April 2001
Report summary
Following on from the discussion paper Ageing pipes and murky waters. Urban water system issues for the 21st Century (PCE June 2000), this report presents the findings of the PCE's investigation into urban water systems. The report highlights issues such as the fragmented nature of waters management, the importance of raising stakeholder awareness of the issues, pricing and charging for water services and placing urban water systems into an ecological context.
Commissioner's preface
There are major tensions between some communities and councils over existing or proposed ownership and delivery models for water. Privatisation fears are limiting vision and constraining dialogue. Until these tensions and fears are addressed, and there is some stakeholder consensus on needs and options, few opportunities to improve sustainable management of urban water systems will be realised.
The United Nations Secretary-General, Kofi Annan, sees a need to confront the water crisis and to build a new ethic of global stewardship.
'…major efforts in public education are needed. Real understanding of the challenges we face is alarmingly low. As more and more of us live in cities, insulated from nature, the need for greater awareness grows. Consumers everywhere have to understand that their choices often have significant environmental consequences.'
Executive summary
This report contains the findings of the Parliamentary Commissioner for the Environment's investigation into urban water systems. It follows the discussion paper Ageing pipes and murky waters. Urban water system issues for the 21st Century (PCE 2000) and the summary of submissions made in response to that document (PCE 2001).
The report addresses:
- the ecological context of an urban water system - including water supply, wastewater disposal and stormwater management;
- the water system infrastructure and technologies - now and in the future;
- the legislation, regulations and institutional arrangements for managing water - barriers and opportunities;
- community views and values - concern for equity and social justice; and
- tangata whenua and water - recognising cultural links and Treaty obligations.
Four major areas of challenge are identified and addressed by specific recommendations:
- The fragmented nature of water systems management and the lack of a clear central government 'home' for the necessary policy and legislation that underpin this essential resource and its infrastructure.
- The lack of stakeholder awareness and understanding of urban water systems and involvement in their management. One of the biggest challenges will be reaching consensus between the various stakeholders on the environmental, social and economic goals of urban water systems. There is a need for a more detailed understanding of community and business expectations and provision of information to promote awareness and understanding of the issues. More research is required on technologies, including those that can be adopted from overseas, as well as social and economic research into urban water systems and options.
- The community and political tensions surrounding the way we currently construct our water businesses: who owns, who manages and how water is valued and priced. The issue of pricing and charging for water dominated the submission responses with widespread support for flow-based user charges. This support was coupled with recognition that community concerns about equitable access to water and privatisation of water systems were a major impediment to the implementation of flow-based charges.
- The lack of appreciation of the need to manage waters in an integrated way according to ecosystem principles. This includes recognition that water is not an unlimited resource.
Findings & recommendations
Enhancing and advancing water management is primarily a socio-political challenge rather than an economic or technical one. Certainly capital constraints will and do restrict opportunities as do some technical issues. But it is the way our water systems are organised: the legislation, policies, infrastructure, institutions and community expectations, which embrace the areas of greatest challenge.
The fragmented framework for the management of urban water systems
The central government framework and responsibilities for the management of urban water systems is split between a number of Ministers, their ministries and various legislation and regulations. The lack of a specific Minister for this very broad sector does not assist overview and accountability nor offer direct leadership to improve the current framework and overall performance.
The absence of a specific agency or unit to advise the Ministerial group limits what information and technical advice the Ministers receive. New Zealand has no Ministry of Infrastructure or equivalent infrastructure policy unit within an existing ministry that can provide sufficient information on all urban water system management issues. There is no Government ministry promoting an integrated response to urban water systems, models and tools to assist integrated management, water efficiency and conservation measures, equitable and efficient pricing and charging measures, and research. The lack of focused research on urban issues within the Crown Research Institute (CRI) system is a major weakness.
The legislative framework
The legislative framework that provides for the management of water services is outdated. Some Acts appear to be in conflict, and effective and efficient management is impeded. In isolation, many of the legislative barriers are small, but collectively they highlight systemic problems with the framework that need to be addressed, sooner rather than later. Many submitters to the PCE discussion paper strongly favoured a consolidated Water Services Act, whilst relatively few were in favour of making more incremental changes.
