4 Potential Approaches
a) Strengthen protection of instream values
The need to define instream values was raised and the need to recognise the differences between water bodies. Technical information should be used to establish the values however, instream values should also reflect the values and priorities at the national, regional and local community levels. A standard approach such as setting default regimes (for example, based on a five year minimum flow), could be taken where information is poor or incomplete, or a set of acceptable methodologies for establishing environmental baselines could be developed to provide certainty for regional authorities and resource consent applicants. The need to explore the potential for developing a National Policy Statement and a National Environmental Standard was raised.
The need to secure instream values, while as far as possible avoiding the reduction of out-of-stream values, was raised. Instream needs should include those relating to ground water and surface water. There was recognition that all values should be considered when making decisions, along with the cumulative effects of proposals.
b) Improve Maori participation and engagement
Understanding the barriers to engagement with Maori was regarded as important, as well as improving awareness of the need to engage with Maori. Some of the Group regarded the current mechanisms for engagement under the Resource Management Act as adequate; however, the need to improve the quality of the engagement was raised.
c) Strengthen water planning processes
The need for a system to allow for decisions to be made more quickly and more transparently was raised, as well as mechanisms for monitoring decision-making processes. Decision makers who understand water issues and are accountable for their decisions were also thought to be needed. The option of an independent national body similar to the Electricity Commission or the former National Water and Soil Conservation Authority, with oversight of water management was raised, along with modifying governance to incorporate water expertise (a similar approach to the former catchment and regional water boards). The three-year political cycle was seen as inappropriate for rapid and apolitical decision making. A "water commission" would need to be independent from central government agencies and local government politicians. Another option suggested was for central government to develop a review function of regional council performance similar to the Education Review Office.
A central review agency was considered to be unnecessary by some water users, provided regional authorities are adequately resourced, their decision making is transparent and subject to appeal, and greater direction is provided by central government.
Central government was also thought to have the roles of setting the policy framework for regional councils to implement, and ensuring that water rights are defined in a consistent and certain way. It was considered by some of the Group that while regional councils should be involved in planning for environmental baselines, councils should not be involved in allocation above the baselines.
d) Set allocation limits
There was agreement amongst the Group that central government should provide direction for setting allocation limits at local levels and that allocation limits must be set in conjunction with environmental bottom lines. The potential for trigger levels to be set to allow for graduated rationing down to bottom lines was raised. Setting criteria for dealing with emergency situations such as national or regional electricity shortages was also suggested.
e) Modify first in, first served
Some of the Group thought that the current system is satisfactory if there is an abundance of fresh water or even when water is fully allocated. The Group agreed that there is potential to use a market approach above instream flow baselines. Baselines should be established by regulatory means, however there was some difference of opinion as to the extent of regulatory intervention needed to constrain a market approach above environmental baselines. The point of difference turned on whether once in-stream flow baselines have been set, there is a further need to provide for social rights outside of a market-based allocation process. The majority view was that such measures (for example, regulation) may not be needed if the in-stream flow baseline and market allocation solution is effective.
Difficult transition issues such as the problem of windfall gains and losses for existing rights holders were also raised when moving to a market-based approach. Windfall gains are less likely for existing users whose use of water (water rights) is already incorporated into the prices of assets such as land. Existing users, who may have a reasonable expectation of continuing use, would consider any loss of access as a loss. But windfall gains or losses could also occur for other groups. However, existing rights have fixed terms and, in many cases, review provisions. It is expected that in general, the needed transition could occur without loss of existing legal rights provided reasonable transition times are allowed.
f) Introduce measures to improve efficiency of use
An effective means of improving efficiency of use is market-based pricing of water. This approach allows existing inefficient users to invest in efficiency funded on-selling water that they no longer require. Education on the efficient use of water was raised as an important tool for achieving efficiency of use. Encouraging best practice to improve efficiency was preferred to regulation.
g) Establish a resource rental
The Group thought a resource rental had potential for improving water allocation, however concern was raised about increased taxation, fiscal gains to the government (and thus losses for users) and the use of the income. It was suggested that it would be important to ensure that the income was used to address externalities or to remediate the adverse effects of poor resource use in the past. Differential rentals could also be established related to the amount of water available, for example, higher rentals during water shortages.
A water market was raised as an alternative by some of the Group which would signal time of water scarcity, and negate the need for a resource rental as a price signal. Resource rentals could also distort investment signals, to the detriment of dynamic or long-term efficiency. One view raised was that a resource rental would increase the compliance costs faced by water and resource users for arguably very little benefit.
h) Enhance transferability of water permits
Transfer of permits was thought to be one of the market approaches that could be used for the allocation of the water that is available once environmental bottom-lines have been established. Greater flexibility could be achieved by allowing subletting or on-selling the excess of water. Given that most regional councils have not made use of existing transferability provisions, study is needed to find the reasons for this. Some enhancement of the statutory provisions together with stronger government direction to use them may be required.
i) Increase/strengthen certainty of rights
There was agreement amongst the Group that clarification and strengthening of instream and out-of-stream rights was needed. This included recognising and respecting existing water infrastructure. Weakening or lack of recognition of existing infrastructure and/or rights was thought by some of the Group to have adverse impacts on the dynamic or long-term efficiency in water intensive infrastructure industries.
j) Additional approaches
Some of the Group decided that a set of principles or decision-making criteria was needed to underpin a water allocation system. The principles/criteria raised were:
- flexibility
- transparency
- economic efficiency
- equitable access
- social equity (not fully supported by the Group)
- precautionary approach (including reversibility and adaptability to environmental change)
- sustainable development
- continuous environmental improvement
- certainty (note tension with other principles)
- co-operation between users.
