NemoClaw Knowledge Wiki

Australias Ord River Irrigation Project Economic Failure and Unforeseen Challenges

4 min read

Australia’s Ord River Irrigation Project: Economic Failure and Unforeseen Challenges

Clip title: Australia’s Water Project Failure: An Economic Breakdown Author / channel: Asianometry URL: https://www.youtube.com/watch?v=mjtj38rc2DI

Summary

The video discusses the long-standing dream of transforming Northern Australia’s vast, sparsely populated tropical lands into a bountiful “breadbasket” through agricultural development. This ambition led to the multi-billion dollar Ord River project, an irrigation scheme initiated in the 1960s. Despite significant investment from the Australian government, the project faced considerable challenges, with initial agricultural ventures proving unprofitable and highlighting the inherent difficulties of large-scale farming in the region.

The Ord River Scheme was conceived in three stages, beginning with the construction of the Diversion Dam (later Kununurra Diversion Dam) in the mid-1960s, costing A83 million in 2013 dollars). This first stage aimed to irrigate 10,000 hectares for cotton farming. However, as early as 1965, economist Bruce Davidson, in his book “The Northern Myth,” critiqued the economic viability of such projects, pointing to poor soil quality, pervasive crop pests requiring extensive pesticide use, and high transportation costs. He argued that cash crops like cotton were uneconomic without substantial government subsidies. Despite these warnings, and driven by political promises, national security concerns (dating back to WWII fears of an unpopulated north), and a desire to create jobs for local Aboriginal communities (who were not initially consulted), the government proceeded with the second stage.

Stage Two involved building the Main Dam, which created Lake Argyle, one of Australia’s largest freshwater reservoirs, at a cost of A700 million in 2013 dollars). This expanded the irrigated land to 14,000 hectares. However, when cotton subsidies were removed in 1972, the farms quickly collapsed, validating Davidson’s economic concerns. Studies in 1978 confirmed the non-profitability of cotton farming in the area due to harsh conditions, pests, and high transport costs. Consequently, the third planned stage, a hydropower station, was never built.

Over subsequent decades, agricultural efforts in the Ord Valley saw slow improvements, diversifying into various horticultural crops like bananas and mangoes, and later chickpeas, soybeans, and Indian sandalwood. Sugarcane production also saw a period of promise, leading to the construction of a mill in 1995, but a decline in global sugar prices and high trucking costs led to its closure by 2008. Renewed government efforts in 2008 and 2009 aimed at a multi-million dollar expansion to service an additional 8,000 hectares and improve social infrastructure. However, this expansion faced significant cost overruns (increasing by 52% from A334 million) and delays, with construction taking longer than anticipated. The Auditor General noted a lack of detailed costings and comprehensive support for additional funding requests. A 50-year lease for part of the expanded area was granted to Kimberley Agricultural Investment (KAI), a Chinese subsidiary, but by 2016, only a fraction of the land had been cleared and planted with crops like chia and sweet sorghum.

The video concludes that the fundamental obstacles identified in the 1960s largely persist. Northern Australia’s soil is generally not rich enough for many high-value crops, its remoteness leads to high transport costs for inputs and outputs, and there is a shortage of affordable labor, especially with competition from the mining industry. These factors render Ord Valley agriculture uncompetitive against other Australian regions or Asian tropical competitors without ongoing government subsidies. Successive administrations continue to pursue agricultural development, but the significant public investment (over A$1.5 billion since the 1950s in public money alone, updated to 2016 dollars) has yielded limited returns, with the cattle industry still dominating. Without a thorough understanding and mitigation of these inherent challenges, future attempts to transform Northern Australia into a “breadbasket” risk repeating past failures and becoming “bottomless money pits.”

Graph View

Backlinks