The current review of the Local Government Act 1974 and the favoured approach of enabling local government legislation will inevitably force the development of new water services legislation. A new framework will need to recognise the cyclical nature of urban water systems and promote an integrated response to water supply, wastewater and stormwater issues. Any new Water Services Act should not duplicate or circumvent the RMA, which would continue to be the primary resource management legislation for water.
Integrated management of the urban water system
The current disaggregated view of urban water management needs, shaped by current infrastructure models, is a major barrier to developing more sustainable, fully integrated and cost-effective systems. The traditional approach to the management of urban water systems, with the splitting up of the various parts that are at times managed in isolation by different units or organisations is outdated. A more integrated and life-cycle approach is required, involving treating the various components of water catchment, supply, wastewater and stormwater as one system or life-cycle.
Valuing, pricing and charging of water services
There is a lack of recognition and understanding of the role of ecosystem services, and a resultant undervaluing of the associated benefits that we gain from these services. The value of these ecosystem services such as pure water supply, and waste treatment and assimilation needs to be factored into decision-making and incorporated into asset management planning.
Current pricing and charging approaches for water and wastewater vary between different territorial authorities and different cities and towns. Charges based on property rates, uniform annual charges (UACs), and flow based or consumption charges are used individually or in combination for water supply. Property rates based charges or uniform annual charges are used for wastewater. Property rates based charges are used to finance stormwater management. With uniform annual charges and charges based on property rates there is no economic incentive for consumers to reduce their water consumption through efficiency measures. Where meters and flow based charges have been introduced, both in New Zealand and overseas, there has been a significant change in behaviour and a decrease in demand on a per capita basis.
It is acknowledged that the introduction of flow based charges for water supply is a sensitive political and community issue. Three major areas of concern can be identified: the concern that flow based charging is perceived to be a precursor to privatisation; the concern that flow based or uniform annual charges may adversely affect low-income households (in comparison with charges built on property rates); and the concern that water supply could be cut off with non-payment of charges.
There is little hope of substantive progress on most aspects of water management until:
there is a mechanism established to develop a consensus as to how the desired public ownership of water assets can be guaranteed
the value and community benefits of managing water in an efficient and effective manner (the "business model") is understood and,
the rationale for flow based charging for water is more widely understood, and that this allocation mechanism is appreciated as being independent of ownership.
Stakeholder awareness and understanding
One of the biggest challenges for achieving progress will be reaching consensus between the various stakeholders on the environmental, social and economic goals and values of urban water systems. Without more extensive community input, and greater understanding of water management options, improving the sustainability of current systems will be very difficult and painfully slow.
Whatever the mechanism, it is essential to provide information to promote stakeholder awareness and understanding of the full range of urban water system issues, so as to ensure the sustainable management of New Zealand's water resource.
Recommendations
To the Minister of Commerce (as the Minister chairing the group of ministers with responsibilities for urban water system management):
- Establish and resource a Task Force to develop recommendations on a range of actions to improve the management of urban water systems in accordance with an ecologically sustainable and integrated approach. The Task Force needs to assess new options and models for the delivery of water services that meet the identified principles and criteria for sustainable urban water systems.
- Direct the proposed Task Force to develop a process, to be implemented jointly by central and local government, for increasing stakeholder input to developing urban water systems and business models. The process should ensure that knowledge and experience pertaining to water management, systems and technologies are freely exchanged between community, tangata whenua, agency and business interests to ensure that all parties appreciate and accept the reasons for any future legislation or policy initiatives.
- Direct the proposed Task Force to examine water valuing, pricing and charging options that maximise in the long term:
- ecologically efficient allocation, use and treatment of all waters;
- equitable delivery of water services to society; and
- financially viable business models for water services that are based on the premise that all water resources and infrastructure remain in public ownership.
To all territorial authorities and water services providers:
Prepare an overarching water services strategic plan as a framework for the sustainable and integrated management of urban water systems. The strategic plan needs to be prepared with the involvement and participation of tangata whenua, the community and other stakeholders. It also needs to include the development of indicators for the ecological, social and economic sustainability of the whole system.
