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• 6. Water

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• 6.1 Summary of Issues: Water Sector
• 6.2 Background
• 6.3 Water Supply
  • 6.3.1 Collection
  • 6.3.2 Treatment
• 6.4 Water Distribution
  • 6.4.1 Water Quality
  • 6.4.2 Leakage
  • 6.4.3 Risk Management
• 6.5 Water Demand
• 6.6 Wastewater
  • 6.6.1 Collection Assets
  • 6.6.2 Efficiency
  • 6.6.3 Wastewater Treatment
  • 6.6.4 Wastewater Discharge
  • 6.6.5 Wastewater Processing Demand
  • 6.6.6 Impact of Tourism
  • 6.6.7 Pricing and Demand Management
• 6.7 Irrigation
• 6.8 Future Investment Requirements: Water Supply
  • 6.8.1 Collection and Treatment
  • 6.8.2 Distribution Assets
• 6.9 Future Investment Requirements: Wastewater
  • 6.9.1 Treatment and Disposal
  • 6.9.2 Collection
• 6.10 Asset Management and Planning
• 6.11 Water Sector Issues for Sustainable Development
  • 6.11.1 Water Shortages in New Zealand - Their Distribution in Space and Time
  • 6.11.2 The Adequacy of Current Methods of Allocating Water
  • 6.11.3 The Extent of Uptake of "Integrated" Approaches to the Management of Water Resource and Associated Infrastructure

Water resources in New Zealand are not only essential to the economy, but are also a significant part of New Zealand's heritage and recreational activities. In addition, water has important spiritual value for many Māori.

6.1 Summary of Issues: Water Sector

Generally, there is an abundant resource of water in New Zealand, and in general the quality of the water supply infrastructure as surveyed is of a high standard. There are however areas where there is tight competition for the water resources and some areas where drought conditions have resulted in water shortages.

One of the big issues for the water supply industry is competing uses for water and the allocation of water rights.

For the reticulated water supply and wastewater systems, the main issue is the limited amount of consistent, reliable and easily accessible information. Whilst water is governed by Territorial Authorities, information is not necessarily public information, and individual water and wastewater managers have been relied on to supply information for this report. Generally industry managers have been co-operative and have gone out of their way to supply information. It is still difficult to obtain what may seem relatively straight forward information in a consistent and reliable manner, because of the variance in performance measures used by the Territorial Authorities. Apart from the Ministry of Health drinking water standards there is no specific information that is required to be disclosed by the industry in a consistent way across the country.

There are some water supply systems with unsatisfactory Ministry of Health source and treatment gradings. Significant investment is required to upgrade treatment plants in Nelson (already underway), Dunedin and smaller councils not surveyed, where funds are scarce. This will become a serious issue for some areas.

Similarly areas with low distribution gradings, need significant investment in the piped network in order to comply with drinking water standards. This is again believed to be more of an issue for the smaller councils not surveyed for this report.

For wastewater there is also a current issue relating to quality rather than quantity. Whilst most treatment facilities are compliant with current resource consents, significant upgrades to treatment plants will be required in Hastings, Napier and Dunedin along with a number of smaller councils in the near future in order to obtain future resource consents.

Each of the Territorial Authorities surveyed had some form of 10 year (or more) plan for upgrading their water and wastewater networks. For most of the Territorial Authorities the upgrades are funded through a combination of rates, rates-funded loan, developer levies and assets vested to council. For the majority of Territorial Authorities surveyed, there appear to be no significant funding constraints.

However, treatment plant and reticulation upgrades to meet drinking water standards may provide some funding issues for some councils. Similarly for wastewater the main financial constraint is related to the upgrading of treatment facilities to meet environmental standards.

Information on projected demand and planned capacity upgrades has not been readily available, and there are gaps in the information. The new Local Government Act will assist the industry to develop more information, but as the councils are accountable to their local community rather than to a national body, it is anticipated that the information reported will continue to vary across councils.

6.2 Background

Typically, water supply services are provided by Council-owned utilities, operated either as council departments or stand-alone business units, through networks that are geographically self-contained.

Water supply utilities in New Zealand are typically fully integrated. They tend to provide the full range of services, from raw water and wastewater collection and treatment to distribution/disposal, in their region. There are two major exceptions to this industry structure in Auckland and Wellington.

The general structure of the New Zealand water supply and wastewater industry is depicted in Figure 38 below.¹³ The figure excludes private supplies.

Figure 38: Structure of the New Zealand Water Supply and Wastewater Industry

→ Larger Version of Figure 38 [13KB GIF]

In Wellington, raw water collection, treatment and bulk water transport services are provided by Greater Wellington Water (Greater Wellington - The Regional Council), with all other services, including wastewater collection, treatment and disposal, provided by the four city councils in the Wellington region (with each city council supplying its own district). In 2000, a new service agreement was formed between Hutt City Council, Upper Hutt City Council and Hutt Valley Wastewater Services for the bulk disposal of wastewater. In this service agreement Hutt and Upper Hutt have maintained ownership of the treatment and disposal assets.

Auckland's industry structure is more complicated. Whilst Watercare provides the bulk supply of water to the Hibiscus Coast area, Rodney District Council has a fully integrated system for its remaining areas and is the sole provider of services in the northern part of the Auckland Region. Watercare provides most of the raw water collection, treatment and bulk water transport services to the other five district and city councils in Auckland. Each of the entities that receive services from Watercare provides its own local water supply services. Watercare also provides bulk wastewater treatment and disposal for four of the councils, whilst North Shore City Council and Rodney District Council undertake their own treatment and disposal.

The majority of the population receive water supplies from public water supply systems, governed by 74 Councils¹⁴ and two regional entities (Watercare Limited and Greater Wellington Water). A small minority of the population receive water from small privately owned or co-operative supply schemes. The remaining population rely on individual supply (including rainwater collection and the use of bores). Industry obtains a large proportion of its water requirements from their own sources. Territorial Authorities accordingly have a significant role in the water industry. The key roles and responsibilities of Territorial Authorities for water services include:

• owner and provider of water utility services;
• customer representative;
• de facto price regulator;
• regulator under the Local Government Act 2002, Health Act 1956, Building Act 1991 and the Resource Management Act 1991.

As a consequence the Local Government Act is a key piece of legislation in the water industry. However, the water sector is governed by many different sets of rules and is accountable to many different bodies. There is no one single body responsible to all facets of legislative performance.

The provision of water services is affected by a number of other pieces of legislation, for example: The Commerce Act 1986; Water Supplies Protection Regulations 1961; Food Act 1981; Fire Services Act 1975; Building Regulations 1992 (The building code).

Figure 39: Legislative Framework Applying to New Zealand Water Utilities

The water sector is highly fragmented in structure and comprises a huge variety of assets; comparisons across the sector are therefore not simple. Whilst most Territorial Authorities report service and quality levels to some degree, the indicators that are reported vary widely. For the purposes of this report, information was gathered from Territorial Authorities servicing the major population areas (over 30,000) or smaller areas where there is significant projected population growth. The total population connected to these water supply systems is approximately 2.5 million.

6.3 Water Supply

87%¹⁵ of the population receive water supplies from 1,875 community water supply systems. The larger systems are governed by Territorial Authorities,¹⁶ but there are many systems included in the register that are private supplies such as schools, universities, motels and hospitals. The remaining population rely on individual supply (including rainwater collection and the use of bores). Industry obtains 66% of its water requirements from its own sources.¹⁷

New Zealand has substantial rainfall and extensive lake and river systems, with some regions, including Canterbury and Hawke's Bay, also having aquifers. These water resources are by no means evenly distributed. Rainfall in Milford Sound can exceed 10,000mm per year, while Alexandra on the other side of the Southern Alps typically has just 340 mm of rain per year.¹⁸

According to the New Zealand Yearbook 2002, it has been estimated that New Zealand water consumption approaches 2,000 million cubic metres a year. Figure 40 shows New Zealand's water consumption by activity. Irrigation and livestock make up 75% of New Zealand's water usage, reflecting the economy's heavy reliance on primary industries.

