Options for Improving Environmental Management in the EEZ
The section on current environmental legislation in the EEZ identified that change is needed to the way New Zealand manages the environmental effects of activities in its EEZ (from 12 to 200 nautical miles offshore). There are gaps and inconsistencies in the current management regime. Change is needed both to protect the environment and to provide certainty to businesses wishing to operate in the EEZ.
This section of the paper outlines four options for improving environmental management in the EEZ. These options are described in detail below, followed by an analysis of the advantages and disadvantages of each.
Option 1: The voluntary approach
Option 1 is to work with industries to help them to develop their own environmental operating procedures for the EEZ. Operating procedures can be industry-led or agreements between parties, but the defining characteristic of Option 1 is that it must be voluntary to sign-up to. Operating procedures designed for the EEZ could initially be voluntary, but if they were acceptable to government they could guide the form that future legislation might take.
An example of an informal industry-led voluntary approach is the assessment of environmental effects being done by OMV New Zealand Ltd (OMV). OMV intend to extract oil from the Maari crude oil field in January 2006 (the Maari field is within the EEZ). OMV are undertaking a full assessment of environmental effects process with key stakeholders, central and local government, Maori and local community groups, despite there being no statutory requirement to do so. In order to take what measures it reasonably can to reduce the risk of the project's long-term viability being affected by regulatory changes, OMV approached central government agencies to identify key environmental issues as part of the voluntary assessment of environmental effects process.
Another voluntary approach to environmental management is through independent accreditation of environmental performance. An example of this approach is Telarc's services for independent evaluation of management systems. Telarc also measures environmental management systems and provides certification in line with international standards such as ISO 14001.
The Packaging Accord is an example of a voluntary industry and government initiative. The signatories to the accord - industry, local and central government - have voluntarily committed to taking steps to reduce the proportion of packaging in our total waste stream. Signatories are aiming to save resources when they design, make and choose packaging and to do their best to recover and reuse the materials. This means producers and packaging users will take more responsibility from the beginning to the end of the packaging lifecycle. This is an example of 'extended producer responsibility', a core principle of the New Zealand Waste Strategy 2002, supporting sustainable development.
Another example of a voluntary initiative between government and industry are the mining codes of practice in Australia. In 1994 Environment Australia formed a partnership with the Australian mining industry to identify and develop products on best practice environmental management in mining. The partnership is guided by a stakeholder representative steering committee, with members drawn from mining companies, the Minerals Council of Australia, government departments, research organisations, and non-government organisations with specific interests in mining.
Environment Australia and a mining industry representative chair the stakeholder representative steering committee jointly. Funding has been shared between government and industry: recurrent funding is provided mainly from Environment Australia, while industry has provided sponsorship funding for the production of specific booklets, supplied authors at reduced or no cost for many booklets, provided expertise to the technical review panel, and met the costs of steering committee members.
The negotiated greenhouse agreements between the Ministry for the Environment and businesses is an example of voluntary agreements between industry and government . During the first Kyoto Protocol commitment period (2008 to 2012), the government recognised that the international competitiveness of some New Zealand firms or industry groupings could be at risk because of an emissions charge [The government has decided to introduce an emissions charge on fossil fuels and industrial process emissions (ie, carbon dioxide and fossil methane) from 2007 to create an incentive to reduce emissions. The charge will approximate the international emissions price, but be capped at NZ$25 a tonne of carbon dioxide equivalent.] to be introduced in 2007. Firms that are prepared to undertake to meet international best practice targets in the management of their greenhouse gas emissions can negotiate a full or partial exemption from the emissions charge with the government. This is called a negotiated greenhouse agreement (NGA). To date, one NGA has been concluded and applications to negotiate an NGA have been received from a dozen other firms.
Option 2: Filling the gaps in current legislation
Option 2 would fill the gaps in the current legislation, so that the legislation that applies to each activity in the EEZ has a consistent approach and is comprehensive. There are two ways this could be done:
- by simply creating extra rules to fill the gaps in current legislation, or
- by including a requirement in each Act to assess the environmental effects of each activity.
Because current legislation has been designed on an activity-specific basis, filling the gaps would require an assessment of each piece of legislation, taking into account the rules that already exist. Changes to current management will depend on the ability of current legislation to protect the environment.
