Part 2: Challenges associated with water management

Introducing our work programme - Water management.
He taura whiri kotahi mai anō te kopunga tae noa ki te pu au

In this Part, we highlight some of the main challenges now facing organisations in managing water and delivering water-related services, and the challenges expected in the years ahead.

The interconnectedness of the water cycle, the relationship between land use and water quality, and the place that water plays in our physical, economic, social, and cultural well-being are at the heart of the challenges associated with water management.

There are several factors that make governance in the public sector complex and challenging. Organisations are set up for a defined purpose and are limited by what their enabling legislation allows them to do. There can be conflicting objectives and priorities throughout the public sector. Also, our water management system devolves a significant level of responsibility for implementation from central to local government.

Decisions about how water is managed and how water-related services are delivered are made within a specific legal, political, and institutional context. We expect organisations to base their decisions on reliable information, to be transparent about how they arrived at decisions, and to be transparent in reporting on their performance. Organisations must also consider the limits of the resource itself, the values of water users, and the costs of meeting community expectations.

Addressing legacy issues

Water and land use

The impacts of past and present water uses on water quality have yet to manifest fully. In some instances ... it can take years for the nutrients to affect water quality. The lag between the initial water pollution and water quality deterioration means that the current situation is only a partial representation of the real water quality problem.
NZIER public discussion paper – Water management in New Zealand, March 2014, page 13

New Zealand is facing legacy issues associated with how we have used our land and water resources to support our economy.

Our water resources are of particular importance to our primary sector and tourism – the two most significant contributors to our economy. Conversely, our economy has an effect on the water resources it relies on – for example, diffuse pollution from steady increases in intensive farming, irrigation requirements, and sedimentation from land development generally.

Addressing these adverse effects and delivering outcomes that could take generations is challenging to achieve in short political cycles, and when multiple organisations are working to deliver these outcomes.

It is also hard to find clear information about the costs of improving water quality, even though transparency about costs and benefits of policy and investment choices and any trade-offs is essential for making good decisions.

Investment in water infrastructure

A significant proportion of our water infrastructure was built after World War II and is coming towards the end of its expected life. It is likely that much of the water-related infrastructure owned by local authorities will need to be repaired or replaced between 2040 and 2060.3 In June 2016, the estimated replacement value for the infrastructure that delivers three waters services was $54.7 billion.4

We have reported that local authorities might not be reinvesting enough in three waters assets, suggesting that these assets could be deteriorating to an extent that they are unable to meet the levels of service that their communities expect.5 We will continue to explore and report on this matter.

Many local authorities are facing potentially significant costs associated with ensuring that their water services infrastructure meets changing environmental standards.

Responding to change

The environment in which we live is changing at a rapid pace – including climate change effects, changing demographics, new technology, the values our communities place on the environment, the services communities expect from the public sector, and shifting regulatory settings. These changes are affecting how organisations manage water resources and deliver three waters services.

Climate change impacts

The average temperature over New Zealand has warmed by about 0.9°C since 1900.6 A new report commissioned by Greater Wellington Regional Council shows that the Wellington region could see a temperature rise of up to another 3°C by 2090 – which would make Wellington's climate more like that of present-day Sydney, Australia.7

Although there is variability from year to year, rainfall totals have increased in the southwest of the South Island and have decreased in the north of the North Island. Some heavy rainfall events have become more intense because higher temperatures allow the air to carry more moisture. Global sea levels have risen about 19cm since the start of the 20th century, and are almost certain to rise at a faster rate in the future.8

New Zealand is particularly sensitive to the effects of climate change. Many New Zealanders live on the coast and on floodplains, we rely on the availability of freshwater, and we are surrounded by oceans.

Natural hazards

New Zealand is vulnerable to natural hazard events – earthquakes, flooding, and land slips. Developing resilient communities, including the water infrastructure to enable them to survive and thrive, is important to the public sector. The Ministry of Civil Defence and Emergency Management is preparing a new National Disaster Resilience Strategy, in collaboration with local and central government and other agencies with a role in preparing for and responding to natural hazard events.

