Fording the Rapids: Charting a course to fresher water

Dr Eric Crampton
23 August, 2021

Providing future generations with rivers and aquifers at least as clean as our generation found them requires durable freshwater management systems that can stand the test of time.

Regulatory measures can improve outcomes for now. But sustained improvement may require substantial and costly changes in land use – at least in some places. Imposing substantial cost on existing users of water resources, whether these users be farmers or council wastewater facilities, makes it harder to sustain support for necessary changes.

Finding cost-effective solutions allows more good to be done. Finding solutions that build support among the communities that have to live with the changes also matters. Regulations that bankrupt farms needing to service existing debt, or that impose high cost on councils with weak stormwater and sewage networks, risk being overturned with changes in government.

If people expect the regulatory system to break down, they will not make the investments necessary to effect lasting change.

Better systems are needed and are possible.

This report argues for cap-and-trade approaches to freshwater management, based on a strengthened version of the Taupō nutrient management system, beginning in areas large enough to warrant the approach – like Canterbury and Waikato.

Taupō’s nutrient management system shows that cap-and-trade approaches can work for dispersed pollution.

But it can be improved upon, in the longer term.

Taupō’s system focuses on one pollutant, nitrogen, but different places have different problems ranging from phosphorous and sediment to E. coli. Targeting one pollutant, when many pollutants can matter, risks worsening those not targeted.

The smart market approach pioneered by researchers at the University of Canterbury and the RAND Corporation makes it easier to set cap-and-trade systems that enable trading while respecting multiple environmental limits. The mapping approach developed by Land and Water Science can track the consequences of changes in the intensity of agricultural land use over a
dozen pollutants.

Combined, they would enable catchment-level capand-trade management of a wider set of pollutants. Building the system would take time; it can only be a solution for the longer term. Regulatory approaches, like those currently underway, will still be necessary for the shorter term.

But for the longer term, a smart cap-and-trade market in water quality would provide the kind of durable system that can withstand changes in government.

It would help to find the lowest cost ways of improving the quality of our lakes, rivers, and aquifers – making larger improvements easier.

Providing farms and councils with tradeable rights within the system, and sharing the burden of reducing environmental footprints, ensures a just transition. A just transition is important in its own right, and is also important in strengthening support for the system over decades to come.

It can be done. And our waterways deserve it.

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