It’s time to include some new thinking to how we value, service and invest in one of our greatest natural assets, the Great Barrier Reef. In an historic partnership, the Queensland Farmers’ Federation (QFF) joined forces with the Queensland Tourism Industry Council (QTIC) and WWF-Australia to commission a robust economic assessment to value the Reef and determine rational annual investment.
The Jacobs report, Investing in the Great Barrier Reef, applies standard regulatory economics principles and estimates that conservatively the Great Barrier Reef is worth $21 billion. Based on this asset value, Jacobs calculated that the Reef would annually receive $547 million for operations and maintenance and $283 million for depreciation if it were a regulated piece of community infrastructure, such as a dam. Currently, government investment in the Reef is about $200 million per year.
For some time now, QFF has highlighted that there is a very real and substantial mismatch between Reef recovery goals and the level of investment. By their own admission, the Australian and Queensland governments have set very ambitious water quality targets for the Reef.
By contrast, a recent Queensland government report on the costs of achieving the water quality targets show that the funding currently allocated to this is grossly inadequate. The reality is that without long-term strategic investment at levels reflective of the goals, the water quality targets will not be realised.
The report also recommends that governments undertake a detailed business case to analyse the full benefits and costs of higher levels of Reef funding. This is important for agriculture as it would result in a more holistic approach to future investment; not just value environmental outcomes as has predominantly been the focus in the past. Farmers absolutely understand that there are tradeoffs and economic costs in any investment decision. Our sector has embraced triple bottom line results for many years.
One of the fundamental principles of investment decisions is the likely return on that investment. Jacobs’ estimates that an annual investment of between $547 million and $830 million to maintain the Reef (if it were a regulated asset) would deliver an annual return of between 5.6 and 8.5 times the investment. Another important investment consideration is that for every $1 of government Reef related investment, farmers have on average invested $1.55.
The report does not delve in to recommending where higher levels of investment should be spent. However, there is a compelling case to make sure we get future investment in agriculture right and remember that agriculture is a pillar of regional communities. In the Reef catchments alone, the sector’s gross value of production is about $5 billion per year and it is responsible for more than 40,000 jobs. Further, the sector has an enviable outlook and huge growth potential.
Many people in the community understand the broader benefits of a healthy Reef and healthy agricultural industries.
They also understand that appropriate, ongoing investment is required to maintain them. Resourcing long-term Reef management will require bipartisan economic commitment by all levels of government, reef-associated industries and coastal communities.
QFF firmly believe that this report challenges the discussion, and provides the stimulus needed to help reframe the way we all look at how to value, service and invest in the Reef. – Stuart Armitage, QFF President
