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Sort out water rights says OECD

Sort out water rights says OECD

First published in Energy and Environment on June 27, 2019.

Sorting out iwi (tribal)/Māori rights to water in order to expand water pricing or permit trading to improve water quality and allocation should be a key environmental priority for the Government says the OECD report on the NZ economy.

Much of the OECD study is based on the wider economic situation in NZ, however it also has a heavy emphasis on energy and environment issues. It looks at the environmental challenges facing NZ around the degradation of natural capital through falling water quality and failure to reduce greenhouse gas emissions.

The OECD report says NZ enjoys clean air, high levels of renewable freshwater resources and abundant attractive recreational spaces. NZ’s natural capital provides the basis for the primary sector and about 45% of total exports.

However, “NZ’s growth model is approaching its environmental limits. The expansion of dairy farming in recent decades has increased freshwater contamination, threats to biodiversity and greenhouse gas emissions.”

While the growth in the dairy herd had slowed, the OECD said NZ must build on exporting higher value export products and decouple growth from natural resource use.

NZ had low environmental taxes by OECD standards, but the shift might require producers to “pay for the environmental damage they cause and continued support for R&D investment to mitigate GHG emissions (mainly biological methane) and water pollution from agriculture.”

More progress also had to be made on urban water quality issues where sewage and stormwater infrastructure was not coping.

NZ’s nitrogen balance was only slightly below the OECD average, but the increase over the last two decades had been the second largest. This was putting pressure on water quality and water allocation in many areas.

“Pricing and permit trading should be expanded (subject to agreeing iwi (tribal/Maori right) to achieve” improvements in water quality and allocation. “Using economic instruments to improve water quality would entail levying pollution charges or setting caps on discharges of pollutants in a catchment and allowing trade in discharge permits”.

The OECD also highlights NZ’s failure to make any significant reduction in GHG emissions saying they remain amongst the highest per capita and per unit of GDP in the OECD.

Although the growth in the dairy herd had slowed between 2012 and 2017 the emissions intensity of dairy production has fallen by only 1% per year.

This had to be addressed as was the fact the transport sector was the main source of growth in GHG emissions.

NZ was not on track to meet its current 2030 emissions target and would have to rely on afforestation and international carbon trading to meet them. This was only a temporary solution and NZ needed a comprehensive plan to achieve its reductions emissions. This would require stronger carbon pricing and higher fuel taxes including on the use of coal in industry.

“A 2018 ban on new offshore oil and gas exploration was billed as an important step to address climate change when announced. Subsequent analysis indicates that the net impact on global emissions is uncertain, due to a shift to higher emissions production internationally, but more likely to be negative. The annual cost to NZ has been estimated to average 0.22% of GDP over 25 years.”

Energy and environment recommendations by the OECD included:

• Increase the emissions price to a level consistent with NZ’s intended transition to a low emissions economy.

• Announce a date for inclusion of biological emissions in the NZ ETS or alternative pricing and regulatory measures to reduce them.

First published in Energy and Environment on June 27, 2019.

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