I am having to use up my backlog of work here. This was written mid 2016 (so some people and situations have moved on) as an entry to become an intern at the Economist. Once again, alas no.
Those familiar with the Economist will probably recognise the style. The trick was to cover as much ground with the least number of words while coming to, or at least alluding to, some sort of recommendation.
For the record, I gave this to a local MP who I see every now and then at my local cafe (only in NZ!). They confirmed that my rationale about why water is not priced is almost certainly correct.
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Initially writted May, 2016
As recently as 2011 the Economist was lauding the benefit of high milk prices to the New Zealand economy (Creaming Along, June 16th, 2011). Alas, milk has not escaped the worldwide fall in commodity prices and the country’s reliance on it is starting to hurt. Farmers are receiving 55% less for whole milk powder than what they were in 2014, below the breakeven point for most. As profits have evaporated the wider environmental costs to producing this stream of white gold have become harder to ignore.
Inevitably the the flashpoint is water. A steady stream of newspaper articles highlighting the reduced quality and size of local waterways keeps the public aware that being able to swim in your local river, long thought a virtual cultural right, is no longer a given. Although dairy farmers protest that they are being singled out, most see a direct correlation between this and the number of cows increasing by 30% in the last 10 years.
Milk is essentially a higher value export product than water and grass, areas where New Zealand has a competitive advantage. However, cows are a pretty inefficient intermediary in this process with some estimating that it takes 250 litres of water to produce 1 litre of milk. On the other hand, cows are magnificent at producing effluent and methane, both polluting (methane is NZ largest contribution to greenhouse gas emissions). Significant investment has been made in keeping stock directly out of waterways but urea born nitrates tend to build up in the soil and in some areas have compromised drinking water supplies. New irrigation schemes have also allowed dairy farms to operate in previously marginal areas, some of which are on major tourist routes. As tourism has now overtaken dairy as the main export, and is promoted using the country’s “clean, green” image, some ask if it is time to sacrifice the sacred cow.
On a worldwide scale New Zealand’s water quality is still high and in some areas unbelievably so. Some have decided that it is far simpler to avoid what economist Eric Crampton terms the “middle cow”, and export bottled water directly. Tensions erupted recently when a local council was found to be selling land with water rights for 1.4 Billion Litres/year to be used for this very purpose. Although less than used on a farm with 450 cows (half the average herd size), and potentially more lucrative than milk, this has outraged those who think water rights are already over allocated in the area.
Mr Crampton points out that a market for water would help here, reinforcing Parliamentary Commissioner for the Environment, Jan Wright’s, previous call for one to be established. However, the public generally see water as a public good so promoting water markets is like pushing the proverbial uphill. In the end water is priced indirectly, and inefficiently, via higher property prices for those with existing water rights.
John Key, both the Prime Minister and minister for tourism, has previously taken the stance that “nobody owns the water” although maintaining this position must be a struggle. With a background in finance, he almost certainly knows it is a fiction, and the liberal wing in his party would probably support water pricing. However, it is politically expedient. Buying and selling water rights implies ownership, inevitably leading to Treaty of Waitangi claims by indigenous Maori. The previous leader of the National party, Don Brash, almost defeated the sitting Labour party by stirring up antagonism toward Maori treaty claims. As current leader of the National Party, Key, a close watcher of the polls, would lose significant support by acknowledging the legitimacy of these claims if they arose, but at times requires the Maori party’s support in parliament to pass legislation. Although unsatisfactory, the stance keeps both sides at bay but does little to solve the problem of deteriorating water and sensible ways to determine who gets to use it.
Rough against rough 