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Proposed National Environmental Standard on Ecological Flows and Water Levels: Discussion Document

• Acknowledgements
• Executive Summary
• 1 Introduction
• 2 Ecological Flows and Water Levels in the Context of Environmental Flows and the Resource Management Act
• 3 How Could National Direction Address Issues with Ecological Flows and Water Levels?
• 4 The Options
• 5 Proposal for an NES on Ecological Flows and Water Levels
• 6 Preliminary Evaluation of Costs and Benefits of Preferred Option
• 7 Future Actions to Complement the NES
• 8 What Next?
• 9 References
• Appendix 1: Definitions
• Appendix 2: Existing Approaches to Ecological Flows
• Appendix 3: Environmental Flows and Water Levels
• Appendix 4: Executive Summary and Recommendations from: Draft Guidelines for the Selection of Methods to Determine Ecological Flows and Water Levels (Beca 2008)

6 Preliminary Evaluation of Costs and Benefits of Preferred Option

This section provides a preliminary assessment of the likely costs and benefits associated with the proposed national environmental standard over the first 10 years (SKM 2008). Section 32 of the Resource Management Act includes the requirement that an evaluation must be undertaken to examine the extent to which each objective of an NES is the most appropriate way to achieve the purpose of the RMA, and that this evaluation must take into account the benefits and costs of the final standard. This more detailed analysis will be undertaken after consultation on this discussion document and prior to finalising a proposed regulation (standard) for approval by the Minister for the Environment. Submissions on this preliminary assessment will help inform the final analysis.

The potential costs and benefits of the proposed national environmental standard can be considered to occur in four main areas. These are:

• environmental outcomes

• regulatory process

• effects on existing and potential resource consent holders

• effects on the wider public.

6.1 Environmental outcomes

The objectives of the proposed standard are to have clear environmental limits in place and improve practice in ecological assessments. The major benefits of the proposed standard will, therefore, be improved environmental outcomes.

The only environmental cost associated with the proposal is a risk that a concentration on ecological methods could be interpreted as placing a lesser emphasis on other components of an environmental flows such as recreational and cultural values. That is not the intention of the proposal.

Potential environmental benefits resulting from the implementation of the proposed national environmental standard include:

• increased awareness of the need for, and role of, environmental flows and water levels

• greater protection of ecological values through improved selection of assessment methods

• reduced potential for over-allocation and unintended degradation of ecological and other values, particularly in catchments for which environmental flows and water levels are not set in a regional plan

• reduced potential for water allocation via the resource consent process to result in cumulative impacts at the catchment scale

• appropriate consideration is given to ecological values in the determination of environmental flows and water levels

• increased robustness of ecological assessment in highly allocated catchments.

Improvements in the management of water resources and environmental flows will be highly valued by New Zealanders. Values arise from direct use of a water body for recreation or scenic appreciation, but also from spiritual beliefs and experience, cultural identity and history. Some of these values attributed to freshwater can be quantified – such as the average dollar spent by anglers per day – whereas other are intangible. For example, people may value the knowledge that a river system is preserved even though they may never visit the site. Freshwater resources are also valuable to the tourism and recreational industries, and as part of the many benefits attributable to the country’s clean green image (MfE 2001).

6.2 Effects on the regulatory process

Because it is an instrument under the Resource Management Act, the proposed national environmental standard will have an effect on regulatory processes, ie, on resource consent decisions and plan preparation, review and variation.

Potential costs associated with the development and implementation of the national environmental standard include:

• costs to central government in the development of the proposal and in providing supporting guidance

• costs to central government to review the effectiveness of standard and technical guidance

• costs to regional councils for the development of processes and procedures to implement the proposed national environmental standard

• increased costs for regional councils to undertake the detailed assessments and methodologies required by the technical document in highly allocated catchments.

Potential benefits associated with the development and implementation of the national environmental standard include:

• increased consistency in water management at a national level

• reduced administrative time and resources expended in supporting the resource consent process

• expedient response to emerging water allocation issues for water bodies for which no environmental flows or water levels are set in a regional plan

• identification and prioritisation of water bodies for monitoring, and the technical assessment that is required to support the development of environmental flows and water levels through the regional plan process

• reduced time and resources expended in supporting the ecological component of environmental flows and water levels through the regional plan process, including a reduction in the scope of resulting appeals.

6.3 Effects on existing and potential resource consent holders

The cost to resource consent applicants will depend on whether or not an application breaches an environmental flow or water level set in a plan or the interim limits set through the proposed national environmental standard. Different levels of public interest in a resource, and the level of opposition / support will also influence whether some of the benefits of the proposed NES are realised by consent holders. Some resource consent applicants will face increased costs, others will face reduced costs.

Potential costs to resource users associated with the proposed standard include:

• additional costs to meet the assessment requirements (ie, to comply with the technical methods) for consents that exceed interim limits

• additional costs to meet the assessment requirements (ie, to comply with the technical methods) for consents that exceed environmental flows and water levels established in a regional plan

• opportunity costs if resource users delay applying for resource consent until the regional plan process is complete.

Potential benefits include:

• increased certainty and transparency in the resource consent process

• reduced assessment requirement and processing cost for replacement resource consents, for water bodies for which no environmental flow and water level is set in a regional plan, and the application falls within the interim limits

• because of the availability of standardised methods, reduced processing costs for resource consent applications for abstraction that exceeds interim limits or an environmental flow and water level set in a regional plan

• consistency of assessment requirements for entities that seek resource consent in multiple regions.

