Tradable water consents through a national brokering system:
Currently there is limited trading of consents in New Zealand. Tradable water permits would allow for the trading of water resource consents, or portions of it, to other water users through a water market in order to increase efficiency of water allocation and use. This market would bring buyers and sellers together to trade unused allocations. A national brokering system should be created in New Zealand to allow the inefficient or unproductive use of water to be bought out and water reallocated for more economically and environmentally efficient and sustainable irrigation uses. The national broker should work with regional Water Executives to reallocate water that is being used inefficiently. A cap based on scientific environmental baselines should be placed on the total amount of water available for trading to ensure a base level of water is available for environmental purposes.
Advantages:
- Less water wastage from excess consents.
- Relatively inexpensive.
- Opportunity for private sector investment in a national brokering scheme, stimulating profit-generation.
- Could add an extra $180 to $300 million in output to the economy each year.[1]
- Inefficient water-use discouraged as less efficient consent-holders risk losing consents.
- Reduces the rigidity of ‘first-in first-served’ principle as water is more easily transferable.
- Economic efficiency of market for redistribution rather than inefficient public redistribution.
Disadvantages:
- The need to regulate private sector behaviour increases regulatory costs.
- The scientific method, Instream Flow Incremental Methodology (IFIM) for determining environmental baselines is scientifically and methodologically contentious so designated regional caps may be inadequate.
- Trading off of excess water may result in further depletion as the excess water is required to supplement the amount of water available for environmental, social, and cultural purposes.
- Attitudinal barriers to water trading as it is perceived as privatisation.
- Cost of metering mechanisms which are necessary to measure actual water usage in order to ascertain excess.
- Financial and administrative costs of creating an auditing mechanism which is necessary to check for individual hoarding of excess.
- Alteration of council plans to accommodate new policy – some rainwater tanks require resource consents based on tank size.
- Complications with seasonal variation and permanence of water permit transfer.
- Difficult (but not impossible) to incorporate the environmental values of water in the trading regime.
Subsidies for the use of specified water efficiency-enhancing irrigation technologies:
This policy would involve the subsidisation of proven efficiency-enhancing irrigation technologies. Currently these include rainwater tanks and drip irrigation. As purchase and installation is expensive, many irrigators have been reluctant to adopt these technologies. Therefore, subsidies in the form of cash rebates for the purchase and installation of rainwater tanks and drip irrigation should be provided to irrigators to encourage the efficient use of water. Subsidies for rainwater tanks would be dependent on tank size with higher subsidies provided for larger tanks. Following the Waitakere City Council’s plan: a $200 rebate should be provided for 2000 litre tanks; a $300 rebate should be provided for 3000 litre tanks; a $500 rebate should be provided for 4500 litre tanks; and a maximum rebate of $600 should be provided for any larger tanks. For drip irrigation systems, a subsidy should be provided according to their land holding size for installing such irrigation sets. Further research concerning the range of land holding sizes in New Zealand relative to the costs of drip irrigation systems will be required to determine subsidy levels.[2]
Advantages:
- Less rainwater wastage.
- Rainwater tank installation is optional, thus allowing for circumstantial flexibility.
- Increased employment for tank installation and maintenance.
- Reduction of localised flooding, stream erosion, groundwater contamination, and stream and estuary sedimentation.
Disadvantages:
- High government cost of subsidies.
- Deadweight loss associated with subsidies.
- May be ineffective if rainfall is low.
- May be ineffective in regions with high rainwater tank and drip irrigation use.
- May be ineffective if subsidies not high enough. Irrigators may decide that subsidies do not cover enough of the high purchase and installation costs.
- Alteration of council plans to accommodate new policy.
Public information: ‘water footprinting’:
This policy would involve application of regulation under the New Zealand Food Standards Code requiring irrigating sectors to display the water footprints of their products on the labels of their products. This water footprint would be defined as the total volume of fresh water that is used to produce the particular good or service. In terms of the footprinting methodology, the footprinting mechanism being developed by the International Organisation for Standardisation is a viable option for New Zealand. However, as some regions in New Zealand have more plentiful supplies of water than others, the footprinting mechanism should also include the relative impact of the amount of water used rather than simply the amount of water used.
As it takes five times the amount of water to produce an Australian kiwifruit as it does to produce a New Zealand kiwifruit, a water footprinting system will produce a competitive advantage for New Zealand’s product in the international trade arena.[3] However, with the current pressure on farmers to produce carbon footprints, there may be attitudinal barriers to the success of this legislation.
Advantages:
- Reduced consumer demand for water-inefficient products.
- Opportunity to develop and patent a water footprint measuring methodology which could be used to generate profits.
- Employment opportunities for water footprinting research.
- Opportunity to get in ahead of the rest of the world, ensuring time to increase efficiency before the rest of the world catches up.
- International trade advantage as a result of demonstrating environmental stewardship.
Disadvantages:
- Costs associated with the development of a footprinting mechanism.
- Costs associated with the creation of labelling standards.
- Regulation and auditing necessary to ensure business compliance with labelling standards.
- Difficulties in labelling international products.
- May reduce business competitiveness in some sectors, hurting New Zealand’s most productive industries.
- Policy may be ineffective if consumers choose to ignore labelling.
- Attitudinal barriers of business interests.
[1] New Zealand Business Council for Sustainable Development, “Best Solution to New Zealand’s Water Problems,” http://www.nzbcsd.org.nz/water/content.asp?id=444 (accessed October 18, 2009).
[2] The Maharashtra Government in India, for example, offers a subsidy to farmers for installing drip irrigation sets according to their land holding size. The extent of the subsidy prescribed is 50 per cent for marginal and small farmers, 35 per cent for medium farmers and 30 per cent for big farmers, the maximum limits being NZ$575, NZ$403 and NZ$345 respectively. Source: Government of Maharashtra, India, “Sprinkler and drip irrigation scheme (1991-92),” http://mahades.maharashtra.gov.in/files/report/Sprinkler%20and%20drip%20irrigation%20scheme%20(1991-92).pdf (accessed October 21, 2009).
[3] FoodWorks, “New Zealand Food Issues,” http://www.foodworks.co.nz/news/issues.htm (accessed October 13, 2009).