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Solutions for Freshwater Management

Florian Bugiel Lake Rotorua In the last three years, issues of declining water quality and over-allocation of freshwater have surged in importance both inside and outside of government. Eighty-two percent of New Zealanders now say they are extremely or very concerned about the state of New Zealand’s waterways.

The unease of voters and policy-makers is well founded. According to government data, 60 percent of New Zealand’s rivers and lakes are now unswimmable, and most regions have at least one river or aquifer that is either fully or over-allocated, or likely to become so in the next one to five years. This directly undermines New Zealand’s claim to be “100% pure.” Further pressures on our water resources will be driven by economic development, population growth, and climate change. Decisions on freshwater policy will have flow-on effects for urban and rural development, biodiversity conservation, and renewable energy production.

So what is to be done? Although technology may offer some opportunities to address issues of declining water quality and over-allocation, it is the human component of water management that is likely to determine the relative security of New Zealand’s water future. To conserve our freshwater resources, we must engage experimentation, innovation, information sharing, dialogue, and collaboration across sectors and stakeholders to increase the likelihood that New Zealand delivers freshwater policy that improves the wellbeing of all New Zealanders.

Introducing Motu’s freshwater work programme

Motu Economic and Public Policy Research is launching a new freshwater management work programme. It will apply rigorous research and stakeholder dialogue to develop practical, evidence-based economics and policy solutions to freshwater management challenges in New Zealand. Currently New Zealand suffers from significant knowledge gaps regarding how communities benefit from, depend on, use and affect our freshwater environment, and how freshwater management can be optimised through the design of economic and policy instruments.

The long-term outcome from our work will be strategic and sustainable freshwater management underpinned by an integrated policy framework that is dynamic, intergenerational, and grounded in evidence. We know that achieving this is possible, but there is no “quick-fix.” Instead priority must be given to conducting robust research, socialising the results, and ensuring that we build technical, institutional, and social capacity in freshwater economics and policy in New Zealand. The multi-year work programme will be implemented in stages and deliver specific outputs at each stage. For more about our freshwater work programme please download this brochure.

The work programme is led by Julia Talbot-Jones, Motu Affiliate and Lecturer at Victoria University of Wellington. You can contact Julia by email.

Funders

Aotearoa Foundation

Publications

Urban water security: Assessing the impacts of metering and pricing in Aotearoa New Zealand

Authors: Julia Talbot-Jones | Thomas Benison

Working Paper

The use of water management tools, such as water metering and pricing, are likely to become increasingly important for addressing urban water security in Aotearoa New Zealand.

Review of policy instruments for freshwater management

Authors: Sophie O'Brien | Julia Talbot-Jones | Suzie Greenhalgh

Working Paper

As pressures on water resources increase in New Zealand, so does the need for alternative policy approaches that can adequately address the demands of competing interests.

The Taupo Nitrogen Market: The World's Only Diffuse Source Trading Programme

Authors: Suzi Kerr | Suzie Greenhalgh

Note

The Taupo Nitrogen market was part of a water quality policy package with three components – regulation of farm nitrogen leaching, a public fund, and a market.

Observed trading activity and estimates of transaction costs suggest the…

Environmental Trading Games: Water quality trading

Author: Corey Allan

Game

Motu has developed a game where participants take part in a simplified nutrient trading system or a simplified emissions trading system. This was designed to give participants ‘hands on’ experience of trading.

Nutrient Trading SystemParticipants manage either a…

Improvements to the national direction for freshwater: Submission

Author: Julia Talbot-Jones

Other

The state of freshwater in New Zealand is in decline. This is increasingly well documented in Ministry reports and other government documents. For this reason, I am generally supportive of the more comprehensive direction
proposed for freshwater management…

Cost-effective water quality improvement: a framework for cooperative wetland development

Author: Will Collin

Other

There is a need to find solutions that allow for cost-effective water quality improvement in New Zealand. This research paper looks at one of these solutions; cooperatively developed large constructed wetlands, whereby a group of…

Nutrient Trading in Lake Rotorua: Determining Net Nutrient Inputs

Authors: Suzi Kerr | Kit Rutherford

Working Paper

Lake Rotorua is experiencing increasing nutrient-related water quality problems. This paper is one in a series that explores the idea of creating a nutrient trading system as part of the ongoing policy response to this problem.

