5 A Discussion of Costs and Benefits
The Ministry for the Environment has commissioned a cost and benefit (Section 32) analysis of the Standard. The analysis will be reported in two parts - a scoping report for consideration in this discussion document and a full appraisal. This section is based on the scoping report, with fuller quantification during the next phase. This analysis represents an exploratory overview of possible scenarios to help inform consideration of the effects of the proposed National Environmental Standard. A more complete estimation of the costs and benefits will be produced following this public consultation.
The base case for the cost benefit analysis is defined as the water measurement regime in the absence of the proposed National Environmental Standard, comprising:
- regional councils' current and planned future policies on water measurement, including the obligations placed on consent holders
- consent holders' current and future voluntary installation of meters and measurement of their water use for their own information.
The focus of this section is therefore the extent to which the proposed National Environmental Standard would alter consent holders' use of water measuring devices, relative to existing (current and likely future) use to comply with regional council policy or for their own purposes.
5.1 Costs and benefits
Section 2 and Section 3 have covered some of the benefits of applying water measuring devices in a nationally consistent manner. The efficient use and development of water is a matter to have particular regard to when achieving the purposes of the Resource Management Act. In particular the National Environmental Standard will provide the necessary infrastructure for many of the new tools for efficient water management being developed under the water programme.
Smart use of water measuring information will increase the awareness of water use. It will also provide water users and managers with important information during water short times to better manage reliability of supply and environmental flows.
There are three broad categories of possible costs and benefits of the proposed National Environmental Standard:
- Costs and benefits to consent holders - capital and operating costs of measuring devices; cost savings and production benefits to consent holders from measuring their own water use.
- Regional and national benefits of improved water management and allocation due to better information on water use.
- Changes to enforcement and administration costs to regional councils.
There are also three affected groups that will be affected by the standard; these are central government, regional government, and water take consent holders who do not already have a compliant water measuring device installed.
Table 2: Costs and benefits
|
Affected group |
Costs |
Benefits |
|---|---|---|
|
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5.2 Implications of the costs to consent holders
The costs of measuring devices vary widely according to type (mechanical, ultrasonic or electromagnetic), take (pipe or channel), and size. The purchase cost for compliant measuring devices ranges from $200 for the small takes to several thousand dollars for the large takes. The Aqualinc stock-take report estimates that nearly two-thirds are for small takes of up to 20 litres/second and have measuring device costs at the lower end of the range.
Installation costs also vary widely. First time installations can be particularly expensive if headworks need altering to accommodate meters. Subsequent replacement installations would cost much less. The working life of measuring devices was reported to range from three years in high sediment water to over 15 years in filtered water.
Little information is available on operating costs as they can vary widely according to proximity to the measuring device and reporting requirements. The proposed National Environmental Standard requires measuring devices to be serviced every five years.
The table below shows costs to consent holders in more detail.
Table 3: Costs to consent holders
|
Group |
Measuring devices installed currently |
Percentage of consents affected |
Effect and estimated costs |
|---|---|---|---|
|
Group A |
Yes - of National Environmental Standard quality |
80% of consents with measuring devices already installed |
No effect No cost |
|
Group B |
Yes - but NOT of National Environmental Standard quality |
20% of consents with measuring devices already installed |
Doubling in capital and operating costs to comply with the National Environmental Standard |
|
Group C |
No - but would install measuring devices within five years, of National Environmental Standard quality |
25% of consents without measuring devices currently |
No effect No cost |
|
Group D |
No - but would install measuring devices within five years but NOT of National Environmental Standard quality |
10% of consents without measuring devices currently |
Doubling in capital and operating costs to comply with the National Environmental Standard |
|
Group E |
In the absence of the National Environmental Standard, would install measuring devices, NOT within five years, of National Environmental Standard quality |
45% of consents without measuring devices currently |
Capital and operating costs brought forward by an average of 15 years |
|
Group F |
In the absence of the National Environmental Standard, would install measuring devices, NOT within five years, NOT of National Environmental Standard quality |
15% of consents without measuring devices currently |
Capital and operating costs brought forward by an average of 15 years and double to comply with the technical specifications and procedures of the National Environmental Standard |
|
Group G |
In the absence of the National Environmental Standard, would NOT install measuring devices |
5% of consents without measuring devices currently |
Full capital and operating costs of measuring devices |
The additional costs to consent holders under the proposed National Environmental Standard would not be evenly distributed across regions or consent holders. There is wide variation in the possible effects of the proposed National Environmental Standard, according to existing regional council policy requirements and consent holder interest and incentives.
