A Collective Responsibility Approach
As noted earlier, to achieve optimal use of natural resources, environmental costs should be internalised in the costs of producing goods and services. For environmental effects that cannot be attributed to individuals authorities face the challenge of finding other ways to internalise environmental costs, Establishing collective responsibility is one way to approach this problem. Although individuals cannot always be identified, authorities can usually identify a group of individuals whose activities cause effects which can be monitored and attributed to the group. In addition, authorities must be able to set an environmental standard for the group to meet.
New Zealand's Biosecurity Act 1993 provides a mechanism for establishing a pest management strategy that is binding on parties affected by, or responsible for, the pest. Further, there is a presumption that the strategy will be developed by those affected, rather than by the government. This recognises that pest management requires collective action, and that pest control is non-excludable, ie is a public good.
Foran et al (1991) suggested that, where non-point source pollution is a problem, consortia be formed consisting of landusers and others discharging contaminants to water in the United States. These consortia would be responsible for achieving the water quality standards in the US Clean Water Act. if standards were not met by a stipulated date, a consortium would be required to show diligence in implementing further reductions. If diligence were not shown, the consortium would be in violation of its permit; the agency could fine the consortium and/or individual members, require "best management practices" (BMPs) for specific land use activities and assess fees for those activities.
The Murray-Darling Basin Commission uses a limited version of collective responsibility
to manage salinity problems in Australia's largest river system. Each participating state
has agreed to contribute to mitigation projects to reduce salinity in the Murray River,
and to offset any increase in salinity discharge within its borders. The states are bound
to prevent any irrigation, drainage or land management works that would cause its net
contribution to exceed the agreed balance (MDBC
1992).
For instance, once initial credits are used up in New South Wales, new dischargers must offset their salt contributions (debits) by obtaining salinity credits privately or from the state government at full cost (DWR 1992). Landowners in any project area must therefore take collective responsibility for their salt discharge. A recognised shortcoming of the strategy in its current form is that non-point sources of salt discharge from outside scheme boundaries are not properly incorporated. This may make it difficult to enforce liability on the schemes themselves (Taylor, pers comm).
In another Australian example, some collective responsibility for non-point source pollution might be established in New South Wales. Kaine and Reeve (1993) propose a system of tradeable discharge permits to manage phosphorus loading of the Carcoar Reservoir. They suggest that, in addition to requiring phosphorus discharge permits for point sources, "common property" permits should be assigned to non-point source dischargers, eg groups of rural landholders, who would constitute corporate bodies.
The members of a group would be jointly responsible for complying with the permit and paying any fines. Kaine and Reeve recommend that all landowners in a defined sub-catchment be automatic members of the group, which would need to develop a management strategy including cost-sharing provisions. Kaine and Reeve also propose a system of "banking" unused discharge fights from one year to the next to allow for annual variations in weather which will cause actual phosphorus loadings to vary from the average.
Catchment Management Consortia to Improve Water Quality
An approach similar to that suggested by Foran et al and by Kaine and Reeve could be used to address NPS water pollution in New Zealand, through collective responsibility. Such an approach could work in the following way:
A regional council would identify a water body where diffuse (NPS) runoff is a major contributor to adverse effects on water quality, causing significant damage to other parties.
Regional councils have statutory responsibility for water quality in New Zealand. While agricultural runoff is a major contributor to water pollution in many areas, councils also need to identify other point and non-point sources, such as earthworks for urban development or roading.
The council would consult with all interested parties and set water quality standards for the water body, based on analysis of costs and benefits.
Based on consultation, the council would set water quality standards recognising both the costs and benefits of resource use, to maximise net benefit from the water body (see Sinner 1991, 1992b). In the example in Figure 1 below, standards would be set at
The regional council would identify segments of the water body and the parties, including non-agricultural sources, contributing contaminants to each segment. The parties would have the option of joining a catchment management consortium (CMC) for their segment, or adopting BMPs,
Point source dischargers would be included as well as NPS dischargers. Parties who are identified as possible contributors of contaminants would also be required to join the CMC or adopt BMPs6. All landowners in a segment (ie sub-catchment) would be required to participate unless they could provide good evidence that they contribute no contaminants to the water body.
Members would be allowed to "opt out" of the CMC by adopting a "best possible" management plan approved by the regional council. A patty seeking such an exemption would bear the onus of proof for demonstrating that current or proposed management practices reduce discharges as far as practicable. BMPs for farmers could include a range of practices, depending on the council's determination of the nature and extent of runoff from the property. Because new information may come to light on the nature of the problem or possible solutions, the exemption should be for a fixed period of time. Members who "opt out" should therefore be allowed to participate in the local CMC as an observer, ie with no voting powers.
Parties who may contribute contaminants in the future (eg forest owners or road contractors) should be allowed to join the CMC at the beginning to negotiate an allowance for their future needs. Forest owners, for instance, could argue that the "pulse" of sediment that will accompany log harvest should be acknowledged by the CMC as a legitimate existing use that must be accommodated in devising a strategy.
The council would assign permits to CMCs requiring compliance with water quality standards by a specified date. The permit would specify locations where standards must be met, eg at the bottom of the segment (or sub-catchment) and at points within the segment significant for in-stream and abstractive users. The council also specifies the duration of the permit.
If reductions in contaminant loadings are required to meet water quality standards, the burden of reductions should be shared fairly amongst all CMCs. Councils will need to recognise those who have already made reductions.
