5 Property Rights in the Study Areas
This section discusses the property right which the consent and RMA gives to the holder, and compares this with that which was perceived by the holders interviewed.
Flexibility
Consents are often specific for take and use, with the intention that the take consent addresses effects on the source water body, and use deals with efficiency requirements and effects associated with how the water is used. In many regions a digression from the stated use or any of the specification may require a review of the consent which may open up the opportunity to change or alter any aspect of the consent, and in some cases a change in the amount of water available. There are some restrictions on flexibility which necessarily arise from the nature of the resource - e.g. run of the river takes are flow based and cannot be moved temporally. Others, such as groundwater resources, may be unnecessarily restricted by being specified on a flow basis where a bulk allocation for an irrigation period may be more appropriate.
All three of the areas studied specified the way in which the water could be used. Canterbury requires that the land use and application rate be specified, and Tasman requires that the irrigation type and application rate be specified. Marlborough have moved to separate consents for extraction and use, but because the abstraction volumes are linked to land use, in practice this does not greatly improve flexibility. All three require that the consent apply to a specific location.
In practice the land use and probably location conditions of the consent are likely to be alterable, although they require application to the council to make these changes. Extractors were all aware of the limitations imposed on flexibility. In some cases this was regarded as limiting management freedom, but in most cases the controls on flexibility were merely seen as a minor inconvenience. This was because:
- the consent conditions could be changed if necessary, with some transaction costs associated with hire of experts etc if necessary
- monitoring of consent conditions associated with use was weak and in practice minor changes could be made without consequences
- changes in water allocation to different land uses could be overcome by transferring water to unirrigated parts of the farm
- selling or leasing of excess water where the change results in current consents exceeding allowed consents for the new use (Tasman).
It appears that the limitations on flexibility are not significant at present, and in Marlborough and Canterbury represent an ad hoc approach to trying to control land use. As such they are not very effective, and may be better replaced by a more comprehensive planning regime. Tying the water to a specific location was potentially limiting on transferability, although this had not been tested among the focus groups.
Non-extractive stakeholder groups were varied on the need to constrain flexibility. Some saw a need to limit flexibility as a way of maintaining effective control of intensification of land use and to ensure efficient use of water. Others were less concerned about the use to which water was put, as long as outcomes were managed appropriately. Some saw no particular advantage to in stream values in encouraging efficiency unless the gains from efficiency resulted in water being returned to the resource. Currently gains in efficiency are captured by the extractors resulting in greater intensification, and as a result downstream ecological values may be further affected.
Quality of title
The quality of title is hugely variable among regions. The Milne and Mooar (2002) paper discusses this and the authors note that property right can be altered by:
- availability of the resource
- consent review initiated by alteration to river abstraction rules associated with a change to a catchment, regional or national level planning mechanisms
- water shortage orders
- review for efficiency issues if allowed for in regional plan and/or the consent
- further consents, particularly upstream consents or equivalent consents affecting reliability (although this is unlikely where it affects the viability of the prior consent)
- review at the end of the consent period
- cancellation if not used for five years or more.
The quality of the title is therefore somewhat attenuated from the ideal, highly secure property right.
From the extractor's point of view, quality of title was the aspect of the property right about which they were most concerned. Their concern arose primarily because of the potential for changes to the consents and the threat of increase in allocations affecting their own take, particularly in reliability terms.
Most extractors felt reasonably secure in the short term regarding potential changes to their consents, but in the medium term both the Tasman and Canterbury irrigators see the potential for changes to their consents. This arises because of over-allocation of the resource in the case of Tasman, or because a lack of secure planning environment which could see further water allocated without knowledge of the resource, resulting in a less reliable supply and cutbacks in the future once the resource is better defined. Marlborough consent holders appeared generally more secure about their quality of title - possibly because of a plan being in place and a perceived conservative allocation of the resource.
In the longer term all extractors see a big risk from changes in the political environment, with the environmental and recreational lobbies becoming more powerful. Climate change was also seen as creating the potential for further attenuation of their property right.
The lack of a secure and scientifically well founded planning regime were cited by both extractors and other stakeholders as the greatest limiting factor in more secure property rights.
The stakeholders and extractors had greatly differing views on the quality of title. The other stakeholders saw the extractors as having an enormously secure title, with renewals almost automatic and changes only of a minor nature. They also believed that the capacity of extractors to profit from the water leads to an ability to spend more money on securing the consents under favourable conditions, where other parties had to fund the costs of fighting for their rights without any associated income stream from the resource.
Exclusivity
In general a single consent is reasonably exclusive, since the holder has the sole right to the allocated water. However there can be constraints on this - such as with community irrigation schemes (where the right may be shares in a water distribution company), or in water short situations with water user groups.
In general exclusivity was not seen as a major concern, although in some areas the lack of monitoring of consents compliance was raised as an issue. There was a general concern at the low level of compliance monitoring in Marlborough, and some discussion about this issue in Canterbury but no general concern that illegal takes were occurring. In Tasman the level of compliance monitoring was high, and was seen by some as officious.
Among other stakeholders there was almost universal agreement that monitoring of consents by councils was poor.
Duration
The term of consents can vary, and typically is between 7 and 35 years. The expectation that renewal will occur has not been strongly tested at this stage, with most renewals being roll-overs under transitional regimes.
