1. Introduction

1.1 Overview of New Zealand’s freshwater resources

All New Zealanders have a common interest in ensuring that the country’s freshwater resources are managed wisely, in order to provide for future generations and the environmental, cultural, social and economic well-being of New Zealand. Our freshwater resources are some of the best in the world in terms of quality and availability.

New Zealand is fortunate in that overall it has an abundance of high-quality fresh water. Despite this, many regions in New Zealand have significant freshwater management issues regarding the quality, quantity and allocation of their freshwater resources. These issues are largely a result of human activity such as land-use practices and water abstraction and use. Māori believe there has been degradation in the mauri of the water through the reduction of the relevance and importance of the kaitiakitanga ethos.

Although the seriousness of many of these issues has not yet reached the level of other countries, New Zealand’s freshwater resources are likely to face increasing pressures in the future. For this reason, a proactive approach to freshwater management is vital, given the importance of fresh water to the economic, environmental, social and cultural well-being of New Zealand. Water is essential for many sectors in New Zealand’s economy and its communities. It is vital for the agricultural sector – from dairy farming or growing fruit and vegetables to aquaculture. It is vital for the generation of electricity, with hydroelectric schemes on many of our large rivers. It is also vital for our settlements, for drinking-water supplies, and as an input to many industrial processes. The value of fresh water to industrial uses alone was estimated at $34.2 billion per annum in 2004 (White et al, 2004).

Water is central to Māori cultural and personal identity and well-being. Rivers and lakes carry ancestral connections, identity and wairua for whanau, hapū and iwi, as reflected in tribal pepeha and personal mihi. As one example of its significance, Māori communities place importance on mahinga kai areas, which provide physical sustenance but also ensure that through cultural practices associated with food gathering, matauranga Māori is retained and celebrated for future generations.

The importance of fresh water was recognised as one of four key issues for the country in the 2003 Sustainable Development Programme of Action (Department of the Prime Minister and Cabinet, 2003). Subsequently, a Sustainable Water Programme of Action has been developed (Ministry for the Environment, 2006), which seeks to:

• improve the quality and efficient use of fresh water by building and enhancing partnerships with local government, industry, Māori, science agencies and providers, and rural and urban communities

• improve the management of the undesirable effects of land use on water quality through increased national direction and partnerships with communities and resource users

• provide for increasing demands on water resources and encourage efficient water management through increased national direction, working with local government on options to support and enhance local decision-making, and developing best practice.

1.2 Statement of the issues

There are two main issues relating to fresh water in New Zealand:

• increasing demands on freshwater resources

• reduced or declining water quality.

Demand for fresh water in New Zealand is increasing for many uses, including domestic drinking-water, industrial and manufacturing processes, agricultural and horticultural irrigation, and electricity generation. In recent years much of this demand has been caused by an increase in intensified agriculture, particularly in Canterbury, Waikato and Southland. The past 50 years have also seen a steady increase in the area of irrigated land. Since the 1960s the area of irrigated land in New Zealand has been increasing by around 55 per cent every decade, and irrigated land use currently uses 77 per cent of all water abstracted nationwide. Of the approximately 500,000 hectares of irrigated land in New Zealand, 350,000 hectares are in the Canterbury region alone (Woods and Howard-Williams, 2004).

Although demand for water is greater on the east coast of the South Island, this issue affects most regions of the country to some degree. This includes urban areas, many of which experience water shortages during the drier parts of the year. Although the demand for water varies considerably between regions throughout the country, the overall abstraction rate per capita is two to three times greater than the OECD average (OECD, 2007). This high rate of abstraction does not necessarily indicate that the level of water being used has reached crisis levels, but it does suggest that careful management of New Zealand’s freshwater resources would be prudent. This is particularly true given that economic and population growth in the future will mean pressure on water is almost certain to increase.

The second issue is the poor quality of some of New Zealand’s freshwater resources. This is canvassed in greater detail in the 2007 State of Environment report prepared by the Minister for the Environment. It is estimated that 10 to 40 per cent of the country’s lowland lakes are eutrophic (OECD, 2007). Eutrophication refers to a state where a water body becomes artificially enriched with nutrients to such a degree that biological growth in the water body increases to a level that significantly alters the natural ecosystem. Particularly notable lakes with significant eutrophication include Taupo and Ellesmere (Waihora).

Water quality in rivers is variable, although very few waterways in predominantly urban catchments meet ANZECC⁴ guidelines. Many rivers in rural catchments are also degraded and do not meet the guidelines. In urban areas the main source of contamination is stormwater, whereas in rural catchments it tends to be from diffuse (non-point source) pollution from farming. Since the 1980s point-source discharges of pollution into rivers have decreased, mainly through the increased standards placed on regional discharge permits under the RMA. Over the same period, however, the number of non-point source discharges has greatly increased. Most of this increase can be attributed to the intensification of agricultural land, notably the widespread conversion of low-intensity sheep farms and forestry to dairying. Although some efforts have been made to attempt to address the impacts of intensive farming on water quality, such as the 2003 Dairying and Clean Streams Accord (Fonterra Co-operative Group, 2003), the success of these efforts has been relatively modest.

In addition to the two key issues identified above, there are a number of other associated issues in the way fresh water is managed at a national level, including:

• ensuring Māori participation and effective engagement in the management of fresh water

• uncertainties over the impacts of climate change on freshwater systems

• the need to improve the national and regional strategic planning of water management to provide greater certainty

• the need to provide recognition of the nationally important values of fresh water, so that these values are considered in all decision-making

• recognition that in some regions the setting of environmental bottom lines and allocation limits is costly and contentious, and often raises local political challenges that are difficult to overcome without a national approach or guidance

• the fact that water is over-allocated in some catchments, is not consistently allocated to its highest value use over time, and can be wasted

• frequent tension between investment certainty and planning flexibility

• a lack of effective action in the management of diffuse discharges of contaminants on water quality in some catchments

• the development of water infrastructure failing to keep pace with demand.

