The chairman of the Land and Water Forum ("Forum"), Alistair Bisley, has described the Forum's Third Report, "Managing Water Quality and Allocating Water", as a "once in a generation opportunity" to influence water allocation mechanisms. The Forum's Third Report, which was released on 15 November 2012, can be viewed here.

According to media reports, 95% of the 60 plus members signed the Third Report meaning that several parties refused to sign. Furthermore, consensus was not reached on the key issue of whether the right to appeal decisions on their merits to the Environment Court should be retained. The issue of water use charges and taxes also remained unresolved.

How does the Third Report measure up? You can view our summary of the key recommendations here.

The National Policy Statement on Freshwater Management requires Councils to set environmental bottom lines for water quality and quantity. The recommended process for setting those bottom lines was articulated in the Forum's Second Report. The focus of the Third Report is clearly on "implementation" through the identification of general management tools and methods to manage water quantity and quality. Regional councils will, however, be left with the task of selecting and adapting the tools and methods and identifying specific limits via a collaborative process. The reality is that the "hard fight" is likely to be fought at this later stage when the general principles agreed to in the Third Report are translated into hard limits for each catchment and regional rules. This part of the process is unlikely to be "plain sailing" and will be a serious challenge for the use of collaborative processes at the regional level.

The Third Report identifies the integration of land and water management within catchments as key for managing water quality. The first critical step in the process involves identifying the current total contaminant load in each catchment. Sensibly, the Third Report acknowledges that the process of identifying and quantifying contaminant levels from non-point sources is technically difficult and highly dependent on modelling which is not always accurate or reliable. Despite these difficulties, the recommendations in the Third Report clearly rely on accurate accounting of contaminants including the use of contamination allowances and market based instruments such as trading systems.

In terms of water allocation, the Third Report focuses on how to allocate water amongst users in a way which fosters investment certainty and allows water to move to its highest value use. This approach will be of some comfort to a number of water users. The Third Report recommends the establishment of different trigger levels for water allocation depending on whether the catchment is:

  • approaching full allocation;
  • fully allocated; or
  • over allocated.

In catchments where there is no pressure on the allocation limits, no change to the allocation process is recommended beyond setting thresholds and monitoring use. The allocation method would stay as "first-in first-served". For fully and over allocated catchments, the Third Report identifies a number of management tools regional councils can use, with the choice ultimately being left up to each region. The emphasis in these catchments is on accurate water accounting, water efficiency and the ability to transfer and trade water rights. In fully allocated catchments, the only way in which new users would be able to enter the "water economy" would be through transfer or trade of consents and/or through water being made available through voluntary surrender on expiry. This signals a significant move away from the first in first served principle of water allocation in some catchments. The Third Report does not seek to resolve the nature of iwi rights and interests in freshwater and has no bearing on the Māori Council's judicial review application against the Government's partial assets sale programme (recently heard in the High Court). Although iwi rights and interests were not part of the Forum's mandate, the Third Report concludes that the integrated catchment management approach recommended is sufficiently flexible to accommodate outcomes from Crown-iwi negotiations. There was, perhaps, room for more discussion around how the allocation model sits with Maori, particularly in relation to the trading and transfer of water rights and Maori concerns about the mixing of waters.

The recommendations in the Third Report will undoubtedly have significant cost implications for regional councils, and in turn, for water users and ratepayers. There is some discussion about charges and taxes for water use in the Third Report, but there is no indication as to how the scientific assessment, accounting systems, collaborative planning processes, or trading systems would be funded. The Forum calls on central government to take on a much more active role in setting a national policy and legislative direction and also, potentially making government appointments to regional council committees. It is not clear whether any of the costs to regional councils will be absorbed at a national government level.

The Forum, conscious of the need to "tie-off" matters covered in the previous reports, revisits the role of the Environment Court and collaborative policy and plan making. Again, there was no consensus on whether the right of appeal to the Environment Court should be removed. We outlined our concerns about the potential removal of merit appeals in our article on the Second Report which you can view here. Those concerns remain unchanged. Given that the Forum has indicated that it expects each region to deliver the efficient allocation of water through clear policies and rules in regional plans rather than through "ad hoc consenting", the proposal to remove appeal rights from the regional plan process, is even more concerning.

The Forum has decided to come back together in July 2013 to discuss the potential for an on-going role in freshwater management. The Third Report does not discuss how any ongoing role would sit alongside the National Objectives Framework, set up by the Ministers and being informed by a reference group comprising various stakeholders and interest groups, and supported by scientists, other than to note that the outcomes of that exercise will have important implications for recommendations in the Third Report.

Given that the Third Report simply sets out general recommendations for the Government to consider, there is no way to know what will be taken on board and what will be cast over. Some changes recommended such as the removal of appeal rights, the introduction of permit trading and changes to consent durations would require amendment to the RMA. None of the changes in the LAWF reports have been carried through to the proposed amendments in the Resource Management Reform Bill.