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Insights 16: 10 May 2019
Read: Improving New Zealand's freshwater management system is vital but politically fraught, writes Eric Crampton on Newsroom
New report - Refreshing Water: Valuing the priceless
Auckland event - supported by the Initiative - Jonathan Haidt: Moral Psychology in an Age of Outrage (tickets for purchase)

Valuing the priceless
Dr Eric Crampton | Chief Economist |
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 summary are available here.

Free is expensive
Dr Patrick Carvalho | Research Fellow |
Readers of The New Zealand Herald should welcome its recent introduction of a $5-weekly subscription to access premium content. So should non-readers.

If successful, New Zealand will benefit from an additional stream of high-quality journalism worth paying for.

As the global spread of media paywalls attests, informative and accurate online news is hard to produce solely via advertisement sales. (For one, robust analyses on politics, economics, and current affairs are not as “clickable” as homemade cat videos and tabloid stories.)

The problem with any “free” news service is that it is neither free nor transparent.

If the price for accessing the news equals zero, either the content has no value, which means the reader is paying with time and focus not spent elsewhere. Or worse, the reader is the product – and should not complain about falling for the clickbait pandemic or extraction of personal information.

Quite often, the promise of “free” internet content turns into a wave of copyright lawsuits, phishing scams, and predatory privacy breaches – only to re-emerge as a cornucopia of paid-subscription services such as Netflix, Spotify, Kindle Unlimited, and media paywalls (including the recently released Apple News+ bundle service).

The emerging subscription-based trend now represents the new normal, branded as Content-as-a-Service (CaaS) business. According to a 2018 West Monroe Partners report, the average American pays US$237 a month for subscription services, ranging from web-based software to video and music-streaming services, and yes, newspapers.

This is not to say “free” internet services are dying: Facebook and Google, among others, will continue to offer their services without upfront fees. But as we all should know by now, such services are not free but are paid with user data and clicks.

On that note, let us wish the Herald’s premium paywall a long life. In a post-truth clickbait world, journalism that is fact-based and well-informed is an even dearer commodity.

My two-cent advice: Just because something is free does not mean it is not expensive.

Le cultural clash
Dr Oliver Hartwich | Executive Director |
It took the Australian Government years to decide whom to task with building its next generation submarine fleet. It was still not enough time to prepare them for the cultural clash that followed.

Back in 2016, the Australian Prime Minister – Malcolm Turnbull, most probably – awarded the AU$50 billion contract to French company Naval Group over rival offers from German and Japanese firms.

As the ABC recently reported, building submarines involves far more than high-tech engineering, quality materials and good project management. As it turns out, cultural sensitivities also matter.

The problems started on a small scale when some Australian defence personnel and their families were posted for four years to the French company’s shipbuilding base in Cherbourg. To their surprise, they noted that everyone over there spoke French. Worse, there were no schools where their children could study Australian English.

Facing this obvious and unforeseeable emergency, the Australian Defence Department had to settle for the next best thing: a boarding school across the English Channel in Portsmouth. At a cost of £28,740, paid for by Australian taxpayers, the children of Australian navy engineers will now be educated there. Travel between Britain and France will also be covered.

While the Australians in France ensured that their children did not have to learn French, the French in Australia ensured that they did not have to become Australian.

A few things seem non-negotiable for French employees contracted to build submarines in Australia. Lunch breaks mean proper breaks with proper meals, not just a sandwich in front of a screen. It is appropriate to be a quarter of an hour late for meetings and for meetings to go on much longer than scheduled. And what is wrong with everyone taking a month-long vacation during summer?

As the ABC reported, the cultural clashes between Australians and French have become so severe that efforts have begun to rectify them. Seminars and full-day workshops are being offered to French staff to explain Australian manners and the importance of BBQs, and to teach them Australian English.

The situation is serious, so perhaps our government offered some technical assistance.

The New Zealand Treasury just presented a new card game made just for hopeless situations like this.

After some charcoaled kangaroo washed down with a few bottles of Beaujolais, maybe the Aussies and the French could explore what sun and moon feelings they share – and forget about those troublesome submarines.

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