Water FAQ

No. 

Most of our food prices are set by the international marketplace, so changes in New Zealand input costs will not have an impact on food prices.

This is certainly true for dairy products most of which are exported and a fair proportion comes from regions that do not require significant irrigation.

Even if there is a charge for water it is likely to be a small fraction of the final value of the product, just as the cost of coffee beans is a tiny portion of your $4.50 flat white. Changes in input costs happen all the time without retail prices changing.

Charging for water will encourage this scarce resource to go to the most efficient users. Over the medium to longer term that will result in a more efficient production, and faster economic growth. It will also lead to better capital investment -currently when farmers gain the right to irrigate it increases their land values by around $8,000 per hectare. The largest change after charging for water will be a drop in land values for the farmers with the right to use water for free at the moment. Lower land prices will over time mean lower debt, which will reduce the cost of running a business. Eventually it is likely to lead to lower food prices and more jobs. 

Māori would argue that under the Treaty of Waitangi they already have ownership, because at no point was it given away or sold to the Crown. In order to charge for water the ownership issue must be resolved.

As part of the settlement, it is likely that Māori would receive a water allocation in under-allocated catchments. In over-allocated catchments it is likely Māori would receive a share of the revenue from operating the water market. In either case this outcome is more preferable than continuing to give away our fresh water resource to businesses (many of which are foreign-owned) to boost their profits. 

Nothing changes for households. However, you will face a lower rates bill because councils will be able to charge commercial water users and polluters to clean up fresh water. 

It is difficult to tell how much money will be raised as it will be a market system. Regional Councils decide the priorities for them.

They will need to pay the market price for the water they use. 

In every other settlement Māori have operated in good faith and settled for a fraction of the total value of the resource lost. We trust that they would do the same here. 

Yes, but they will need to pay the market price for the water they use.

These will be set in the same way they are now. Regional Councils set water quality targets in consultation with the communities and the scientists help translate that into allowable leaching rates. These will be reduced over time until water quality guidelines are reached. 

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. 

Because they have already paid for it. 

No. The cost of hydro electricity is far lower than any other energy source so it won’t affect the price at all. 

Yes, minus administration and monitoring costs. 

All commercial water users will pay, including electricity generators.

 Commercial water users will be required to pay for their entitlement rights (which gives them the first right of refusal to use water at the market price) and the per unit use price. IF a commercial water user doesn’t have an entitlement right they can still access any water left over after those with entitlements take their share, but they still pay the per unit market price.

 Hydro dams will need an entitlement to use the water, but will only pay a per unit charge for the water that is lost in their dams via evaporation. 

Regional Councils must monitor pollution levels. Currently monitoring and water quality improvements are funded by ratepayers but TOP wants polluters and commercial water users to pay for the cost of monitoring. 

That will depend on the catchment, particularly how much pollution needs to be reduced.

Research suggests that most dairy farms can reduce their environmental impacts without losing money. Destocking may reduce revenue but it also reduces costs considerably.

Any settlement will cover customary and commercial use of water. As with the fisheries settlement, the outcome would not prevent people using water for household and recreational use.