Most…

Cost sharing and free allocation in a nutrient trading system with heterogenous farms : a model of the Lake Rotorua catchment

Authors: Levente Timar | Simon Anastasiadis | Suzi Kerr

Other

We use a nutrient trading simulation model to explore the incidence of costs across heterogeneous farm properties after mitigation actions and trade of allowances.

We compare two approaches to the free allocation of nutrient discharge allowances:…

Nitrogen Trading in Lake Taupo: An Analysis and Evaluation of an Innovative Water Management Policy

Authors: Hugh McDonald | Madeline Duhon | Suzi Kerr

Working Paper

This paper provides an overview and early evaluation of the Lake Taupo nitrogen cap and trade programme, established as part of Waikato Regional Council’s 2011 Regional Plan Variation Five. The policy establishes a catchment-wide cap…

ROTAN Consistent Parcel Data for NManager - R9984

Dataset

The data is given in two sheets. The first sheet gives each parcel in the Lake Rotorua catchment, the amount of land assigned to each land use and the regulatory information for the parcel (lag…

Legacy Loads for Lake Rotorua 1920-2099: Estimations from ROTAN

Dataset

This data gives the legacy loads from historic land use for the Lake Rotorua catchment. Nutrients leach from the catchment into the groundwater and then into the lake. The legacy loads are the leaching from…

Nutrient Trading in Lake Rotorua: Legal Mechanisms

Authors: Barclay Rogers | Cameron Law | Vernon Rive

Other

This report provides a brief overview of the issues arising from a nutrient trading programme within the context of the Resource Management Act 1991 (RMA). In our view, a nutrient trading programme can, in theory,…

Nutrient Trading Programme: Incorporation into Environment Bay of Plenty Regional Plan (Advice from Chapman Tripp)

Author: Cameron Law

Other

This report provides an outline of the steps that will need to be taken to introduce a nutrient trading programme by way of a Plan Change to the Bay of Plenty Regional Plan. As discussed…

Relationships between Farm Productivity, Profitability, N Leaching and GHG Emissions: A Modelling Approach

Authors: Suzi Kerr | Duncan Smeaton | Robin Dynes | Tim Cox

Article

The financial and environmental performance of a typical dairy and sheep/beef farm under contrasting inputs and systems were modelled to test associations between productivity, profitability, nitrogen (N) leaching and green house gas (GHG) emissions. GHG…

Nutrient Trading Programme: Enforcement Issues

Author: Vernon Rive

Other

This report address a number of high-level issues concerning legal enforcement of a potential Nutrient Training Programme (NTS) for the Rotorua Lakes Catchment. It concludes that in its current form, the RMA provides the basic…

Nutrient Trading in Lake Rotorua: Design, Implementation and Enforcement - Legal Issues

Author: Vernon Rive

Other

This report presents an overview of a project coordinated by Motu which has investigated the feasibility of implementing a nutrient trading scheme to address declining water quality in the Rotorua Lakes.

The focus of the paper…

An Inertia Model for the Adoption of New Farming Practices

Author: Simon Anastasiadis

Other

Nutrient emissions from agricultural land are now widely recognized as one of the key contributors to poor water quality in local lakes, rivers and streams. Nutrient trading for non-point sources, including farm land, has been…

Educational Water Trading Games: Simulation Software and Future Potential

Authors: Simon Anastasiadis | Andrew Fenemor | Jim Sinner

Game

This document summarizes the design of an educational water trading game. The intention of the game is to educate participants about how regulations for fresh water quality and quantity might function.

The trading game was developed…

Nutrient trading to improve and preserve water quality

Authors: Kit Rutherford | Tim Cox

Article

Kit Rutherford and Tim Cox are modelling a market where the currency is nitrogen exports and the commodity is clean water.