Figure 40: New Zealand Water Consumption by Activity

Source: New Zealand Official Yearbook 2002

These figures do not include water for hydroelectric generation, which exceeds 100,000 million cubic metres a year. Water flowing through hydroelectric generation can be used again. For example, on the Waikato River, including its tributaries, 10 state owned hydro-electric stations, and a number owned by local authorities, use and reuse flow, which at Karapiro (the final station), is more than 7,000 million cubic metres a year. The total national irrigation, agricultural, industrial and domestic water consumption could be supplied three times over by the Waikato River at Karapiro.¹⁹

In reality, however, the Waikato cannot provide water for all of New Zealand because of the cost, let alone environmental impacts, of transporting or redirecting water. Water availability is a localised issue for each region and because of the variability in rainfall, discussed above, water shortages are a significant issue facing regions on the east coast of the South Island, and southern parts of the North Island.

New Zealand's water supply infrastructure is made up of discrete water supply systems with little interconnection. Each reticulated system has assets for collection and treatment of raw water and assets for distributing the water from the treatment plant or point of supply to the customer. Each is covered in turn in the following paragraphs.

6.3.1 Collection

The total water availability for the Territorial Authorities surveyed is 668 million cubic metres per year, with a daily abstraction capacity of 1.84 million cubic metres per day. For these councils 56% of the water is source from surface water extraction and 44% from groundwater sources.²⁰

Collection assets in each region reflect the available sources of supply. Abstraction assets include:

• Off river storage - assets used in the storage of surface water, such as dams and reservoirs which are located away from rivers;
• On-river storage - assets used in the storage of surface water, such as dams and reservoirs which are located on rivers;
• River extraction assets - assets used to collect surface water;
• Boreholes - assets used to collect ground water, including springs.

Other assets that are associated with the collection of raw water include:

• Catchment land - land used as part of the catchment area for the source water;
• Pumping Stations - pump water abstracted into raw water mains;
• Raw water pipelines - pipelines used in the transportation of raw water from its source to the treatment plant, including valves;
• Structures - including headworks, tunnels, railway lines.

Collection assets are maintained in perpetuity. We are not aware of any existing constraints on water supply resulting from the capacity and condition of water collection assets.

A key component of the collection function is obtaining and maintaining access to water rights. We address this issue further in section 6.11.2.

6.3.2 Treatment

The extent of required treatment depends on the source of water. Where water is abstracted from boreholes, the water is generally of a very high quality, such that no treatment, other than possibly disinfection, is required. A water system can have good quality water without having any treatment at all. Surface water abstraction usually requires a more complicated treatment process, and a range of treatment plants are used. Other assets associated with treatment are reservoirs or storage facilities and land.

Table 21 shows the treatment capacity of plants from the surveyed Territorial Authorities,

Source: PricewaterhouseCoopers Surveys

For the majority of abstracted water, no treatment is required. However, of the 380Gl of surface water²² available for extraction, 91% is given either full treatment or advanced full treatment processes. For both the Auckland and Wellington regions, all of the water is treated to full or advanced full treatment levels.

The Ministry of Health grades water to provide an indication of its confidence in the public health safety of each drinking-water supply serving a community of over 500 people. The full Register defines 1,875 supplies serving 3,500,401 people.²³ The grading has two letters: the first (capital) letter represents the source and treatment grading, while the second (lower case) letter grades the water in the distribution zone itself. Gradings of "C" or "c" indicate marginal quality, while lower gradings show that quality or risk management is unsatisfactory. An ungraded supply is indicated by "u" in the Register.

Table 22 provides a summary of the Ministry of Health Gradings for the 1,875 registered supplies.

Note 1: The Grading U includes Auckland supply components not yet regraded after the Waikato River was added to its sources. Previously Auckland Region was graded A and the water from the Waikato is treated by an advanced full treatment process.
Note 2: The Ministry of Health has very recently finalised a new Grading specification, under which supplies will be progressively regraded from 2004 onwards. This is especially relevant for some supplies, which have not been regraded since the mid 1990s

Source: Extracted from the National WINZ (Water Information New Zealand) database by the ESR Water Information Systems Group at ESR, Christchurch

For the Territorial Authorities surveyed for this report, the summary Ministry of Health gradings are provided below.

Source: Ministry of Health (July 2003)

Assuming that Auckland and the Waikato source are regarded at A or B standard, this would indicate that approximately 70% (2.5 million out of 3.5 million) of the population on Ministry of Health graded supplies are receiving high quality water supply.

The water quality of the larger councils is generally of a high standard, but there are some areas where quality or risk management is unsatisfactory. The water in these areas is "safe to drink", but there is a higher risk of health issues arising from these water supply systems. The proposed Health (Drinking Water) Amendment Bill seeks to make compliance with drinking water standards mandatory. If the legislation is passed, it is expected to be phased in over five years and that water suppliers supplying over 10,000 people would be required to improve their gradings. This has implications for those currently with the lowest gradings, in particular, the need to invest in improved treatment facilities. This is an issue for Dunedin and Nelson and many of the smaller councils where surface water sources are subject to minimal treatment, and investment funds are scarce. (Nelson has already begun construction of a new treatment plant.)

6.4 Water Distribution

Distribution covers all assets used to distribute water from the treatment plant (or point of supply) to the customer, including storage of treated water, such as:

• pumping stations;
• reservoirs;
• potable water mains - pipes used to distribute potable water to the end user, including valves, fire hydrants and including both fire mains and rider mains;
• special purpose valves - such as pressure reducing stations and valve points
• structures - such as tunnels and bridges, that are located within the distribution system
• bulk flow meters
• customer related equipment - those assets used to connect the customer to the mains including:
  • service pipes
  • tapping bands
  • manifolds
  • tobies
  • backflow prevention devices
  • customer meters

The ownership and responsibility for the maintenance of customer-related equipment varies from one Territorial Authority to another. Some Territorial Authorities take varied responsibility for the customer equipment up to the meter or toby:

• Full;
• To the property boundary;
• Only to the tapping band.

The total length of distribution pipeline, for the Territorial Authorities surveyed is 20,504km (fire + rider mains). Age and type of pipes varies considerably across the country reflecting historical settlement and development patterns. Older pipes tend to be cast iron, concrete or asbestos cement. New pipes are typically PVC or polyethylene.

Current maintenance practices across Territorial Authorities are based on condition principles, such that assets are renewed in a timely manner to ensure current needs are met. Asbestos cement pipes do not impose a health risk on the water supply systems (as the name might suggest). However, analysis of faults by one Territorial Authority²⁴ does support the widely held perception that asbestos cement is a poor performing watermain material.

6.4.1 Water Quality

The Ministry of Health distribution grading (lower case) grades the water in the distribution zone itself. Gradings containing "c" indicate marginal quality, while lower gradings show that quality or risk management is unsatisfactory. An ungraded supply is indicated by "u" in the Register.

The summary of the Ministry of Health distribution gradings for the 1,875 registered supplies is as follows:

Source: Extracted from the National WINZ (Water Information New Zealand) database by the ESR Water Information Systems Group at ESR, Christchurch

For the Territorial Authorities surveyed for this report, the Ministry of Health gradings are as follows:

Note 1: U relates mainly to the Auckland Region as discussed above.
Note 2: Wanganui District Council at the time of this publication was a "D" grading, but the Ministry of Health has since approved an "A" grading.

Source: Ministry of Health (July 2003)

The data in the tables above demonstrates that the quality and risk management of the distribution systems is generally of a very high standard. The Proposed Health (Drinking Water) Amendment Bill, as discussed above, has implications for those currently with the lowest gradings, and may require investment in pipeline upgrades for those with the poorest gradings. Again this is an issue for Dunedin and a number of smaller councils (not surveyed) where funds may be scarce due to smaller rate bases.

