Cap-and-trade to sustainable freshwater management
Wellington (Tuesday, 7 May 2019): The New Zealand Initiative today released its latest report, Refreshing Water: Valuing the priceless. We believe it provides the best way of achieving the goals set in Minister Parker's Essential Freshwater programme.
New Zealand has a real chance to substantially improve the sustainability of our rivers and aquifers through a freshwater equivalent of the Emissions Trading Scheme. But that requires recognising the interests of iwi and existing consent-holders and equitably sharing the burden of achieving sustainability.
Report author Dr Eric Crampton, Chief Economist with the Initiative, said: “New Zealand deserves far better freshwater management. Aquifers need to be maintained, and rivers need to flow. Several reports on freshwater management have pointed to cap-and-trade regimes – versions of the Emissions Trading Scheme for river basins that are under pressure – as a promising way forward. But fear of sparking Treaty claims has blocked those solutions.”
The report points to a smart-market solution with hard-wired environmental constraints as the best way of valuing and sustaining our priceless freshwater resources. Current consent-holders, including farms, industries, commercial users and councils, would see their existing consents converted into tradeable water permits. Crown negotiation with iwi and hapū would provide a tradeable water allocation and confirm kaitakitanga over rivers.
Reductions in water use in overallocated places would come through a combination of time-limited rights and Crown buy-back of water rights through the trading system.
“The water trading system would not only build in tight environmental constraints, it would also make a just transition, and equitable treatment of iwi claims, an integral part of achieving sustainability,” Dr Crampton concluded.