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How much will the scheme cost to set up and run, and how will it be paid for?
Everything that is needed for the pollutant cap-and-trade scheme is also needed under the existing regulatory model. The costs of a tradeable system beyond those of a normal regulatory system will be small as we have seen in Taupo.
There are differences in the way that water will be allocated under our proposal. At the moment, councils incur very large costs in trying to decide how regional plans are written to determine who gets granted consents for water. These costs fall on ratepayers. In a more market oriented system, over time, these difficult decisions will not have to be made by Councils (beyond determining environmental limits and setting caps to reflect these). This is a massive cost saving. The costs of negotiating for water will be incurred by the parties seeking to use it, just like the costs of negotiating for any other type of good.
There will be costs that central government bears in establishing a new legislative regime (this is usual machinery of government stuff) and there may be a fiscal cost associated with resolving the Maori ownership issue. We expect this to be covered from revenue raised via the commercial market.
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