3 NPS Characteristics and their Management in a Property Rights Framework
Characteristics of NPS discharges
Agricultural NPS discharges are highly complex and variable. Ribaudo et al (1999) describe five links an agricultural NPS system:
- The link between production practices and movement of pollution off a farm, with variables of rainfall, soil characteristics, slope, management, and conservation practices.
- Pollutants moving from the field to water resources, with the amount of pollution reaching the resource depending on distance, rainfall, slope, vegetation, the properties of the pollutant, and conservation practices.
- The relationship between the discharge and water quality.
- The effect of the change in water quality on the ability of the resource to deliver services (both use and non use) of value.
- The value placed on the services (use and non-use) from the resource.
These authors discuss the difficulties which NPS poses for policy design. These include:
- the observability of the runoffs and pollutant loadings - monitoring of all NPS is impractical and would be prohibitively expensive. Furthermore there are no reliable proxies which can be used to substitute for direct monitoring, because of the poor correlation between ambient quality and aspects of production
- natural variability as a result of weather related events
- the heterogeneity of geographic impacts. Even in relatively small areas farming practice, land forms, climate and hydrological characteristics can be extremely variable. Even if models were able to be developed which catered for this heterogeneity, they would need to be calibrated and applied to each site
- transboundary effects - the impacts of NPS can occur at some distance from the source
- time lags - the time between the discharge of a NPS pollutant and its arrival at the location where it causes an externality can be measured in decades. For example it is estimated that it will take 30-50 years between changes in land use and adjustment in nutrient loads in Lake Taupo (EMS 2003b).
To these should be added the cumulative nature of the impacts. Although only a relatively small amount of discharge occurs from each site, the cumulative impact of a large part of a catchment with these discharges can be significant on a receiving body, which as noted above could be some distance from the discharge site.
These characteristics make policy development to manage NPS pollution extremely difficult.
Property rights framework
Originally water quality issues were managed under riparian law, inherited from English law. Riparian law enabled those with riparian rights the use of water from the stream or river, including rights to discharge into the water body. However this right was modified by the common law maxim "sic utero tuo ut non alienum laedas", which holds that the right to use is only to the extent that the use does not interfere with the rights of others. The concept of "natural flow" under English law also enabled those with riparian rights to receive the water in its accustomed quantity and quality (Paavola J, 2002).
Some commentators (e.g. Brubaker, 1996) regard common and riparian law as superior to regulation in protecting water quality because:
- it allows those with affected property rights (e.g. affected parties) to take direct action thus placing the right to act with those who have the economic incentive to do so, as opposed to weak and politically influenced regulatory regimes; and
- the common law and riparian law has no balancing act within it - i.e. no diminution of the riparian right to water in its accustomed state is allowed. [Although in the US a doctrine of utilitarianism was adopted by courts for a time in the late 19th century, but this was subsequently rejected.] Most regulatory mechanisms, including the RMA, include an aspect of balancing of different costs and benefits which in some circumstances will result in a loss of water quality.
While this may be argued for PS pollution, regulation of NPS through common law or riparian law would appear to be problematic because of the difficulty in specifying the polluting party and the extent of their contribution. It is also questionable whether individuals would consistently have sufficient resources to pursue the necessary legal remedies.
This common law right has been extinguished in New Zealand with the passage of numerous pieces of legislation. The RMA 1989 now holds primacy as the legislation under which water quality is managed. [Although other pieces such as the Health Act 1956 regulate aspects of quality through drinking water standards.] The RMA provides for management of water quality primarily through controls on contaminants as discharges (S15), or potentially also through controls on land use (S9).
Regional councils can establish management plans for water bodies. These plans can set standards for water bodies or adopt those from the third schedule of the Act. Any standards may not allow for a deterioration in water quality unless it is consistent with the purpose of the Act to do so.
Government (local and central) also has the option of using subsidies to achieve water quality objectives with respect to NPS contamination. This occurs already with a number of catchment control schemes, where property owners are subsidised to undertake plantings and retire riparian areas. As noted by Ribaud et al (1999) the use of subsidy implies that the polluting party has a property right to pollute, and that right is being purchased by the state.
There is little prior case law or even regulation to go by in the New Zealand situation. EMS (2003b) discusses the development of potential rules for managing NPS pollution in the Lake Taupo catchment, and notes that no rules have yet been developed here for this type of problem. EMS (2003a) addressed the application of regulation to stock crossings, an analogous but more tractable issue, and noted that only 5 councils had attempted to develop rules for this type of pollution
Private and public property rights
Private property rights
As noted above private rights to pollute have not been established by the state in respect of NPS pollution in NZ. In the three regions investigated in this study no current rules are in place for NPS discharges, but all three are moving toward a regime of permitted status for NPS related activities which are undertaken in accordance with specified practice. EW and EBOP have developed or are developing rules to cap NPS discharges in sensitive areas (Taupo and Rotorua Lakes). In the case of EBOP they are likely to regulate through Section 9 (land use) limitations. In both these cases where property rights are being established in respect of NPS discharges, they appear to be recognising a level of existing use rights for landholders. NPS discharges are to be capped, with other approaches such as purchase of rights of subsidies are being considered to reduce discharges It is unclear however whether this will extend beyond these two special case scenarios if regulation is needed more widely.
In other jurisdictions private property rights to NPS have been established - for example in the US case there have been some catchments where plans have been put in place which limit the total contaminant loading on a water body, with the aim of setting in place limits, and therefore rights, to discharges for the various polluters in the catchment (Faeth, 2000). [This system has been extended in two cases to allowing for trading between different polluters, although trades have not yet been undertaken. Even in this case however it is not clear how closely NPS polluters have been limited in their activities, with trades taking place between point source discharges and NPS discharges (who are paid to undertake best management practice).]
Public property rights
In practice the rights to maintain a particular level of water quality have been retained by the state, as representative for those values which stakeholders in society have an interest - such as the ecological values, the fishery, amenity values etc. These are generally allowed for in the RMA as effects which need to be taken into account in the management of the water resource.
Some of these effects have a higher status, such as those in section 5 (environmental and sustainability issues) and section 6 (matters of national importance). Other matters in Section 7 such as kaitiakitanga, amenity, intrinsic ecosystem values, environmental quality, and the trout and salmon habitat would appear to have lower status under the act as matters to which the consenting authorities should have "particular regard" rather than matters which must be provided for.
The stakeholder rights are therefore strongly related to the effects based regime. These rights are generally exercised through the planning and consent hearing framework. There do not appear to be many cases at present of water bodies with set standards for required quality, and thus the status of the public right to water quality is unformalised.
Property rights of Maori have not been explored in any depth in this study.
Summary
The rights to water quality in relation to NPS discharges can be represented as the private right to discharge and the public right to clean water. These are both very poorly defined, with the status of neither water quality nor NPS discharges formalised. [Although the regions visited as part of this study are all proposing rules in their plans which will formalise the status of both public and private rights.] The way in which these rights are ultimately defined and managed will determine the nature of the rights which landholders will have to NPS discharges.