The assessment carried out in this report indicates that there are gaps in the ability to regulate the environmental effects of:
- the introduction of new species through ballast water
- the disturbance of the benthic environment (bottom of the sea floor) when building platforms and drilling in the marine environment
- the disturbance of the benthic environment when laying submarine cables (which can require a four-metre-wide and two-metre-deep route)
- the disturbance of the marine environment when conducting non-biological scientific research (which can include drilling and dredging in the benthic environment)
- the disturbance of the marine environment when prospecting for minerals.
It would be difficult to create rules to protect the environment without undertaking an assessment of the environmental effects of proposed activities. For example, to protect sensitive areas (such as sea mounts) in the EEZ, government could create a blanket rule that submarine cables should bypass sea mounts. However, without assessing the area itself it would be difficult to tell the sensitivity of the proposed site. For the example of the sea mounts, the cable layer would need to determine if there were any sea mounts on their proposed route. This could be a costly exercise if there is poor information for the area.
The second way of filling gaps in current legislation would be to include in each Act a requirement to assess the environmental effects of each activity, in addition to making sure that each Act has procedures for setting conditions to protect the environment. An example of how this might work would be to include a requirement to assess the environmental effects of petroleum mining via the Crown Minerals Act. This would mean that before drilling or site preparation was started, an assessment of the area and the effects of the activity would be made. Government would also be able to place conditions on the way petroleum permits are granted, or to add environmental conditions on permits (if necessary).
Option 3: One Act managing resources in the EEZ
Option 3 is to replace all of the current legislation applying in the EEZ with one Act. This new Act would apply to all activities across the board. It would control resource management in the EEZ, including the allocation of resources and/or management of their effects. Current legislation, including the Fisheries Act, Marine Mammals Act, Wildlife Act, Maritime Transport Act, Crown Minerals Act and the Continental Shelf Act, would be repealed in so far as it applies to the EEZ.
Part of managing resources in the EEZ would include an environmental management regime for the EEZ. A new regime would require each activity to undergo an assessment of environmental effects and then set out conditions and rules for operating in the EEZ. The new Act could include a common approach to assessing environmental effects and/or a common threshold of impacts for the EEZ.
The RMA is an example of how one Act can manage a number of resources. Although the RMA did not replace all resource management legislation, [For example the Fisheries Act 1996 manages fisheries resources and the Crown Minerals Act 1991 manages mineral resources.] it brought together laws governing land, air and water resources and introduced a new approach to resource management. Companies wishing to carry out activities (other than permitted activities) must apply for a resource consent. The prescribed process includes an assessment of the effects of the activity on the environment. The RMA applies to all land, and includes New Zealand's territorial sea (mean high-water springs out to 12 nautical miles). The jurisdiction of the RMA cannot be extended beyond 12 nautical miles due to the more limited 'sovereign rights' that New Zealand has in the EEZ.
The defining characteristic of Option 3 is that the new Act would manage all activities in the EEZ - not just the environmental impacts of the activities. It would create a 'one-stop-shop' for management in the EEZ.
Option 4: The umbrella act: one assessment of environmental effects
Option 4 would use a single piece of legislation - an 'umbrella' act - to require the environmental assessment of all activities occurring in the EEZ. The umbrella act would also give the government the power to place conditions on or prohibit activities if significant environmental effects are likely as a result of the activities. Unlike Option 3, an umbrella act would not affect existing legislation.
This approach is similar to Australia's Environmental Protection and Biodiversity Conservation Act, which is an umbrella act that requires approval and an environment assessment if an activity would result in a significant environmental effect. It applies to all activities, even if there is existing legislation controlling a particular activity. There is a series of triggering criteria, and a variety of mechanisms to assess the proposed activity depending on the information available and the severity of the impact. A similar approach could also work in New Zealand.
The umbrella legislation would also need to enable government to place conditions or prohibit certain activities on the grounds of adverse effects. If an environmental assessment reveals significant adverse environmental effects, government needs some means to place conditions on the activity, or even prohibit the activity from going ahead. This would need to be integrated with any existing permits and licences government already issues.
This approach could be adapted for the different nature of activities in the EEZ - from large-scale projects with localised impacts (eg, an oil rig), to transitory industries with multiple operators and where cumulative impacts become more important (eg, shipping). Later, an assessment could be done on the effects of the shipping industry through a particular region (eg, off the Taranaki coast or along one of the major shipping lanes). The assessment might identify sensitive areas that should be avoided by ships, or require different operating practices to avoid environmental damage.
