Intro
The water management system in New Zealand currently faces a number of issues, particularly the inefficiency of water usage by consent holders and the lack of a suitable system to ensure that water is used efficiently and effectively and the relevant environment and ecosystems are not significantly compromised as a result. Section 5 of the RMA (Resource Management Act) sets out the purpose of the Act to promote the “sustainable management” of natural and physical resources, and “safeguarding the life-supporting capacity of air, water, soil, and ecosystems” . This paper investigates the current system of water allocation in New Zealand, and discusses how a system with more discernible property rights could allow for more efficient use of our natural resources.
First In, First Served
Sections 124A-D of the RMA dictate a first-in-first-served (FIFS) approach by entitling current consent holders to priority when it comes to renewing consents. However, it is at the common law level, and in particular, Fleetwing Farms v Marlborough District Council that we have seen a reaffirming of the ‘first in, first served’ approach taken by the courts upon dispute over allocation of right to use of natural resources. Fleetwing Farms dealt with the case of two competing consents for a mussel farm applied for at different times in which the court eventually determined the priority fell in favour of the party submitting the first completed application.
While s122 of the RMA confers that consents are “neither real nor personal property”, Aoraki Water Trust v Meridian Energy Ltd creates confusion with regards to property rights in the use of the principle of non-derogation, this being the lack of power of a consenting body to grant further consents where doing so would derogate from previously approved consent holders to enjoy their consents. The court cited derogation from a consent to be an undermining of public trust in the relevant regulatory body. This principle is also seen in Dart River Safaris Ltd v Kemp which concerned the potential shared usage of a section of the Dart River for commercial jet-boat use where the granting of an additional permit to use the same section would have interfered with the legal rights prescribed to the appellant by the initial consent granted to them.
Public goods are generally considered to be non-rival and non-excludable, however, the application of the principle of non-derogation by the courts creates exclusion to parties applying at a later date, and therefore the resource becomes excludable. The principle of non-derogation represents a further step at common law level towards pseudo-property rights as a result of the FIFS system currently employed under New Zealand common law, despite s122 of the RMA explicitly stating that consents are not real or personal property .
Inefficiencies in Water Management
The RMA does confer some consideration for efficiency of use of natural resources, stating that actors have regard to factors such as efficiency of use and any finite characteristics of such resources . The Ministry for the Environment notes that the first-in-first-served approach is simple from an administrative view, but is not a suitable system of management where resources are scarce and sustainability is a primary focus of operation.
Fraser builds on this view, going further as to contend that in some respects there is actually an incentive to overuse, which is a product of over-allocation of water in current permits and the lack of financial burden currently placed on users . Additionally, metering systems which allow for renewal of permits with subsequent allocations that are in line with actual usage can lead to a ‘use it or lose it’ approach by users, which only increases overall inefficiency and misuse of resources.
The RMA does allow for some council control over use of water, these measures range from the ability to impose cutbacks on use by permit holders or restructuring existing consents upon renewal/re-issue . However, these varying means demonstrate a lack of centralised direction on water management and thus make it more difficult to ensure efficiency of use, to curb over-use, and to ultimately fulfil s5 of the RMA which seeks to promote sustainable management of our natural and physical resources .
Alternative Allocation Regime
The current system lacks a substantive codified approach to water management, and the first-in-first-served approach produces a number of issues such as over-use and inefficiency and thus is not a suitable long-term solution. A market-based approach to rights-allocation and use would place more responsibility and incentive on the user to preserve and protect their share of the resource, and in turn drive overall protection of such resources. This type of approach to catchment management has recently been proposed by The Opportunities Party as a feature policy in the lead-up to the 2017 New Zealand General Election , as well as the ACT party who suggest that conferring property rights onto users will create the requisite responsibility to ensure ecosystems and protected and the resources used effectively .
To generate an initial level of property right, regulation could be adopted to ensure all commercial users of a specified amount or greater will pay a levy on use, or purchase an allocation of water. This allocation of water may be used by the permit holder or be traded on the open market with other users. Currently, under s136 of the RMA , current permit holders may transfer their allocation rights to another party on either a permanent or temporary basis, however Hayward and Nyce both note that trading schemes will not be effectively utilised where scarcity does not exist.
In order to counter Hayward’s issue of lack of scarcity across the board and to control over-use on a regulatory level, the relevant governing body would impose a total yearly allocation of water per catchment area. This would operate in a similar fashion to the Annual Catch Entitlement and Total Annual Commercial Catch (TACC) scheme implemented in the commercial fishing sector. Section 13 of the Fisheries Act currently stipulates a total catch for the relevant fishing year must be determined and permit holders are then allocated a percentage of the TACC . This total yearly water allocation per catchment would then form the basis for allowing the purchase and sale of a percentage of this allocation, as well as the ability to trade or sell surplus allocation(s).
This alternative scheme addresses the key issues of inefficiency of allocation and over-use, as well as ensuring users are directly compensating for their commercial use of water. Furthermore, the alternative system also addresses the need for scarcity by creating it through a total annual allocation system which in turn aids to ensure preservation of water stocks.
