New Zealand’s freshwater management is in need of a refresh. The kinds of systems that work for allocating and managing water when water is abundant are not the systems that work when water becomes increasingly scarce. And increasing pressure on our aquifers and rivers has made water increasingly scarce in places like Canterbury.

The problem is well-recognised. We have had decades of reports telling us of the looming problems, not only in water abstraction (taking water from the aquifers and rivers) but also in nutrient management.

And the 2017 election campaign, to the extent it focused on policy at all, focused on two unavoidably important problems: housing affordability and freshwater management. Minister Parker, in October last year, announced an ambitious programme to improve freshwater management.

This week, the Initiative released a report outlining what we believe to be the most promising way forward in freshwater management. Our report, Refreshing Water: Valuing the Priceless, suggests cap-and-trade systems as the best way of managing water abstraction and ensuring the sustainability of our rivers and aquifers. It provides a ‘best-buy’ in environmental management, ensuring that we can do the most good.

The potential for cap-and-trade systems is also well-recognised. Reports going back more than a decade have pointed to these kinds of systems. But despite the problems being well-recognised, and the solution being reasonably well-recognised, we have seen little policy progress.

And the reason for that is also well-recognised. Successive governments have feared that making administrative water allocations, like irrigation consents, look more like tradeable property rights will result in Waitangi Tribunal claims around water.

We argue that it is time to cut this Gordian knot. If iwi have water claims in particular areas that have not been extinguished by Treaty, sale or contract, then it is a fundamental issue of natural justice that those claims be recognised and fairly treated. Resolving iwi water claims, through negotiation with local iwi and hapū, also then allows us to move forward towards better freshwater management systems.

But we also need to deal fairly with existing water users who have legitimate and established interests. Better freshwater management systems cannot be built on what current users, from councils to farmers, could reasonably view as substantial expropriation. Instead, the burden should be shared between existing users and all of us who benefit from a more sustainable system.

It is time to finally refresh water.

Eric Crampton’s report Refreshing Water: Valuing the Priceless and a report summary are available here.