The Land and Water Forum (the Forum) has released its third report – focusing on the allocation of water and managing water quality. Its second report addressed setting of objectives and limits for fresh water quality and quantity by collaborative processes.

The Forum has emphasised that the frameworks for allocating water and managing discharges of contaminants should focus on ensuring that freshwater objectives and limits are met over the time period specified in plans, New Zealand's long term economic welfare is maximised, and the frameworks are achieved in a way that is fair and accepted by the community.

In order to deliver on these aspirations it will be imperative that the limits themselves are realistic and achievable. The Forum recommends that setting freshwater objectives and limits should be undertaken together with the consideration of strategies, methods and timelines for achieving them (including evaluating different scenarios).

Iwi's Rights and Interests

The Forum has waded into the issue of iwi rights and interests in freshwater emphasising that this matter needs to be resolved for the system to be stable and durable. Interestingly, the Forum noted that it can "see significant win-wins in this process, including the development of under-utilised land and resources, and the ability of iwi to partner with others [in] the growing of the water economy – including through the development of infrastructure." It looks likely that iwi will become an increasingly major player in the water space – although if the Crown accepts the Forum's statement that existing rights should not be compromised, then this may prove to be a constraint on opportunities for iwi in regions where water quantity or water quality is already over-allocated.

Allocating and Trading Water

There is a tension between existing rights and allowing new parties opportunities to enter the water economy. Considerable investments have been made in reliance on existing resource consents and these require certainty as to ongoing access to water, especially if further investment in more efficient technology is required or desirable. Yet these existing allocations may not be to the highest valued use, and in that sense not the most efficient use of water. The Forum recommends that regional councils manage water allocation with long-term economic welfare as the primary driver. It notes that the national water management system should not embed preferences for particular users or sectors, or favour particular land or industrial uses.

Consistent with this wider issue, the Forum recommends that water rights need to be easily transferable between users to allow it to move to its highest valued use (stated as being to enable society as a whole to obtain the greatest collective value from water resources across the full range of values). The Forum recommends that the new water allocation regime should be underpinned by a transparent accounting and registry system that is consistent across regions. It also recommends that consents should have standard core elements designed to enable transfer with minimal transaction costs and be easily divisible so that transfer of portions of consents are well understood and enabled.

In catchments that have low demand pressure there is no need to change the way water is allocated. Instead the Forum recommends that a threshold be specified in plans to indicate when a water body is coming under use/demand pressure and to signal pending scarcity in the available quantum. The Forum further recommends that national direction should be given to regional councils to ensure consistency in the development of scarcity thresholds. Once a scarcity threshold is reached, the Forum recommends that all existing water takes currently permitted be given a consent, and new water takes be explicitly managed to maintain the limit and protect existing authorisations. The Forum suggests national guidance on the range of methods available for allocating the portion of the allocable quantum between the threshold and the limit.

Recommendation 59 – We note recommendation 59 is that Central Government should consider the potential for efficiencies and the advantages of consistency of developing a single model, accounting system, set of guidelines or national standard for the establishment and support of market systems for water management. There is a notable lack of discussion about the detail of this within the report itself.

Infrastructure

Throughout the Forum's report there are references to the role and opportunities for infrastructure to manage water issues including to address over-allocation, to provide environmental benefits and greater reliability and supply. The Forum has made split recommendations on the proposal to extend consent duration beyond 35 years for large-scale projects that have been provided for through collaborative planning processes, and the proposal to establish an expectation that consents will be reissued on expiry - provided that incumbents are able to demonstrate compliance with consent conditions. IrrigationNZ issued a press release stating that last minute changes to the Report have weakened its integrity and emphasised that irrigators need long-duration consents and an explicit right of renewal to allow for long-term investment and thinking.

Both 'sides' propose that within three years of implementing the Forum's recommended changes to the freshwater management regime, these matters should be reviewed in a manner that is consistent with the Forum's statement on iwi rights and interests in freshwater. The key difference is some members of the Forum consider this review should be undertaken by the Government and implement the identified matters; whereas other members consider the review should be undertaken by the Forum or similar group and only assess the case for extension of consent duration and reissue on expiry. The latter members also consider the review should include an assessment of the effectiveness of the new national water quality and quantity objectives framework in setting consistent and effective limits, and whether new consents are being issued subject to the ability to immediately review consent conditions in accordance with limits and policies set through collaborative processes. It will be interesting to see the Government's position on this issue.

Managing Water Quality

The Forum has recommended the threshold concept be utilised for water quality management, with national direction to ensure consistency in the process of developing thresholds. The threshold (being a proportion of the contaminant limit) is to be specified in plans to indicate when a water body is coming under resource use pressure, and when a change in the management regime should occur. The Forum recommends that once the threshold has been reached, all new discharges and activities that increase the total discharge need to be explicitly managed to maintain the limit and protect existing rights to discharge. The Forum suggests that national guidance should be given to regional councils on appropriate methods of allocating contaminants for managing water quality.

Reference is made to regional councils determining whether allocating discharge allowances (to individuals or groups) is an option for managing to a limit for a particular contaminant in individual catchments. The Forum sets out criteria to guide this decision including whether: identification of the manageable sources of the contaminant is possible; the contribution from individual sources is able to be directly measured or estimated; and a transparent compliance and enforcement regime can be established.

The Forum considers that both point source and non-point source discharges should be able to be managed within the RMA framework. There are several recommendations about 'good management practice' with a recommendation that this be incorporated and incentivised within regional plans.

Enabling Change – quality of analysis

The Report highlights concerns with the standard of section 32 reports, noting that the quality of social and economic analysis has been variable, that there is often a failure to identify and evaluate a full range of viable alternative policy options, and that some local authorities have treated it as a reporting requirement instead of informing decision-making. The Forum makes recommendations to rectify these deficiencies. It also suggests that Central Government should consider implementing a review of section 32 reports analogous to the Regulatory Impact Assessment process followed by central government agencies. Further, it recommends that central government should enhance its auditing programme through which council performance is monitored and reported against.