The issue of how Māori are being meaningfully engaged in the management of freshwater issues was highlighted in the Wai Ora report, which reflected significant input from iwi and hapū representatives from throughout the country. Seventeen hui were held across both the North and South Islands in February 2005. Through these hui it was communicated that Māori feel strongly that the decisions being made around freshwater management are not based on a partnership with tangata whenua that adequately reflects the Treaty of Waitangi, and in particular Article II.

It is also clear from these hui that Māori believe that the values and importance of their role as kaitiaki of fresh water have been diminished through local and central government decisions, and that this has led to the further degradation of fresh water. From these hui there was a general consensus that iwi and hapū have some form of customary rights or interest in water (Ministry of Agriculture and Forestry and Ministry for the Environment, 2005). Many Māori feel a sense of frustration over the lack of decision-making power currently available to them in managing the freshwater resource.

The final key issue for freshwater management is the impact of climate change on New Zealand’s freshwater systems. It is unclear whether there will be any impact at all, and if there is, what that impact will be. The most recent predictions suggest that the west of the country is likely to experience greater rainfall, while the east is likely to experience less than at present (Ministry for the Environment, 2001). In some ways this can be seen as an amplification of current climate conditions. Similarly, severe weather events, such as prolonged drought and storms, may increase in frequency and intensity.

The implications of changes in climatic conditions on freshwater systems are unclear at this stage, but it is certainly feasible that there could be significant implications for infiltration rates, evaporation rates, catchment inputs, erosion rates and flood risk. A further issue is that longer-term changes in climatic conditions may promote the expansion and/or relocation of some primary production activities that are currently not feasible. There is the potential for this to increase demand for fresh water in some areas. Although the precise nature of the impacts of climate change is unclear, there is no doubt that climate change needs to be considered in planning for the future of New Zealand’s freshwater resources. With this high level of uncertainty it may, in a number of cases, not be possible to make well-informed decisions on planning for climate change at this stage. It is possible, however, to design systems and decision-making processes that are adaptable and responsive as our understanding of the freshwater impacts of climate change improves over time.

Given these issues, the Government has investigated a range of options to improve freshwater management in New Zealand. This section 32 assessment provides a record of that review.

1.3 National policy statements

The purpose of national policy statements is to state objectives and policies for matters of national significance that are relevant to achieving the purpose of this Act. (Section 45[1])

The purpose of this Act is to promote the sustainable management of natural and physical resources. (Section 5[1])

With the exception of the New Zealand Coastal Policy Statement, national policy statements are not mandatory, but may be prepared at the discretion of the Minister for the Environment where they consider that policy guidance on a matter of national significance would be beneficial. Only two national policy statements have been issued: the New Zealand Coastal Policy Statement (NZCPS) and the National Policy Statement on Electricity Transmission.

The process for developing a national policy statement (other than the NZCPS) is outlined in sections 45 and 46 of the RMA. Broadly, the initial stages of this process involve:

• the Minister (and Cabinet) determining whether an NPS is desirable

• seeking comments from iwi authorities and appropriate organisations

• preparing a proposed NPS

• establishing the process for the national policy statement to be considered, which can be either:

  • the process set out in sections 47−52 of the Act, which allows for the Minister to establish a board of inquiry with specific terms of reference, public notification, submissions and a hearing process, and finally a recommendation from the board of inquiry to the Minister, or
  • an alternative process to be determined at the discretion of the Minister, but which must give the public time to consider the NPS, make submissions and to be heard; a recommendation will still be made to the Minister.

The Minister has chosen to establish a board of inquiry to consider the proposed NPS.

1.4 Section 32 evaluation

The specific purpose of this document is to report the findings of the evaluation required under section 32 of the RMA (known as a section 32 evaluation), which relates to policies and plans prepared under the Act. A section 32 evaluation requires that an evaluation be undertaken that considers the alternatives, costs and benefits of a proposed plan or policy. Specifically, section 32 states that:

3. An evaluation must examine –
   1. the extent to which each objective is the most appropriate way to achieve the purpose of this Act; and
   2. whether, having regard to their efficiency and effectiveness, the policies, rules, or other methods are the most appropriate for achieving the objectives.
4. For the purposes of the examinations referred to in subsection (3), an evaluation must take into account –
   1. the benefits and costs of policies, rules, or other methods; and
   2. the risk of acting or not acting if there is uncertain or insufficient information about the subject matter of the policies, rules, or other methods.

Taken collectively, section 32 requires the benefits, costs and potential risks of the proposed NPS to be evaluated. In this context the terms 'benefits' and 'costs' include environmental, social, cultural and economic considerations. The section 32 evaluation is a crucial aspect of the development of the NPS, and the process used is outlined in detail in section 4.

1.5 Structure of this document

This document is structured to meet the requirements of section 32 of the RMA. The sections of the report are as follows.

• Following this introduction, section 2 outlines the current situation (the status quo). This includes a review of the existing statutory and non-statutory measures for managing freshwater resources, and a review of the current approach. This section identifies five current issues, which lead to the need for national action in the form on an NPS.

• Section 3 identifies a range of alternatives to the NPS, and evaluates their likely effectiveness relative to the three outcomes identified in the Government’s Sustainable Water Programme of Action.

• Section 4 provides an overview of the evaluation methodology and the requirements of section 32.

• Section 5 includes a detailed evaluation of the NPS as proposed. This includes an evaluation of each objective, and an estimation of the costs and benefits associated with each policy. Risks and uncertainties are also identified.

• Finally, section 6 provides conclusions to the section 32 assessment.