To see how this might work in practice, we can use prospecting for minerals as an example. A minerals prospector must apply for a permit under the Continental Shelf Act 1964. If a new umbrella act were to apply, the proposal would need to be assessed to see whether it 'triggers' the requirement for an assessment of environmental effects. If the proposal does trigger the requirement, an assessment for environmental effects would need to be undertaken and approval granted through the umbrella act before a permit to prospect for minerals could be granted.
Analysis of the options
Each of the four options has both advantages and disadvantages, which are outlined below.
Option 1: The voluntary approach
Advantages
Under the voluntary approach, government would work with industries in the EEZ to develop operating procedures. Complying with the environmental best practice operating procedures would (at least initially) be voluntary. There are two main advantages to this approach. First, a voluntary approach allows for incremental changes to environmental management in the EEZ. Although there is limited human activity in the EEZ currently, it is likely to increase in the future, and we can use the time before commercial activity increases significantly to work with industry to develop operating procedures to protect the marine environment in the interim.
The second benefit is that stakeholders can be used to help design the regulations that will affect them. Industry are in the best position to know what the impacts of their activities are, and they are likely to be well informed about best practice in their areas.
Finally, a voluntary approach to environmental management would be relatively inexpensive for government to implement, with much of the cost being taken up by business. Management could be more flexible and adaptive because legislative change would not be necessary.
Disadvantages
The key argument against Option 1 is that a voluntary agreement needs to be in the industry's interests for it to work. Environmental voluntary agreements work best when there is an incentive for businesses to sacrifice short-term commercial gains for long-term benefits. In this case there are limited incentives for companies to protect the environment in the EEZ, particularly when there is a financial disadvantage in doing so.
Some international companies that operate in the EEZ already assess the environmental effects of their activities before they begin work. They need to do this to satisfy the expectations of their shareholders that they will operate in an ethical manner. However, generally, when adopting environmental operating procedures, there is a financial incentive for companies to adopt minimum requirements. Also, if the purpose of doing an assessment of environmental effects is to decide if a project should go ahead or not, industry has an incentive to decide to go ahead with the project. It would be difficult for companies to make an objective decision.
Voluntary agreements tend to work best when there are a limited number of parties to sign an agreement, or if one party has significant influence over others (eg, a monopolistic buyer or seller). Without a legislative mandate to do so, the government would not be able to enforce compliance with operating procedures that are voluntary. By definition, a voluntary approach is not legally binding. Government would therefore be unable to stop companies undertaking activities with significant adverse effects. It would also be very difficult to assess the cumulative effects of activities, as companies would operate independently of each other.
The voluntary approach is not favoured by some of the stakeholders that have been involved in this project. They believe that the current system is fragmented and difficult to understand. Many of the companies would like to see regulations developed that would be able to provide them with the certainty to allow them to make investment decisions. If a voluntary approach were taken to environmental management in the EEZ, with each industry developing different operating procedures, then environmental management is likely to stay fractured.
Option 2: Filling the gaps in current legislation
Advantages
A benefit of filling in the gaps of current legislation is that it allows environmental management to be tailored to each activity. In particular, activities that are permanently located in the EEZ are likely to need to be managed differently to those activities that are transitory (such as shipping). For example, it would be impractical to assess the environmental effects of every shipping voyage, but there could be an assessment of the environmental impact of the industry as a whole. For other activities (eg, oil rigs), it would be more appropriate to do a case-by-case assessment of each project.
This option utilises the existing legislation. Filling the gaps in current legislation would also provide certainty to businesses operating in the EEZ about what the rules are and who will enforce them. Essentially this option is an extension of how we currently regulate activities in the EEZ, on an activity-by-activity basis.
Disadvantages
The problem with Option 2 is that simply filling the gaps in existing legislation would not cover emerging new activities. In the next 10 years it is likely that there will be increasing activity in the EEZ, with new activities starting. Under this option, every time a new activity starts in the EEZ, officials will have to devise a system for how to assess and then manage the environmental effects of the activity.
Another problem with Option 2 is that this solution is likely to require changes to many pieces of legislation. Making these changes while trying to make the pieces of legislation consistent is likely to be very difficult. Also, there are different departments dealing with the different pieces of legislation, so it would be difficult to assess the cumulative effects of activities.
Option 3: One Act managing resources in the EEZ
Advantages
Option 3 is to replace all the current legislation applying in the EEZ with one Act controlling resource management (including allocation of resources and/or management of their effects) in the EEZ across the board (ie, in relation to all activities). One of the advantages to this option is that it would be easy for businesses to have to interact with only one agency. The management regime would have clear rules, which would provide certainty to businesses. Option 3 would also cover future activities, because each activity would go through the same assessment of environmental effects.