6.4.2 Leakage

Leakage in the distribution system is not easily measured. There is a nationwide water losses benchmarking initiative that some councils are participating in. The current annual real losses (CARL Basic) are measured in terms of non-revenue water less accounted for non-revenue water per connection per day. The average for the 13 Territorial Authorities that were able to provide information was 161 litres/connection/day. A more widely measured indicator is percentage non-revenue water (which includes water lost through bursts/outages, meter reading errors, fire fighting use, leakages and operational use such as flushing) as a proportion of the total water volume. This indicator can only be estimated for most Territorial Authorities, as metered data is not readily available. Of the surveyed Territorial Authorities, only 8 have universal metering. Other Territorial Authorities have undertaken investigations such as night flow testing to estimate the percentage non-revenue water.

The average percentage non-revenue water for the councils surveyed is 16% (varying from 9.4% to 29.6%). For the Auckland region, (where there is universal metering) the percentage non-revenue water is 13%. These figures are similar to Australian averages. The Australian Urban Water Industry WSAAfacts'99 reports water losses as a percentage of total volume. The average was 12.3% with a range from 4.2% to 32.3% for the 1998/1999 year.

6.4.3 Risk Management

Virtually all of the Territorial Authorities surveyed had some form of water supply contingency plan. These plans varied from emergency response plans to risk management and lifeline documentation, to individual plans for particular scenarios. For a number of Territorial Authorities there was some doubt as to whether or not the planning in place was sufficient to meet the requirements of the new Emergency Management and Civil Defence Act. Many of the plans in relation to terrorist threat were improved and/or tested at the time of the cyanide threat in March 2003. In the Auckland region, most of the Territorial Authorities have their own emergency response plan in addition to the Regional Drinking Water Incident Cooperation Plan (RDWICP).

Other service quality indicators are available in a limited way across a subset of councils.

6.5 Water Demand

The current total water demand for the councils surveyed is 380 million cubic metres per year. The breakdown of the current water use in New Zealand (for Territorial Authorities surveyed) is shown below.

Figure 41: Reticulated Water Demand in Surveyed Territorial Authorities

Source: PricewaterhouseCoopers Surveys

The capacity of the water supply system is determined by a wide range of factors, including:

• pumping station capacity;
• storage facility capacity (dams or reservoirs);
• resource consent limits.

Resource consents also vary in that some consents allow a maximum abstraction from a river or water body, while other consents require a minimum flow to remain in the river, in which case the actual capacity is controlled by rainfall.

The estimated capacity of the water supply systems surveyed totals 668 million cubic metres per annum. The capacity utilisation rates range from 22% to 92% and on average is 56%. This is the average utilisation over the year. There are seasonal peaks for water supply.

Most of the country's largest urban areas have reliable water supplies. The new supply pipeline from the Waikato River should be more than adequate to provide for the foreseeable needs of Auckland City although there are some distribution problems due to the location of growth nodes in the northern part of the region. Wellington City and Hutt City are well served by supplies from the Wainuiomata catchment, the Hutt River (run-of-the river as well as storage at Te Marua) and the Hutt aquifer. Christchurch City has an excellent high volume management supply from groundwater.²⁵

Dunedin's municipal take is from a number of small surface streams which tend to dry up in summer and which have minimum flow requirements to protect instream values. This suggests that further supply infrastructure may need to be developed in the future.²⁶

There are some areas of New Zealand where population growth pressures are creating pressure on drinking water supplies during drought periods, e.g. Nelson, Tasman, Kapiti Coast, and Tauranga.

Nelson City has recently constructed an $11 million water treatment plant. In Tasman, there is pressure on the municipal supply from both domestic and industrial users. A feasibility study is being undertaken into the possibility of constructing a pipeline from the Motueka Plains through Tasman, Ruby Bay and Mapua to the Waimea Plains, linking back into the Tasman District Council reticulation system. This would enable supplementation of urban supply in the growth areas of Ruby Bay and Mapua and provide additional water to meet urban and industrial demand on the Waimea Plains. On the Kapiti Coast, the Kapiti Coast District Council has considered various water storage and pipeline²⁷ options and the feasibility of borefield development to supplement summer supplies is currently being investigated.

In order to control water use in drought periods, some Territorial Authorities introduce either voluntary or active hosing restrictions.

In some regions, tourism has a sizable seasonal impact on drinking water demand. As a consequence, higher infrastructure capacity is required than would otherwise be needed to meet the requirements of the local community. This is discussed further in Section 6.6.6.

6.6 Wastewater

As for water supply, there are a large number of discrete wastewater systems. A lower proportion of the population are connected to the wastewater system than are supplied by water reticulation systems.

The total volume of wastewater produced approaches 345 million cubic metres per year for the surveyed Territorial Authorities. In addition, many large industrial sites have private discharge arrangements with regional councils, rather than discharging to a reticulated system.

As for the water supply system, wastewater systems are not interconnected across the country. Each reticulated system has assets for collecting untreated wastewater from customers and transporting it to treatment facilities for the treatment and disposal of wastewater effluent, which includes liquid, solids and gas. Each of the collection, treatment and disposal activities are discussed in the following sections.

6.6.1 Collection Assets

Collection refers to all assets used to collect raw wastewater from the user and transport it to the treatment plants including:

• manholes
• sewers - local and trunk
• pumping stations
• rising mains - pressure pipes conveying effluent from pumping stations to the rest of the network
• holding tanks
• customer related equipment - those assets used to connect the customer to the sewer including:
  • laterals - pipeline connecting customer to the public system
  • trade waste meters and equipment - assets used to collect data from trade waste customers.

The ownership and responsibility for the maintenance of laterals varies across Territorial Authorities. Some Territorial Authorities take full responsibility for the full length of the lateral. Others are only responsible for wastewater from the property boundary whilst some Territorial Authorities are not responsible for any assets beyond the point where the lateral is connected to the public system.

The total length of sewer is 15,659km for the Territorial Authorities surveyed. The age and type of sewers varies considerably across the country, reflecting historical settlement and development patterns. Older pipes tend to be earthenware, concrete or asbestos cement. New pipes are typically made of PVC, with a small amount of polyethylene also used.

Current maintenance practices across Territorial Authorities are based on condition principles, that is assets are renewed in a timely manner to ensure current needs are met.

6.6.2 Efficiency

The most appropriate measure of the efficiency of the reticulation system is the amount of inflow/infiltration into the system. Inflow/infiltration is a indication of the leakage into the system, and is usually higher in wet weather. Inflow or infiltration causes higher volumes of wastewater that need to be processed at treatment plants, therefore requiring additional energy and chemical inputs. Because wastewater is not metered, inflow and infiltration is estimated. Inflow and infiltration investigations have been completed to varying degrees, but generally include smoke testing, dye testing, house to house inspections and/or flow gauging. The weighted average level of inflow/infiltration is 23%, ranging from 11% to 33%. (Note, this excludes Kapiti Coast District (3%), where drought conditions have reduced inflow and infiltration, and Auckland City and Wanganui District where there are combined stormwater/wastewater systems (typically closer to 40%).

Two Territorial Authorities (Auckland City and Wanganui District) have combined wastewater and stormwater systems. In these areas, the inflow/infiltration percentage is significantly higher than for other Territorial Authorities. Renewal programmes are well underway in both areas to segregate the systems.

For Auckland City it is expected that the sewer separation will continue and be completed in the next 20 years, at an estimated cost of $178 million. The logic behind the design of a separate sewer system is to avoid wastewater entering the environment and, in addition, reduce the volume of inflow and infiltration into the wastewater system.²⁸ For Wanganui District Council, the sewer separation cost is expected to be approximately $40 million.²⁹

As for water supply, most Territorial Authorities are reporting wastewater quality and service levels in some capacity, but the type of information and level of reporting is diverse. As wastewater originates with the customer, unless a customer has an asset failure on their own property, they are unlikely to be "out of service". Therefore, it is not relevant to consider indicators such as interruptions to supply. In the same way, quality of wastewater for each customer is not relevant, but quality of discharge to meet environmental standards, as determined by governing bodies, is critical.

