The issue of water scarcity is one which requires immediate action. Facing drier summers and increasing household, agricultural, and industrial demand for water, water in New Zealand must be managed efficiently. As 77 per cent of New Zealand’s allocated fresh water is used for irrigation, solutions must be sought for the increased efficiency of water allocation for irrigation.[1] A number of opportunities exist for the enhancement of efficiency in New Zealand. The following recommendations are three ways in which the New Zealand Government can encourage the efficiency of water-use through policy.
Water consents must be tradable through a national brokering system to ensure that consented takes are used in the most efficient and productive ways. I believe this option to be most economically viable, and likely to increase the efficiency of water-use amongst New Zealand irrigators. By setting up a market to trade water resource consents, or portions of it, wastage of unused water under resource consents is reduced. The inefficient or unproductive use of water can be bought out and reallocated for more economically and environmentally efficient and sustainable irrigation uses. Additionally, a tradable consents regime would reduce the rigidity of the ‘first-in first-served’ principle as water would be more easily transferable. Under this scheme it should be necessary to incorporate environmental, cultural and social values into the national brokering system. In order to maintain these values, a cap or environmental baseline should be used in order to determine the amount of tradable water available without disrupting the environment. Although there will be initial difficulty in setting up a national brokering system, this will ease in the future. The longer-term potential economic benefits are substantial, possibly adding an additional $180 to $300 million in output to the economy each year.[2]
Subsidies must be provided for the use of specified water efficiency-enhancing technologies. This option is likely to enhance the efficiency of water-use in New Zealand, provided that the subsidies are significant enough to encourage uptake by irrigators. If the New Zealand Government is willing to allocate funds to this policy it may be viable.
Information must be provided to the public in the form of a ‘water footprinting’ scheme, increasing consumer demand for water-efficient products. This option will only enhance the efficiency of water-use in New Zealand if consumers prove to be environmentally conscious. There exists little substantial evidence to support the claim that the majority of New Zealand consumers are currently environmentally conscious. In anticipation of growing international environmental consciousness and demand for environmentally friendly products, however, it is advisable that the New Zealand Government start considering this option. However, as a universally accepted water footprinting mechanism is yet to be developed, this policy is not ready to be implemented. In the meantime, an enabling environment should be created for the adoption of the water footprinting policy in anticipation of the release of a universally accepted water footprinting mechanism.
Ultimately, the most viable options for increasing the efficiency of water allocation in New Zealand at the present time are the tradable consents regime and the introduction of subsidies. Subsidies are costly and incur a deadweight loss so my recommendation is the adoption of a tradable consents regime.
It may be advantageous, however, to implement a combination of the above policies, focusing on all levels of demand: the systemic level (water trading system), irrigator level (subsidies), and the consumer level (water footprinting). The water footprinting policy, however, should be withheld until a universally accepted mechanism is adopted.
[1] Ministry for the Environment, “Snapshot of Water Allocation in New Zealand.”
[2] New Zealand Business Council for Sustainable Development, “Best Solution to New Zealand’s Water Problems.”