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5  Natural Resources

New Zealand's natural resources (such as our land, air and water) are seen as a comparative strength. They enable many of our economic, social, and cultural activities. Therefore, sustainable use of our natural resources is essential for our long-term living standards.

Opportunities lie in improving the management of New Zealand's natural resources, in order to maximise the value society derives from them now and in the future. This includes how decisions are made for the consumption of, and investment in, natural resources. The goods and services that these resources provide continue to be undervalued in many decisions, as they can be difficult to accurately identify and quantify, which may result in sub-optimal resource use.

In particular, resource management could be improved by building a better evidence base to assess the state of our natural resources, the value derived from them, rate of change, and return on investments. Benefits are also possible from enabling the resource management and planning system to be more responsive to emerging issues and effective at balancing competing interests.

New Zealand is richly endowed in natural resources. These include both non-renewable resources (such as soil, coal, oil, gas, and minerals) and renewable resources (such as forests, fish, and water). These resources, together with ecosystem services[111] – for example, climate regulation, flood and disease regulation, water purification, nutrient cycling and soil formation – make up New Zealand's natural capital. In addition to underpinning the country's primary production and attracting a large number of tourists, the environment provides significant opportunities for recreation and is integral to our cultural identity.

Some aspects of New Zealand's natural capital are in decline.[112] The goods and services provided by natural resources continue to be undervalued in many consumption and investment decisions, as they can be difficult to accurately identify and quantify. This section notes particular pressures on fresh water, soil, and biodiversity – and the challenge of climate change – but does not attempt to be exhaustive. Rather, outlined are important concepts and particular challenges governments and societies face in managing New Zealand's natural resources in order to maximise benefit from them now and in the future.

The direction of resource management

The management of New Zealand's natural capital is improving, in recognition of its importance to the economy and living standards. There is a growing focus on concepts such as limits, allocation, resilience, and investment. The challenge of managing the country's natural capital to maximise living standards is no easy task given competing and evolving goals, complex interdependencies, and shifting scientific understanding.

'Limits' can play an important role in ensuring that New Zealand does not exceed biophysical thresholds or irreversible tipping points in an ecosystem. In some circumstances, the setting of more conservative limits or targets may better reflect societal and cultural values, or possible economic benefits, such as obtaining a premium from environmentally-friendly products. If there is uncertainty around where a tipping point is, a precautionary approach would ensure a buffer is maintained between the amount of a stock used and the estimated tipping point. Albeit, uncertainty of environmental impacts makes this difficult in practice. Exactly who should set limits on use (e.g. governments, iwi, businesses, communities and individuals) will differ depending on the resource type in question.

Within the agreed limits, resources should be allocated to the users who will create the highest benefits for society. Greater long-term benefits will be possible if users are incentivised to improve their productivity over time, and resources can be moved to higher value uses as they arise. In some instances, the best course of action may be preservation of a resource, including because of its value to economic growth. For example, natural landscapes and unique biodiversity can attract tourists; trade benefits may be possible from protecting the country's 'clean, green' image; and new technologies could be adopted that increase or maintain productivity while protecting the environment. For finite, exhaustible resources – such as petroleum, coal and minerals – the aim should be to use these assets at a rate and in a manner that will provide the greatest contribution to living standards as a whole, over time.

Challenge and opportunity – Freshwater quality and allocation

While recent reforms have improved management, fresh water is an example of a resource that has traditionally been undervalued. Users typically pay little or nothing for its use andfresh water resources have historically been allocated without reference to water replenishment rates and environmental outcomes. As a result, the quality and availability of fresh water is under pressure and deteriorating in some locations.

Although some quality indicators (such as water clarity) have recently shown improvements, other quality indicators (such as nitrogen and phosphorus levels) show deteriorating trends – particularly in intensively farmed lowland and urban areas. For example, between 1990 and 2012, the estimated amount of nitrogen that leached into soil annually from agriculture increased 29 percent.[113] Excessive nitrogen in water bodies causes growth of nuisance slime and algae that can reduce oxygen in the water, impede river flows, block irrigation and water supply intakes, and smother riverbed habitats.