Most Territorial Authorities record the number of overflows and/or the number of blockages in their wastewater systems, but the breakdown of these by cause is less accurately recorded. Because of the limited reliability and availability of this data, it is not meaningful to draw conclusions from these results.

Wastewater contingency plans are generally covered in the emergency response plans or lifeline documentation as for water supply. Whilst the wastewater infrastructure is of a different nature to water, the general procedures are the same. There are some Territorial Authorities that have a contingency plan for water but not for wastewater.

6.6.3 Wastewater Treatment

The level of treatment of wastewater varies from council to council. The treatment types of the councils surveyed are depicted in the following table.

Source: PricewaterhouseCoopers Surveys of Territorial Authorities

For the purposes of this review:

• "primary" refers to equalisation, grit removal, solids reduction and screening;
• "secondary" refers to treatment such as trickling filters, activated sludge removal and nutrient removal (including oxidation ponds where they are the primary biological process);
• "tertiary" refers to any process after secondary treatment such as disinfection by chlorine or ultra violet and includes polishing methods.

In recent years, there has been major capital expenditure by local authorities on the upgrade of wastewater collection, treatment and disposal infrastructure, and most of New Zealand's wastewater plants have been substantially upgraded.

The capacity of wastewater treatment plants has two aspects: peak day and average day capacity. For most regions, peak daily flows occur when inflow/infiltration is high, thus lowering the concentration of the wastewater to be treated. Therefore a treatment plant can treat a higher quantity of wastewater and still meet the effluent standards required. In this report, capacity refers to the average daily capacity, rather than peak day capacity, unless otherwise specified.

As can be seen in the table above, the majority of wastewater is treated to a high level undergoing primary, secondary and tertiary treatment. However 23% is treated with only primary treatment and, although this will probably meet current resource consents, it will not be possible for these Territorial Authorities to renew these on expiry. Within the next decade Hastings, Napier, and Dunedin will be required to upgrade treatment plants to meet environmental requirements of new resource consents. This is also understood to be a potential issue for smaller communities with primary treatment facilities. Some communities, where treatment upgrades are being accelerated in order to obtain resource consents, face financial difficulties.

Aside from upgrades to treatment processes, treatment plant assets are maintained in perpetuity and we are not aware of any existing constraints on wastewater systems due to the capacity and condition of treatment assets.

6.6.4 Wastewater Discharge

Discharge assets can be minimal in some systems and extensive in others. Disposal assets can include:

• Outfalls - sewers used in disposal process;
• Outfall pumping stations - pumping stations fed by outfall sewers;
• Incinerators - used to incinerate waste products;
• Sludge disposal assets - land, buildings and equipment used specifically for waste disposal, e.g.. farms and special purpose landfills.

For the majority of the Territorial Authorities surveyed, disposal assets consist of either an outfall pipe with the possible addition of a pumping station. The replacement value of the disposal assets is small compared to the collection and treatment assets. The assets are maintained on condition principles, such that they are renewed in a timely manner and upgrades are relatively easily planned and executed.

Discharge quality is difficult to compare across the country as discharge consent monitoring requirements vary with each consent. Resource consents are administered by 12 Regional Councils and four Unitary Authorities. As such, the resource consent requirements for each region vary greatly. Breaches of resource consents are not always publicly disclosed and as a result we cannot determine meaningful discharge quality indicators, except to say that breaches of resource consent do occur and on occasion result in legal proceedings.

6.6.5 Wastewater Processing Demand

The total volume of wastewater produced for the Territorial Authorities surveyed is 345 million cubic metres per year. The percentage breakdown by source is shown below.

Figure 42: Current Wastewater Volumes by Source

Source: PricewaterhouseCoopers Surveys of Territorial Authorities

There is sufficient treatment capacity to treat the quantity of wastewater for each Territorial Authority surveyed, both for peak day and for the annual demand, except at Rodney District Council, where treatment throughput exceeds consent limits. New resource consent limits have been approved but not yet issued. In addition, Rodney District Council is about to begin works on a treatment plant capacity upgrade.

Wastewater reticulation capacity has been measured by assessing the number of recorded overflows that were related to either wet weather or dry weather overflows. For the majority of the country this is not an issue. Some systems have designed overflows, which enable the system operator to control system overflows. The Auckland region has the highest proportion of wet weather overflows (largely due to stormwater inflow), particularly (but not solely) in the part of the system which combines wastewater and stormwater flows.

As noted above, the peak day in most areas is determined by high inflow and infiltration in wet weather and as a result treatment plants have a much higher peak day capacity than average day capacity due to the high water content on peak days, diluting the wastewater and enabling resource consent requirements to be met.

6.6.6 Impact of Tourism

In some regions, seasonal peaks arise from high levels of tourism. In these areas, higher infrastructure capacity is required than would ordinarily be needed to meet the requirements of the local community. This has financial implications for Territorial Authorities and ratepayers. In August 2003, Market Economics Limited prepared a report Effects of Tourism Demand on Water and Sewerage Infrastructure in Four Local Authorities for the Ministry of Economic Development and The Ministry of Tourism. The objective of the study was to identify the costs that tourism demand places on local authority infrastructure, relative to the net recovery of these costs from the tourism industry. It assessed the effects for four case study locations: Stewart Island, Kaikoura, Queenstown and Rotorua. All four areas were found to be recovering visitors' share of operating costs from the visitor sector. However funding capital investment to meet tourism demand was identified as an issue for small communities. The initial per capita costs to meet water and sewerage capital investment needs can be very high ($11,000 per capita for Stewart Island, compared to $3,800 for Wanaka and $21 for Rotorua). The significant per capita investment required to introduce a reticulated water supply scheme and augment the sewerage scheme for Stewart Island is a concern for Southland District Council and a constraint on growth of the tourism industry on the Island.

6.6.7 Pricing and Demand Management

Demand management is more difficult for wastewater than for water supply. The easiest form of wastewater demand reduction is from reducing the water supply demand.

Only a very small proportion of wastewater customers are volumetrically charged. Price control is not currently imposed on the water industry. Public (Territorial Authority) ownership is effectively relied on as a substitute for price control. The Local Government (Rating) Act 2002 ("LGRA"), which superseded the Rating Powers Act gives councils the power to "rate" property to provide the council with its main income stream. General rates are charged on property value. Targeted rates can be assessed on the basis of a range of calculating factors, only some of which are related to aspects of a property's value.

In addition to the rating mechanisms outlined above, which can be applied to water services, the LGRA also allows for water to be charged on a fixed yearly basis, or on the volume of water consumed. Territorial Authorities are not permitted to charge for wastewater services on a volumetric basis, although Council-controlled organisations and private suppliers have more flexibility.

Depending on the trade waste by-law in each area, most of the councils have trade waste customers which are charged a trade waste charge which incorporates quantity and quality of discharges into the reticulated system.

6.7 Irrigation

Approximately 500,000 hectares of land is under irrigation in New Zealand. Of this 165,000 hectares is under community irrigation schemes that range in size from 500-30,000 hectares, the rest is under private irrigation schemes.³⁰

The following table shows the water allocated to irrigation by region through out New Zealand.

Notes:
* Agricultural Production Survey for the year ended 30 June 2002.
** In 2002 the population definition was changed to all units identified on Statistics New Zealand's Business Frame or the Inland Revenue Department's Client Register as engaged in agricultural activity.
*** Figures may not add to the totals due to rounding.
**** Symbols used in this table:
"c" denotes an estimate that has been suppressed for reasons of respondent confidentiality.
R revised

Source: Statistics New Zealand. Table jointly compiled by SNZ and the Policy Information Group, Ministry of Agriculture and Forestry.

The Ministry of Works and Development managed the Crown's irrigation schemes until 1 April 1988, when responsibility for administering the schemes was transferred to the Ministry of Agriculture and Fisheries.³¹ All but one scheme was subsequently sold.

