Fresher Water

Dr Eric Crampton
Insights Newsletter
27 August, 2021

Freshwater politics is a nightmare. Long-term improvements in water quality depend on the development of systems that can withstand government and policy changes. 

But the path to get there is fraught. 

The Initiative published its second report on freshwater management this week. 

The first report proposed cap-and-trade solutions for freshwater abstraction with strong environmental protection. Existing consents would turn into tradeable water rights, with additional rights awarded to iwi where rights had not been otherwise extinguished. In this system, agricultural producers, water bottlers, city councils, and others could trade rights to abstract water from aquifers and rivers, while still maintaining minimum river flows and ensuring aquifer sustainability. 

This second report shows how similar systems could manage freshwater quality, but only in the longer term. A system like this would take time and effort to build, but it would provide a durable framework to improve water quality over time. Other measures are needed until a better system can be developed. 

Parts of that better system need to be built in any case. Parliamentary Commissioner for the Environment Simon Upton, responding to the recent independent review of the Overseer farm management tool, concluded that Overseer could “no longer be a central pillar of freshwater quality management.” 

If an upgrade or replacement for Overseer is needed regardless, that upgrade could make room for a future cap-and-trade scheme. 

Our scheme combines a front-end management system, such as Overseer, with more detailed modelling by Land and Water Science that analyzes the effects of land use on several pollutants, such as nitrates, nitrogen, phosphorous, sediment, and E. coli. When combined with a smart market, the system would enable trading in emission rights while ensuring environmental bottom lines were met. 

But freshwater politics is hard. 

Whenever central government looks out over the countryside, it sees overburdened catchments. And it looks to blunt measures to reduce those burdens that neither take account of the local communities or local water users affected by them, nor provide much sharing of the burden. 

Many communities are making commendable efforts. However, inadequacies at the local level led to overburdened catchments and central government intervention. 

To be sustainable, reform must be backed by those who bear the burden of regulations and transitions must be just. Cap-and-trade systems accomplish this by allocating rights to existing users and sharing costs. The system would require substantial work. It is worth it to manage freshwater sustainably in the long run.  

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