Effective and efficient pathways for investment in improved water quality in the Great Barrier Reef

Effective and efficient pathways for investment in improved water quality in the Great Barrier Reef (GBR) [1] provides a quantitative assessment of the most cost-effective catchment management actions in 46 basins within the GBR catchment and a data visualisation tool to support the comparison of investment scenarios.

The method aimed to:

• Establish and apply integrated science and economics to identify and test effective and efficient investment pathways for pollutant load reduction to the GBR.
• Build on and enhance the cost effectiveness analysis previously undertaken across 5 regions in the GBR to identify the most efficient investment pathways for reducing water quality impacts on the reef.
• Show how investments will enable appropriate actions to work towards Reef 2050 Plan[2] targets for each of the priority basins.
• Develop the tools and analysis needed to properly inform prioritisation of investment in the actions and locations that are likely to have the most significant impact in reducing pollutant loads to the Reef.

The effective and efficient pathways for investment in improved water quality in the Great Barrier Reef methodology (the method) was driven by the outputs of the Paddock to Reef models (P2R)[3] and integrated with cost and efficacy data to identify the groups of actions needed to achieve the target load reductions for the three key contaminant sources considered of major impact to the reef. P2R modelling provided the modelled annual baseline load for dissolved inorganic nitrogen (DIN), fine sediment, and pesticides (5 PSII herbicides). Target load reductions were based on the Ecologically Relevant Targets (ERTs) established in the Reef 2050 Water Quality Improvement Plan (WQIP), which investigated the most cost-effective policy solution sets to reduce the impacts associated with sediment and nitrogen run-off across key GBR catchments.

The method used previous modelling results to evaluate the cost effectiveness of different management response pathways, and how they contributed towards the achievement of the ERTs. ERTs[4], which are basin-specific pollutant load reductions for DIN, fine sediment, and pesticides, were set for 46 catchments within the Great Barrier Reef based on the Reef 2050 WQIP[5], previous work in the Burdekin WQIP[6] and the Scientific Consensus Statement[7]. Key contaminant sources were attributed to a specific land use type and pollution source for each of the modelled sub-catchments. For the scenarios looking at changes in practices, (e.g. moving practice from High (score of D) to Moderate- (score of C), C to Moderate-Low (score of B) and B to Lowest-risk (score of A)), the most recent estimates for percentage of land within each basin being managed with practices at different water quality risk states were applied.

Ten policy solution sets (intervention types) were investigated, including seven solution sets from the 2016 Reef Costings Study[8] and three additional interventions that were identified as being potentially significant (horticulture and grains, major point sources (Wastewater Treatment Plants - WWTPs) and pesticides).

The final solutions investigated were:
1. Practice change – Cane
2. Practice change – Grazing
3. Practice change – Pesticides
4. Practice change – Irrigation
5. Practice change – Horticulture (bananas)
6. Catchment remediation – Gullies
7. Catchment remediation – Streambanks
8. Catchment remediation – Treatment Systems
9. Point source WWTP management
10. Land use change.

The solution sets evaluated the above-mentioned practices using the minimum compliance standards baseline for cane, grazing and bananas and based on the findings of the 2017 Scientific Consensus Statement.

Each of the solution sets were individually modelled to allow comparisons of cost-effectiveness between options and to establish efficient investment pathways – the investment required to mitigate one unit of pollution (e.g. $/kg DIN). Because each solution set has different types of costs (establishment/capital, refurbishment, operations and maintenance, and opportunity costs) and different timings of costs, the cost effectiveness for each solution set required costs to be discounted to present value terms. Based on the information available, for each solution set and each relevant cost category parameters, ‘low-’ (best), ‘more likely-’ (e.g. true costs), and ‘high-‘ (worst) cost parameters were established. These parameters became the input parameters for the Cost-effectiveness Analysis (CEA) modelling.

Monte Carlo simulations were undertaken for all major input parameters and for each individual solution set. Monte Carlo simulation performs risk analysis by using different input parameters and their distribution bounds in multiple iterations to find the range and probabilities of outputs of interest. When multiple solution sets are compared, this analysis then provides insight into the degree of confidence that two alternative solution sets have different levels of efficiency. For example, where there is no cross-over between the 90% confidence interval range of CEA, it is very likely that the CEA of one solution set is superior to the other. The output of the Monte Carlo simulations can be used to gain insight into which input parameters of the CEA calculations (e.g. capital costs, efficacy estimates) have the greatest impact on the estimates of CEA.

A Solution Statement was also produced for each solution set outlining their scope and extent, the management actions they contained, the costs and efficacy of those actions, the necessary assumptions and limitations used and a summary of the relevant results.