Source: Extract from Report to Parliament - Sale of Irrigation Schemes Financial Summary, MAF Policy, Ministry of Agriculture and Forestry

In addition to the ex-Crown schemes listed above, 2 schemes have been developed privately.

Infrastructure assets vary from scheme to scheme, and there is limited public information on the quantity of assets. The assets consist of pipelines (varying considerably in size), community water races, pumping stations and dams.

Approximately 50% of the 500,000ha irrigated land uses water pumped from ground water. Significant investment in local electricity distribution networks has been required to service growth in irrigation load in the past ten years in the South Island. Some irrigation supply in Central Otago and Northland is based on storage. In Central Otago there are ten (nine historic and one new) special purpose community irrigation dams, three of which also provide electricity generation. The nine historic dams are in need of upgrading. In addition, three schemes are supplied by the Clyde Dam and one scheme is supplied by the Hawea Dam. In Northland, there are two special purpose irrigation reservoirs supplying the Kerikeri irrigation scheme and drinking water for the Kerikeri township.

There are large variations in the design and function of the schemes. "Some schemes are designed to deliver water under pressure to the farm gate while other schemes offer little more than the ability for farmers to take water in a catchment, leaving them to develop their own delivery and supply mechanisms."³³

In terms of reliability of supply, there is a trade off in the development of each scheme between providing fewer farms with good reliability or a greater number of farms with lower reliability. In many of the existing community schemes, most of which are serviced from water races, there is insufficient flexibility to vary water rostering to crops or farms with a higher risk businesses. Also, the irrigation schemes dating from before 1960 were designed to provide only 66% of the water requirements for the full property. Farmers farm to these limitations.

Strategic storage development would increase reliability, for instance, the recent development of the Waimakariri Irrigation scheme (near Christchurch), which is based on run-of-the-river supplies that are clearly inadequate for the area. The scheme was designed for a group of farmers; their needs have increased and neighbouring farmers want water now that they can see the benefits. Storage capability would improve the situation.³⁴

The development of large-scale community schemes has the potential to generate significant social and economic impacts. Whether such impacts, particularly social impacts (such as population, occupation/employment, community services), are viewed as beneficial varies between stakeholder groups, with widely divergent opinions across the sector.³⁵

The combined area for projected development is 460,000ha over 10 years. From MAF's perspective, much of the private irrigation (usually from ground water) might be achieved over that period depending on dairy and arable markets and electricity pricing, but community schemes are unlikely to exceed 150,000ha over the next 10 years due to long delays with resource consent processes and the difficulties of getting sufficient landowner support to fund them. Unless there is a benevolent community backer (such as a district council) the potential schemes will often be truncated to serve a lesser area for the most committed landowners and this could frustrate or prevent more efficient longer-term options.

6.8 Future Investment Requirements: Water Supply

The current water demand for the reticulated water systems of the Territorial Authorities surveyed is 380 million cubic metres per year. Whilst there are issues with capacity in drought periods there is sufficient capacity to meet this demand when drought conditions are absent. For the water sector, projected demand and planned capacity have been investigated to 2021, as this is the year that 20 year population projects have been forecast to from the 2001 census. The projected demand for 2021 is expected to be 457m cubic metres per year, an average 20% increase across the country. However, growth forecasts vary significantly between regions.

6.8.1 Collection and Treatment

The current abstraction and treatment capacity is sufficient to supply forecast annual demand. This, however, does not take into consideration seasonal peaks. In Auckland and Hamilton, abstraction and treatment capacity must be augmented to meet forecast peak demand. This will require investment in treatment plants to obtain the water rights for abstracting more water from the Waikato River. This augmentation expenditure is not believed to be a constraint for either region.

Augmentation is required in other regions, to provide for peak period demands. Each of the Territorial Authorities surveyed had some form of 10-year (or longer) plan for upgrading their collection and treatment assets. For most of the Territorial Authorities the upgrades are funded through a combination of rates, loan funding and developer levies. For the majority of Territorial Authorities surveyed, there were no significant funding constraints apparent.

Source: PricewaterhouseCoopers Surveys of Territorial Authorities

Growth projections vary widely across the regions. For the Auckland Region growth is lowest in Auckland City, with still a significant growth forecast of 15%. For Rodney District Council the growth forecast is as high as 196%, where it is expected that some houses with their own water supplies, will become connected to the reticulated system.

For the Wellington Region, high growth (18%) is expected in Wellington City, but low to no growth is expected in Porirua, Upper Hutt and Hutt City.

Across the North Island, there are areas of high growth: Tauranga (100%), Hamilton (40%), Kapiti Coast (30%), Napier and Hastings (20%), but in other regions low or no growth is expected.

In the South Island, of the four councils surveyed, high growth is projected for Nelson (35%), but low or no growth is expected for the other areas. The reason for the decrease in water capacity to 2021, shown in the table above, is that excess water availability in Invercargill is expected to be allocated to other uses. The water availability in Invercargill will continue to meet expected demand, hence this does not raise any issues.

6.8.2 Distribution Assets

The increase in water demand reflects the demands of: current customers on the existing network (increase in water demand per customer), new customers on the current network (infill developments) and new customers on extensions to the network (greenfield developments).

The growth on existing distribution networks is expected to be readily managed through current infrastructure, with additional pumping stations and pipe augmentation in the higher growth regions. Augmentation programmes are aligned with renewal programmes for most regions. Augmentation is typically funded through rates, rate-funded loans and developer levies. In addition, a new customer to an existing network pays a charge to fund (either partially or fully) the cost of the new service pipe and associated equipment (including meter where applicable) connecting the customer to the network, although the charge varies significantly from council to council.

For extensions to distribution networks (greenfield developments) the predominant source of investment funds is from developers constructing the assets, which are then vested to councils. In some regions developers are charged an additional developers levy in order to fund augmentation work required on the current network created by the new development.

6.9 Future Investment Requirements: Wastewater

The current wastewater demand is 345 million cubic metres per year and is expected to increase to 420 million cubic metres per year by 2021. This is shown in the following table:

Source: PricewaterhouseCoopers surveys of Territorial Authorities

Growth forecasts for wastewater tend to mirror those for water. Rodney District Council has the highest growth forecast of 249%, partly because this includes the connection of houses that are currently on septic tanks. The other high growth areas are Tauranga, Auckland Region, Hamilton and Kapiti Coast. In the South Island wastewater demand is expected to increase more than water demand. This is because the increase in water usage is expected to be offset by a decrease in water losses.

6.9.1 Treatment and Disposal

In a number of areas (including Rodney, Hamilton, Tauranga, Palmerston North, Rotorua and Nelson) additional treatment capacity is required to meet the forecasted annual (and peak) demand. In other areas such as Auckland, additional capacity is required to meet peak demand.

In addition to the investment in augmenting treatment plant capacity, new resource consents will be required in many locations for additional discharge volumes. Augmentation of disposal assets (outfalls and pumping stations) is more easily executed and of a lesser cost than for the treatment plants. As for water supply, most Territorial Authorities fund the upgrades through a combination of rates, loan funding and developer levies. For the majority of Territorial Authorities surveyed, there were no significant funding constraints identified for required investment in treatment and disposal assets. Funding constraints were more evident for councils required to upgrade treatment plant processes to meet environmental standards, as discussed in section 6.6.3.

6.9.2 Collection

Upgrades to the collection reticulation system are carried out in a similar manner to the water supply distribution networks. The increase in wastewater demand arises from the same three categories of customers: current customers on existing networks, new customers on existing networks and new customers on extensions to existing networks.

Growth on existing collection networks is expected to be readily managed through current infrastructure, with additional pumping stations and sewer augmentation in the higher growth regions. Augmentation programmes are aligned with renewal programmes for most regions and are funded through rates, rate-funded loans, developer levies and contributions from new customers.

Like water supply systems, extensions to collection networks are undertaken by developers, who then vest the assets to councils. Developers may be charged an additional developers levy to fund future augmentation work on the current network.

