Detrimental Effects of PC1 on Territorial Authorities
The Maxim Institute claims that 44 out of 67 territorial authorities could be on the cusp of decline and suggests ‘communities’ should make a decision to ‘exit’ or not.” Quote below:
“Over the next 30 years our main centres and areas close by will continue to grow, albeit with ageing populations. For the remainder of the country, the populations of 44 out of 67 Territorial Authorities will either stop growing or start to decline. If we do not attend to this divergence of economic and demographic outcomes, we risk opening the door to broader societal division between people and communities in growing areas and those in stagnation or decline.”
One of their suggestions for managing this decline is:
“New Zealand needs to rethink its sole focus on economic growth, shifting to a framework that also empowers communities to meet both the economic and social needs of their populations in the midst of “no growth or even decline.”
I am sure that the Maxim Institute will have statistics to back their claim, but the question that needs to be asked and answered is WHY is this decline happening & WHY are the regions losing ground?
A classic example of one of the reasons for this to be happening is shown in the effects of the Waikato Regional Councils Healthy Rivers Project, Proposed Plan Change (PC1).
This proposed plan change requires rural land owners to bear the brunt of returning the water quality in the Waikato and Waipa Rivers to the levels that they at in 1863.
Under PC1, to achieve the desired water quality results rural land owners are to be regulated in what they can discharge from their land and what they can do on that land. This increase in the quality of the river waters is supported by the rural land owners but the suggested methods to be used to achieve the results are going to exacerbate the decline of the rural territorial areas within the Waikato and Waipa catchments.
The rural land owners (regional exporters) are the “wealth creators” of New Zealand both now and into the foreseeable future, and yet these landowners are going to have very significant costs placed on their operations for in the most part very little or no increase in water quality.
This will have the following negative impacts and costs:
The proposed plan change (PC1) is likely to have significant economic consequences for farming operations at the individual and regional level.
The Waikato University, Institute for Business Research has estimated these costs across the whole catchment as follows:
Production Losses from dairying $30,545,834
Stock Exclusion Costs $242,645,021
(This cost represents an additional 40% increase in on farm debt)
Cost of estimating Nitrogen Reference Point $3,300,000
Cost of Farm Environment Plans $20,200,000
McDonald and Doole (2016) describe the adverse impact on the Waikato region as between $159 and $618 million for dairy, $50 to $147 million for sheep and beef and a range of other support and smaller industries with forestry impacted to between $364 million and $1.1 billion. These figures include and indicate a linked impact to support, supply and product industries along with the majority of the loss being a result of employment reductions. The reduction in size and volume of a central component to the economy has therefore a much greater impact than just one off mitigation costs.
The negative impacts of PC1 on the Waikato are substantial. This suggests it is appropriate to undertake further research to better estimate ways to reduce these costs. Further, there is a strong case for PC1 to be revised to enhance cost effectiveness on the basis of current estimates.
Total Negative Impact in Waikato region will be billions of dollars with the PC1 documents quoting figures of $500 to $600 million dollars per year for the eighty year time frame of the proposed plan change implementation.
This total negative economic impact on the Waikato region comes about even though only 15 of the sub-catchments in the Waikato and Waipa catchments are exceeding the standards proposed to be introduced through the enactment of PC1.
In other words there is going to be significant costs across the Waikato region with flow on effects across the country as a whole, for very little gain.
PC 1 uses an 80-year timeframe to achieve the water quality objectives of the Vision and Strategy. The timeframe is intergenerational and more aspirational than the national bottom lines set out in the NPS FWM.
Based on the information that was currently available, the CSG concluded full achievement of the Vision and Strategy by 2096 is likely to be costly and difficult. The 80-year timeframe recognises the ‘innovation gap’ that means full achievement of water quality requires technologies or practices that are not yet available or economically feasible.
39per cent of Nitrogen and 55 per cent of Phosphorus come from other sources than farming. The facts are that, yes, farming is a contributor, but it is not alone. What about these other sources?
