4. Section 32 Evaluation Methodology

4.1 Introduction

1. an evaluation of the appropriateness of the proposed NPS objectives in achieving the purpose of the Act
2. an evaluation of proposed NPS policies; focusing on the benefits, costs, effectiveness, efficiency (and risks of not/acting) of each individual policy.

A national perspective is adopted in the evaluation of both the objectives and the policies. That is, the identification and assessment of costs and benefits include not just central, regional and local government, but also private sector interests, including businesses (eg, the agricultural sector, tourism sector, industry), households and other stakeholders. It also includes a Māori perspective to ensure relevant sections of the RMA and the role of Māori in the management of fresh water are addressed.

Taking a national perspective also means that 'transfers' between parties are ignored; that is, a benefit to one party is weighed against a cost to another, and the net effect is considered. For example, there may be a benefit to a new user and a cost to an existing user, and the relevant benefit is the difference between the new user’s benefits and the costs to the existing user. The focus is thus on the net efficiency gain from a national viewpoint, not just the gains to the new user. This national viewpoint perspective is important, because without it the evaluation becomes overly complex and focuses on the positions of individual stakeholders.

To achieve this consideration of net effects, the evaluation of objectives takes into account the impact of the NPS on both Part II of the RMA and the economic, social, cultural well-being, and health and safety. To put it another way, consideration is given to a range of factors and perspectives, and the evaluation of policies considers specific costs to and benefits for particular groups within the community and to the environment. Special regard is given to the position of tangata whenua, with their status within this context based on their relationship with taonga and through the Treaty of Waitangi. This is explained in further detail below.

However, given the significance of the policy subject matter for this NPS, and the potentially wide-ranging impacts on tangata whenua and other stakeholders, the distribution of costs and benefits is also important and both sets of impacts will need to be considered. Cost−benefit analysis generally pays little or no attention to the distributional implications of a project or policy, because such impacts are often 'transfers' within the analysis.

Overall the evaluation has attempted to clearly identify the procedural elements and the expected outcomes that distinguish the NPS from the 'without NPS' scenario. The key thing about any cost−benefit analysis is that it is always focusing in on the differences between two scenarios.

The NPS has, in some cases, identified timeframes for implementation. In quantitative cost−benefit analyses costs and benefits occurring early are given a higher weighting than those occurring later because of the effect of discounting to reflect society’s time preference (people want results sooner rather than later). In terms of outcomes, the sooner specific measures are put in place to improve the approach to water management, the sooner society will enjoy the benefits. This is noted here as a matter of principle, as in the evaluation itself there is no specific attempt to consider the relative weighting of costs and benefits as they relate to time scales.

In order to identify the differences between the 'with' and 'without' evaluation of objectives and policies, the procedural elements and outcomes of the without scenario are identified, initially in relation to each objective and then for each policy. The without scenario is a continuation of the status quo, but it should be stressed that a before-versus-after analysis is not being undertaken: it is a 'with' versus 'without' analysis. This means that any changes to the status quo that are expected to occur even without the NPS should be taken into account in describing the without NPS scenario (eg, further degradation of water quality, further intensification of land use adjacent to freshwater bodies, and improvements to freshwater management by regional councils).

Finally, given the complexity of water management, it is worth identifying the various parties that will be affected. Some parties play more than one role, and the nature of the effects will be different depending on their role (eg, a private property owner may be a water user, and also a possible source of water contamination). This approach will help identify costs and benefits (and by implication, any 'transfers').

4.2 Evaluation of the objectives

The meanings of the proposed objectives were closely examined to ensure they could be the most appropriate way of achieving the purpose of the Act. An analysis of the relationships between the objectives was also undertaken to gain an understanding of potential interactions, and to see if there were any overlapping or conflicting aspects to any of the objectives.

Once the meaning of each objective was clarified, they were evaluated against the purpose of the Act, which is:

(1) ... to promote the sustainable management of natural and physical resources.

(2) In this Act, sustainable management means managing the use, development, and protection of natural and physical resources in a way, or at a rate, which enables people and communities to provide for their social, economic, and cultural wellbeing and for their health and safety while –

1. Sustaining the potential of natural and physical resources (excluding minerals) to meet the reasonably foreseeable needs of future generations; and
2. Safeguarding the life-supporting capacity of air, water, soil, and ecosystems; and
3. Avoiding, remedying, or mitigating any adverse effects of activities on the environment.

For each objective, the evaluation has included seven key elements, related to the purpose of the Act. These were:

• sustaining the potential of natural resources (section 5(2)(a))

• safeguarding the life-supporting capacity of natural resources (section 5(2)(b))

• adverse effects on the environment (section 5(2)(c))

• social well-being

• economic well-being

• cultural well-being⁶

• health and safety.

Finally, an overall assessment was made of the appropriateness of the objective as a whole in terms of achieving the purpose of the Act. The Act requires the evaluation to examine the extent to which the objectives are the most appropriate, which could be interpreted to mean they need to be assessed against all other potential alternatives. This was done as the objectives were being developed and refined over the past 12 months, during which time ongoing improvements were made to the proposed objectives and policies. This has involved many stakeholders and an 'all of government' approach. As a result, only the final versions of the proposed objectives are evaluated here, although any remaining areas of concern over the appropriateness of an objective are discussed.

4.3 Evaluation of the policies

The evaluation of the proposed policies required an assessment of their appropriateness in achieving the objectives. The terms used in the Act are efficiency and effectiveness.

• Efficiency refers to the costs and benefits associated with the policy. An efficient policy is one where the benefits are greater than the costs.

• Effectiveness means how successful the proposed policy would likely be in achieving the objective.

A largely qualitative approach was used in the identification and analysis of costs and benefits. Some costs in relation to the implementation of the NPS for district, regional and central government have been identified, and these are included in Appendix A. In addition, some financial impacts on the primary sector and New Zealand’s ‘clean green’ image are included in Appendix B. Each policy was analysed and the environmental, social, economic and cultural costs and benefits were estimated. As noted above, an important element of this is identifying the parties affected by the various benefits and costs. This is particularly important as any given aspect of a policy can be a cost to some parties and a benefit to others. The distribution of costs and benefits was explicitly considered in the analysis. A summary of the costs and benefits of each policy is provided and forms the basis for a commentary on the effectiveness of each policy.

The identified costs and benefits should be regarded as possibilities rather then certainties. This evaluation forms part of a much larger process of NPS development, preceding the board of inquiry process and a second section 32 evaluation, and the approach taken in this current evaluation has been to identify as many of the potential costs and benefits as possible and to provide indicative figures where possible. If, during the public consultation and board of inquiry processes, specific costs or benefits are highlighted as being of particular significance or concern, further investigation could be undertaken. However, it is worth noting that even given the most detailed evaluation work will not result in a full quantification of all costs and benefits. Economic methods for determining non-tangible considerations do exist, but they tend to be costly, time-consuming and controversial. Also, given the scale of an NPS it is virtually impossible to apply such values on a national scale, as they are more suited to project-specific outcomes. Finally, risks of acting or not acting when there was uncertain or insufficient information about the subject matter of the policies was considered.