6.10 Asset Management and Planning

As discussed in section 6.6, information across the water sector is fragmented and not readily available in a comparable format. This is true also of asset management and planning information. All of the councils surveyed have Asset Management Plans and Capital Expenditure Funding Plans, but the content and format of each is very different. Information on future demand and capacity requirements is limited. The new requirements of councils under the new Local Government Act will make this more transparent.

Under the Local Government Act 2002, there is now a "five cornered" planning and reporting process which includes for each council, requirements to report the following:

1. Not less than once every six years - the community's desired outcomes
2. Long Term Council Community Plan ("LTCCP") - describes activities and outlines what the council intends to do towards achieving of the agreed community outcomes. An LTCCP provides detailed information for each of the first three years of its planning period and outline information for the remaining seven years.
3. Annual Plan - Under the new LGA, the annual plan is limited to an updated and refined budget and rating statement in the second and third years of a triennial LTCCP.
4. Annual Report - stating actual achievements (as measured against the LTCCP and Annual Plan).
5. Not less than once every three years report on the progress made in achieving the community outcomes

Also, according to the Local Government Act 2002, all local authorities are required to carry out (through a consultative process) comprehensive assessments of water supplies, wastewater and stormwater activities in their district (whether the services are provided by them or by someone else). The assessments must:

• Describe how drinking water is obtained and extent to which it is potable.
• Describe how wastewater and stormwater are disposed of.
• Identify the risks to the community where any such service is absent.
• Assess quality and quantity adequacy issues.
• Identify current and future demand issues.
• Consider the full range of options for the future and their environmental and public health impacts.
• State the Territorial Authority's intended role and proposals for meeting the current and future demands.

The assessments are to be completed by June 2005. Most of the councils surveyed are in the initial stages of the assessments. It has not yet been determined whether the assessments will be undertaken as integrated catchment studies, nor is it known how complete the assessments will be by June 2005. The Act does allow Councils some discretion in respect of the level of information provided, which may be exercised with regard to:

• the cost and difficulty of obtaining the information;
• Territorial Authority resources available;
• the possibility that the council may be requisitioned under the Health Act to provide a particular service.

Industry managers have concerns about the significant increase in consultation that is required under the new Local Government Act. Public consultation is an important input to the process of policy formulation on service levels and standards in the water, wastewater and stormwater sectors. These sectors do not have fully functioning markets where pricing signals convey consumers' preferences for service levels and standards. Therefore consultation is required. The optimal level of consultation is a matter of balance and judgment.

While the water supply, wastewater and stormwater assessments are matters for Councils to undertake, rather than the water industry, water and wastewater services are generally managed by departments or units of Councils (except in the case Auckland City and Papakura District Council) and therefore water industry managers play a significant role in completing the assessments.

Councils are at varying stages in their development of asset management processes. Virtually all of the Territorial Authorities surveyed are using the Infrastructure Asset Management Manual (IMM) 2002 and its companion Infrastructure Asset Valuation and Depreciation Guidelines. Those that are not using the manual intend to do so. One organisation, which has been using the guidelines, is now changing to base the Asset Management practices on the WSAA ("Water Services Association of Australia") Asset Management Practices.

6.11 Water Sector Issues for Sustainable Development

The study has identified a number of infrastructure-related water resource management issues, which have a direct or indirect bearing on the ability of Government to achieve its long run sustainable development objectives.

The POA identifies water quality and allocation as one of the four key priority areas. The POA for water has been developed to achieve the following outcomes:

• Freshwater is allocated and used in a sustainable, efficient and equitable way.
• Freshwater quality is maintained to meet all appropriate needs.
• Water bodies with nationally significant natural, social or cultural heritage values are protected.

Taking into account the infrastructure related water resource management issues identified in this report and the key elements of the POA for water, we consider the principal infrastructure related water issues for sustainable development are:

1. Water shortages in New Zealand - their distribution in space and time.
2. The requirement to avoid or mitigate adverse effects on the environment including effects on instream values.
3. Current methods of allocating water and the adequacy of those methods.
4. The requirement to protect receiving environments from the adverse effects of wastewater and stormwater discharges.
5. The desirability, and extent of uptake, of "integrated" approaches to the management of water resources and associated infrastructure.

These issues and their relevance to the quality of infrastructure - including whether infrastructure meets or is likely to continue to meet sustainable development needs - are discussed below.

6.11.1 Water Shortages in New Zealand - Their Distribution in Space and Time

Water shortages are relevant to the issue of infrastructure quality because they can affect the need for various types of infrastructure development, including storage reservoirs, pipeline, stock water races and irrigation schemes. Shortages of water of adequate quality for potable supply can also create a need for treatment plant facilities.

The type of infrastructure that is provided to satisfy water supply needs is relevant to several of the sustainable development objectives referred to earlier.

New Zealand is well endowed with water resources compared to many countries. Nevertheless water shortages are increasingly being experienced in some parts of the country during summer months.

The degree of water shortage in a given area is a function of the natural availability of water (in turn, a function of local climate, physiography and geology e.g. the presence/absence of aquifers) and the local demand for water, which in turn is a function of factors such as population density, the degree of industrial development and land use type.

The most drought-prone areas of New Zealand occur on the east coast of both the South Island and the North Island and include Canterbury, Marlborough, parts of Otago, Wairarapa, Hawkes Bay and Gisborne. Nelson, Tasman and Kapiti - all on the western side of the main divide - are also drought-prone areas.

Unfortunately, some of the country's most drought-prone areas coincide with the areas of greatest demand for water. The current situation with respect to regional water shortage is summarised in the table below.

Source: Regional Council Interviews

Within a given region, the availability of water can vary considerably, with some areas being "water short" and others not. For example, Golden Bay is well endowed with water relative to the rest of the Tasman District on the eastern side of the Takaka Hill.

On a national basis, about "77% of water allocated is for irrigation,³⁶ 16% is for community, municipal and domestic uses and 7% is for industrial takes."³⁷

In recent times there have been some major land use changes in New Zealand, for example dairy conversion in Canterbury, Southland, Wairarapa, Bay of Plenty, Manawatu; viticulture in Marlborough (Wairau Plains, Awatere Valley), Tasman, parts of Canterbury, Otago, Wairarapa, Hawkes Bay, Gisborne). The effect of these changes has been to increase the demand for water,³⁸ exacerbating water shortages in previously water-short areas and creating the potential for water shortages where they were previously non-existent or only rarely experienced (e.g. northern Southland).

In Canterbury, there are problems with water supply for primary production over the whole of the Plains. Both surface and groundwater resources are more or less fully allocated and in some cases thought to be over-allocated.³⁹ During the summer, the beds of some of the smaller rivers are commonly dry and groundwater levels drop as a result of reduced recharge (from surface waters) and groundwater abstraction. One of the results of this is that irrigators are having to seek deeper water (up to 200 metres deep) which results in greater expenditure and pumping costs.

In Marlborough, the demand for water for viticulture has outstripped supply. In most areas, both surface and groundwater resources are fully allocated and there are significant constraints on when water can be taken.

In Tasman, the Waimea Plains surface flows and groundwater resources are fully allocated so that during summer months there are shortages of water for municipal supply, irrigation and industry. Population pressures are exacerbating the situation and there is an informal waiting list for water.

Some regions (e.g. Bay of Plenty, Manawatu-Wanganui, Waikato, Hawkes Bay) report a steady increase in the demand for water as a result of a combination of factors including an expansion of dairying,⁴⁰ horticultural development, viticulture, population growth, urban subdivision, and rural lifestyle blocks.

The value of water is generally being factored into land prices. Properties that have access to water have risen substantially in value. This is particularly in evidence in areas subject to viticulture and dairying development. One estimate puts the values of water availability on the Wairau Plains at $50-60,000 per hectare. The value of water for agricultural production has implications for water allocation (section 6.11.2).

The availability of water for domestic needs (including drinking water supplies) and the associated issue of the type of infrastructure that is needed to deliver reliable, safe and equitable supplies, is a sustainable development issue as it relates directly to objective e) above in section 2.4.1.

