HYDROTRADER MEDIA RELEASE
8 MARCH 2012

Bombshell announcement from ECan foreshadows ban on water permit trading

Environment Canterbury’s new Land & Water Plan, due to be notified in July 2012, will likely ban, or at least severely limit, the transfer of unused water permits, says New Zealand’s only specialist water permit trading company.

Dr Tony Davoren, Managing Director of Christchurch-based HydroTrader, says environmental consultants were shocked to hear of the move at a recent meeting with ECan. His company has since written to ECan Commissioner Dame Margaret Bazley expressing their concerns, and Dr Davoren is calling for a public debate on whether water permit trading should be allowed to continue.

“We certainly weren’t aware that a ban on transferring so-called ‘unused’ water allocations was being considered. This draconian measure will significantly impact the productive sector, stalling much-needed economic growth for Canterbury,” says Dr Davoren.

While the plan is currently only in draft form, it could be made operative late in 2012, or early in 2013, due to fast track procedures available to ECan under the Environment Canterbury (Temporary Commissioners and Improved Water Management) Act 2010. This means that once submissions have been considered by a hearing panel appointed by ECan, they will issue a decision which can only be appealed to the High Court on points of law.

Dr Davoren says not only did the ECan staff member indicate a ban was likely once the plan was notified, but that the option of banning transfers while allocation limits are being reviewed is also under consideration.

“If people don’t voice a concern now about the direction ECan is heading, then the anti-trading provisions of the 2011 Regional Policy Statement (currently being finalised by hearing commissioners) and Land and Water Plan, could be enacted this year, which would spell the end of water permit trading.”

“While ECan may portray such claims as ‘alarmist,’ and point out that their proposals are merely ‘up for discussion,’ the reality is that they are working to an extraordinarily tight timeframe, with a very clear goal of prohibiting or limiting the transfer of any ‘unused’ allocations.”

While the reasons for the ban will be sold as an attempt to reverse over-allocation in order to protect environmental values and the reliability of supply of existing water permit holders, there is little evidence that a simplistic ban on trading ‘unused’ allocations will work says Dr Davoren.

“The relationship between allocation limits and environmental protection is far from straight forward, especially with groundwater zones which tend to smooth out the effects of abstraction over months, and sometimes years.”

“For example, during the 2011/12 irrigation season groundwater abstraction within over-allocated groundwater zones has had no adverse effect on lowland streams, or on the reliability of supply of existing users, due to high groundwater levels and very low irrigation abstraction,” says Dr Davoren.

“Should there be another recharge season like the one we’ve just had, groundwater levels during the 2012/13 irrigation season are likely to remain high. This shows the danger of using overly simplistic regulatory tools to manage a dynamic environment.”

“The other concern we share with many permit holders is how ECan will determine what water is ‘unused,’ as it can take many years of recording water use to determine what is needed to meet the reliability standard set under the current ECan water plan of full reliability nine years out of ten. If ECan use a short period, such as three to five years, there is a very high risk that they will incorrectly classify water as ‘unused’.”

As for the popular view that water permit trading plays into the hands of ‘water barons’ who will make a fortune buying and selling a public asset that no-one owns (as Central Government recently stated in response to the claim for freshwater ownership by the New Zealand Maori Council), Dr Davoren considers this to be “scaremongering rubbish.”

“In five years of permit trading most of the transfers we’ve facilitated have been between small to medium-size landowners. And the combined annual volume changing hands has been less than two percent of the volume effectively allocated in the groundwater zones between the Rakaia and Waimakariri Rivers, where most trading has occurred to date. These farmers and other water users are simply trying to increase production in order to make a living at a time when commodity prices are so variable,” says Dr Davoren.

HydroTrader’s challenge to ECan is to avoid using a ‘blunt instrument’ to re-set allocation limits, and instead work on ‘smart measures’ such as a mix of economic instruments, adaptive management regimes, managed aquifer recharge, the lapsing and cancellation provisions of the RMA, and a ‘sinking lid’ for when consents expire or are surrendered.

HydroTrader’s experience of water permit trading is that it can be a real ‘win-win’ for both the farming community and the environment. However it would appear that ECan’s message is a flat ‘use it or lose it,’ says Dr Davoren.

“Without permit trading, further irrigation development in Canterbury is likely to stall for at least ten years until the Canterbury Water Management Strategy delivers irrigation schemes with adequate storage to provide reliable and affordable water.”
ends

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