Extractors were universally aware of the term of their consents. These varied between 10 in Marlborough, 10-15 in Tasman, and 35 in Canterbury. In practice the Canterbury extractors felt their term of 35 years was meaningless, because the consent conditions could be changed at any time. In other areas the stakeholders were aware that renewals were treated as new consents, [This awareness was not universal, but typically in each group there were a number of individuals at least who were aware of this condition.] but for practical purposes they felt that as long as the consent conditions were being met, it was highly unlikely that the consents would not be renewed. Their experience of neighbour's reapplications confirmed this as the common practice in their areas.
The other stakeholders saw the rights of renewal as very strong, with no applications for renewal having been turned down. They felt that consents should be limited to a 10 year period, as changes in scientific knowledge and planning regimes meant that longer periods were inappropriate.
Transferability
In principle water consents are transferable, and this will happen as a matter of course with the sale of land for which consents are part of the sale and purchase agreement. However the key issues for water consents are the ability to transfer away from the land, the ability to transfer part of the consent, and the ability to do so on a temporary or permanent basis. Legally there does not appear to be any impediment to transferability, although there are practical and technical constraints associated with infrastructure, the resource and its geography. Transfer may also not be a low cost process, particularly where transfer requires the permission of the regional council.
Consent holders in Marlborough and Canterbury generally did not believe that their consents were transferable. In Marlborough there was some discussion about how so called 'grey' transfers could be achieved - that is transfers which were legal in form but not substance - and they were aware that consents had been subdivided and transferred with subdivisions or transferred with amalgamation of land. In Tasman transfer is encouraged, but consent holders considered that the conditions around the transfer were limiting ability for any significant transfer. They were concerned about applying to the council to transfer water under a "use it or lose it" regime, and felt that this might result in the loss of their consent or at least a change in consent conditions.
In all regions there were a number of consent holders who opposed transfer, citing concerns about alienation of water from the land and a belief that any unused water should be returned to the common pool for reallocation. For a number of extractors the concerns about transferability echoed those of other stakeholders, and reflect a common view of water as a public or common property for the community. In this view there are 'proper' uses for the water as a public and free resource, and for these people buying and selling the water was not seen as an appropriate use.
Opinion was divided among the other stakeholders regarding the desirability of transfer. Some had no concerns and felt that this would allow water to go to the highest value or most efficient use, while others had a philosophical objection to trading in what was seen as a common property. Others did not object directly to transfer, but objected to consent holders profiting from a free resource and would only favour transferability if consent holders paid for the resource. A number of individuals cited concerns about what a market system might do, with the "water baron" concept cited.
Divisibility
In principle the water consent is divisible, although this is not always simple and may require application to the consent authority or some other means of sharing. Some consents, such as the Rangitata Diversion Race (RDR) take or other community irrigation schemes, are very divisible since the water is split among a large number of users without any difficulty. However individual takes may have greater transaction costs associated with divisibility if the change needs an alteration to the consent conditions.
In practice for most consent holders divisibility is an issue primarily associated with transferability, and as this was not a major issue divisibility did not feature as a major concern. For this reason the extractors and other stakeholders were not questioned directly.
In some areas consents had been divided and transferred with subdivision. These cases also cited practical ways around lack of simple divisibility, such as sharing of consents.
Discussion
We believe that the research we have undertaken has conclusively disproved the hypothesis that there is a mismatch between consent holders understanding of their property right and their actual property right. Except for the issue of transferability, where conditions were more permissive than many believed, the extractors had a very clear understanding of their rights. They also had a clear understanding of the practical implications of many of the conditions and the issues associated with changes to their consents. In a number of cases consent holders rationalised the impact of constraints by noting that with legal representation and consulting experts, it was usually possible to obtain a consent with conditions which, if not ideal, were manageable.
The consent holders do see their property rights as being significantly attenuated in respect of flexibility. There was some concern about duration, but those with shorter term consents were more concerned about the quality of the right and potential changes to their rights, than they were about whether the consent would be renewed. The major issue for all was the quality of title and potential for changes which would encroach on their right. These concerns included:
- potential encroachment with continued allocation from the resource
- use it or lose it conditions
- claw back provisions under the Tasman District Plan
- greater impact of environmental and recreational lobbies on future abstraction regimes
- potential impact of climate change on river flows and on flow management regimes.
We feel therefore that the major constraint on the property rights at present is a lack of adequate specification of the property right. This includes a lack of adequate investigation and knowledge of the resource, so that the appropriate level of abstraction is unable to be defined, and inadequate planning regimes, which have not defined total abstractions and flow levels which are sustainable in the longer term.
These conclusions were fairly uniform across resource types (groundwater, surface water and stored water). There were greater differences in specific concerns among regions, with Tasman and Canterbury interviewees more concerned about quality of title than those in Marlborough. These differences were associated with the planning framework and resource status, and reinforce the conclusions reached above.
These concerns were echoed by other stakeholders consulted, who felt that their property rights in the resource were undermined by an inadequate planning regime which did not provide certainty either for themselves or for consent holders. These stakeholders were also concerned about their ability to respond adequately to consent applications, with funding being a major issue. The comment that money gives rights was noted several times from this group, and in fact was echoed by the consent holders who commented that while the requirements to get a consent were arduous, providing legal and expert advice was hired, consents could usually be gained. This trend should be viewed with concern, but it is probably the outcome of an uncertain scientific and planning environment.