Most of the country's largest urban areas have reliable water supplies with adequate capacity for current demands. There are some areas of New Zealand where population growth pressures are creating pressure on drinking water supplies during drought periods, e.g. Nelson, Tasman, Kapiti Coast, and Tauranga (see section 6.6). Drinking water supplies are generally of high quality in New Zealand and considered "safe" to drink. The results of the Ministry of Health public health grading of the source, treatment and distribution (reticulation conditions, management, and actual water quality) of community water supplies indicates that for the majority of the larger urban areas, the water quality is very high.

Industry obtains 66% of its water requirements from its own supply sources (surface water or bores),⁴¹ but most industries (by number) take their water from the local municipal supply. Some industrial plants, like other water users, are subject to rationing or other water conservation measures during drought periods. For example, the three largest industries in Tasman - the Medium Density Fibreboard Plant, the Meatworks and the Apply Cannery - are all required to cut back on water use and hence production during drought periods. Similarly, some industries in the Kapiti area suffer from municipal supply constraints during drought periods. Such constraints, if they continue, may affect the future ability of existing industries to grow and/or the ability of the areas concerned to attract additional wet industries.

The other substantial use of water resources in New Zealand is for irrigation. Irrigation can offer substantial benefits in terms of converting land to higher value agricultural use. Irrigation schemes can also have significant environmental effects,⁴² which need to be assessed on a case-by-case basis. It is conceivable, even likely, that in some situations irrigation schemes are not sustainable either in terms of the "sustainable management" requirements of the RMA or the Government's sustainable development objectives.

The efficiency of irrigation schemes is however an aspect of the quality of irrigation infrastructure which has a direct relationship with one of Government's sustainable development objectives (section 2.4.1).

Over the past three to four years Government has funded feasibility studies into a number of irrigation schemes in drought prone areas of New Zealand.

The eastern sides of both islands are predicted to become increasingly drought-prone as a result of climate change. This, coupled with a high degree of investment in agricultural and horticultural activities (including viticulture) is likely to lead to increased demand for irrigation water. It may also lead to pressure to develop other forms of water supply infrastructure such as storage dams and long distance pipelines to augment urban supplies.

Certain types of infrastructure development, including hydro-electric power, urban water supply, irrigation, and stock water schemes, have the potential to significantly affect downstream flow regimes, bringing them into potential conflict with instream uses such as habitat/ecosystem maintenance, recreational activities (e.g. angling, boating) and maintenance of landscape values.

Sustainable development objectives a) and b) above relate directly to the need to protect instream uses of water.

The RMA requires persons exercising powers and functions under it to provide for the "sustainable management" of natural and physical resources, the definition of which includes safe-guarding the life-supporting capacity of water and ecosystems and avoiding, remedying or mitigating adverse effects of activities on the environment.⁴³

Sections 30, 6 8(7) and Part I of the Second Schedule of the RMA provide for the control of the quality, level and flow of any water body, including setting maximum or minimum levels of flow and control of the range or rate of change of levels of flow. Establishment of minimum flows is an important tool to assist regional councils in allocating water between competing in-stream and out-of-stream uses. The Act provides various other mechanisms for allocating water between in stream and out of stream uses.⁴⁴

Virtually all regional councils specify minimum flows for rivers and streams within their regions.⁴⁵ These are primarily aimed at protecting aquatic life during drought periods but some are also aimed at protecting specified in-stream uses such as angling or boating or at providing sufficient dry weather assimilative capacity for effluent discharges.

Minimum flows set a "bottom line" below which out-of-stream use of the water is prohibited or restricted. Usually a flow or level rule has the effect that new water permits will include conditions that specify that once a particular flow has been reached at a particular point in a river (or level in a lake), the take or diversion must be temporarily suspended or reduced.

A variation of the minimum flow regime used by some councils is the staged flow regime. This method involves reducing water takes as water flows (or lake levels) reach specified levels. The advantage of this is that rivers are less likely to reach absolute minimum flow levels as frequently and greater variability is maintained in the water body.

The setting of minimum flows or variable flow regimes aimed at protecting aquatic life and other instream values is not an easy task⁴⁶ and relies, among other things, on a knowledge of the extended flow history of a catchment. In the absence of such knowledge and the resources to undertake detailed instream flow studies, some councils have resorted to a "rule of thumb" approach, for example setting the minimum flow at 50% of the natural 5 day low flow. Such approaches are open to criticism.

Many regional councils are under pressure from environmental and recreational groups to increase the minimum flows on rivers to protect in stream values. The effect of this - coupled with increased pressure on both surface and groundwater resources, and drier summers - is to reduce the security of existing takes, placing both potable supplies and agricultural investment at risk.

There are some examples (e.g. Kapiti, Dunedin) where the need to protect instream uses of water has placed significant constraints on public water supplies leading to a search for alternative more secure supply sources, including possible storage facilities. Southland Regional Council recently declined two applications for large irrigation takes from the Riversdale Aquifer on the basis that there is not enough known about the relationship between groundwater abstraction and minimum flows in the Mataura River which is subject to a conservation order. Such outcomes are consistent with sustainable development.

The RMA is a primary vehicle for achievement of Government's sustainable development achievements and, in this respect, infrastructure developments - like other forms of development - are necessarily subject to RMA constraints.

6.11.2 The Adequacy of Current Methods of Allocating Water

As highlighted by the recent Government decision to "call in" a number of applications to take water from the Waitaki River, including Meridian Energy's proposed hydro-electric power developments and some irrigation proposals, the issue of water allocation is relevant to infrastructure development to the extent that water allocation decisions can be a major determinant of the type of infrastructure development that is able to take place.

Water allocation is directly related to one of Government's sustainable development objectives:

Freshwater should be allocated and used in a sustainable, efficient and equitable way.

It is also relevant, as illustrated by the Waitaki case, to sustainable development objective d) relating to increased use of renewable forms of energy.

Water is allocated from surface and groundwater sources by regional councils pursuant to the provisions of section 30 of the RMA. Part II of the Act contains matters relevant to the competing allocation of water between in-stream and out-of-stream uses, and also to out of stream conflicts. Section 7(b) of the Act requires regional councils to have particular regard to the "efficient use and development of natural and physical resources" and other parts of section 7 are relevant including the requirement to have particular regard to the maintenance and enhancement of amenity values [7(c)] and to the protection of trout and salmon [S 7(h)]. Regional policy statement and regional plans provide additional guidance.

Water permits create a right to take, use, dam and/or divert water subject to the availability of that water. They are not real or personal property (S 122 RMA) and they do not confer ownership of water. Nevertheless they are "personal" to the consent holder and the right to take water is a valuable/tradable commodity. Section 136(2) of the Act allows for the transfer of water permits to successors in title and potentially to other sites in the same catchment, aquifer or geothermal field provided that such a transfer is expressly allowed in a regional plan or approved by a regional council. The transfer can be for a charge (as determined between the two users) or could be for no charge. The transferability of water permits is a tool that can be used to reallocate water between uses (water permits are normally transferred by agreement when a property is sold, they do not automatically transfer).

Several regional plans contain provisions enabling the transfer of water permits to take place. Regional Councils have indicated this is occurring.

When considering applications to take water, regional councils may consider the purpose and efficiency of the water use as well as the abstraction and they may decline an application on the basis that the need for water has not been justified. However, the RMA currently does not provide for allocation mechanisms such as comparative assessment of competing allocations, purchase of entitlements to water (e.g. by way of tender) or proportional allocation (based for example on the applicant's history in the activity). Neither does it provide guidance as to priority of use.

