Brian Fallow: Political challenge over water allocation

A Fresh Start for Fresh Water calls for limits on what can be put into waterways. Photo / Sarah Ivey

With any luck and with some political leadership, the release of the Land and Water Forum's report, A Fresh Start for Fresh Water, will prove something of a watershed event.

It may come to be seen as the point when we stopped thinking of water, if at all, in terms of boundless bounty and began to confront the challenges of increasing scarcity and pollution.

The forum, chaired by Alastair Bisley, encompassed a wide range of stakeholders and has been an exercise in Nordic-style "collaborative governance".

They call for limits to be set on what can be put into waterways, and how much can be taken from them, but they do not attempt to prescribe them.

Nor do they quarrel with regional councils continuing to be the key decision-making bodies, catchment by catchment.

But they say regional governance must be strengthened if the devolved model is to be kept, and propose adding Government appointees to councils to provide skills they might lack and adequate representation of iwi on water-related committees.

They say the councils need to be given a lot better guidance from central government on what to do and how to do it.

National decisions need to be taken, and the sooner the better, about strategic objectives and about environmental standards.

"Many catchments are over-allocated or approaching full allocation," the report says.

"Water scarcity is an increasing problem in some areas and may be worsened by changing weather patterns, but our current system of allocating water does not encourage efficient use or easily allow transfer to best use."

The days of first come, first served - predicated on plenty for everyone - are numbered.

The forum proposes, as a matter of urgency, setting some "threshold of pending scarcity" which would require adoption of a more sophisticated system for allocating water in a catchment.

It gives the Government three broad options to consider. One is to continue existing consents but impose tougher conditions as they expire.

This is not necessarily a soft option. Even now electricity generators complain that renewing consents for existing hydro schemes is a more arduous and lengthy process than getting consents for a new gas-fired power station.

The second broad option would be to establish a new system of allocation set out in a regional plan.

Devising such a plan would require balancing efficiency considerations, community preferences and providing a degree of preference to existing consent holders at risk of finding themselves with stranded assets.

The third option is user pays.

An auction or tender system for water permits, coupled with trading, would harness the power of prices and markets in allocating scarce resources and enable water to flow, so to speak, to those who can make best use of it.

Remember that we are talking here about the proportion of the resource which is available for commercial use and has not been reserved for the maintenance of ecological and recreational values.

The forum is not recommending the use of pricing, or either of the other options for that matter. But it believes the option should be on the table.

On the issue of pollution and water quality the forum eschews a one-size-fits-all approach.

It seems keen on industry-wide codes of best practice, reinforced if possible by incentives, and penalties for recalcitrant free-riders.

In the case of the dairy industry, that might involve the extension of riparian planting to filter runoff, with the councils providing native plants at cost and fencing where possible to keep cattle away from waterways.

It notes Fonterra's recently introduced "Every Farm, Every Year" scheme to independently appraise its suppliers' effluent infrastructure and implement effluent improvement plans for those who need them.

Sanctions for failing to comply with such a plan would include not picking up the supplier's milk.

Another Fonterra initiative - still under development - would provide merit payments to encourage adoption of the expected management practices not only on effluent but the efficient use of nutrients and irrigation water.

These are a welcome advance from the days when acrid fumes of injured innocence and denial used to waft off the industry whenever people complained about dirty dairying or worried about the threat it posed to the national clean, green brand.

The forum's report sees a place for cap-and-trade mechanisms, such as the Lake Taupo nitrogen market, and other forms of polluter-pays.

But it acknowledges that for some water bodies, improving water quality to an acceptable standard is likely to be an inter-generational task requiring both a strategic plan and funding.

The report puts a lot of weight on collaboration among the diverse groups with an interest in waterways.

This is starkly at odds with fractious and adversarial relationships of the past.

The forum itself is an exercise in this approach.

It has required 58 different stakeholders, including iwi, farmers, environmentalists, hydro generators, tourism interests and so on, to talk to each other, instead of the traditional hub-and-spoke approach where everybody separately lobbies the Government or the regional council and then complains bitterly that they have given too much heed to competing interests.

Whether this can be replicated at a regional level, when very specific interests and not lofty generalities are involved, remains to be seen, however.

In the end regulatory bodies will have to call an end to discussion and debate, and make decisions.

Water is not just an issue for rural New Zealand, of course.

Some $11 billion of capital expenditure will be needed over the next eight years on water supply, waste water, storm water and flood protection facilities in cities and smaller communities.

Yet responsibility for all this is split among 67 local and 12 regional bodies.

The report suggests rationalising them into a small number of publicly-owned utilities, with a national regulator replacing council oversight of pricing and service provision.

It also says metering and charging for water would yield efficiency and environmental gains. It accepts other stakeholders have an interest in these beyond the Land and Water Forum.