David Parker: Profiteers can pay for privilege

Pricing water for commercial uses, however, is very different to water used by households. Photo / Getty Images

Opinion

Pricing a valuable, scarce resource is key to ensuring it's used efficiently.

The greatest threat facing New Zealand's water is the increasing pollution of our rivers, not companies selling our water overseas. So why should water taken for bottling be priced?

There are two justifications. Firstly, economic fairness. Who should get the value of public resources? The second is environmental. Putting a price on a scarce resource like water encourages efficiency because wasting water would then cost more. And efficient use of a resource such as water is better for the environment.

There are those who will argue that water is not scarce in New Zealand. But the value of water has risen because pristine water for bottling and irrigation water is now scarce.

In farming, this is because new technologies have made it possible to irrigate larger tracts of land and the high price of milk and other commodities makes intensive farming more economic.

There is not a lot of undeveloped arable land left, which has led to increased development of existing farm land instead and the need for large takes of water.

If water was abundant like air, there would likely not be a market price for it. Economics 101 tells us that if establishing a market price for a good that is abundant, the price would be zero (for the resource itself, not for the cost of extracting it). It is the same for sea water, for clay, or pine needles. But pristine water for bottling is no longer abundant and therefore it is valuable.

Pricing water for commercial uses, however, is very different to water used by households. Those who don't want a cost on large, commercial uses of water are scaremongering when they say household water would also be priced. None of the serious proponents of water pricing I know want new costs on domestic use. Water is a necessity of life and the amount used by homes is small both in rural areas and cities.

Another line used to oppose water pricing is that "no one owns water" therefore no one should be charged for taking it. There's no logic in that. Others say "everyone owns water". However you express it, some have interests in water that others don't, such as those who have a resource consent for it. Those consents are now worth a lot of money.

Those who don't want a cost on large, commercial uses of water are scaremongering when they say household water would also be priced.

Another diversion tactic employed by the Environment Minister is to point to the unpriced water in our National Parks, or water left in our rivers to flow out to sea. That is not the water that is scarce or that would be priced. It is water that is pure enough to bottle, and irrigation water, that is both scarce and valuable.

If you are going to price large commercial water users, in my view it is better to charge a resource rental rather than to extend existing rights forever, known as 'grandparenting'.

Grandparenting without payment would be an enormous transfer of wealth to the person lucky enough to currently hold the time-limited right. This windfall transfers the value of that resource long into the future. It is also unfair across generations. Future generations would get no return on the public water used for private profit. Baby boomers would once again profit at the expense of future generations.

Grandparenting makes it harder to adjust environmental bottom lines. In fisheries, it led to the separation of fishing quota from many of the people doing the work and created financial barriers to new entrants to the market.

Another argument raised by commercial users is that a price on bottled or irrigation water raises the cost of household water, power, milk and meat. It won't.

Courts have ruled that a resource consent is not a property right. This is expressly stated in the Resource Management Act. The courts said any government could introduce a resource rental. Just because a bottler got it free yesterday does not mean it shouldn't be priced tomorrow. The money raised could be used to reduce other taxes, to clean up rivers, to settle Maori treaty claims, or for more water storage, more renewable electricity, or for social services.

Why should commercial bottlers of water privately profit from this scarce public resource without paying?

Debate on this article is now closed.

David Parker is Labour's environment spokesman.