The land that time forgot, and govt economics 101

Forest & Bird delivers a lesson in economical resource use — simplifying and streamlining, if you will — that doesn’t involve balancing the environment and the economy; and a reminder of the conservation job, put on ice for a quarter century

As the flagship Resource Management (Simplifying and Streamlining) Amendment Bill proceeded in 2009, Energy and Resources Minister Gerry Brownlee was at odds with his government, pursuing economically-inefficient resource management, in his ill-advised grab for Schedule 4.

Forest & Bird — joining others catching hold of Brownlee’s coat tails, and riding their momentum — told the Local Government and Environment Committee last week that it is especially important and urgent, following Brownlee’s assertions of a non-Schedule 4 mining ‘mandate’, to ensure that everything is in the Schedule that ought to be. I wrote about that here; I am not going to do it again, but there are other aspects to it.

Talking to the government in a language it understands, Forest & Bird had commissioned work on the economic function of Schedule 4, from consultant economist Geoff Bertram.

Ironically, his advice suggests that, in a way, “resource management (simplifying and streamlining)” is what Schedule 4 is all about. It was a bipartisan compromise, but yet, not really a concession by economic or mining interests, because its very rationale supports those interests.

According to Bertram, in high-value conservation areas, where balancing the environment and the economy simply isn’t possible in any meaningful way, because too many important values are unquantifiable, the least-cost method for everybody is to rule out any balancing, at all:

Economic efficiency requires, among other things, the minimisation of transaction costs so far as possible. In the case of areas of very high natural value, it is not efficient to allow continual battles between the competing interests, both because the issue of “development” versus “conservation” is inherently impossible to resolve except by exercise of judgment (usually with an arbitrary component); and because such battles have negative spillover effects. Extractive industries as a whole face the chilling effect of aroused public hostility, while the threat of major impacts on high-value landscapes and ecosystems has an equally chilling effect on tourism and aggrieves affected communities.

In most western democracies, legislation has been enacted to enable low-value areas to be developed by extractive industries, while removing the highest-valued areas from all developments and then providing some intermediate areas in which commercial and non-commercial values must be balanced by a formal process.

Striking a balance between the measurable economic gains from commercial development and the unmeasurable (non-quantifiable) loss of natural values in the process of development is time-consuming and difficult, placing heavy cost burdens upon all parties (as the history of the RMA, and the debates over mining in the Coromandel during the 1980 and 1990s, make clear). Those costs inevitably increase with the scale of the natural values at stake, as public concern (expressed through submissions, litigation, and political activity) increases.

Taking account of the uncertainties involved, and given the benefits of regulatory certainty, an economically efficient (least-cost) administrative solution is to classify the conservation estate into areas of progressively higher inherent value, to place a boundary around the highest-value category, and to ban extractive economic activities within that boundary. This in essence is the origin of Schedule 4 of the Crown Minerals Act.

This is the resource management (simplifying and streamlining) that you’d have, if you weren’t so busy having economic growth simplifying and streamlining.

The other interesting part of Forest & Bird’s submission is a paragraph tucked away at the back, highlighting a quarter century old problem:

Finally, we note that much of New Zealand’s public conservation land has yet to be adequately classified to recognise its conservation values. Places of national park quality are in limbo as stewardship land, a category of land administered by the Department of Conservation (and protected by the Conservation Act) but not yet classified. A prominent example is the Mokihinui Gorge adjacent to Kahurangi National Park, most well known for a proposal to build a 14km-long hydro-dam despite the Gorge’s extremely high natural values. A mining company is prospecting in the Mokihinui Gorge at the same time. The Gorge area is stewardship land, but evidence presented by the Department of Conservation in defending the area from a dam shows that its conservation values are exceptional, perhaps national park quality. The main implication of an area being still unclassified is that legal tests under the Conservation Act and Crown Minerals Act are much weaker than is appropriate.

The Department of Conservation (DOC), and the conservation estate as we presently know it, were established in 1987. A great deal of unclassified land was dubbed ‘stewardship land’, pending a review, that would see it all properly allocated to other conservation categories. As former Minister Philip Woollaston told a Wellington symposium recently:

The classification of land which was allocated to DoC was a major and time-consuming exercise involving considerable research and fieldwork. To complete it was clearly going to take many years. The land which was not National Park or already classified under the Reserves Act, the Forests Act or the Wildlife Act became ‘stewardship land’ — a statutory holding pen — until it could be assessed and, if merited, given more precise statutory protection.

["Origins of the legislation and policy relating to minerals in conservation areas", paper delivered to the Institute of Policy Studies' symposium, Mining in the Conservation Estate: Lasting Lessons from the Schedule 4 Debate, August 23, 2010.]

A comprehensive review was supposed to happen within three years; nearly 25 years later, it hasn’t, presumably because DOC is not funded and resourced for it, nor is it a Ministerial priority. Certainly Woollaston confirms this, in the term of his own government:

DOC was struggling with limited resources to establish itself from the fragments of a number of departments and the government, preoccupied with major social and economic reforms on a number of other fronts, did not see reserve classification as a priority.

But this is not just a ‘nice to have’, one day, when we can afford it. It has real world implications, right now. Forest & Bird points to the Mokihinui River hydro proposal, on our television screens and in our courts at the moment. That is one example of an iconic place, in stewardship limbo, where developers are trying to get consent for projects utterly unsuited to the environment, under law (generic Conservation and Resource Management Act provisions) not properly tailored to the values at stake.

If the millions of money and other resources currently being poured by Meridian, DOC, et al, down the Mokihinui River litigation channel was directed to clarifying the status of some of that stewardship land, we might actually make a little progress. In Bertram’s terms, by offering certainty, it would minimise everyone’s long-run costs.