The increase in water scarcity worldwide can be attributed to changes in both the hydrological cycle and human consumption patterns. Firstly, changes in the hydrological cycle are connected to climate change; a phenomenon caused by global warming, whereby greenhouse gases such as carbon dioxide are released into the atmosphere, forming a barrier to outgoing solar radiation. As a result, heat is trapped in the earth’s atmosphere, contributing to the warming of the planet and thus, altering the hydrological cycle. In many cases, increased atmospheric heat leads to increased evaporation of surface water, shifting the distribution of water from the earth’s surface to the atmosphere, thus reducing available surface water. The global increase in greenhouse gas emissions is exacerbating this process. Consequently, many countries are facing drier summers. The current water scarcity problem faced by Australia provides an illustration of what some parts of New Zealand could look like in the future. Average temperatures in New Zealand are projected to increase approximately 1°C by around 2040, substantially increasing the number of hot days where temperatures exceed 25°C.[1] Climate change modelling suggests that New Zealand will experience increases in the frequency of droughts, changes in rainfall patterns, and changes in evaporation rates.[2] Eastern areas of New Zealand will become increasingly dry, aggravating existing problems of water availability.[3] In Hawke’s Bay, a region already experiencing water shortage issues, a 15 per cent reduction in rainfall by 2010 has been forecast as a result of climate change.[4]
Direct human impacts on water supply have also led to a decrease in available water. Increasing household, agricultural, and industrial demand is leading to the depletion of water stocks. Irrigation demand in New Zealand is projected to increase by 34 per cent.[5] Total fresh water demand and allocation in New Zealand increased by 50 per cent between 1999 and 2006 – a figure largely explained by the increase in demand for irrigation.[6] Current allocation trends suggest that New Zealand will face a situation of full allocation in many catchments by 2012.[7] Due to the finite supply of water, this increasing demand coupled with changes in the hydrological cycle, is leading to increasing water scarcity.
As water is a valued component of various economic, cultural, social, and ecological systems, multiple varying interests are all adversely affected by water scarcity. The stakeholders particularly affected by water scarcity are: environmental groups whose interests include the protection of flora and fauna; recreational groups whose interests lie in the protection of recreational utility; business consent-holders whose existing and future supply security is threatened; Iwi whose interests lie in the protection of Mauri (spiritual value of water) and aquaculture; and potential users whose investment is deterred by the insecurity of supply. The costs of water scarcity range from habitat loss to financial losses for water-intensive businesses. Water scarcity in the west of the North Island in 2008, for example, led to estimated costs of at least $1 billion.[8] It is therefore extremely important water is used efficiently.
Under the Resource Management Act (RMA), New Zealand has a system of ‘water consents’. Section 14 of the RMA requires consents for the damming, diversion, taking, or use of both underground and surface water.[9] These consents enable consent-holders to extract specified quantities of water. Applicants must prove that the effects of their particular activity on the environment are relatively unproblematic in order to gain consent.[10] Regional councils take into account existing allocation levels and grant consents based on certain allocation limits. As of 2008, about 20,000 individual consented takes were issued in New Zealand with irrigation exhibiting the highest number of abstractions – 78% of total consented takes. [11] In some areas in New Zealand such as Canterbury and Hawke’s Bay, freshwater sources are rapidly reaching a state of full allocation – the point at which no more water can be taken without causing harm to the environment or the entitlements of existing users.[12] The efficiency of water allocation is, therefore, extremely important.
Currently, the water allocation system in New Zealand is fraught with inefficiencies. Resource consents for water are granted on the basis of the first-come first-served principle, reducing the ability of more productive future users from accessing water. Additionally, when applying for consent, people tend to apply for the maximum they are likely to use. As a result, water is allocated to parties who do not fully use it. The surplus is not easily made available to others as it is currently bundled in the consent, when only the use itself, or part of it, needs to be transferred.[13] Consequently, the surplus is not made available to those who may need it. Additionally, once a consent is granted, there is no mechanism in place to ensure that the water allocated is used in the most efficient manner with the least wastage.
In order to maintain economic competitiveness, cultural and social utility, and ecological conservation, in a context of increasing scarcity, the technical efficiency of water allocation and use must be optimum. Thus far, few significant policy changes have been made in this sector due to entrenched interests. Policy recommendations have mostly involved change within the existing allocation framework – for example, amendments to the RMA, allowing the transfer of water between catchments. This report, however, seeks to break from the existing framework, introducing new ideas which are emerging in the international arena – for example, water footprinting in the United States and tradable consents in Australia. This project, therefore, seeks to introduce and evaluate new policy instruments to remedy this lack of technical efficiency in water allocation for irrigation in the New Zealand context by introducing incentives to encourage more efficient use of water.
Note: There are multiple ways to approach the issue of water scarcity in New Zealand. Options can be categorised as either reducing demand or increasing supply. Investigating policies for both categories is a large undertaking. Although both valid, for the sake of coherence, the scope of this report will be limited to the demand side of water allocation.
(South Island, New Zealand)
[1] Ministry for the Environment, “Urban issues – Forces of change,” http://www.mfe.govt.nz/issues/urban/sustainable-development/forces-change.html (accessed August 4, 2009).
[2] New Zealand Business Council for Sustainable Development, “A Best Use Solution for New Zealand’s Water Problems,” http://www.nzbcsd.org.nz/water/nzbcsd_water.pdf (accessed September 4, 2009).
[3] Ibid.
[4] Marty Sharpe, “Down the toilet?” The Dominion Post, http://www.stuff.co.nz/dominion-post/news/hawkes-bay/324743 (accessed August 4, 2009).
[5] Ministry of Agriculture and Forestry, “Future Water Allocation Issues – 4.5 Comparison of Demand and Supply Profiles,” http://www.maf.govt.nz/mafnet/rural-nz/sustainable-resource-use/water-efficiency/future-water-allocation-issues/future-issues-in-water-allocation-07.htm (accessed August 4, 2009).
[6] Ministry for the Environment, “Freshwater Demand (allocation),” http://www.mfe.govt.nz/environmental-reporting/freshwater/demand/index.html (accessed August 4, 2009).
[7] New Zealand Business Council for Sustainable Development, “A Best Use Solution for New Zealand’s Water Problems.”
[8] National Institute of Water & Atmospheric Research, “2008,” http://www.niwa.co.nz/our-science/climate/publications/all/cs/annual/aclimsum_08 (accessed August 4, 2009).
[9] Environment Canterbury, “What is a Resource Consent?” http://www.ecan.govt.nz/Resource+Consents/How+to+Apply/ (accessed September 4, 2009).
[10] Hawke’s Bay Regional Council, “The Resource Management Act,” http://www.hbrc.govt.nz/LinkClick.aspx?fileticket=mBi%2ByOYKVto%3D&tabid=244&mid=1241 (accessed September 4, 2009).
[11] Ministry for the Environment, “Snapshot of Water Allocation in New Zealand,” http://www.mfe.govt.nz/publications/ser/snapshot-water-allocation-nov06/snapshot-water-allocation-nov06.pdf (accessed August 19, 2009).
[12] New Zealand Business Council for Sustainable Development, “A Best Use Solution for New Zealand’s Water Problems.”
[13] Ibid.