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Working paper

Theory vs Reality: Making Environmental Use Rights Work in New Zealand (WP 04/06)

Issue date: 
Tuesday, 1 June 2004
Status: 
Current
Author: 
View point: 
Publication category: 
JEL classification: 
D23 - Organizational Behavior; Transaction Costs; Property Rights
H23 - Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
K11 - Property Law
P14 - Capitalist Systems: Property Rights

Formats and related files

The potential advantages in flexibility and efficiency of environmental use rights (such as permits and quotas) over prescriptive regulatory approaches have been well surveyed, and are being advocated in New Zealand now as a tool for achieving sustainable development. So why have they not been more widely adopted here?

Abstract

The potential advantages in flexibility and efficiency of environmental use rights (such as permits and quotas) over prescriptive regulatory approaches have been well surveyed, and are being advocated in New Zealand now as a tool for achieving sustainable development. So why have they not been more widely adopted here? How can government help remove barriers and improve both economic and environmental outcomes in New Zealand?

At the structural level the barriers tend to be well known, or presumed, as a lack of statutory frameworks or central government guidance, and information costs involved in defining the resource and in determining an appropriate rights framework to optimise its use.

Even given these structural and technical barriers there remains the task of explaining why, since those barriers are not insuperable, little progress has occurred. Other factors include the extent to which such responsibility in New Zealand is delegated by central government, competing priorities for regional governments, lack of pressure on resources (eg; water in much of New Zealand), the difficulty of making contentious choices and strength of existing interests, reluctance to acknowledge any private rights to some resources, the relative ease of using existing regulatory tools, and low benefits relative to costs in small markets particularly where geographical distinctions exist such as for water and certain types of pollution.

This suggests that the best focus for central government may be on better guidance, filling gaps in legislative frameworks, and providing or encouraging provision of the necessary institutions and systems in ways that allow economies of scope and scale. It is unclear how much scope there is for improvement but getting rid of unnecessary barriers, as long as it is done without unnecessary elaboration or restriction, will help secure whatever gains are out there to be had.

Disclaimer

The views, opinions, findings, and conclusions or recommendations expressed in this Working Paper are strictly those of the author(s). They do not necessarily reflect the views of the New Zealand Treasury. The Treasury takes no responsibility for any errors or omissions in, or for the correctness of, the information contained in these working papers. The paper is presented not as policy, but to inform and stimulate wider debate.

 

Last updated: 
Tuesday, 23 October 2007