Annex 4: Hydro and Irrigation Scheme Users
Irrigation company no. 1
Background
The company has consents to dam and take with conditions that it maintains prescribed flow regimes according to a regional plan which is an operative planning document. Farmer irrigators must have their own resource consents to take and use water for irrigation whether they be direct from the river or any other ground or surface water source within the catchment. Farmers also own shares in the company that entitle them to use water in the catchment. The dam company does not deliver water to farmers.
Farmer consents are held by individuals or small schemes that have a shared take and distribution scheme. However the river management plan determines two classes of consents. A consents (which are called affiliated consents) are those which are available to people who hold shares in the irrigation company only. B class consents are open to those people who do not own company shares.
The company releases water at a rate that matches actual water demand with required river flow regimes. To facilitate this some schemes supplied from the river have to book water use in advance. Any unrequired surplus of inflows can be retained in the dam for future use when inflows are less than requirements on a daily basis.
The flow regime when A shares can be exercised are matched to the flow regime maintained by the dam company hence they are enabled by the dam company's management of in stream flows. B class shares are able to be exercised at a flow regime above that of the A shares. In effect B shares are virtually worthless as the river is managed by the dam company to just meet the flow regimes required. Therefore the B class consents can only be exercised at high peak flood flows or times when the dam company is spilling water, these are very rare events.
This structure affords a great deal of flexibility to move or trade the shares within the A class of shares.
Duration
The majority of consents are for a 35-year period.
Flexibility
Individual irrigation consents are specified as to the consent class with individual conditions on the flow rate and location of take however they can be easily transferred to another location within the scheme area. The only restriction is that shares cannot be transferred to the area above the dam (this is a scheme imposed restriction).
Exclusivity
It is considered that this is a fully allocated and planned resource with no opportunity for additional takes from the water resource. Therefore consent holders consider that their rights are fully exclusive of other entrants who could impact on the nature of the property right.
Quality
There was a high degree of confidence in the quality of the consents because they are connected to the river management plan. Although this is due to be reviewed in approximately five years time there is an expectation that there will be no change because it is felt that the river management plan is being adequately managed and there are no recognised detrimental environmental results occurring.
Some individual irrigator consents are connected to flow regimes in tributary rivers to the main stem of the river. These are gradually having low flow regimes placed upon them as the planning process is completed. For some irrigators this has had the impact of slightly reducing the reliability of their access to irrigation water. This process is now substantially completed and therefore there is an expectation that there will be no further impact on the quality of the property right.
The only impact on reliability of supply can be caused by insufficient inflows to the dam to allow sufficient storage of water to guarantee the minimum flows in the river.
Transferability
The consents are fully transferable within a trading market set up to handle shares in the irrigation company. Shares have traded for a value of up to $5000 per share, which gives the right to irrigate four hectares of land.
Divisibility
Shareholding is divisible in that share parcels can be split between a number of purchasers at the time of sale.
Summary
- There is a high degree of confidence in the enduring nature of the property right because the consents are tied to a river flow regime which is managed by the parent dam company ensuring compliance with the conditions. There is an expectation that this regime will be continued through the next round of review of the river management plan. The status of the river management plan is a pivotal factor in this confidence.
- The ability to transfer water through trading of company shares has created a strong market for them and further enhanced the value of the property right to the users. This also creates a great degree of flexibility.
- There is no consideration of future attenuation of the right due to an already high allowance for environmental and in stream uses.
- This is a good example of a strong property right. It appears that the ability to collectively manage the combined demands of abstractors and in stream flows gives a great deal of comfort through its ability to efficiently manage the resource to accommodate actual use requirements with future use requirements. In other words the ability to adapt to actual use on a daily basis rather than peak consented use gives the dam company the opportunity to manage the resource in a very efficient way.
Irrigation company no. 2
Background
The consents to take, divert and use water from a single point on a river are held exclusively by a company. Individual irrigator shareholders effectively hold an entitlement to utilise that water under the conditions imposed by the company. The company delivers the water to an offtake point on each farm through a canal distribution system.
The consent is conditional on the flow regime in the river as set by the management plan which is an operative plan. This allows a block of class A abstractions which is as yet not fully allocated. Abstraction rates are ramped according to the residual flow in the river.
Duration
The duration of the consent is 35 years.
Flexibility
The consent is tightly specified and connected to the flow regime of the river. The take is described as the peak flow rate requirement which is adjusted according to available flows in the river. There is little or no flexibility due to the nature of the consent.
Exclusivity
As there is unallocated potential take in the allowable abstraction block on the river, there is potential for new abstractors to impact on the availability and reliability of irrigation water to the company. The size of the block was known at the time of the development of the scheme and issuing of the prospectus. Therefore the impact of additional abstractions was known at the time and factored into the reliability estimates of the scheme.
Quality
The quality of the resource was known at the time of scheme development and is not expected to deteriorate. There have been some problems related to the rating curve used on the flow of the river and recalibration of the river profile. This is now being done on a more regular basis to allow some greater consistency and reliability of information about flow rates.
Transferability
Shares in the scheme are transferable on a long or short-term basis as long as delivery is possible within the existing delivery infrastructure.
Divisibility
The consent is not divisible.
Summary
- Consent holder knowledge of the nature of the resource was high as a result of the relatively recent application and development process.
- A high degree of certainty was enjoyed because of the connection of the resource to an operative river management plan.
- There was a feeling that there was potential for attenuation of the nature of the right as part of review of the river management plan or a review of environmental outcomes. It was expected that pressures on this would come from angling and in stream users.
Hydroelectricity generator
Background
The consent holder generates electricity on a major river through a number of dams. The system is effectively a run of river scheme with some storage capacity in one lake at the head of the catchment. The generator is entirely reliant on river flows at their dams for the scale of generation that they can carry out.
Consent renewal to dam and use has just been completed and approved through a tribunal hearing with appeals lodged in the Environment Court by the generator and other objectors to conditions of the decision to grant the consent.
The consent is subject to the policies and objectives of the regional council which has set flow regimes on the river but has not prepared a river management plan. The catchment is considered to be fully allocated in some reaches of the river but not fully allocated above the generators structures.
Duration
The consent has been granted for 35 years.
Flexibility
The consent is tightly specified as to the generators operation with little flexibility other than the operating levels of the storage lake. However there is sufficient flexibility for them to maximise the generation potential subject to the operating levels of the storage lake.
Exclusivity
There is potential for other abstractors to take water above the dams and therefore negatively impact on the generation potential of the structures.
Quality
Doubt remains over the quality of the consent while issues remain around the operating level of the storage lake and the requirement to monitor and possibly mitigate environmental effects that might appear in the future.
Transferability
Consents are not transferable.
Divisibility
Consents are not divisible.
Summary
- The consent holder was under a degree of uncertainty as to the future nature of the consent as a result of the consent renewal process being appealed. This entails considerable expense and risk to the nature of the property right.
- There is an expectation that the right can be further attenuated as a result of further abstractive uses of the water that would impart on the generation capacity of the business with flow on impacts on business profitability.