6.4 Effects on the wider public

Potential costs to the wider public associated with the proposed national environmental standard include:

• a reduced ability to influence the selection and application of technical assessment methodologies for individual water bodies

• risk that the weighting placed on the ecological component of environmental flows during the development of a regional plan may be to the detriment of alternative values (ie, recreational, cultural, tangata whenua, aesthetic).

Corresponding benefits may include:

• certainty that the appropriate environmental limits are in place

• greater focus on the application of appropriate management interventions to protect the values associated with a water body rather than on the debate surrounding the selection and application of technical assessment methods

• increased consistency and transparency in the resource consent and regional plan decision-making processes

• reduced time and resources expended submitting applications for resource consents, and plan changes and variations.

6.5 Summary of the costs and benefits

Table 3 summarises the potential benefits and costs associated with implementation of the proposed national environmental standard to the resource consent and regional plan processes, and identifies how these are likely to be distributed between the four groups considered.

Table 3: Summary of costs (‘c’) and benefits (‘b’) associated with the proposed NES

Notes

^ = increased; v = decreased, relative to the status quo.

a May increase or decrease costs for resource consent applications, depending on existing regional council requirements.

6.6 Partial quantification of the costs and benefits

To assist with evaluation of the proposal, some of the costs and benefits outlined in Table 3 have been quantified. Because many of the potential costs and benefits (particularly those associated with community values and environmental outcomes) are relatively intangible, the assessment does not cover all of the entries in Table 3 and is only a partial quantification of the proposal.

Increased regulatory costs and cost saving from the proposed national environmental standard are the most straightforward part of the proposal to quantify. This preliminary quantification is, therefore, focused on those costs and benefits associated with regulatory processes.

The major aspect of the proposal that is not quantified concerns the environmental benefits. The total value of New Zealand’s rivers, lakes, wetlands and groundwater resources to New Zealand is not known. Sharp and Kerr (2005) summarise a variety of regional studies undertaken to quantify the various environmental values associated with freshwater resources. They conclude that New Zealand residents can place a high value on the protection of the natural environment. An example they cite is a net present value in the order of $60 million to Canterbury households arising from the protection of flows in the Waimakariri River. The value of New Zealand’s freshwater bodies will be very large but the extent to which this proposal improves or protects that value has not been quantified.

The following other costs and benefits are not quantified:

• benefits to the wider public and consent holders of increased certainty and transparency in the resource consent and regional plan processes

• increased national consistency

• opportunity costs if resource users delay applying for resource consents until regional plans processes are in place

• greater focus during decision-making on values and the appropriate levels of protection rather than on the debate about technical methods.

To quantify the benefits and costs, some assessment must be made of the number of resource consent and regional plan decisions that will be influenced by the proposed national environmental standard once it comes into force. A partial assessment of the benefits and costs has been made using the ranges and the mid-point of those ranges given in Table 4.

Table 4: Quantification of some cost and benefits associated with the proposed NES

Assumptions about the number of resource consent applications are based on trends in resource consent numbers and allocated volumes over the period 1999–2007 (Lincoln Environmental, 1999; Aqualinc 2006). It was assumed that, within the next 10 years:

• 40% of existing consents will expire and applications for replacement consents will be made for them (780 consents per year)

• the number of new resource consents applied for each year will stay constant over the next 10 years (1000 consents per year)

• of the resource consent applications for new takes, 20% will be on water bodies for which no environmental flow or water level is set in a proposed or operative regional plan, and half of these (100 resource consents per year) will be for takes that exceed the interim limits

• 2% of resource consent applications for new takes will exceed environmental flows and water levels set in regional plans (20 consents per year)

• all consents that exceed environmental flows or water levels will be publicly notified (120 consents per year).

Other assumptions used in the cost-benefit analysis include that every regional plan will be subject to review over the next 10 years and that an average of one plan change per region will be initiated over this period. It is also assumed each regional plan review or variation process will attract an average of 50 submissions from interested parties. One review of the national environmental standard and technical guidance is assumed to occur within 10 years of the Standard becoming operative.

The net present value of benefits and costs on the basis of the assumptions listed above is contained in Table 5. The low and high estimates are based on either end of the ranges given in Table 4. Overall, the proposal would results in a net benefit in the range of $14 to $36 million over the 10 years following implementation of the Standard. While this range should be considered indicative only, it does show that the proposed national environmental standard is likely to have a positive net present value. The benefits are likely to increase if other non-use values associated with the proposal, including existence values, are taken into consideration.

Table 5: Summary of quantified costs and benefits (over 10 years at 10%)

The analysis shows significant benefit to regional councils resulting from the proposed national environmental standard. This benefit is largely realised through reduced administration costs for processing resource consent applications and a reduction in the costs associated with selecting and applying the technical methods to determine the ecological component of environmental flows and water levels in the regional plan development process. The analysis also shows significant benefits for the wider public through a reduction in the scope and detail of submissions, both on individual resource consent applications as well as on regional plan reviews and/or changes.

For resource users, the analysis indicates that the benefits derived from the clear specification of assessment requirements and a reduction in hearing costs outweigh the costs to undertake additional technical assessment according to the methods specified in the technical document. However, at the high end of the range, there could be substantial costs to resource users that may, if benefits are at the low end, outweigh the costs to resource users as a collective.

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