CMCs need to have confidence that any investments to improve water quality will not be made redundant by changes to their permits Thus, permits should be valid for at least eight to ten years. To avoid a gradual increase in uncertainty as the expiry nears, the permit should be automatically renewed each year for the full period unless the council decides to tighten water quality standards. In this case, the new standards would take effect at the expiry of existing permits (it after eight to ten years), unless the CMC agrees to implement the standards earlier.
The CMC would monitor compliance with water quality standards, audited by the council.
Monitoring is useful not just to assess compliance with standards, but also may help the CMC to understand sources of contaminants. Although monitoring could be done by council staff, it would probably be at a higher cost, and more importantly there would be less acceptance and understanding of water quality issues by members of the CMC.
Unless substantial data is already available, or a problem is urgent, the council should allow for some period of time (eg one year) for the CMC to establish its monitoring programme and examine initial results before proceeding to the next step.
If, from the outset, water quality were below the standards specified in its permit, the CMC would be required to develop a reduction strategy that meets approval by the regional council, designed to meet the standards by the date specified in the permit.
The strategy would state what measures will be taken, by whom, by what date, and how costs will be shared. It would also state the anticipated water quality results. Although these will not be known with certainty, there needs to be some estimate of expected results.
In the case of agricultural members of the CMC, practices to reduce runoff could include fencing and enhancing vegetation in riparian areas; grazing regimes which minimise runoff; fertiliser management to minimise runoff; and changes in land use for highly sensitive areas. Where practices involve direct costs, loss of income, or significant time demands, the CMC members would decide how the burden should be shared. A combinadon of practices on specific sites would be agreed upon by the CMC to get the necessary reduction in contaminant runoff at the least total cost.
The CMC would be given powers to enforce management and funding decisions on all members of the CMC.
Unless new legislation is specifically provided, CMC decisions could be enforced through a legal contract between all members. Alternatively, decisions could be incorporated as rules in regional plans. This latter approach would be cumbersome and inflexible, giving CMCs a strong incennve to enforce decisions by contract.
Voting and accountability rules would be needed, perhaps similar to those in the Companies Act. Rather than assigning one vote per person, it would probably be more fair to assign voting rights on the basis of rateable value of property. A "supermajority" (eg two-thirds or three-fourths) would be required for all mandatory management practices or funding decisions to be imposed on members. In addition, minority protection rules would be required, with appeal to the regional council, to prevent a majority from imposing unfair requirements on any single member or small group of members.
If the CMC fails to develop a strategy which meets council approval, or fails to implement such a strategy, the council could impose fines against the CMC for discharges above the allowed amounts, or require BMPs by regulation.
If there are to be any fines, these should be set out in the permit from the outset. Fines can create a strong incentive to achieve reductions, and funds raised can be used to mitigate damage or compensate water users affected by the pollution. A schedule of increasing fines would be appropriate to reflect the increasing marginal cost of pollution.
Foran et al urge regulatory authorities to exercise flexibility in implementing this new approach, and suggest imposing fines only where diligence is not shown. Such an approach could be supported by modelling of the catchment to estimate contaminant flows under various practices, especially if CMCs agreed to accept the model's estimates.
However, relying on "diligence" rather than compliance with standards creates an incentive for the CMC to lobby for approval of a low-cost but inadequate strategy. Government must then either pay for research to disqualify the strategy, or to approve it and allow damage to go unpenalised.
The CMC would also be responsible for maintaining standards, eg if standards are met initially and no reduction strategy is required. Violations of standards would result in fines or mandatory land use practices imposed on the CMC by the council.
The CMC is not required to develop a management strategy as long as standards are met. However, it may well be in its interest to do so to reduce the likelihood of fines. If the council does not intend to impose fines, it should require development of a management strategy that meets the council's approval.
Adjacent CMCs would be allowed to alter the water quality standards at their common boundary by mutual agreement, subject to the approval of the council.
Trading between segments would involve raising or lowering the water quality standards at the point where the two segments meet, eg the upper CMC agreeing to meet a higher standard in return for compensation from the lower CMC. The lower CMC would still be required to meet the standards at the bottom of its segment. In the case of controls on inputs to a lake, trading between all CMCs would be allowed. In either case, the council would have to be satisfied, possibly through a full consent process, that the overall objectives for the catchment would not be jeopardised.
Allowing such adjustments (trades) increases the scope for finding lower cost strategies to achieve necessary reductions. It may be less costly to reduce discharges in one CMC than in another, eg because of the cost of fencing or planting riparian margins. Trading within segments takes place informally between members of a single CMC, and would not alter the requirement for the CMC to meet the water quality standards at points specified in its permit.
Location-specific standards designed to protect abstractive or instream users would be adjustable only with the agreement of affected parties, and subject to approval by the council.
CMCs would be allowed to merge with neighbouring CMCs, or to split into separate groups, according to efficiency of size (monitoring, group dynamics).
It may be difficult for a council to assess accurately the optimal boundaries of CMCs in a given catchment. Furthermore, situations can change with time. Although councils should set the boundaries initially, with experience the CMCs themselves will be in the best position to determine optimal size and boundaries. Any merger or split would require a supermajority approval by each affected CMC.
6 "best management practice" is referred to in the Resource Management Act as best practicable option (BPO).
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