and completing a project. The cost to complete a project has to be ascertained before assessing the economic impact and financial implication of a project.

Ascertaining the correct cost of a project is not possible without using an appropriate cost concept. Thus, the management must use an appropriate cost concept to ascertain the costs of different elements of a project and the overall costs of a project. After the determination of appropriate cost to complete a project it would be possible to evaluate the economic benefits expected to accrue from the project. The economic benefits expected to accrue from a project shall be reduced by the actual cost of development and completion of the project. If the resultant outcome from the process is positive then, it can be concluded that the development of the project will be economically beneficial for an organization. In such situation proceeding with the project is the best option for the organization.                             

However, in case of government projects it is not always about the economic benefits from a project often the projects are developed and built for the welfare of general public. In this case however, the giant dams proposed to be built in northern Australia will have huge economic benefits as per the report of CSIRO as has been discussed in the revenue model section in this document. A cost benefit analysis of building the dams in northern Australia is provided below to discuss the impact relevant cost concept on operational decision making in this regard.

Cost benefit analysis:

As per the CSIRO report the expected outcome of six different dams to be built in northern Australia are enumerated in the table below:

Catchment areas	Fitzroy	Darwin	Mitchell
Expected areas to be affected	94,000 Sq. Km.	30,000 Sq. Km.	72,000 Sq. km.
Annual average rain fall	552 mm.	1423 mm.	996 mm.
Potential areas to be  irrigated under the plan	180,000 hectares areas	60,000 hectares areas	140,000 hectares areas
Expected new jobs to be created	5260 new jobs	2845 new jobs	7250 new jobs
Boost in economy	$1.2 billion	$2.62 billion	$1.5 billion

Source: Prepared by author from the information available about the proposed dams ‘The Australian” website.

The expected overall cost of building the 4 dams in north Queensland is $2.8 billion along with additional cost of $1.3 billion to develop other 2 dams in northern Australia. Thus, in total the cost of building dams is expected to be around $4.1 billion whereas the annual economic benefits from the proposed dams is $5.3 billion. Thus, it is clear from the above fact that dams should be built as the expected economic benefits are in excess of cost of building these dams (Petts, 2018).             

Conclusion: 

Considering the discussion about the economic benefits and expected cost of developing the giant dams in northern Australia it is clear that there would be huge boost to the economic activity of the country due to huge impact on agricultural activities subsequent to the development of giant dams in northern Australia.    

References:

Burtonshaw-Gunn, S.A., 2017. Risk and financial management in construction. Routledge. Available at: https://www.taylorfrancis.com/books/9781351903080 [Accessed on 4 November 2018]

Canter, L.W., 2018. Environmental Impact of Water Resource Projects: 0. CRC Press.

Chen, J., Shi, H., Sivakumar, B. and Peart, M.R., 2016. Population, water, food, energy and dams. Renewable and Sustainable Energy Reviews, 56, pp.18-28.

Cooke, G.D., Welch, E.B., Peterson, S. and Nichols, S.A., 2016. Restoration and management of lakes and reservoirs. CRC press, pp.10-18.

Kaiser, M.G., El Arbi, F. and Ahlemann, F., 2015. Successful project portfolio management beyond project selection techniques: Understanding the role of structural alignment. International Journal of Project Management, 33(1), pp.126-139.

Kerzner, H. and Kerzner, H.R., 2017. Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons, pp.7-12.

Kondolf, G.M., Gao, Y., Annandale, G.W., Morris, G.L., Jiang, E., Zhang, J., Cao, Y., Carling, P., Fu, K., Guo, Q. and Hotchkiss, R., 2014. Sustainable sediment management in reservoirs and regulated rivers: Experiences from five continents. Earth’s Future, 2(5), pp.256-280.

Lock, D., 2017. The essentials of project management. Routledge.

Mir, F.A. and Pinnington, A.H., 2014. Exploring the value of project management: linking project management performance and project success. International journal of project management, 32(2), pp.202-217.

Muller, R., 2017. Project governance. Routledge.

Nicholas, J.M. and Steyn, H., 2017. Project management for engineering, business and technology. Routledge.

Petts, G.E., 2018. Perspectives for ecological management of regulated rivers. In Alternatives in regulated river management(pp. 13-34). CRC press.

Turner, R., 2016. Gower handbook of project management. Routledge.

Zietlow, J., Hankin, J.A., Seidner, A. and O’Brien, T., 2018. Financial management for nonprofit organizations: Policies and practices. John Wiley & Sons. Available at: https://books.google.co.in/books?hl=en&lr=&id=gq1UDwAAQBAJ&oi=fnd&pg=PT15&dq=Financial+management+&ots=AvEEqOWARW&sig=dvrOrfNF3dRhvVXcJQXo6s2HbEk#v=onepage&q=Financial%20management&f=false [Accessed on 4 November 2018]