A New Start for Fresh Water: Allocation and Property Rights

Abstract

The purpose of this article is to consider water allocation and property rights as presently governed under the Resource Management Act 1991 (RMA), canvass the key problems associated with the present regime and then discuss the manner in which these problems might be addressed in Phase Two of the amendments to the RMA.

The article addresses the following issues:

Allocation between competitors for water is presently determined by those first in time. This system of allocation does not enable an application for allocation to be refused on the basis that a later proposal meets higher environmental or economic standards. The government is signalling that the first-in first-served approach is to be replaced by a system that enables water to be allocated to its most valued uses. This looks likely to include a market based system for allocation.

Research has shown that a lack of flexibility over allocation and transfer has discouraged efficient water use. Irrigators, for example, are fearful that moving to more efficient forms of irrigation will result in the loss of water rights. This is because restrictions on the kinds of use, and location of use, make it difficult to use water for other purposes under existing consents. Restrictions over use and location similarly make it difficult to transfer water rights to other parties either in full or for short periods of time.

Work undertaken by successive government departments has indicated that greater flexibility and transferability of water rights would provide a strong financial incentive for greater efficiency. The government's New Start for Fresh Water (NSFW) strategy is largely silent on the issue of flexibility and transferability, but the government is committed to maximising the economic return from water. Considering this policy background and current recessionary environment it is likely that reforms to flexibility and transferability will be introduced in order to both encourage more efficient water use and stimulate new economic activity. There is presently little detail on how any of the potential changes to water allocation and property rights might work. The Land and Water Forum and government's Technical Advisory Group (TAG) are to report to the government on this by July this year. It is unclear at this stage whether there will be an opportunity for public submissions prior to the report being delivered. This is because the Land and Water Forum is supposed to represent all key stakeholders. However, the NSFW does anticipate wide public consultation before major policy decisions are made. It is worth noting in this vein that the aquaculture TAG's initial report was open to public submission. In any case, there will be an opportunity for wider public submissions once any proposed legislative reforms reach the select committee stage.

Keywords: Water, Allocation, Property Rights, Resource Management Act, New Zealand