If the claims of the decline of territorial authorities and the increased growth of the main centres is correct (and this is exacerbated as expected under the enactment of PC1), then pollution from these other sources (e.g. stormwater and effluent discharge from urban areas) are only going to grow as a percentage of the total discharges
From the council figures, we know that 7 per cent of the N and 18 per cent of the P comes from point sources and the balance (32 per cent N and 37 per cent P) is from natural sources.
PC 1 places emphasis on managing N, almost to the exclusion of all the other contaminants. This introduces the need for farm-level “Nitrogen Reference Points” (NRP), “Grandparenting” and the use of the “Overseer” nutrient management model (or any other approved model).
Overseer was developed as an expert system to inform nutrient management decisions at the farm level. As with any model attempting to describe biological processes, it’s predicted outputs are subject to errors. For example the minimum error (CV, coefficient of variation) in the predicted rate of nitrogen leaching from Overseer is about 30% but it can be much higher (>100%) if the incorrect input data is used, inadvertently or otherwise.
PC 1 proposes to set absolute discharge limits for N (Nitrogen Reference Points, NRP) for each farm. The ‘errors’ in Overseer mean that there will always be uncertainty as to whether the specific N discharge limit is met or otherwise. Litigation is a likely outcome.
PC 1 proposes to use ‘grandparenting’ to allocate N loadings at the farm level. These will be based on the predicted N leaching losses from Overseer for the two seasons 2014/15 and 2015/16, taking the higher of the two estimates (Schedule B). This system is crude, unfair and inequitable because it rewards in perpetuity the least efficient N users. In any case there are more sophisticated approaches to allocate N losses to individual farms.
Applying a one size fits all rule to nitrogen loss through the Nitrogen Reference Point (‘NRP’) is not the most appropriate approach as it fails to take into account the significant differences that apply compared to other parts of the catchment and as a result the different costs and benefits compared to elsewhere. The effect of enforcing existing NRP’s will place a ‘cap’ on rural production and development, effectively discouraging the unrealized potential of the area.
Plan Change 1 cannot hope to achieve the statutory expectations of the Waikato Settlement Act’s ‘vision & strategy’ because the V&S assumes reduction in impact, whereas PC1 motivates property owners to maximise their use of grand parented ‘rights’ in relation to Nitrogen discharges.
Plan Change 1 rewards the most those who have done the least to reduce their environmental impacts.
In addition, the current understanding is that achieving water quality restoration requires a considerable amount of land to be changed from land uses with moderate and high intensity of discharges to land use with lower discharges (e.g. through reforestation).
The non-complying activity status for land use intensification is excessively conservative and will have unintended consequences.
Restricting land use change on a broad scale across the Waikato and Waipa catchments is unjustified and should be removed from the plan. Land use flexibility is fundamental to sustainable primary production enterprises and especially in relation to food production, where the enterprise must be able to respond to the demands of an increasing population.
In relation to horticulture the result of the proposed changes means that effectively there is no expansion of any horticultural production within the Waikato/Waipa catchments from this point (public notification of PC1) forward. This will (due to expanding population) eventually have the end result of transferring food production (and any consequent detrimental effects) to other areas outside of these catchments.
In relation to reforestation as a method of achieving water quality restoration, under the proposals for limiting land use based on the current Nitrogen Reference Point for that land, no land owner is going to voluntarily opt to change their land use to a lower level of discharge as this then has the effect of lowering the capital value of that land due to the inability to ever change back to a more intensive use, under the rules in PC1.
An effects based approach more consistent with the RMA would be to allow intensification where contaminant discharges are maintained, reduced or offset using “Best Practicable Options”.
In summary:
Yes, Territorial Authorities are probably declining but this decline will be only exacerbated and sped up by the enactment of PC1 in its current form and eventually this will have a detrimental economic effect on the whole country as the majority of our income still comes from primary production.
Andy Loader