NZ Herald
  • Home
  • Latest news
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather forecasts

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
    • The Great NZ Road Trip
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
    • Cooking the Books
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • What the Actual
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business / Economy

Basil Sharp: A generation of lost opportunity

By Basil Sharp
NZ Herald·
20 Jun, 2016 05:00 PM4 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

Water rights trading would enable farmers to better plan their business operations. Photo / Getty Images

Water rights trading would enable farmers to better plan their business operations. Photo / Getty Images

Opinion
We need to allow trading of water use rights for the future of the environment and the economy.

Creating a market for water use rights would be good for the environment and the economy. It's true to say New Zealand has no overall water shortage. True, but meaningless in practice.

Yes, we are blessed with six times the water per person compared to Australia and 16 times that compared to the US. But rainfall varies geographically and seasonally. Droughts are expected to get longer and more frequent. Ask farmers in Canterbury and Otago, and increasingly in Waikato, if water is scarce.

If water is scarce then it has value. Yet, here's the paradox: water is one of our most valuable natural assets but we don't know its economic value. Successive governments have failed to provide a workable framework that reveals value and enables the exchange necessary for efficient use.

Almost 30 years ago, Sir Geoffrey Palmer, then Minister for the Environment, recognised there was no incentive to make efficient use of water because of the first-come-first-served system and limits on trading access, still in place. His clever fix was this: abstraction rights could be traded within limits that ensured minimum river flows. Focusing on use rights (and the responsibilities that come with them) sidesteps the politically charged issue of ownership.

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.

The current system works like this: farmers hold a permit to irrigate their land and can exercise this use right for the duration of the permit. They also have to follow usage rules. Councils can and should monitor use rights and recover compliance costs.

If farmers and other users could transfer their use rights - trade them for money - then the price of water would be revealed. It's already common for water permits to be transferred when land is traded. But what if the opportunity to transfer was freed up? Farmers within a catchment could trade their use rights and trades could occur across industries. They could occur for the duration of the permit, or be leased. This would all take place within sustainability limits.

Water would gravitate to its most highly valued use. Transfers would adapt to changes in demand. A new element of certainty around use would enable water users to better plan their business operations.

River flows and the recharge of many aquifers naturally vary. This new scheme would cope with that by defining use rights as a percentage of the total water available, possibly on an annual basis. So, if my regional government announces that 1000 cubic metres are available this year and I hold use rights to 10 per cent, then I can plan my operations around 100 cu m being available.

If farmers and other users could transfer their use rights - trade them for money - then the price of water would be revealed.

It would be necessary to tweak availability if conditions change, such as a particularly good snow pack. This may sound complex but it's practical and feasible. Meaningful limits could be established by applying science and involving the affected community.

What about the idea of government or councils setting the price of water? Should the price of water in Nelson be set higher, or lower, than in Otago, depending on local demand and supply (thirsty vineyards vs thirsty cows)? Environment Minister Nick Smith argues that it would be unfair to charge water bottling companies for the water they use and not charge other users, such as farmers.

Discover more

New Zealand

Large-scale water theft in Canterbury

20 Jun 03:10 AM

In a recent Dialogue piece, he gave the example of E'stel, a Nelson water-bottling and export company. It has a consent to draw water from an under-used aquifer. E'stel's permit to use water is the outcome of first-come-first-served.

Labour environment spokesman David Parker has made a case for government collecting a resource rental on water, as it already does for minerals and oil. The problem with water, unlike gold, for example, is that we do not know the value of water taken. Resource rentals were tried, without success, in the fishing industry. Pricing water this way would create uncertainty and lead to distortions in the economy. Imagine the uncertainty created by political parties promoting pricing strategies.

Advertisement
Advertise with NZME.

It's time for Parliament instead to build the foundations for efficient use by requiring regional councils to set sustainable limits, free up the opportunity to transfer water use rights, and let the market reveal value.

We have lost 30 years of opportunity. The cost is obvious: water is over-allocated in numerous catchments, patterns of use can't readily adapt to changing economic conditions, and water quality has deteriorated. We can do better for the generation that follows.

Basil Sharp is Professor of Energy and Resource Economics at the University of Auckland.
Save

    Share this article

Latest from Economy

Premium
Business|markets

Allbirds predicts turnaround - finally - if lucky break on tariffs holds true

09 May 12:23 AM
Premium
Business|personal finance

‘Rip-off’: App developer and Consumer say fees will stifle open banking

08 May 11:00 PM
Premium
Stock takes

Stock Takes: Will reporting season see the end of a bear market?

08 May 09:00 PM

One tiny baby’s fight to survive

sponsored
Advertisement
Advertise with NZME.

Latest from Economy

Premium
Allbirds predicts turnaround - finally - if lucky break on tariffs holds true

Allbirds predicts turnaround - finally - if lucky break on tariffs holds true

09 May 12:23 AM

PLUS: Waterproof Allbirds - and some "professional" sneakers for the office.

Premium
‘Rip-off’: App developer and Consumer say fees will stifle open banking

‘Rip-off’: App developer and Consumer say fees will stifle open banking

08 May 11:00 PM
Premium
Stock Takes: Will reporting season see the end of a bear market?

Stock Takes: Will reporting season see the end of a bear market?

08 May 09:00 PM
Premium
Matthew Hooton: Desperate times call for bold measures

Matthew Hooton: Desperate times call for bold measures

08 May 05:00 PM
Connected workers are safer workers 
sponsored

Connected workers are safer workers 

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • What the Actual
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven CarGuide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP