Analysis of the Water Market in New Zealand - Coursework Example

Analysis of the Water Market Student’s name Code & Course Professor’s name University City Date Analysis of the water market The water problems in New Zealand are not typical, and vary from one location to the next. 2.1. The Water Challenge in New Zealand Demand A report published in 2015 identified demand as one of the bigger problems facing the country. In the space of just ten years, the average weekly allocation of water had increased by up to a third (Morton, 2015). There have been sharp rises in the water being allocated for uses like irrigation, according to the Land, Air, Water Aotearoa (LAWA) an online environmental resource monitoring website that is run by the Cawthornn Institute, the central and regional governments. According to this report, this demand has been growing for several years now. For instance, in 2010, which is the most recent year for which usage data had been collected, activities like irrigation had received nearly twice as much allocation as a decade before. Regions like Canterbury, Otago and Southlands used a huge share of their allocated supplies, up to 86 percent. Most of this use was attributable to hydro-irrigation. Auckland, the West Coast and Nelson used majority of their water for public drinking and for manufacturing processes (Morton, 2015). Quantity By international standards, the water in New Zealand is plentiful. In fact, New Zealand has one of the highest per capita water availability, at one time ranked fourth with Canada, Norway and Iceland taking the top three positions. However, one could argue that this could be down to the relatively low populations and abundance of water resources nationally. Despite this, the land and water forum noticed that in some catchment areas, the allocated extractions exceed the amounts of water available. For instance, about half of the river streams in Canterbury are either over, near fully or fully allocated (NZIER, 2014). In some parts of the country, even ground water sources are under pressure. Again the Canterbury region falls victim. As of 2011, there already were reports that up to 10 of the 29 zones in the region were fully allocated, and another six were yellow zones; those where the allocation exceeded 80 percent (NZIER, 2014). Quality Just like the quantity, the quality by international standards is generally above board but declining. Demands from agriculture and urbanization have resulted in increased nutrient concentrations and sedimentation that affect quality. The standards used by the ministry of environment to gauge the quality of ground, river and lake water largely depend on the nutrient level in the water and the levels of sedimentation (NZIER, 2014). 2.2. Identification of Regulatory Drivers The situation in New Zealand is Unique. It is known for its lush green forests, spectacular landscapes and beautiful coastlines. Nature is at the center of the allure of New Zealand, providing habitable environment and contributing to economic production (Stephens et. al., 2016). However, these resources are being diminished at an alarming rate (Roberts, et al., 2015). In fact, New Zealand is one of the countries with the highest number of policies meant to protect the environment, and the water resources by extension. There are up to 22 laws that protect the environment in some way (Brown et. al., 2015). There are government agencies dedicated to conservation and ministries like those of primary industries, environment and the protection authority that deal with matters of conservation and water policy (Stephens et. al., 2016). The government has signed up to 6 international treaties to protect nature and biodiversity. Further, areas that are legally protected cover up to a third of the country now (Brown et. al., 2015). The difficulty in protecting nature, the environment and water resources comes from the difficulty that arises from divergent interests by the various different stakeholders. According to Brown et. al., (2015), the government, business, private and public interest diverge when it comes to protection of natural resources. At all levels, the government’s efforts are driven by a controversy that demands action from an already struggling national purse. For business and private land owners, the costs of conservation normally outweigh their benefits from loss of these resources. Most of the time, they do not consider the longer term cumulative disadvantages (Brown et. al., 2015). The public enjoys both sides of the spectrum, the benefits of the conservation of natural resources, as well as some of the economic advantages that come from activities that do not necessarily protect natural resources (Brown et. al., 2015). The politics surrounding the legislative framework is also influential. The water policy issue is a high profile thing, sparked in the past few years by reports regarding land and water reform, media comments by parliamentary commissioners, the national objectives framework and labor and green policies. Researchers still contend, though, that the water policy situation has not changed much since the nineties. There are helpful policies, like nutrient caps in some regions and direct cash subsidies (Brower, 2016). The policy environment, though, creates a lot of uncertainty. There is consensus on the nature and the magnitude of the problem, but there is of much in the way of policy relevant empirical literature. Therefore, the development of policy focuses only on transitional approaches rather than durable ones. For instance, the data on how much water the rural sector uses is lacking, relying only on consent data rather than the real information (NZIERb, 2014). There is also the feeling that most of the policy in New Zealand that deals with matters of environmental and resource conservation is regulatory and public funding related, and is isolated from economic policy (Stephens et. al., 2016). The lack of information also affects the management of infrastructure and asset management, especially the three waters. Every different council faces a variety of problems unique to their needs and assets. Most of the reports that deal with the management of the three waters initiative only focus roughly on the current infrastructure, before quickly moving to recommendations for improving the outcomes. The lack of information makes it difficult to understand linkages and trade-offs between council infrastructure and water (Castalia, 2014). 2.3. International Solutions to Combat the Water Challenge Suitable development, conflict, natural disasters and human migration are all issues that are dependent on water. The biggest factors that affect and have driven the narrative on water related issues are the demands of the Agri-food, industry and energy sectors. With increased competition for water among users, the scarcity problem is likely to get much worse worldwide (UNESCO, 2016). Across the world, many countries have found themselves in situations similar to New Zealand, and through their failures and successes, lessons can be learned going forward. Australia is one such example, which adopted a water market and to steps to ensure the trading allocation of water flew to the highest value users. Researchers also concluded that this system reduced the impact of drought on areas with low water availability. The new water market policy is divided into two; short term annual allocations and longer term permanent allocations. This water market system followed issues with allocation, overuse and over-allocation to sleepers or dozers (NZIER, 2014). The policy in Australia is augmented by efforts to i. Manage salinity by making sure the trade as no adverse effects ii. Restricting trade depending on the socio-economic concerns for various towns iii. Buyback of entitlements to sustain minimum environment flows and reduce cases of over-allocation. Another country that uses the market approach is Chile, with minimum flows established to protect the environment. In Chile, while some catchments have high levels of trade, others have little trade and a low price. The policy and government in Chile focuses on regulation to provide better information and transparency (NZIER, 2014). Reference list Brower, A. (2016) South Island high country land reform 1992–2015. Policy Quarterly, 12(1) 36-42. Brown, M. A., Stephens, R. T., Peart, R., and Fedder, B. (2015) Vanishing Nature: facing New Zealand’s biodiversity crisis,. Auckland: Environmental Defence Society. Castalia. (2014) Exploring the issues facing New Zealand’s water, wastewater and stormwater sector. Wellington: Castalia Strategic Advisors. Morton, J. (2015, July 2). New Zealand's growing thirst for water. Retrieved September 1, 2016, from New Zealand Herald: http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11474279 NZIER. (2014). Water Management in New Zealand: A Roadmap for Understanding Water Value. Wellington: NZIER. NZIERb. (2014). Water Taxes: Implications of Party Policies on water Regulation. NZIER. Roberts, L., A. Brower, G. Kerr, S. Lambert, W. McWilliam, K. Moore, J. Quinn, D. Simmons, S. Thrush, M. Townsend, P. Blaschke, R. Costanza, R. Cullen, K. Hughey and S. Wratten (2015) The Nature of Wellbeing: how nature’s ecosystem services contribute to the wellbeing of New Zealand and New Zealanders. Wellington: Department of Conservation. Stephens, T., Greenhalgh, S., Brown, M. A., and Daigneault, A. (2016) Enhancing the tax System to halt the Decline of Nature in New Zealand. Policy Quarterly, 26-34. UNESCO. (2016). The United Nations World Water Development Report. UN Water. Read More