New Zealand in top 10 for greenhouse gas emissions.

Smith skips the “however” in OECD environmental review

Environment Minister Nick Smith’s take on an OECD report on New Zealand’s environmental performance is that it says we are doing well. He skipped the word “however”, which makes frequent appearances in the OECD’s press release and the report.

All up, it’s a constructive report, as you would expect from an OECD (Organisation for Economic Co-operation & Development) unit headed by Dr Smith’s predecessor from the 1990s, Simon Upton.

Simon Upton.

Mr Upton was elected to Parliament as a National MP in 1981, when he was 23, and was appointed to the Cabinet in 1990, holding the portfolios of health, the environment, and research, science & technology. As environment minister he shepherded the Resource Management Act into law in 1991, and he was responsible for establishing the Crown research institutes.

When he resigned from Parliament in 2001, he went to Paris to chair the OECD’s Round Table on Sustainable Development, and in 2010 he was appointed head of the OECD’s environment directorate, based in Paris.

For yesterday’s release of the organisation’s environmental performance review of New Zealand, he was back in Wellington. That much was acknowledged by Dr Smith but, for the rest, his response to the constructive review was a glib use of the kind references in the report.

Nick Smith.

Dr Smith said the review “highlights New Zealand’s green credentials and the strong progress we have made over the past decade, as well as the challenges we need to address. This report highlights that New Zealand fares well in terms on environmental quality of life. We have good air quality, an exceptionally high proportion of renewable electricity, easy access to pristine wilderness and an advanced & comprehensive natural resource management system.

“This report shows how far we have come over the past decade. We introduced environmental pricing on waste in 2009 and on greenhouse gas emissions in 2010. We have introduced new national policy statements in areas of freshwater management, urban development & coastal management, as well as national environment standards on air quality. We have also made important institutional changes with the creation of the Environmental Protection Authority, new laws regulating activities in New Zealand’s huge EEZ (exclusive economic zone) and the new Environment Reporting Act 2015.

“We also concur with the OECD assessment of New Zealand’s future environmental challenges of climate change, freshwater management, biodiversity, reducing the complexity of urban planning & transport funding reform. This report reinforces the importance of the significant work programmes the Government has under way in each of these areas.

“This environmental report card will help us sharpen our future direction & environmental aspirations, as well as learn from the experiences of other countries. I thank the OECD reviewers & the examining countries of Australia & the UK for their contribution to this thoughtful report.”

Report reflects Upton’s constructive criticism

Many New Zealanders opposed to giving greater sway to environmental care in the 1990s regarded Mr Upton as a jumped-up little squirt. What he did was back his views with a formidable breadth & depth of information, and he looked for the positive & constructive.

That’s reflected in yesterday’s OECD review, which was worked on by over 30 OECD people.

Heading the project was a Canadian, Nathalie Girouard, who worked on economic policy & country studies when she joined the OECD in 1993 and co-ordinated its green growth strategy for 5 years, and research was led by a Russian who gained his master’s degree in environmental management in Amsterdam and is now a US citizen, Eugene Mazur, a policy analyst involved in various environmental performance reviews since 2003 (his next one is on Estonia) and spent 14 years on environmental policy reform in countries of Eastern Europe, the Caucasus & Central Asia.

If Dr Smith can get his RMA reform, the Resource Legislation Amendment Bill, through Parliament in the final session of Parliament before the election – on the slimmest of majorities as his only support at the moment is the Maori Party – economic factors will carry as much weight as environmental.

That makes plenty of sense in many circumstances, but it would be very easy for the economic to quickly dominate the environmental assessments: concrete over the more hypothetical. The debate that has followed the 23 February announcement of the Government aim for 90% of rivers & lakes to be swimmable by 2040 is evidence that this government doesn’t rate the damage from high levels of nutrients entering waterways as highly as the public response suggests it should.

The OECD press release out yesterday began: “New Zealanders enjoy a high environmental quality of life & access to pristine wilderness. However, New Zealand’s growth model, based largely on exploiting natural resources, is starting to show its environmental limits with increasing greenhouse gas emissions & water pollution.”

Cleaning up lakes has been on Dr Smith’s agenda since National returned to power in 2008. The national policy statement for freshwater management was published in 2014 and the “swimmable” declaration was made a month ago.

