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Brian Fallow is the Herald's Economics Editor

Brian Fallow: NZ's marine rights come with duties

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It can be hard to quantify the risks associated with large-scale oil development. Photo / Thinkstock
It can be hard to quantify the risks associated with large-scale oil development. Photo / Thinkstock

We rarely think farther offshore than where we fish, says Michael McGinnis.

But it is high time we did.

McGinnis is an associate professor in international marine policy and science at the Monterey Institute of International Studies and the National Centre for the Blue Economy in California.

He has recently concluded an extensive study of marine governance in New Zealand under the auspices of Victoria University's Institute of Policy Studies.

It is especially timely because of legislation before Parliament to set up an environmental management regime for New Zealand's exclusive economic zone and continental shelf.

That is a lot of ocean and an even larger slice of the earth's crust - more than 20 times New Zealand's land area.

As technological advances bring more of its mineral wealth within reach, conflicts between economic opportunities and environmental risks are bound to grow.

The opportunities are potentially vast.

It is pick-a-number territory but GNS Science in its submission to the select committee considering the bill put a figure of $4 trillion on the possible oil and gas resources alone, to say nothing of cobalt, nickel, copper, phosphate and other minerals.

The bill defines its purpose in terms of balance.

It "seeks to achieve a balance between the protection of the environment and economic development in relation to activities in the exclusive economic zone and on the continental shelf".

To achieve that it requires regulatory decision makers - in effect the Environmental Protection Agency - to "take into account" a list of factors.

Some are economic, like the "economic well-being of New Zealand" and the "efficient use and development of natural resources", while others are environmental, like the protection of biological diversity and of rare and vulnerable ecosystems.

But the legislation gives no indication that some of these factors or values should be given more weight than others or, beyond vague talk of the need for caution, how conflicts between them should be resolved.

Straterra, representing the mining industry, is happy to see the issue framed in this way.

But for McGinnis this talk of balance fundamentally misrepresents the United Nations Convention on the Law of the Sea, the framework agreement under which any rights we claim arise. "Internationally you are obliged to act as stewards. It is not an issue of balancing use against biodiversity protection. The convention reflects a hierarchy of values and stewardship is the priority."

Many submitters to the select committee make the same argument.

The Parliamentary Commissioner for the Environment, Jan Wright, interprets the Law of the Sea as laying down that the right to exploit resources and profit from royalties has been granted conditional on environmental protection.

The Environmental and Conservation Organisations of New Zealand (ECO) says the the Law of the Sea makes the right to exploit resources explicitly subject to the protection and preservation of the marine environment.

In other words the deal is not: Here is a rather generous slice of the world's natural capital; try not to do too much harm when you exploit it.

It is more like: This is the part of the planet you are responsible for. In return you have preferential rights to its resources.

Talk of balance implies there is some common unit of value, like dollars, in which competing interests can be expressed and weighed against each other.

It may be possible to put a dollar value on a fishery.

But not on the whole ecosystem in which those fish, as predators and/or prey, are an intrinsic part and which might suffer grievous damage from overfishing.

When it comes to oceans governance it is essential, not to mention international best practice, to think in a holistic, integrated way about entire ecosystems, McGinnis says.

Instead what he finds in our case is a Balkanised bureaucracy with limited responsibility for bits of the system but with inevitably divergent cultures and in some cases inherently liable to industry capture: 18 statutes, 14 agencies and six Government strategies by his count.

The legislation aims to fill in the gaps by giving the new EPA responsibility for licensing and regulating activities which fall between those which are forbidden and those which are automatically permitted, and which are not covered by existing legislation.

Straterra contends that the "footprint of prospecting, exploration and mining activities in the exclusive economic zone would be relatively small, with little cause for concern over competing demands for use of space, or cumulative effects".

But the Deepwater Horizon oil spill in the Gulf of Mexico in 2010 had a rather large and greasy footprint and is a gruesome illustration of the risks both to the environment and the national brand.

McGinnis says that large-scale oil development involves a lot of subcontractual relationships, which tends to mean that risk assessment becomes compartmentalised and fragmented.

"So one of the things Norway and other countries are doing is integrated risk assessment across those contractual boundaries. It is one of the things I recommend in the report. The BP spill made clear that if you don't think about it comprehensively you underestimate the risk. But it's hard to do."

The legislation provides for "adaptive management" or adjusting the regulatory requirements as a project goes on.

"Without this provision developers face an insurmountable hurdle," Straterra says. "The developer must be able to work with the EPA within conditions of a marine consent - a vital asset for raising investment capital - to provide for modifications as the project develops and evolves, within agreed outcomes."

The reference to the need to satisfy investors is a reminder that these are capital-intensive industries and New Zealanders are spectacularly bad at capital formation.

The returns to capital are likely to flow offshore, but that still leaves royalties and employment in support industries.

One thing McGinnis likes about the New Zealand set-up is that regional councils have responsibility not only for terrestrial catchments but out to the 12-mile limit. That ought to make an integrated, ecosystem-based approach easier.

But he detects a lack of professional or institutional capacity within the councils to deal with the issues likely to emerge within territorial waters.

And he sees a potential train wreck as the intensification of farming - the polite term for dirty dairying - collides with aspirations for a 500 per cent increase in aquaculture, which depends on clean waters.

Oceans policy has to be underpinned by clear statutory mandates, good science - which needs to be funded - a mindfulness of intergenerational equity and, if possible, collaborative decision making. In that last context the consensus-building approach of the Land and Water Forum is a promising model, though it it has yet to be tested when serious money is at stake.

"I have been involved in consensus-based processes. The belief is it saves time and money and prevents litigation. I don't know those assumptions are valid in a lot of cases," he said.

It is no substitute for leadership and political will, the biggest missing factor McGinnis sees in the New Zealand context. Durable policy in this area has to reflect the values of the culture, he argues.

He is a big fan of the concept of kaitiakitanga.

"No amount of government policy can have the impact that a broader social constituency for the oceans would have."

- NZ Herald

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