A summary of the process used in the effective and efficient pathways for investment in improved water quality in the Great Barrier Reef methodology was as follows:

• Calculate the ERTs for the 46 basins within the Great Barrier Reef Catchment
• Incorporate water quality information from various sources (e.g. Report Card 2016, Reef 2050 WQIP) into modelling
• Assess change in practice and how it might impact the outcome based on management actions within the catchment
• Conduct a cost-effectiveness analysis for each step.
• Determine the optimal sequence of actions to achieve the targets or scenario requirements.

All costs were estimated in real terms and discounted to a present value using agreed discount rates. A discount rate of 7.0% (real) was used, with sensitivity analysis at 4.0% and 10% (real) as per the Queensland Treasury guidelines. A 30-year time frame was used for the analysis of each solution set with costs for 5-year investments (cash costs) and 15-year (net present value) quantified to assist with scenario and investment pathway development. The cost categories included for each solution set were dependent on the specific elements of that solution set. Where information on the geographical differentiation of solution set efficacy or costs was available, this was also included into the modelling for each of the reporting areas. In all cases, a range of values for the different costs were modelled to establish the most likely, 5th percentile and 95th percentile using a Monte Carlo analysis with 20,000 iterations.

An assessment of each of the final solution sets were also assessed against the non-cost risks to capture the impact of non-cost risks on the CEA.

The detailed modelling outputs from the solution sets are then input into the Reef Planning and Investment Tool, a scenario development and data visualisation tool.

The effective and efficient pathways for investment in improved water quality in the Great Barrier Reef method incorporates a range of criteria, including:

• Loads coming off land
• Economic targets
• Dissolved Inorganic Nitrogen (DIN)
• Fine sediment
• Pesticides
• Management effectiveness
• Cost-effectiveness of actions
• Ecologically Relevant Targets (ERTs)
• Key costs for each solution
• Non-cost factors that can impact the cost-effectiveness of interventions to reduce pollutant loads, such as adoption and efficacy risks.

For the method, the following data are required:

• Data from Paddock to Reef modelling, the 2016 Reef Costings Study, and the Scientific Consensus statement
• Basin-specific ecologically relevant targets (ERTs)
• Percentage of land managed at specific water quality risks
• Costs for each solution set
• Non-cost risks to each solution set
• Best-available underpinning science
• Expert knowledge.

To use the Reef Planning and Investment Tool, the following data are required:

• Budget allocation data
• Action and implementation data from the solution sets.

For the method, the following expertise is required:

• Expert knowledge of the baseline pollutant loads and targets for GBR reporting basins
• Expert knowledge of GBR basin-specific pollutant sources
• Economic knowledge of GBR reporting basins
• Advanced modelling expertise.

To use the Reef Planning and Investment Tool, the following expertise is required:

• Knowledge of the solution sets generated by the method to manipulate scenarios within Reefonomics
• Basic modelling knowledge.

For the method, the following materials are required:

• Expert knowledge of Great Barrier Reef reporting basins and advanced modelling
• Software to generate solution set
• Any relevant additional software (e.g. mapping software)
• Database management software for storing solution sets and solution set statements.

To use the Reef Planning and Investment Tool, the Reef Planning and Investment Tool software and database management software for storing the outputs generated by each scenario are required.

• Detailed solution sets for specific actions within the GBR catchment
• List of management actions for each reporting basin within the GBR
• Solution set statements for each solution set
• Cost-effectiveness analysis modelling for each solution set
• Reef Planning and Investment Tool, a data visualisation and scenario-running tool

• Determining priorities for on-ground actions in water quality for specific pollutants to receive the best value for money
• GBR-specific water quality target achievements

Decision-makers, investors in Reef water quality improvement projects.

• Transparent process to prioritise investments based on economics and feasibility within GBR reporting basins
• Comparison of actions for priority areas within GBR reporting basins
• Designed for cost-effectiveness and viability
• Evidence-based
• Step-by-step process
• Visualisation

• Requires high-level technical expertise for modelling the solution sets
• Dependent on expert input within the GBR region
• Robustness of results is limited by information quality
• Limited to industries related to specific practice changes

Solution Statement 01: Practice Change - Sugarcane fertiliser

Solution Statement 02: Practice Change - Grazing

Solution Statement 03: Practice Change - Pesticides

Solution Statement 04: Practice Change - Sugarcane (Irrigation)

Solution Statement 05: Practice Change - Horticulture (bananas)

Solution Statement 06: System Repair - Gully remediation

Solution Statement 07: Catchment Remediation - Streambanks

Solution Statement 08: Catchment remediation - Treatment Systems

Solution Statement 09: Upgrading Sewage Treatment Plants

Solution Statement 10: Land use change

This page should be cited as:

Department of Environment, Science and Innovation, Queensland (2021) Effective and efficient pathways for investment in improved water quality in the Great Barrier Reef, WetlandInfo website, accessed 18 March 2024. Available at: https://wetlandinfo.des.qld.gov.au/wetlands/resources/tools/assessment-search-tool/effective-and-efficient-pathways-for-investment-in-improved-water-quality-in-the/