In addition to quality concerns, some areas face pressures on the quantity of water available. For example, in the Bay of Plenty, a 2013 water allocation status report highlighted that 62 percent of rivers and lakes in the region (for which there are adequate flow records) were over-allocated.[114] Also, in Canterbury, a number of river and aquifer takes are either fully allocated or near the limit of what can be abstracted while maintaining environmental flows.[115]

Recent freshwater reforms[116] have recognised that New Zealanders cannot keep increasing their use of freshwater resources, and have introduced limits to use based on sustainability. In particular, the National Policy Statement for Freshwater Management 2014 requires the quality of all freshwater bodies to be maintained or improved, introduces mandatory quality bottom lines, and provides opportunities for regions to set additional limits and objectives. This reform – together with increased monitoring; freshwater clean-ups; greater involvement of communities in decision-making; improvements in irrigation infrastructure; and a focus on science and data – should result in improved outcomes for the country's freshwater resources.

Now that a limits-based approach has been adopted for freshwater management, the key issue for central government is how to best support the transition to a world of 'growth within limits'. This includes ensuring that: appropriate limits are set and monitored; freshwater is allocated to its highest value use; and the resource is allowed to move to higher value uses as they arise. The Crown and Māori also need to agree on how iwi/hapū rights and interests in freshwater will be recognised. Until such agreement is reached, there will be investment, regulatory and legal uncertainty, which will make it difficult to transition to the new management regime.

There are opportunities to restore natural resources that have been degraded over time, or at least reduce the rate of degradation.This would entail short-term costs, but in many cases, these costs should be seen as an investment in New Zealand's natural resources, and should be weighed against the expected long-term benefits. Necessary interventions may include requiring users to cover the costs to society of their activities (e.g. to internalise the downstream costs of pollution), investing in infrastructure (such as wastewater and stormwater infrastructure), and clean-up initiatives (such as pest control or lake weed removal). This requires determining how costs should be distributed and how to smooth the transition, including by encouraging innovation and adoption of new technologies.

Resource use decisions should also take into account society's desired level of resilience to natural hazards(including droughts, storms, sea-level rise, earthquakes and biosecurity incursions).Such events or changes can have significant economic impacts (e.g. the Treasury estimated that the 2013 drought reduced real GDP by 0.7 percentage points).[117] The resilience of government finances can also be tested if weaker economic growth reduces revenue and government assistance is sought for those adversely impacted. Planning for environment-related shocks can reduce the impacts on individuals, communities, industries, and the environment. This is becoming increasingly important as the growing complexity of societies makes the consequences of shocks more wide-ranging and difficult to predict.[118] Particular attention should be given to those elements of the economy and environment that are less able to adapt and are more vulnerable to shocks – such as water resource allocation, biodiversity, and infrastructure – and to identifying any others.


  • [111] Ecosystem services are the benefits people obtain from ecosystems, including provisioning services such as food, water, timber, and fibre; regulating services that affect climate, floods, disease, wastes, and water quality; cultural services that provide recreational, aesthetic, and spiritual benefits; and supporting services such as soil formation, photosynthesis, and nutrient cycling. Source: United Nations Millennium Ecosystem Assessment (2005) Ecosystems and Human Well-being: Synthesis. Island Press, Washington, DC.
  • [112] Ministry for the Environment & Statistics New Zealand (2015) New Zealand's Environmental Reporting Series: Environment Aotearoa 2015. Available from and
  • [113] Ministry for the Environment & Statistics New Zealand (2015) New Zealand's Environmental Reporting Series: Environment Aotearoa 2015. Available from and
  • [114] New Zealand Institute of Economic Research (2014) Water Management in New Zealand – A Road Map for Understanding Water Value.
  • [115] Canterbury Water (2009) Canterbury Water Management Strategy: Strategic Framework – November 2009.
  • [116] For more information on the freshwater reform programme see:
  • [117] The Treasury (2013) Budget Economic and Fiscal Update 2013, pp.17-18.
  • [118] Patrick Helm (2015)Risk and resilience: strategies for security. Journal of Civil Engineering and Environmental Systems.
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