Beneficial use of coal seam water and enterprise transition for case study farms, Chinchilla district, Queensland

Monckton, David (2017). Beneficial use of coal seam water and enterprise transition for case study farms, Chinchilla district, Queensland PhD Thesis, School of Agriculture and Food Sciences, The University of Queensland. doi:10.14264/uql.2017.358

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Author Monckton, David
Thesis Title Beneficial use of coal seam water and enterprise transition for case study farms, Chinchilla district, Queensland
School, Centre or Institute School of Agriculture and Food Sciences
Institution The University of Queensland
DOI 10.14264/uql.2017.358
Publication date 2017-02-10
Thesis type PhD Thesis
Supervisor Jim Cavaye
Sue Vink
Neil Huth
Total pages 275
Language eng
Subjects 070106 Farm Management, Rural Management and Agribusiness
070108 Sustainable Agricultural Development
140201 Agricultural Economics
Formatted abstract
New water sources are rarely available in Australia for irrigation. It is even rarer for this to be offered to potential users for little or no cost. However, this is the case with coal seam water (CSW). CSW is produced as a by-product of gas extraction. Availability of this water is possible because coal seam gas (CSG) companies operating in Queensland are obliged to treat and dispose of this normally salty water. The cost of this treatment is considerable and yet the companies have not, to date, sought to recover these costs. There is no available data on why the companies choose any particular option within a range of options available for the disposal of CSW. The provision of this water was and is unprecedented to potential users. Accordingly, there is no precedent for its adoption. The objective of state government policy is to encourage the beneficial use of CSW such that it maximizes its productive use. Beneficial users include the environment, existing or new water users, and existing or new water-dependent industries. Following this, remaining CSW is to be treated and disposed of in a way that firstly avoids, and then minimizes impacts on the environment. Current legislation stipulates that if CSW fails to meet sufficient quality criteria it then becomes a waste product. This requires that it be disposed of under strict guidelines.

Given that treated CSW is available for use in agriculture, a key question must include how irrigators can best use it. This may mean making decisions about using it for irrigation in their current dryland production system. The thesis particularly aims to determine the economic benefits from the use of this water for irrigation and the motivations of different users who may incorporate this water into their production systems. However, the overall purpose of this thesis is to discover how much water is being made available for beneficial use generally, where and for what purpose. The thesis also aims to provide alternative options for the use and distribution of this water for maximum economic, social and environmental benefit. Individual production data and modelling reveals that an average 100 gigalitres per year (GL/yr) of CSW will be produced during the lifetime of the industry to 2060. This information is derived from gas well production modelling. However, there is no published information which deals with actual water production, its application and use. This thesis presents the first verified information on water use, supply and distribution based on empirical data. Estimates of the amount of CSW available for irrigation is derived from on-farm assessments and landholder interviews.

The research for this thesis partly uses cost-benefit methodology for case study farms which utilise input data from economic modelling and from farm interview data provided by affected landholders and industry expert commentators. The study area chosen is Chinchilla, Queensland where most of the State’s CSW is available for irrigation. Here it was found that there were 36 landholders receiving this water. Fourteen of these were willing to be interviewed. In addition, there were 9 other landholders and 13 industry experts interviewed. CSW produced in the Chinchilla area is mostly treated at discrete Reverse Osmosis (RO)[1] plants and supplied to existing weirs and water infrastructure as well as to dedicated reticulation systems. Hence, CSW is only available for agriculture in particular locations such as in the Chinchilla, Wandoan and Wallumbilla districts. For this reason, a case study approach not only suits this physical situation but also the contextual nature of landholder transition and decision-making about irrigation in their enterprise.

The acceptance and use of CSW by landholders is not universal. At the outset, potential irrigators need to meet a certain set of conditions before they are in a position to accept and utilise CSW. The first condition is physical proximity to a treatment facility; the second is the ability to meet the supply contract conditions. The third is a willingness to accept the supply risks with an untested and unknown water source. Many potential irrigators did meet these conditions. Despite this, many still chose not to use this water. The reasons for this are complex and related to a combination of economic, social and environmental considerations.

The interview material is designed to obtain first-hand information about the reasons why landholders would use or refuse this water. For all landholders, the decision to incorporate CSW into their production system was influenced by their individual outlook and circumstances. One key deciding factor for users was the profit potential and the enterprise establishment opportunities. Clearly, this was favourably influenced by the low price of the water and its reliability of supply. For those unfavourably disposed, their decision was generally based on more complex reasoning. It included perceptions about potential negative impacts on groundwater resources or concerns about the equity of CSW distribution.

In addition to the landholder interview material which is designed to answer specific research questions, discovering the reasons for CSW use and quantifying its impact, requires economic modelling of potential benefits from CSW use in irrigation. The modelling is designed to provide empirical evidence of its potential for beneficial use. This is investigated with reference to farm case studies in the Chinchilla District. These case studies compare dryland cropping and grazing with irrigated cropping using water from various sources. One major difference for CSW irrigation is that contracts include penalties for refusal to take contracted volumes. This leads to difficult and complex decision making possibilities for potential users. Consideration is given as to whether this water may have a positive or negative impact on water flowing into the Murray-Darling river system. In the Queensland section, as with other parts of the Murray-Darling River Basin (MDB), water licence provision is over-allocated. Therefore, the Federal Government has commenced a major program of water buy-back to help restore environmental flows and create a more sustainable use of water for consumption. The question then arises as to how the production and consumption of CSW affects the overall water balance within the Queensland section of the MDB.

This thesis investigates the current situation with respect to these questions and identifies its contribution to sustainable agriculture. This thesis provides new and significant information about a new source of water and how it is accessed and delivered for economic benefit. It provides empirical evidence to verify modelling of water production data. It provides new information about agricultural industry transition arrangements needed to incorporate a new source of irrigation water with particular characteristics. It also assesses alternative distribution and disposal methods to improve overall benefit from this valuable new water source. One of these recommendations discusses re-injection into the Condamine Alluvium. This discussion explores the scenario whereby more farms on better agricultural land are able to access water for a longer period of time. Such a scenario would delay the need for buy-back of over-allocated groundwater licences, which would provide significant economic benefits for sustainable agriculture. This thesis includes a unique estimation of the potential cost of this failure to replenish the water resources of the Condamine Alluvium and provides suggestions for long term improvements to sustainable agriculture. As a result, this thesis recommends a complete review and re-evaluation of the way CSW is delivered to potential users. While this would not necessarily change the way water is currently distributed this would be instructive for future use of this and other groundwater. Therefore, the results are important for the further development of CSG in agricultural areas in Australia and internationally.
Keyword Coal seam gas (CSG) water
Agricultural sustainability

Document type: Thesis
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Created: Wed, 08 Feb 2017, 12:12:31 EST by David Monckton on behalf of Learning and Research Services (UQ Library)