Disadvantages
There are some strong disadvantages to Option 3, however. It would be costly for government to implement this option, because the required legislative process would be long and resource intensive. The pieces of legislation that apply in the EEZ at the moment are not targeted at just environmental management. For example, the purpose of the Fisheries Act 1996 is to 'provide for the utilisation of fisheries resource while ensuring sustainability'. The Fisheries Act, in particular, is a large and complex piece of legislation that has been amended over time. Trying to incorporate multiple pieces of legislation with different purposes would be an extremely difficult task. Finally, the change to institutional arrangements would be difficult to implement.
Option 4: An umbrella act: one assessment of environmental effects
Advantages
An umbrella act would be a new piece of legislation which would require the environmental assessment of activities, while leaving the current pieces of environmental legislation in place. The advantage of this option is that it fills the clear gap in current legislation in the EEZ. Currently, regulations can be placed on most activities, but there is no requirement to do an assessment of the environmental effects of activities before they start.
'Umbrella' legislation would also be flexible enough to cover new activities, and with each activity following a similar assessment process it would be easier to compare the effects of different activities. For future activities that are not covered by existing law (eg, aquaculture), the legislation would give government the ability to place conditions or prohibit activities where there are significant effects. Where law does not apply, government's ability to place such restrictions is questionable.
Disadvantages
A key disadvantage of the approach is the lack of a single government agency with the clear mandate to assess environmental effects and to authorise or prohibit activities. As already discussed, currently different agencies control different activities. New institutional arrangements could be established to either establish a new organisation with responsibility for all environmental authorisations (the Australian model), or those agencies with current responsibilities could be given more powers to consider environmental matters (eg, the Crown Minerals division of the Ministry of Economic Development for mining) and one of those agencies mandated to take the responsibility for any activities that do not fall within existing agencies' mandates.
The preferred option
The solution for improving environmental management in the EEZ needs to be in proportion to the problem. As this paper has identified, while there are gaps in the management of environmental effects in the EEZ, the amount of activity in the EEZ is currently low. Accordingly, in the short term (one to two years) the voluntary approach is the Ministry for the Environment's preferred option. The benefits of this approach (Option 1) are that it would be relatively inexpensive, would allow incremental change, and is inclusive of industry - and consequently will be more likely to have industry support.
In the medium term (two to three years), and as activities increase in the EEZ, Option 4 is preferred. Option 4 entails government putting in place procedures to assess the effects of activities in the EEZ and placing conditions on the impact that activities have on the environment. Improving environmental management in the EEZ would therefore be a two-step process: a voluntary process in the short term, with legislation enacted in the medium term. Industries that take advantage of the voluntary approach, and set up before legislation is developed, should be recognised in some way in the new legislation, giving industry an added incentive to engage with the voluntary approach.
This paper identifies three options for developing legislation: filling the gaps, one act to manage resources in the EEZ, or an umbrella act approach. Filling the gaps in current legislation (Option 2) is rejected because it would not cover emerging new activities, and trying to make existing legislation take a consistent approach (where appropriate) and comprehensive would be complex and costly. The one act to manage all resources approach would also be very complex, time-consuming and costly. It would involve rolling all of the legislation relating to resource use and allocation in the EEZ into one single act. It has a number of problems, including how to replace longstanding legislation (which has been designed for different purposes). Effectively, this solution would be larger in scope than the problem itself.
Environmental management needs to be different for different activities. Stationary activities (such as petroleum extraction) should be managed differently to those that are transitory (such as shipping).
The environmental context of activities is also important. The environmental effect of prospecting for minerals might be judged to be unacceptable in areas that are identified as being particularly sensitive. Currently we have very limited information about the EEZ, but as information increases, management needs to be adaptive. Option 3 fails to deal with these issues, and consequently should be rejected.
Option 4, an umbrella act, would require all activities over a particular threshold to go through the same environmental assessment. This approach could be adapted for the different nature of activities in the EEZ and would need to take into account existing rules and regulations. This approach would be the most effective solution, because it would allow government to assess and then set conditions on activities that are likely to have the greatest impact on the environment.
In conclusion, a voluntary approach could improve environmental management in the EEZ in the short term, but as activity in the EEZ increases, umbrella legislation should be developed. This should be a two-step process. Industries should be encouraged to take advantage of any voluntary approach initially, while in the medium-term legislation would build on these initiatives to create a comprehensive national framework for assessing the environmental impacts of activities.