Water Security for Better Lives

Author: OECD

Article

This publication examines the critical issues surrounding water security (water shortage, water excess, inadequate water quality, the resilience of freshwater systems), providing a rationale for a risk-based approach and the management of trade-offs between water…

An Integrated Model for Simulating Nitrogen Trading in an Agricultural Catchment with Complex Hydrology

Authors: Suzi Kerr | Duncan Smeaton | John Rutherford | Tim Cox

Article

Nitrogen loads to several New Zealand lakes are dominated by nonpoint runoff from pastoral farmland which adversely affects lake water quality.

A "cap and trade" scheme is being considered to help meet targets set for nitrogen…

Does Complex Hydrology Require Complex Water Quality Policy?

Authors: Simon Anastasiadis | Marie-Laure Nauleau | Suzi Kerr | Kit Rutherford | Tim Cox

Article

This article was originally published as a working paper.

Nonpoint-source water pollution is frequently considered intractable because it is hard to regulate large numbers of small sources and because the science associated with assessing the impact…

At the Interface of Research and Implementation: An Assessment of the Work of the Nutrient Trading Study Group (NTSG)

Author: Guy Salmon

Working Paper

This was presented as a Report to Motu Economic and Public Policy Research and was commissioned by Motu Economic and Public Policy Research

This review was prepared by Guy Salmon of the Ecologic Foundation to be…

The Rotorua Nutrient Trading Study Group (NTSG), 2007-2008

Author: Glen Lauder

Working Paper

Report for Motu Economic and Public Policy Research

This report was prepared by Glen Lauder, to summarise for Motu the development of the NTSG. It was followed by an independent review prepared by Guy Salmon.

Glen Lauder…

Evaluation of the Impact of Different Policy Options for Managing to Water Quality Limits

Working Paper

Produced for the Ministry for Primary Industries, Wellington.

New Zealand has a diverse range of aquatic environments from mountain springs to coastal estuaries, connected by an intricate network of rivers, lakes, wetlands, estuaries andgroundwater systems. Its freshwater…

The Possible Implications of a Nitrogen Cap on Farming Businesses within the Lake Taupo Catchment

Author: Mike Barton

Working Paper

This paper is an Industry-based project for MBA, Southern Cross University, Lismore, Australia.

This paper is not a Motu publication, but has been made available in order to make it accessible to a wider audience with interest…

Managing Risks and Tradeoffs Using Water Markets

Author: Suzi Kerr

Working Paper

Risk (and often the certainty) of adverse environmental outcomes motivates environmental regulation; other risks also affect welfare outcomes.

Economic instruments are one way to reduce environmental risk while maintaining flexibility that helps manage other risks. However…

Trading Efficiency in Water Quality Trading Markets: An Assessment of Trade-Offs

Authors: Hugh McDonald | Suzi Kerr

Working Paper

Declining water quality as a result of increased nutrient leaching is a serious and growing concern, both internationally and in New Zealand. Water pollution issues have traditionally been addressed with command-and-control type regulation, but market-based…

Does Complex Hydrology Require Complex Water Quality Policy? NManager Simulations for Lake Rotorua

Authors: Simon Anastasiadis | Marie-Laure Nauleau | Suzi Kerr | Kit Rutherford | Tim Cox

Working Paper

This paper was published in 2014 by the Australian Journal of Agricultural and Resource Economics.

This paper examines six different approaches to nutrient management, and simulates the economic costs and environmental impacts associated with them using…

Nutrient Trading in Lake Rotorua: Cost Sharing and Allowance Allocation

Authors: Kelly Lock | Suzi Kerr

Working Paper

This paper:

clarifies how the benefits and costs of water quality improvements in Lake Rotorua are likely to be shared in the absence of a trading system;
presents different perspectives on and principles for deciding how costs…

Nutrient Trading in Lake Rotorua: Overview of a Prototype System

Authors: Kelly Lock | Suzi Kerr

Working Paper

Water quality in Lake Rotorua has been declining for at least the last 30 years as increased levels of nutrients have entered the lake. Despite significant effort and expenditure, the level of nutrients entering the…

Nutrient Trading in Lake Rotorua: Determining Net Nutrient Inputs

Authors: Suzi Kerr | Kit Rutherford

Working Paper

Lake Rotorua is experiencing increasing nutrient-related water quality problems.