Changing demographics

Our population is increasing and ageing, with more of us living in cities. New Zealand is among the most urbanised countries in the world. In 2014, 86% of the population lived in towns of 1000 or more people.9 This increasing urbanisation is putting pressure on our water resources and the infrastructure to deliver three waters services.

The $1 billion Housing Infrastructure Fund has recently been divided between five high growth areas – Auckland, Te Kauwhata (in the Waikato), Hamilton, Tauranga, and Queenstown. The Fund recognises the limitations of rates as the principal funding stream for investing in infrastructure and enables councils with high growth to advance infrastructure projects, such as three waters services, that are important to increasing housing supply.

Conversely, there are areas in New Zealand that are experiencing declining populations. There, councils have to make difficult choices about whether to reinvest in their water assets or consider new ways of delivering services to their communities.

Changing technology

Technology may allow us to overcome some of the challenges associated with water management – for example, more efficient use of water and mitigating water pollution. It may also lead to new ways of delivering water-related services to communities.

The National Science Challenge: Our Land and Water – Toitū te Whenua, Toiora te Wai, was launched in January 2016 with government investment of about $97 million over 10 years. The objective of the challenge is to enhance primary sector production and productivity while maintaining and improving New Zealand's land and water quality for future generations. The research includes a focus on innovative and resilient use of land and water.

Changing community expectations

… we need to ensure that when we set goals for how clean we want our freshwater resources to be, that we are also talking about the cost to our communities of doing this, the economic trade-offs that might need to be made, and how we pay for it.
Local Government New Zealand media release, 14 March 2017

The public sector needs to consider and respond to changing community expectations about the state of our environment and water-related services, when developing regulation and spending taxpayer and ratepayer funds. The sector is ultimately accountable to New Zealanders.

In a 2016 survey, the state of New Zealand's water resources was identified as the most important environmental issue facing New Zealand. Many of the respondents (59%) considered that farming was the main cause of damage to our freshwater resources, followed by sewage and stormwater (43.5%).10

There is some public opposition to water-bottling companies profiting from a natural resource that they do not have to pay for, and similar opposition to water use for irrigators. Asking whether people should pay for the water, instead of or as well as paying for its supply, can raise the more difficult question of who owns water and who should benefit from any pricing regime.

Changing regulatory setting

The regulatory framework to manage our water resources and deliver three waters services has changed and is continuing to change in response to environmental, economic, social, and cultural conditions. The Government has started a review of how to improve management of the three waters to better support New Zealand's prosperity, health, safety, and environment.11 Reviews of the contamination in 2016 of Havelock North's drinking water and the Edgecumbe flood event in 2017 could also lead to regulatory reform. The Government amended the National Policy Statement for Freshwater Management in August 2017 as part of the Clean Water Package 2017 (see paragraph 4.33).

A significant level of responsibility for implementing regulation is devolved from central to local government. For example, regional councils are responsible for giving effect to the National Policy Statement for Freshwater Management through their regional planning documents, while city and district councils are responsible for ensuring that delivery of three waters services meets environmental standards. Consequently, local government must respond to any regulatory changes to the water management system.

Although we will not comment on policy or second-guess the science that supports water management, we have been mindful of regulatory change as we determined the shape of our work programme and identified the themes that we want to explore through our work.

3: Office of the Auditor-General (2014), Water and roads: Funding and management challenges, page 7.

4: Department of Internal Affairs' analysis of local authorities' 2016 annual reports.

5: Office of the Auditor-General (2017), Local government: Results of the 2015/16 annual audits.

6: New Zealand Climate Change Centre (undated), IPCC Fifth Assessment Report New Zealand findings.

7: See the climate change section of Greater Wellington Regional Council's website, at

8: See Climate Change Implications for New Zealand, the Royal Society of New Zealand, April 2016, page 11.

9: OECD (2017), OECD Environmental Performance Reviews: New Zealand 2017, OECD Publishing, Paris, page 43.

10: Hughey, K. F. D., Kerr, G. N., and Cullen, R (2016), Public Perceptions of New Zealand's Environment, EOS Ecology, Christchurch, pages iii and 15.

11: See the website of the Department of Internal Affairs,