Get it right the first time: the Paradise Dam example

The Queensland Government’s rural water business Sunwater has released a great video about the restoration of Bundaberg region’s Paradise Dam to its full capacity, which the state government finally agreed to last Christmas Eve.* This came after more than two years of uncertainty about the dam’s future. In 2019, the state government revealed it had to lower the spillway by 5 metres to guarantee the dam wall wouldn’t collapse if it rained like it did in January 2013 again. The Christmas Eve announcement that the dam would be restored to its full capacity came as a great relief to many local growers, who have planted thirsty tree crops such as macadamias and avocados in expectation of a highly reliable water supply in the Bundaberg region.   

According to Sunwater, the Paradise Dam repair will require 370,000 cubic metres of concrete, more than 90% of the volume of concrete that was used in the dam’s construction in the mid-2000s. It will cost $1.2 billion (i.e. $1,200 million) to repair (see Federal government agrees to fund remaining $600 million cost of fixing Paradise Dam). 

The state government’s original budget for Paradise Dam in the mid-2000s was $240 million. If we convert that to current dollars using the price index for the construction of roads and bridges tracked by the ABS, the cost of construction would now be around $400-500 million, but the repair is going to cost $1.2 billion! Obviously, the cost of constructing dams has increased at a much faster rate than the cost of constructing basic infrastructure. 

Ultimately, the Paradise Dam debacle shows the importance of getting it right the first time. As carpenters say, measure twice, cut once. Something appears to have gone badly wrong in the design or construction of the Paradise Dam in the 2000s. Paradise Dam was the first dam in Australia to use roller-compacted concrete, and as ABC News reported in May 2020:

Concrete used in the construction of Paradise Dam near Bundaberg may have been “intrinsically incapable” of meeting design standards, an independent inquiry has determined.

It’s unclear exactly who stuffed up, but it was a very costly mistake, one which Queensland and Australian taxpayers now have to pay $1.2 billion to correct. 

Paradise Dam, on the Burnett River, near Bundaberg, Queensland. 

*Disclosure: My consulting business Adept Economics was engaged by Bundaberg Regional Council and local grower groups to analyse the economic costs of inaction on Paradise Dam in early 2020 and I’ve participated in various working group meetings hosted by Sunwater since then. Full credit to Sunwater for the professionalism and responsiveness of its staff.  

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. Also please check out my Economics Explored podcast, which has a new episode each week.

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