The dream of turning Australia's tropical north into a major food bowl to replace drought-stricken southern farmlands and feed a future Asia has been shattered by a new report released yesterday.

Despite a billion liters of annual rain, the equivalent of 2,000 Sydney Harbours, northern Australia has limited water, with 65 percent of rain lost through evaporation and 20 percent in rivers, while only 15 percent recharges groundwater reserves.

And climate change will make northern Australia hotter and drier by 2030, reducing water availability, said the report by the Northern Australian Land and Water Taskforce.

However, Northern Australia's resources boom is forecast to continue to grow significantly.

But, water scarcity in the north will be a major issue for future mining, along with access to skilled labor, said the report on sustainable development in northern Australia.

"Given the significant growth anticipated in this industry, it will be important to monitor the impact of the mining and resources industry on the water balance in northern Australia," the government-commissioned report said.

Farmers and rural politicians have for decades called for the "Top End" of Australia to be developed into a food bowl, citing the success of the nation's largest irrigation scheme, the Ord River Irrigation Scheme in the far northwest. The Ord scheme produces fresh fruit and vegetables, mainly for export to Asia.

"It will not be the food bowl for the world," said Western Australian state politician Gary Gray after the reports release.

The report said: "Despite high rainfall from November to April there is almost no rain for the remaining six months.

"Evaporation and plant transpiration is so high throughout the year that, on average, for 10 months of the year there is very little water to be seen."

Most rain falls near the coast or on floodplains, quickly running into the sea and making it hard to capture, and little in the upper reaches of rivers, where the topography suits dams and water reservoirs. Few northern rivers flow all year.

The report ruled out more dams on environmental grounds and said the maximum area that could be irrigated from groundwater was 60,000 hectares, only three times the current area.

Future agriculture in the north could expand by developing small-scale mosaic agriculture, however, and its cattle industry, which exports live cattle to Asia, could double in size by 2030 by intensifying production and improving feeding facilities.