OECD criticisms

Mr Upton said when he presented the report in Wellington: “While the country only accounts for a tiny share of global emissions, the review finds that intensive dairy farming, road transport & industry have pushed up gross greenhouse gas emissions by 23% since 1990. Despite generating 80% of its electricity from renewable sources, among the highest in OECD countries, New Zealand has the second highest level of emissions per gdp unit in the OECD and the fifth highest emissions/capita.

“Having largely decarbonised its power generation, New Zealand needs to ensure its climate policies are effective in curbing emissions in all sectors, notably transport & agriculture. This means strengthening the emissions trading scheme and ensuring sectoral policies are aligned with the need for a low emissions transition.”

Agriculture accounts for 49% of emissions – the highest share in the OECD – and the report suggests they should be incorporated into the emissions trading scheme or alternative measures developed to counter the pressures of farming: “The use of environmentally related taxes, charges & prices should be expanded.”

“Growth in intensive dairy production has increased the level of nitrogen in soil, surface water & groundwater. The nitrogen balance (the difference between nutrients entering & leaving the system) increased more than in any other OECD country from 2000-10.

“Aware of the need to safeguard water quality, New Zealand has begun a process of freshwater policy reforms with a clean water package of proposals in February that address some of the OECD recommendations. Further government support is needed to assist local authorities with setting rigorous goals and to speed up implementation.”

Urban planning

The review also looks at New Zealand’s fast-growing cities and suggests that a simpler urban planning system, less restrictive land use regulations and better co-ordination between land, transport & infrastructure planning could help ease the pressure. It adds: “Car ownership in cities is high and many vehicles are old & emission-intensive. Current vehicle standards & taxes do not sufficiently encourage a shift towards cleaner, more efficient technologies.”

The report says New Zealand should consider more systematic use of pricing instruments to achieve urban policy objectives. It said water charges had helped cut consumption, but legislation prevented use of volumetric charges for wastewater services, road tolls & congestion charges.

The report said there was wide scope to make better use of pricing instruments to encourage efficient land use: “Development contributions (levied to finance infrastructure) do not reflect the true cost of providing infrastructure to a specific area. This makes inefficient and use artificially cheap and potentially accelerates urban sprawl.

“Limited distinctions between development contributions across building types & characteristics – eg, size or energy efficiency – translate into weak incentives for developers to build high performance buildings or low impact infrastructure.

“Financial contributions (levied to reflect costs of development on the environment) are often charged at a fixed rate, rather than being based on the marginal environmental damage of development, and the Resource Management Legislation Bill proposed to remove them entirely.

“Property taxes (rates) are mostly levied on the basis of capital value rather than land value, which may favour greenfield over infill developments insofar as they are permitted.”

The report also advised changes to infrastructure funding policies: “Expansion of pricing instruments would also diversify funding options available to city councils. Many councils need significant investment to accommodate population growth, including in water & wastewater, roads & public transport infrastructure.

“The central government finances about half of local roads or public transport, but entirely finances state highways. This creates incentives for local government to opt for state highway over local road & public transport solutions.

“Funding heavily relies on property taxation (general rates), which implies large cross-subsidies from the general public and weakened incentives for councils to accommodate growth, as infrastructure investment may lead to a higher tax (rates) burden on the community.

“User- & beneficiary-based funding, eg through road & water pricing and better targeted development contributions, would reduce the burden on the public budget. At the same time it would contribute to better demand management and more efficient use of land & resources.

“There may be room for the tax system to capture windfall gains accruing to landowners from infrastructure improvement (eg, betterment levies) and rezoning land for urban use (land value capture) to pay for required infrastructure.”

The OECD’s recommendations on this segment include:

  • giving more attention to spatial planning, while simplifying infrastructure & transport planning requirements
  • broadening the scope of the national policy statement on urban development capacity to encourage good urban design outcomes & principles for sustainable urban development, and
  • facilitating a change to land use plans to reduce the scope for vested interests to thwart development of wider public interests.

One recommendation less likely to go down well is to repeat the Auckland super-city experiment, with adjustments, in other urban areas. For that to succeed, Aucklanders will need to be convinced that the value of amalgamation has exceeded its downside.

Links:
OECD NZ environmental performance review 2017
2014 OECD report: Do environmental policies matter for productivity growth? Insights from new cross-country measures of environmental policies
4 March 2017, Government release: River & lake targets need to be practical
25 February 2017: Conservation & environment science roadmap announced
23 February 2017: Claims of lowered water standards wrong
23 February 2017: 90% of rivers & lakes swimmable by 2040

Attribution: OECD report & release, ministerial release.

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