Thursday, 25 February 2010

RE-POST: NZ's water problems cured by property rights?

Since problems with water use and water “allocations” are in the news again, as discussed in Dr McGrath’s column two posts below this one, I’m reposting this post from July 2006 (with just a few more recent links). 

    Water has become an issue here in Godzone - dirty lakes in Rotorua; “dirty dairying” around the country; falling lake levels in South Island hydro lakes; rising demand for limited river water for agricultural irrigation.
    As Federated Farmers say regularly, the problem isn’t that New Zealand’s running out of water, it’s that water is running out of New Zealand—to which I would add that it’s precisely what you’d expect when the only organisations deputed to oversee the collection of water before it runs out are government appointees, and the first reaction to every problem is to call for government involvement.
    Frankly, all of these problems have been caused either largely or in part by too much government control, and too few sufficiently clear property rights in water.  In other words, it’s a Tragedy of the Commons problem, and one recognised even by the Clark Government who has spent the last three years putting together a scheme for tradeable water rights, and by Rotorua Maori who are just beginning to talk about property rights as a means of protecting water quality in local lakes.
    It's easy to get too excited about this sort of progress. The general manager of Rotorua's Ngati Whakaue Tribal Lands Trust is not yet ready, it seems, to call for clear property rights as a means by which lake water can be protected in common law. And the cabinet paper on tradeable rights was prepared by David Benson-Pope and Jim Anderton, hardly friends of the market, and whatever emerges from their deliberations will not unfortunately be full full property rights: Benson-Pope has been insistent that water is a "public good" and that any rights will not be treated as rights in perpetuity -- "I think there's going to be discussions about trading regimes, about charging and so on," he says -- so it is just another government-driven halfway house. It is, as they say, a start. Just a start.
    The reason it's a good start is that secure property rights gives people the ability to cure these various Tragedy of the Commons problems, giving owners incentive and legal standing to protect, conserve and to maintain what is theirs. As the Canadian Environment Probe organisation has said for a long time, a system of clear property rights and common law protections of property rights offers the best long-term security for water and those who rely on it. And my colleague Craig Milmine has a dissertation from 2000 discussing the theory in detail, and showing how a water rights regime could function in the South Island's Kakanui district.
    I highly recommend hunting down the nuggets in both sources.

LINKS: Cabinet moves to trade water - Dominion Post
Tragedy of the Commons - Garrett Hardin, Concise Encyclopedia of Economics
Rotorua lakes face long battle for health - Stuff
How can we save our lakes? - Daily Post
The role of property rights in protecting water quality - Environment Probe
Sustainable water programme of action - Ministry of the Environment
Water & wastewater publications - Environment Probe
Kakanui water study - Craig Milmine [Hat tip Stephen Hicks]

1 comment:

  1. Tradable water rights are certainly part of the answer. But unless one party owns the entire catchment (and thereby all water in it) government would still have to decide how *much* water to allocate in the first place.

    When we're talking about aquifers we simply don't know the quantum with any certainty. All we know is more extraction = less security for existing users.

    I won't shed any tears for Ecan if they get the gun, but they are in a difficult position. Too much allocation and they get criticised by existing users. Not enough allocation and they're criticised for stifling development.


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