This paper is one in a series that explores the idea of creating a nutrient trading system as part of the ongoing policy response to this problem.…

Nutrient Trading in Lake Rotorua: Choosing the Scope of a Nutrient Trading System

Authors: Kelly Lock | Suzi Kerr

Working Paper

A nutrient trading system is one mechanism that is currently being considered to control and reduce nutrient loss into Lake Rotorua. However this may not be the best mechanism for controlling nutrient loss from all…

Towards a Design For a Nutrient Trading Programme To Improve Water Quality in Lake Rotorua

Authors: Suzi Kerr | David Fairman | Glen Lauder

Working Paper

This paper explores how to enhance the role for academic research (natural sciences, economics and their integration; and stakeholder management) within the development and implementation of water quality policy in New Zealand. Our focus is…

Nutrient Trading in Lake Rotorua: Where Are We Now?

Authors: Kelly Lock | Suzi Kerr

Working Paper

A number of decisions need to be made when setting up a nutrient trading system including defining a target, allocating allowances and setting up a monitoring system. To ensure that the nutrient trading system implemented…

Nutrient Trading in Lake Rotorua: Goals and Trading Caps

Authors: Kelly Lock | Suzi Kerr | Kit Rutherford

Working Paper

For a nutrient trading system to achieve the desired environmental outcome, or goal, this outcome needs to be translated into nutrient flows and allowances. To connect the nutrient loss provided for under the allowances with…

The Mitigation of Nutrient Loss from New Zealand Agriculture: Separating the Probable from the Possible

Authors: Simon Anastasiadis | Suzi Kerr | Alec MacKay | Jon Roygard | Mark Shepherd

Other

Pastoral farming contributes significantly to the New Zealand economy but can have adverse environmental affects. Nitrogen and phosphorus leaching into water ways are known to affect the health of aquatic wildlife and can have health…

Synergies between policy instruments for regulating interdependent pollutants: a numerical analysis of emissions trading schemes in New Zealand

Authors: Simon Anastasiadis | Boon-Ling Yeo | Oliver Browne | Suzi Kerr

Other

Agricultural production affects both nutrient and greenhouse gas emissions. Environmental policy designed to reduce one type of pollution may interact in positive or negative ways with efforts to reduce other types of pollution. In this paper…

Water, Water Somewhere: The Value of Water in a Drought-Prone Farming Region

Authors: Arthur Grimes | Andrew Aitken

Working Paper

Water is critical for agriculture, yet surprisingly few studies internationally have analysed the value placed on water in specific farming contexts. We do so using a rich longitudinal dataset for the Mackenzie District (Canterbury, New…

Innovative governance and smart regulation: institutional and regulatory regimes for a water-constrained world

Author: Neil Gunningham

Presentation

"There is enough water for everyone. The problem we face today is largely one of governance: equitably sharing this water while ensuring the sustainability of natural ecosystems. At this point in time, we have not…

Environmental markets: how can they work for water quality and climate change?

Author: Suzi Kerr

Presentation

Emissions trading, water trading, nutrient trading. These new policy instruments have enormous potential but are frequently misunderstood. They can induce scepticism, fear or unrealistic expectations. Suzi Kerr will clarify the mechanics of a cap and…

Nutrient Trading in Lake Rotorua: A Policy Prototype

Authors: Hugh McDonald | Suzi Kerr | Kit Rutherford

Note

Water quality films

Video

Motu created two short films to illustrate some of the issues around declining water quality in Lake Rotorua. The films feature a dairy farmer and three Maori landowners/caretakers. All have knowledge of a prototype nutrient…