The potential use of economic instruments in the Waikato and Waipā River catchment / Carla Muller.

"September 2018."

Reviewed by: Bryce Cooper. Approved for release by: Bryce Cooper.

Includes bibliographical references.

1. Introduction -- 2. Economic Instruments -- 2.1 Property rights -- 3. Economic Instruments and the Waikato and Waipā River catchment -- 3.1 Background and policy context -- 3.2 Pollution charges and taxes -- 3.3 Cap and trade schemes -- 3.4 Other EIs -- 3.5 Supporting areas -- 4. Conclusions -- 5. Types of Economic Instruments and design features -- 5.1 Market-orientated instruments -- 5.2 Financial instruments -- 6. Economic Instruments Examples -- 6.1 Lake Taupo Nitrogen Trading – Tradable permits for diffuse pollutants -- 6.2 Murray-Darling Water Trading – Tradeable permits for water -- 6.3 Dutch MINAS Policy – Nutrient accounting and tax scheme -- 6.4 New South Wales Load based Licensing – Variable pollution charges -- 7. References.

To date, most environmental policy in New Zealand, especially around water quality, has been through regulatory or voluntary approaches. Economic instruments present an alternative option for managing and improving water quality. Economic instruments are policies which convey market signals to alter behaviour, to better reflect behaviour that society desires. They are often used in conjunction with regulatory and voluntary policies. Theoretically, economic instruments enable effective solutions at low-cost relative to regulation and / or voluntary and education-based policies and provide flexibility in how various businesses choose to respond to policy. However, they have experienced varying levels of success. Economic instruments have been discussed by central and regional governments, as well as resource users. However, they tend to fall in and out of favour and there is debate around whether economic instruments are suitable in the current New Zealand setting and, if so, how they could be applied. This paper provides some theoretical background on economic instruments and their design, discusses the applicability of these economic instruments to the Waikato and Waipā River catchment, and provides some relevant New Zealand and international examples on where economic instruments have been applied.