Agricultural water use in New Zealand: Agricultural water use in New Zealand: should more be done to balance private should more be done to balance private

property rights with greater public interest in property rights with greater public interest in an increasingly scarce resource?an increasingly scarce resource?

Fisher, R , Halsey, G , & Cooper, K Fisher, R , Halsey, G , & Cooper, K

Open Polytechnic of New ZealandOpen Polytechnic of New Zealand

Lower Hutt, North IslandLower Hutt, North Island

About the Open PolytechnicAbout the Open Polytechnic

25,000 students25,000 students Key distance Key distance

education providereducation provider Wide variety of Wide variety of

programmesprogrammes Diverse teaching and Diverse teaching and

research expertise research expertise (particularly practice-(particularly practice-based research)based research)

About the authors & approachAbout the authors & approach

Rick Fisher – Natural Resources Centre (environmental law)Rick Fisher – Natural Resources Centre (environmental law)

Gordon Halsey – School of Business (economics)Gordon Halsey – School of Business (economics)

Kelvin Cooper – Real Estate Centre Manager (property Kelvin Cooper – Real Estate Centre Manager (property valuation)valuation)

Our interdisciplinary approach:Our interdisciplinary approach:Can a water allocation scheme be developed which is Can a water allocation scheme be developed which is

environmentally sustainable, economically efficient, and environmentally sustainable, economically efficient, and accountable (in terms of its impacts on property values and accountable (in terms of its impacts on property values and the environment?)the environment?)

New Zealand: key water allocation factsNew Zealand: key water allocation facts11

11Source:Ministry for the Environment (2007) New Zealand State of the Source:Ministry for the Environment (2007) New Zealand State of the

Environment report. Wellington: MfE Environment report. Wellington: MfE 600,000 ha irrigable land at present: could be 600,000 ha irrigable land at present: could be

another 1.5 millionanother 1.5 million Consumptive demand 2-3 X higher than in other Consumptive demand 2-3 X higher than in other

OECD countriesOECD countries Consumptive demand competes with demand for Consumptive demand competes with demand for

other uses, notably hydroelectric demandother uses, notably hydroelectric demand Irrigation accounts for 77% of allocated water use Irrigation accounts for 77% of allocated water use

(majority from groundwater sources)(majority from groundwater sources) Many catchments (including Hawke’s Bay, Many catchments (including Hawke’s Bay,

Wairarapa, Marlborough, Tasman, Canterbury, Wairarapa, Marlborough, Tasman, Canterbury, Otago) are heavily allocated/fully allocatedOtago) are heavily allocated/fully allocated

Waitaki RiverWaitaki River

New Zealand’s responseNew Zealand’s response

Sustainable Water Programme of Action Sustainable Water Programme of Action (2003-2008)(2003-2008)

Goals:Goals: Seek to improve water qualitySeek to improve water quality Identify and reduce the undesirable effects Identify and reduce the undesirable effects

of land use on water qualityof land use on water quality Improve water allocation managementImprove water allocation management Key tool: Resource Management Act Key tool: Resource Management Act

(1991)(1991)

Resource Management Act (1991)Resource Management Act (1991)

-New Zealand’s town and country planning law-New Zealand’s town and country planning law-RMA and predecessor legislation replaced common -RMA and predecessor legislation replaced common

law riparian rights with a statutory regime.law riparian rights with a statutory regime.-RMA purpose: to promote the sustainable -RMA purpose: to promote the sustainable

management of natural and physical resourcesmanagement of natural and physical resourcesKey provision re water: s 14 no one can take, use, Key provision re water: s 14 no one can take, use,

dam or divert water unless allowed to do so by:dam or divert water unless allowed to do so by: A National Environmental StandardA National Environmental Standard A rule in a planA rule in a plan A resource consent (water permit)A resource consent (water permit)

Regional council boundariesRegional council boundaries

Water management by regional councilsWater management by regional councils

Councils must give effect to national directives, Councils must give effect to national directives, notably Water Conservation Orders, National notably Water Conservation Orders, National Environmental Standards, and National Policy Environmental Standards, and National Policy StatementsStatements

Councils have delegated authority to:Councils have delegated authority to: Control freshwater useControl freshwater use Set maximum/minimum flowsSet maximum/minimum flows Create regional plans and regional rulesCreate regional plans and regional rules Grant resource consents for water extraction and Grant resource consents for water extraction and

use (water permits)use (water permits)

Water as propertyWater as property

Recent environmental law suggests more than a mere right Recent environmental law suggests more than a mere right of access, more a license with some power to exclude of access, more a license with some power to exclude others from access (others from access (Aoraki Water Trust v Meridian Energy Aoraki Water Trust v Meridian Energy Ltd [2005] 2 NZLR 268 (High Court)Ltd [2005] 2 NZLR 268 (High Court)

Property characteristics of a water permit:Property characteristics of a water permit: Has monetary valueHas monetary value Is a ‘good’ for the purposes of properties security Is a ‘good’ for the purposes of properties security

legislationlegislation Can be transferred to another owner on-site, and to another Can be transferred to another owner on-site, and to another

site within a catchmentsite within a catchment Protects the priority of existing consent holders, as well as Protects the priority of existing consent holders, as well as

first in, first served allocationfirst in, first served allocation

Advantages of tradable water Advantages of tradable water permitspermits

Allocative efficiency (use can ‘migrate’ to higher Allocative efficiency (use can ‘migrate’ to higher value users)value users)

Dynamic efficiency (price is a signal to potential Dynamic efficiency (price is a signal to potential investors)investors)

Technical efficiency (allocation requires best Technical efficiency (allocation requires best practice monitoring and distribution)practice monitoring and distribution)

Social efficiency (reduce tension between users Social efficiency (reduce tension between users and regional councils)and regional councils)

Administrative efficiency (level the playing field Administrative efficiency (level the playing field among regional councils)among regional councils)

Key conclusionsKey conclusions

Environmental law :Environmental law : There are property rights in waterThere are property rights in water Current prioritisation rules are unwieldy, and may not promote Current prioritisation rules are unwieldy, and may not promote

environmental sustainabilityenvironmental sustainability

Economic:Economic: Allocation systems may be efficient, via such methods as auctionsAllocation systems may be efficient, via such methods as auctions Problems remain re rent seeking over issues of metering, pricing Problems remain re rent seeking over issues of metering, pricing

and ownershipand ownership

Property:Property: Additional measures may be required to properly value the benefit Additional measures may be required to properly value the benefit

to landowners of having a water permit, and improve to landowners of having a water permit, and improve accountability for any environmental harmaccountability for any environmental harm