Ending a dry argument over dwindling water

Bothered about the exodus to Australia? Wait a few decades and water might fix it.

While most promoters of environmental apocalypse focus on oil, of which there is still rather a lot, it might be water that slows the world economy.

And this country, unlike Australia, is pluvial. Prepare for an Australian invasion later this century, gold medals clanking in their luggage.

Or maybe not. Meridian’s Keith Turner is quoting low figures of flows into his South Island electricity storage lakes. The National Institute for Water and Atmospheric Research has reckoned this half-century will have less rain than the last one.

That adds piquancy to the government’s search for a “sustainable water programme of action”, now three years in the making and due some cabinet decisions soon.

New Zealand doesn’t have India’s problems. India’s green revolution, which has fed its rapidly expanding population, is sucking out of aquifers under the earth two and a-half times the water that falls on the land each year, according to a World Bank study quoted in the New Scientist.

Nor does New Zealand have north China’s problems where, Californian resource economist Scott Rozelle reported in a recent Motu seminar paper, water is also being sucked out faster than it is going in. Rozelle and two Chinese analysts found groundwater levels are falling rapidly in a third of north China, already reducing agricultural output. Rapidly rising industrial demand compounds the problem.

A spectre of widespread agricultural failure lurks behind those studies as farmers sink tubewells ever deeper to keep the water coming. In that event, will biofuels actually substitute for oil in due course?

No such apocalyptic spectre hovers here. But water constraints are developing. They might deny repetition by grape and dairy farmers, among others, of their phenomenal expansion over the past decade or more, which in part fuelled the recent boom years.

Water is a complex and difficult policy issue — arguably as big as roads and electricity, perhaps in the long run bigger.

Marian Hobbs as Environment Minister made progress on one part last year. She proposed a national water standard for drinking water supplies and subsidies to small councils struggling to pay for that. (National’s Nick Smith is not convinced they should have to.)

But three other major issues have still to be resolved: allocation of water, nitrate runoff into waterways from (over)application of fertiliser and waste water.

Many catchments are fully allocated or over-allocated to existing users, leaving little or nothing for newcomers. Most allocations run for 35 years. And aquifers on the eastern side of the South Island are deepening (getting dryer).

Add up the competitors for that water: farmers (the biggest user group), electricity generators (r.i.p. Project Aqua), industry, fishers and other recreational users, tourism operators, conservators of heritage and icons — and humans wanting good water from their taps.

Those who got allocations on the existing first-in-first-served resource consent basis can use their full allotment — or underuse it — regardless of water flows and whether the water might be more valuable to someone else. Freshwater rights are not readily tradable.

At a time when water is becoming scarce, that seems inefficient.

Neither is there trading for polluted water that goes into waterways — the runoff from fertiliser-saturated farms and other waste water.

Those decisions, too, are reserved to planners, administrators and regulators. An alternative, floated by National’s Smith last year, would have allowable limits set and then gradually lowered, with rights to that pollution tradable.

Smith has also been toying with a market mechanism of perpetual tradable freshwater rights.

David Benson-Pope is in charge of water now, as Environment Minister. He didn’t respond to an interview request. The infrastructure group of ministers set up under Michael Cullen three years ago to run water, roads, rail and electricity, seems no longer to meet. Cullen also refused an interview.

But past interviews and statements indicate an ideological discomfort with, or at least technical concerns about, using market instruments to manage water use and abuse.

Moreover, the discomfort seems widely shared.

A booklet hawked through the country in early 2005 by officials to public meetings, Maori hui and stakeholder workshops was tentative about “market instruments”.

And, although Hobbs had said in an interview in April 2005 she expected tradable rights to go on the table, the Ministry for the Environment’s July 2005 summary of comments made to officials at those meetings and written submissions reported widespread wariness of or outright opposition to market instruments, for fear of exploitation, monopolisation and privatisation of what is believed to be a public — and local — resource. (Of course, there is private exploitation now by resource consent holders.)

Industry, the energy sector and some researchers — and, with big reservations, farmers — were the exceptions.

The public and ministerial wariness points to leaving water management with the wise (and unwise) men and women of local and regional councils, with maybe more central government policy statements and standards but not too much market-driven efficiency — at most a pilot trading scheme.

That is the opposite of the out-of-control privateering in China and India, where more government management is badly needed (China’s laws are largely ignored on the ground) to avert disaster.

But perhaps the real answer lies in a mix and the real challenge is to get the mix right. The alternative might be a dry argument.