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Would a water market system coupled with a beneficial use doctrine similar to that of the western United States help foster sustainability of water resource allocation in New Zealand?

In New Zealand, water supply has historically been a given. There is a perception that the country is well-watered and up to a point this is true, or at least has been true. However water is not always available at the right time or at the right place. In addition there are problems brought on by climate change, which will result in more frequent and more severe droughts in certain parts of the country. Climate variability is coupled with a drive for the agricultural sector to increase production. The question is whether our current water allocation system can operate effectively under these conditions. The notion of sustainability has gained much traction in the last few years and this is a concept which we in New Zealand need to embrace in the matter of water allocation. This thesis will examine the state of New Zealand’s water allocation situation and suggest improvement. To this end this thesis will study the experience of the western United States where scarcity makes water precious. New Zealand has not adopted a sustainable approach to the allocation of water resources, arguably because it was never envisioned that the allocation of a resource considered abundant could become a problem. As a result we have adopted a first-in-first-served process almost by default. As such the process does not address the dictates of sustainability, but more importantly as pressure is brought to bear on water supplies, as there will be no more spare water to appropriate, further allocations will need to be an exercise in division, not multiplication. Re-allocation of existing water rights through a market system will be essential to sustain the demand not only of a still more intensive agriculture but also for ecological requirements. There are certain requirements of a successful market system. In the first instance the relative infrastructure is essential to deliver the water to its required destination. The Government is in the process of addressing this issue which indicates it regards a water market system with a certain degree of affection. Once the delivery (and storage) systems are in place, provided transaction costs are low enough to address opportunity cost issues there is no reason why a market system should not be successful once the structure becomes generally acceptable, given a market system for water rights is somewhat novel in New Zealand. While the recycling of unused or unneeded water rights is a sustainability narrative, it will be vital as a matter of policy to complement market transfers with a western United States-style beneficial use requirement which is likewise a sustainability discourse. Such a measure will endeavour to audit water use and ensure that usufructory water rights are used wisely, are not unnecessarily wasted but more importantly these rights are actually used and not left unproductive or speculated. As such, the doctrine will aim to stretch a finite resource to satisfy as many users as is feasible. A re-allocation system for existing water rights coupled with a domestic beneficial use doctrine is a sustainability narrative and has the potential to justify New Zealand’s currently undeserved reputation as a “clean green” country and to define us as New Zealanders.
Type of thesis
Walmsley, M. J. (2016). Would a water market system coupled with a beneficial use doctrine similar to that of the western United States help foster sustainability of water resource allocation in New Zealand? (Thesis, Doctor of Philosophy (PhD)). University of Waikato. Retrieved from https://hdl.handle.net/10289/10611
University of Waikato
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