Editorial: Can we put a price on water?

Water, water everywhere. But at what price?

Water, water everywhere. But at what price?

OPINION: If the reaction to the plan to export bottled water from an Ashburton aquifer is any guide, Kiwis are likely to be outraged at the proposal to export up to 800 million litres a month of pristine South Westland water.

Why we get upset over this giveaway of what we see as a free public asset and not others is more puzzling.

When a stoush over potentially bottling Ashburton aquifer water flared up last year, then Prime Minister John Key made the point that no-one owns water, and that if New Zealand were to start charging for it, then it would have to be consistent.

The end result would be higher consumer prices for everything that used water, from hydroelectricity to milk.

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In other words, free access to clean water is considered a fundamental Kiwi right.

Charging for water is seen as a no-go zone but there are cracks appearing in that political dyke.

Auckland ratepayers pay a separate water bill to council-owned organisation Watercare for their water use. Under the Resource Management Act, local councils, who have authority over water allocation, can charge only to recover the costs involved in treating and delivering water. In Canterbury, this means a fixed charge on a rates bills, but in Auckland, as well as the standard charge, ratepayers pay based on how much water they use.

Auckland City may not be making a profit on the user charges, in the way private water bottlers do, but the separate bill and variable cost can be seen as softening up residents to the idea that New Zealand's water is not an infinite, free resource.

The country's dairy farmers, on the other hand, are sent few signals that water is a precious resource. Yes, they have to have consent to take water (with the implied value of that consent factored into land prices), and that use is metered and capped, but there are no charges for the water itself.

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Free-marketeers argue that unless a resource is priced, then there is little efficiency or transparency is how that resource is allocated.

Dr Eric Crampton, head of research at the New Zealand Initiative, makes the point that bottling water is a more efficient use of the water resource than dairying.

Producing a litre bottle of water uses a litre of water; producing a litre of milk is estimated to use 250 litres of water. It may be time, Crampton said, to "cut out the middle cow".

Perhaps the real flashpoint is that bottled water companies have largely been foreign-owned. As Stuff reported in April, "billions of litres a year leave the country every year for sale overseas, driven by some of the world's largest companies, who do not pay a fee to use the resource".

At least in the South Westland case, the consortium behind the plan is made up of South Islanders, according to records of the shareholders. They are planning to do what many have argued New Zealand should have done long ago: monetise our competitive advantage of plentiful water in perhaps the simplest, most-efficient and least environmentally destructive way.

That sneaky "perhaps" points to the other issue highlighted by headline-grabbing water plans. Because we do not value water, we have little sense of its true value.

 - Stuff


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