KEY POINTS:
Submissions on the Government's proposed National Policy Statement for Freshwater Management have closed. This statement, once approved, is intended to improve the management of New Zealand's freshwater resources.
It is expected to require regional councils to have regard to the "national significance of freshwater" when developing regional policy statements and regional and district plans.
The statement forms part of the Government's response to problems with freshwater that are beginning to appear on a national scale. There is evidence that freshwater quality is declining.
Freshwater includes not only lakes and rivers, but also the significant deep groundwater aquifers - resources that can take hundreds of years to accumulate.
The decline in water quality is believed to be due to more intensive use of water by industry, particularly agriculture, and the diffuse pollution caused by nutrient runoff into waterways, for example from fertiliser.
Among the lakes beginning to be affected are Taupo and Waihora.
Freshwater management is currently the job of local government, with regional and district councils responsible for water within their boundaries, acting within the constraints of the Resource Management Act. Balancing the competing demands on freshwater is a difficult task, and decisions taken by one council can adversely affect adjacent or downstream regions.
Apart from drinking water, freshwater is the key to New Zealand's electricity supply, with up to two-thirds of power generated from hydroelectric stations. It is also fundamental to agricultural export industries, particularly the water-intensive dairy industry.
As one of New Zealand's largest users of water, the dairy industry recognised its contribution to the problem as early as 2003 with the Dairying and Clean Streams accord between the Government and Fonterra. Under this voluntary measure, targets were set to keep cattle out of waterways. Yet progress on the specific targets has been disappointing.
Keeping stock out of waterways is a basic step in preventing pollution from effluent. Specific planting along the edge of waterways can also help. But fencing attracts a cost, and livestock also require access to drinking water, meaning that the majority of farmers do not fully restrict access of their stock to waterways that flow through their farms.
As New Zealand's agriculture continues to intensify, with forests and sheep farms being converted to more lucrative dairying, demand for freshwater will increase. This raises two critical issues for the Government.
The first is ensuring the allocation of our finite water supply is made fairly across competing uses. The second is ensuring on-farm and industrial practices do not continue to contribute to the decline in water quality.
Where water comes from also matters. It is one thing to store rainwater in flood zones for later use; it is quite another to mine groundwater unsustainably.
Bore water is pumped from underground aquifers - ancient formations whose water may recharge very slowly. When excessive water is pumped, the water table falls. Leaching of fertilisers into shallow aquifers can allow concentrated levels of substances such as nitrates and arsenic to accumulate.
These pollutants are harmful to humans and their accumulation can be exacerbated by over-extraction of groundwater.
Should it become necessary to rely on groundwater for drinking water supplies, for example in drought-prone areas, severe impacts on human health may result.
The distinction between use of groundwater and surface water becomes even more significant when climate change predictions are considered.
In its fourth assessment report, the International Panel on Climate Change cited scientific evidence that New Zealand can expect to suffer increased regional droughts. The current one-in-20-year soil moisture deficit is likely to occur every seven to 15 years by the 2030s, and every five to 10 years by the 2080s in the east of both islands and parts of the Bay of Plenty and Northland.
This is a risk indeed to New Zealand's dairying future, but in the absence of appropriate investment in water management infrastructure, it is a risk also to the reserves and the quality of New Zealand groundwater.
To farmers, one of the most difficult questions is how to finance investment in efficient irrigation schemes.
Irrigation is already big business. A recent OECD report showed that demand from agriculture saw New Zealand experience the most dramatic growth in use of irrigation of any country in the OECD - from just 250,000ha in 1990, to nearly half a million hectares by 2003.
Irrigation New Zealand more recently estimated the current tally to be 750,000ha, and expects it to top a million hectares by 2020.
Much of the growth has been in private schemes, which are tapping into groundwater resources rather than relying on surface water runoff.
On the face of it, the industry should already have good incentive to minimise its impact on freshwater quality and availability. The British investigative journalist Fred Pearce calculated that, over the life of a dairy cow, between 2000 and 4000 litres of water are required for every litre of milk produced.
Naturally these estimates vary according to regional productivity and farming practices, but the point is clear - as a major player on the international dairy market, Fonterra must already be one of the most significant exporters of virtual water in the world, and the continuity of its business is absolutely dependent on water availability.
Some industry commentators expect freshwater to be fully allocated in most major catchments by 2012. It is already over-allocated or fully allocated in parts of Otago, Canterbury and Hawkes Bay.
However, economists around the world argue that using water efficiently depends on stronger incentives. At a minimum, this might involve making better use of the ability to trade RMA consents.
Less politically palatable would be an approach involving compulsory water metering and a charge per unit of water use.
Yet if water is neither valued nor charged for as a finite resource, there is far less imperative to use it efficiently and appropriately. If that remains the case, the finance required for investment in storage and irrigation schemes will not be readily available.
* Elizabeth Chambers sees changes of land use in New Zealand becoming a major issue. She has a master's degree from the London School of Economics on the regulation of utilities and is now back in New Zealand working as a consultant.
