Freshwater management in Aotearoa-New Zealand: is trading a viable option for water quantity allocation?

ABSTRACT

Water trading has been proposed as an effective mechanism for delivering economic benefits within environmental limits. It represents one possibility for applying a dynamic allocation framework within which environmental river flows can be monitored and improved to support ecological, cultural, aesthetical and recreational values. Based on international experience, requirements for the successful implementation of water trading are assessed in the Aotearoa-New Zealand context. It is concluded that, if the environment is recognised as a water user, water trading has potential to promote sustainable water use but is associated with significant set-up and ongoing costs. A co-governance policy framework for water trading has not been agreed by iwi/hapū and the Crown based on Te Tiriti o Waitangi (1840). The institutional capacity required for development and implementation of trading is currently lacking, and the roles that government agencies and iwi/hapū would play are unclear. Market operational requirements relating to collection, collation and communication of hydrological data are only partially in place. Finally, New Zealand’s flashy hydrology is not conducive to seasonal water trading and smaller catchments may contain insufficient users to constitute a functioning market. Water trading should therefore not be viewed as an easily implementable solution for improved freshwater management.

KEYWORDS:

• Freshwater management
• water trading
• water allocation
• adaptive management
• environmental limits

Acknowledgments

Many thanks to Paul Franklin of NIWA and two anonymous reviewers for prompting improvements following their reviews of an earlier draft.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Availability of data and material

Source data (for Figure 1) available at https://data.mfe.govt.nz/table/102977-national-water-allocation-statistics-2018-takeframe/

Additional information

Funding

This research was funded by the National Institute of Water and Atmospheric Research (NIWA) New Zealand as part of the Environmental Flows Programme.

Notes on contributors

Douglas Booker

Doug Booker is leader of the Environmental Flows programme at NIWA. He is a hydro-ecological modeller with an interest in freshwater management, hydro-ecology, environmental flows, water accounting, bioenergetics, hydrodynamics, and geomorphology. Doug’s research expertise includes: artificial neural networks; random forests; mixed-effects modelling; generalised additive models; dissimilarity modelling; fluid dynamics; web-apps for science communication; cross-validation procedures; and predictive performance metrics. Doug’s PhD was in hydraulic modelling and sediment transport.

Katherine Booker

Katherine Booker has previously worked as a Senior Economist with Oxford Economics, a global economic forecasting consultancy, and as an Economic Adviser with Her Majesty’s Treasury (UK). She specialises in economic forecasting and evidence based policy assessment, and is currently studying for a masters in applied data science.

Carla Muller

Carla Muller is a Senior Consultant at Perrin Ag Consultants, an agribusiness advisory firm. She specialises in agricultural and environmental economics and has a particular interest in freshwater management and policy development. She has a degree in applied economics and a masters in environmental management.

Channa Rajanayaka

Chana Rajanayaka is the Group Manager - Hydrological Modelling of the NIWA Christchurch site and a hydrological modeller. His expertise includes integrated flow and contaminant transport surface-groundwater modelling, soil-crop-water balance modelling, uncertainty quantification, irrigation, artificial neural networks, soil physics and scale issues in natural systems. Channa routinely provides advice to the central and regional authorities on water allocation, hydrology and modelling, and provides ‘expert witness’ on technical evidence at hearings. Channa’s PhD was in simulation and modelling in hydrogeology.

Andre Konia

Andre Konia is a Pou Ārahi / Māori development leader, a role where he builds and strengthens NIWA scientists relationships with hapū, iwi, and Māori communities to respond to their research priorities and aspirations. Andre’s approach to codevelopment of projects ensures Māori voice is heard and aspirations are embedded. Andre has vast experience in cultural capability building with educators as facilitator of professional learning and development in Canterbury and across the South Island. Andre has worked across the organisation to support Māori research programs in freshwater, marine and coast the majority of the time in an outward facing or liaison role.