Aotearoa Water Action

Background

Aotearoa Water Action (AWA) was formed in 2018 to challenge water bottling consents granted to Chinese-owned Cloud Ocean Water Ltd and NZ-owned Rapaki Natural Resources Ltd. These consents replaced large-volume, historical water permits associated with the old Kaputone Wool Scour and Silver Fern Freezing Works in Christchurch and West Melton.

When the land beneath those businesses was bought by a developer associated with Rapaki, the permits were transferred to that new owner. The developer then sold the wool scour land and its water permit to Cloud Ocean Water Ltd. Cloud Ocean had been assured by ECan (Environment Canterbury i.e. regional council) staff that the existing water permit could be used for water bottling.

At the time, NZTE was proactively facilitating what was effectively the trading of water - by introducing large foreign companies to the people "selling" water via the sale of land and associated water permits. In addition, a company called Hydrotrader had established itself in Canterbury - largely to facilitate the sale of water between farms and farmers. So, there was (and still is) a thriving, unregulated, and international market for water in the region. That market relied on the quality of the region's deep aquifers, scarcity of allocation (demand being greater than supply), and the ease of consent transferability - which is enabled by the Resource Management Act 1991 (RMA).

But also critical to the ease of trading was confidence in consent flexibility. ECan's approach to the rules in its Plan meant the new owner of a traded permit could apply to change the use of that water. Buyers could also count on the fact that there were very few rules or policies in the planning framework to support declining a "change of use" application - making any application to change from one use to another essentially an administrative step.

Seven Years On ECan's Response To The AWA Decision

AWA's last Watchdog update appeared in issue 166 (August 2024) We were 7-8 months on from our "win" in the Supreme Court (SC) and waiting to see how ECan would respond. "The AWA Decision" had quashed the bottling consents originally granted to Cloud Ocean and Rapaki, and ECan's practice of granting new "use" consents was deemed unlawful - based on the wording of the Canterbury Land and Water Regional Plan (CLWRP).

Except where the plan says otherwise, ECan now must consider the "take" and "use" of water together when assessing an application for a water permit. That's problematic (for everyone) because most of Canterbury's catchments are fully or over-allocated, meaning any new application to "take" water is a prohibited activity. And, of course, no one wants to relinquish their water for ECan to reallocate to new activities - because they either need it or may need it or have paid damn good money for it. And ECan's ability to claw water back appears limited, or at least fraught due to legal and practical difficulties.

So, we knew a plan change was coming off the back of the SC decision. The only question was would ECan propose making past practices lawful or would it, faced with water scarcity and rising pollution, plan to have greater control over how water is allocated? Late in 2024 we had our answer. After a bit of legal footwork, we were added to the stakeholder list for draft Plan Change 8 (PC8) - under a long list of NZ and foreign corporates.

Presumably all gunning for a return to the good old days - although, their feedback has not been made public. Unfortunately, and as expected, ECan appears to be leaning into protecting the "rights" of existing consent holders to use or trade water - rather than getting into the business of allocating water itself and making decisions about whether proposed new uses of water will deliver sustainable social, cultural, environmental, and economic outcomes.

We say that because the draft plan change enables "changes of use" and without adding new rules for assessing the effects of the new use. Staff are proposing to claw back some allocation - but not nearly enough in our view. Of course, significant amendments could still be made in response to stakeholder feedback (AWA's included) before PC8 is notified for public submissions.

At the same time there are questions around whether the plan change can be notified at all. The Government has put a stop to most regional plan changes affecting water, until it's made its own changes to the legislation. But there are criteria for making exemptions, and a slim majority of ECan councillors (some of whom have interests in water permits or in shares in irrigation companies) voted to seek an exemption. By the time this edition is published we may know whether an exemption can and will be granted.

The Work To Come

The Supreme Court's decision was a "win" but after seven years this is clearly just the beginning of the battle. ECan's position seems entrenched - although perhaps only just. There are a larger number of more environmentally minded councillors sitting around that table now and voters concerned about river health and nitrate pollution are not small in number nor quiet. If councillors who might have an interest in the outcome of PC8 are forced to step away from the table, and if a majority of those remaining can just open their minds to a new way of allocating water, then better community and environmental outcomes are possible.

The RMA already allows regional councils to put rules in their plans to allocate water amongst competing activities. So, ECan could decide to put rules in place to deliver broader community and environmental wellbeing through the allocation of water. Its rule framework could differentiate between water bodies of different quality (e.g. protecting the best water for drinking water supply), and it could provide a distinct consenting advantage to activities that deliver better outcomes (as determined by communities). With a growing population, drier times predicted in the future, and global corporates in the mix, it is a neoliberal fantasy to assume an unregulated market can meet community needs and deliver "sustainable management" (as required by law).

Through our feedback on the draft plan change, AWA has asked ECan to undertake an analysis of the price of water over time, as demand grows and supply diminishes, for the unregulated market-based scenario - bearing in mind that there is no agency with the jurisdiction to regulate the price of water. We've asked it to consider any equity issues in terms of access to water allocation - including any inequity for NZ businesses faced with bidding for scarce water against global corporates. And we've asked it to consider the effect on profitability and production costs - which may impact trade competitiveness and the cost of goods to NZ consumers.

With water sovereignty front of mind, we've also asked it to understand the legal implications (if any) of establishing an allocation framework that will knowingly support a market for water - including whether ECan will have the ability (taking into consideration the cost of legal action) to create rules in the future that might undermine companies' significant investment in water permits.

That includes understanding the implications of clawing back water allocation that has been paid for based on the certainty delivered by ECan's own allocation framework. In our view, both ECan and the community need to know (right now) if there will be effectively "no coming back" from its proposed "change of use" rules, and its ongoing refusal to take on the job of allocating and reallocating scarce water.

Keep An Eye On Government

Of course, this Government is clearly cooking up something in the background and whatever that is may dictate ECan's approach. No doubt, current leadership would be in favour of a market-based approach or even creating property rights in water if it can pull that off. Looming changes to the Overseas Investment Act will also have an impact on water allocation - in terms of demand-side pressures.

Having iwi at the decision-making table may be the only thing that can get in the way of all that, so we'll be watching the outcome of recent legal challenges with keen interest and fingers crossed. Finally, if Plan Change 8 is notified later in 2025, we hope you'll consider making a submission. As always, thanks to CAFCA for giving us a voice in Watchdog.

Watchdog - 168 April 2025