Environmental protection v economy - a fine balance

PATTRICK SMELLIE
Last updated 05:00 04/07/2014

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OPINION: This week's decision by TransTasman Resources to appeal the decision rejecting its application to create a new export industry dredging for ironsands off the sea floor in the Exclusive Economic Zone is no surprise.

Nor, perhaps, was the initial rejection of the application by the decision-making committee (DMC) appointed by the Environmental Protection Authority to consider TTR's marine consent application under the new regime governing activity in New Zealand's vast offshore resource area.

As the Parliamentary Commissioner for the Environment, Dr Jan Wright, noted in her recent report on onshore fracking for oil and gas, the first applicant for a new activity often faces far higher hurdles than those who follow.

In this way, she warned, the landscape could become unwittingly dotted with fracking sites by virtue of the initial applicant's hard yakka. This is just one of the unseen but real tensions in the endless battle to create a balance that's both politically and environmentally sustainable between environmental protection and economic expansion.

Indeed, the Environmental Defence Society will also be appealing, with likely cross-appeals against whatever TTR comes up with. As always with EDS, its position will be considered, reasonable and will state for the record that it supports mining as long as the environmental impacts can be adequately managed.

The rub is that the DMC concluded after nearly two months of hearings that the environmental impacts of seabed mining were simply too uncertain to allow a management regime to be imposed. It questioned the commercial viability of the scheme, found that TTR had not engaged sufficiently with affected stakeholders, and that in its view the application was "premature".

For TTR, which spent six years and $70 million on environmental impact assessments, mining infrastructure planning and community engagement, that last charge must have been a particularly bitter pill.

How much more could we have done, the Wellington-based company, backed mainly by Australian and American investors, will be asking?

The answer to that, however, is that there is much more TTR can and could have done. Its chief executive, Tim Crossley, told BusinessDesk earlier this week that if the process had been undertaken in Australia - where mining is part of the national fabric in a way that it never has been here - the EPA hearing process would have been a venue for negotiated compromise.

With that in mind, it was almost certainly unwise of TTR to claim on the first day of hearings that it wasn't commercially feasible to take a staged approach to the project.

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In fact, at the 11th hour, TTR was belatedly proposing alternative approaches to the issues arising in the hearings. It will be working hard now to come up with other alternatives, on the assumption either that an appeal will succeed and at least a partial rehearing will be required.

Either that, or it will have to apply for a marine consent all over again, if it can convince its investors the high costs and uncertainty are worth the risk of a second rejection.

What Crossley, and the mining sector generally, didn't expect from the EPA process was what it describes as a "binary" approach - a yes/no, on/off switch approach.

It's a fair bet the government didn't see that coming either. The EEZ legislation and accompanying regulatory impact statement assumed that uncertainty would be dealt with by an "adaptive management" approach. The DMC, however, rejected that approach.

However, the government did accept the risk that in developing a long overdue environmental regime for the EEZ, there was always a chance the environment would have a total win.

Not that environmental activists opposing TTR' plans were so confident.

Kiwis Against Seabed Mining were left pinching themselves over the TTR decision, many having assumed the process was a David and Goliath-style stitch-up.

It's useful for the EPA's broader credibility that the TTR decision showed that's not the case.

However, it's important that this new regime now be rigorously tested in the courts to ensure that the regime has been implemented as intended and to guide future decision-making.

If not, then it's almost certainly curtains for any seabed mining activity ever occurring in the EEZ.

To many New Zealanders, that would be excellent news.

Anticipated royalties of around $50 million or so a year, new annual export receipts of perhaps $150 million and between 200 and 400 local jobs are a price worth paying, some argue, for ensuring the despoilation created on land by mining isn't transferred to the oceans.

What that position fails to account for, however, is that if it doesn't happen in New Zealand, it will happen somewhere else and the resources this country uses on a daily basis for modern life will be supplied by other countries, many of which don't share our concern for high quality environmental management and regulatory process.

It's difficult to see why that would be a better outcome.

- BusinessDesk

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