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Adaptive Governance and Evolving Solutions to Natural Resource Conflicts - WP 07/03

New Zealand’s Natural Resource Management Challenges

New Zealand is facing fundamental pressures on its natural resources of varying intensity by area.The necessary responses are likely to be both time and cost intensive for regulators and users, given the value of the resources involved and the scale and length of life of the associated investments. This makes the resilience of any new management systems particularly important for future economic growth and environmental outcomes. This section therefore attempts to identify the key issues involved in managing change in those systems and ensuring that the systems endure and achieve their goals.[4]

2.1  Impacts of change and making it last

Institutions can be formal or informal, organisational or in the form of customary practices.Whatever form they take, however, the depth of institutional change that is called for can translate directly to the level of time and effort required to make that change endure.

In terms of natural resource management in New Zealand, this relationship can be usefully portrayed in terms of Williamson’s levels of social analysis as summarised in Table 1.  The different social levels illustrated in Table 1 evolve intermittently and at different rates, with time lags in the interactions between them.

Table 1 – levels of social analysis
Change process New Zealand examples
1 Resource allocation and employmentContinuous at a system level – possibly through multiple separate or parallel decisions within a longer-term framework. Specific decisions can be short-term, for decades or even irreversible. Approval of individual resource consents to take water.
Changes in land use from dryland sheep farming to irrigated dairying.
2   Governance arrangementsOne to ten years. Regional planning processes undertaken every decade under the Resource Management Act (RMA).
3   Institutional environment Ten years to a century. Resource Management Act (RMA) replacing the previous planning regimes in 1991.  Creation of Environment Court.
4   Informal institutions and customs Potentially centuries. Customary rights.   Expectations of public access.

Source: (Williamson 2000)

Pressures within levels 1 and 2 can normally be managed within existing institutions.  However some pressures (whether physical or social/cultural[5]) can require more substantive responses.  Responding to pressures, without first identifying how deeply the response will affect the existing institutions, risks generating a response from stakeholders which may defeat the purpose of the reform itself.[6]

Certainty and fairness

Certainty and fairness are also both important in making change last.  Certainty is particularly difficult to deliver in environmental policy design (Table 2) and the issues involved are discussed further in the sections on complexity and sustainable development.

Several dimensions of certainty are relevant.  The first dimension is certainty about the length of the process itself.  A fast process delivers an earlier outcome, thereby minimising the period when stakeholders don’t know what their future rights and obligations will be.  This limited duration of uncertainty reduces delays in investment and foregone use. 

Table 2– how uncertainty affects environmental policy design
Uncertain benefits and costs There is uncertainty on underlying processes, economic impacts of environmental change and over possible technological responses.  Costs and benefits functions tend to be nonlinear, and their shapes of the functions are often unknown particularly the thresholds for change or ‘tipping points’.  Uncertainty favours ‘hybrid’ policies mixing multiple instruments.
Irreversibilities Up-front sunk costs of action e.g. in capital intensive abatement equipment.  Damage is partially or completely irreversible.  Irreversibilities favour either stringent action now or waiting for more information, with no firm preference.  How we predict and value catastrophe is important.
Very long time horizons Potentially centuries versus typical business horizons of 20 or 25 years.  This reduces the ability to predict outcomes and favours using lower discount rates.

Source: (Pindyck 2006)

The second dimension is certainty about the durability of the new regime and the security of any rights created under it, both of which can be undermined by the ability to push change through rapidly or frequently.This type of uncertainty can have long-run costs through limiting the type and level of investment.

The final dimension is certainty about the outcomes of change, which may or may not be desirable to individual parties, but is definitely relevant to perceptions of procedural fairness.If a process is seen to have a predetermined outcome, or be biased towards particular outcomes or parties, that will affect the acceptance of the change itself.

    In Resource Management Act processes all these dimensions of certainty emerge:

  • arguments for faster resource consent processes tend to focus on the benefits of delivering outcomes early;
  • supporters of wide participation and consensus-based decision processes in resource management tend to emphasise the benefits of durability; and
  • debates about central government intervention in planning processes often centre around questions of how intervention will be perceived.

The durability dimension of certainty overlaps with the question of procedural fairness which can be seen as an outcome in itself, although its importance can vary widely.  A clearly defined process for input by those affected, and transparent consideration of views, can reduce the stresses of designing and implementing change.  

“Individuals gain procedural utility from such participation possibilities over and above the outcome generated, because they provide a feeling of being involved and having influence, as well as of inclusion, identity and self-determination” (Frey 2004).  The extent to which perceptions of procedural fairness can be achieved will be influenced by the circumstances at hand, including urgency and economic constraints, but boosting such perceptions can increase the resilience of policy.

Real or perceived breaches of procedural fairness on the other hand can lead to exhaustive appeals and other opposition, as well as having long lasting effects in reducing the openness of the group in question, or other observers, to future action.  New Zealand examples include the construction of the Clyde Dam and the diversion of Whanganui River water into the Tongariro hydro scheme.

The change process

The design of change processes also needs to recognise that they do not take place in a static environment.  Users and regulators of resources will themselves be responding to pressures through developing new technology, applying new techniques and policies, or modifying contractual structures or pricing.[7]  Identifying the appropriate government responses is unlikely to be straightforward, and government intervention risks crowding out private or community responses by acting too soon or being unnecessarily restrictive. 

Sequencing of change can be a controversial topic but there is at least some evidence that the order in which measures are taken is less important than the overall completeness of the package (stability, reformed property rights, and effective institutions) and its tailoring  to the physical, institutional and political characteristics at hand (Rozelle 2004).  Designing change so that it reflects external trends and interfaces with them as smoothly as possible is therefore desirable.

Notes

  • [4]This paper does not go into issues of regulatory design or property rights in natural resources, both of which have been discussed in previous papers (Guerin 2003a, b, 2004).
  • [5]Physical - depletion of gas reserves, exhausting the capacity of a lake to absorb nutrients without ecosystem change, or fully allocating the flow of major river systems.  Social/cultural - changes in environmental expectations, demands for redress for native title grievances, or changes in current public expectations for land access.
  • [6]Relevant research in New Zealand includes the research programme on Planning Under  Co-operative Mandates (PUCM)  which aims  to determine whether a devolved and co-operative system of governance for planning under New Zealand's 1991 Resource Management Act (RMA) and Local Government Act (LGA) will significantly improve environmental outcomes, as well as social, cultural, and economic well-being of communities, including iwi interests. http://www.waikato.ac.nz/igci/pucm/index.htm 
  • [7]Responses by users to pressures for change can precede the change process and evolve as pressures grow and the likely nature of change becomes apparent.  Users may alter intensity or scale of activities (bigger fishing boats) or the extent of fixed or activity-specific investment (multi-purpose boats), partially or complete exit from activities (leasing fishing quota), or arrange with other users to alter relative rights or usage (e.g. side-deals over water use to avoid challenges to a new application). 
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