Simpson Grierson recently undertook a review of water allocation under the RMA. A key conclusion of the review was that while the concept of "sustainable management" is capable of dealing with how much water needs to stay in a water body for protection of in stream values or uses it is of little use in determining allocation between competing out of stream uses of water. The Act does not deal with issues such as equity or efficient allocation and, to a large extent, "the market", geography and time factors are left to determine allocation between potential uses.⁴⁷

Not surprisingly, in light of the above, regional plans currently contain very little guidance as to how water is to be allocated and in the absence of such guidance, the default position under the RMA applies, namely that water is allocated via the issuing of resource consents on a first come first served basis.⁴⁸

Notwithstanding the lack of allocation guidance in the RMA, some regional councils have been criticised on the basis that they have failed to undertake adequate planning for water resource allocation.⁴⁹

The Ministry for the Environment and the Ministry of Agriculture and Forestry are jointly coordinating a whole of government process examining all aspects of fresh water. The Water Programme of Action includes water quality, water allocation and use and waterbodies of national importance. It is intended that the allocation and use project will identify problems with the current way water is allocated and used in New Zealand, and recommend options to improve the current processes. Tools produced under this work programme are yet to be determined, but may include economic instruments, amendments to legislation and national instruments.

The Environment Court in Marlborough Ridge⁵⁰ accepted evidence as to the operation of markets on natural and physical resources:

Market forces encourage efficiency and sustainable management by encouraging resources to gravitate to their most productive use. In the absence of environmental effects that require avoiding, remedying or mitigating, the market should decide which use is the preferred use of land both now and in the future.

The Simpson Grierson analysis says that it is not clear whether this finding should apply to the allocation of public resources such as water, pointing out that, unlike water, land is a private resource to which a permissive prescription applies.

Discussions with regional council personnel indicate that the conundrum faced by those seeking to improve the water allocation system is that the demand for water is largely driven by land use and land use change is largely driven by market forces, including overseas export markets. Consequently any attempt to adopt a planned or prescriptive approach to water resource allocation (based on perceptions of equity or future needs) would be likely to result in a mismatch between land use demand for water and water availability, with potentially serious economic consequences. Several respondents stressed the difficulty, if not the impossibility, of foreseeing future land use changes.

Efficiency of water use is a key issue in respect of sustainable development. As noted above, section 7 of the RMA requires consent authorities to have particular regard to the "efficient use and development of natural and physical resources". The Simpson Grierson analysis considered case law relating to this requirement, finding that:

• Section 7 can potentially go some way to redressing the "inefficiencies" caused by the first come first served principle
• However, it does not necessarily require that a proposal be the most or even a more efficient use of water
• Efficiency issues may extend to the efficiency of the end use of water (e.g. efficiency of a proposed irrigation scheme method of applying irrigation water)
• Efficiency cannot be equated with "necessity"
• Efficiency cannot be equated with profitability
• Nevertheless the flow-on economic benefits of the end use may be relevant in terms of efficiency
• Although section 7 requires regard to be had to the efficiency of use, not whether a use is more efficient than another use, the concept of relative or comparative efficiency is not necessarily precluded … it remains to be seen whether the Courts will compare the efficiency of two or more competing uses of the same water, where there is not enough for all.

Simpson Grierson's overall conclusion was that to date neither case law, plans nor national policy have provided much guidance as to the extent to which comparative economics/efficiency is relevant under the RMA. The comment is made that even if "the market" can allocate water efficiency, it certainly cannot do so equitably.

In our view, it is questionable whether the consideration of equity should be applied to water allocation (other than to the issue of ensuring access to adequate and affordable drinking water supplies). The RMA does not provide for equitable resource allocation.

Simpson Grierson suggests the possibility of establishing a water market including provision for water use charges for the take and use of water and/or for some form of water right tendering regime.

As noted by Chapman et al (2003), unless water has an actual or implied price, it is difficult to achieve water usage that even approaches allocative efficiency. A report by Lincoln Environmental (2000) identifies a lack of economic instruments as an impediment to achieving more efficient allocation of water in New Zealand.

Notwithstanding the lack of guidance as to how to go about water allocation, there is evidence that some regional councils (e.g. Canterbury, Southland, Otago, Tasman, Bay of Plenty, Auckland, Manawatu-Wanganui) are adopting a more strategic approach to water allocation and are undertaking studies or preparing strategies relating to issues such as the distribution of future demand, the relationship between surface flows and groundwater levels, possible reservation of water for future municipal supplies, and supply augmentation options.

Our overall conclusion is that current approaches to water allocation need to be improved, particularly with regard to allocative efficiency (pricing mechanisms, economic instruments), priority of use and representation of the national interest in water allocation decision making. All of these things have the potential to impact on the country's future infrastructure stocks.

6.11.2.1 Requirement to Protect Receiving Environments from the Adverse Effects of Wastewater and Stormwater Discharges

Discharges arising from wastewater collection systems (sewers) and treatment plants have the potential to have significant adverse effects on the quality of receiving environments and/or the uses or values associated with them.

In addition to effluent discharges, wastewater treatment plants also give rise to air discharges (odours) and, ultimately, the need to dispose of solid residuals - sewage sludge or biosolids.⁵¹

Sustainable development objectives a) and b) above relate directly to the need to protect receiving environments from the discharges associated with wastewater and stormwater infrastructure.

Wastewater, stormwater and air discharges are regulated by regional councils under the RMA. The discharge of biosolids to land (as opposed to the disposal of sludge in landfills) is also regulated by regional councils under the RMA. Regional plans contain rules and policies relating to the management of discharges and, in considering consent applications, councils are required to have regard to the sensitivity of receiving environments.

In recent years, there has been major capital expenditure by local authorities on the upgrade of wastewater collection, treatment and disposal infrastructure, and most of New Zealand's municipal wastewater plants have been substantially upgraded (e.g. Invercargill, Dunedin, Wellington, Hutt City, Palmerston North, Wanganui, Hamilton, New Plymouth, and Auckland). A few are still in the process of being upgraded e.g. Christchurch, Napier, Hastings, Gisborne.

This work, coupled with the fact most of the country's urban population centres are located on the coast (enabling them to take advantage of the high assimilative capacity of coastal waters⁵²) means that a high proportion of the country's total wastewater stream is being, or will soon be able to be, discharged without significant adverse effects on life-support systems, essential ecological processes or "natural capital" such as fisheries resources.

Regional councils indicate that generally most wastewater treatment plants are achieving effluent discharge standards.⁵³

Some smaller communities (with low rating bases) are experiencing difficulty achieving adequate standards of sewage treatment and disposal and, in some cases, this is reflected in unsatisfactory environmental outcomes. There is a high incidence of "failure" of septic tank systems as a result of unsuitable soils, overloading and/or poor maintenance. This situation is being addressed, at least to some extent, by way of the Government's Sanitary Works Subsidy Scheme, which provides a subsidy of 50% towards the capital cost of sewage treatment works for communities up to 2,000 people, with the subsidy rate declining for larger communities. The Minister of Health recently announced subsidies for 15 sewerage schemes totalling approximately $30 million.

Some growth areas which are relying on oxidation pond technology (e.g. Nelson, Tasman) are experiencing problems with overloading of the ponds resulting in odour generation.

Wastewater discharges have a significant adverse effect on Māori cultural values, particularly if discharges are in the vicinity of traditional food gathering areas. Māori have a preference for land disposal of effluent. Several Councils have investigated land disposal options but the option has generally not been selected due to constraints on the availability of suitable land, local climate considerations or concern about groundwater contamination. Some Councils are beginning to address Māori concerns by passing treated effluent through wetlands or land/rock channels prior to discharge to receiving waters.

Government policies promote the recycling/beneficial use of wastewater residuals, that is the application of treated effluent and biosolids to land. Survey responses indicate that a number of facilities have been developed for the manufacture of biosolids (e.g. in Wellington, Hutt, Christchurch, New Plymouth) and several councils are considering the development of such facilities. Watercare is considering biosolids disposal options for Auckland and is also looking at re-use options for treated wastewater.

Several cities and towns around the country are experiencing ongoing problems with stormwater contamination. In a few areas (Auckland, Wellington) - where stormwater catchments are subject to high traffic densities - the runoff of vehicle-derived contaminants (Cu, Zn, PAHs) from roads is resulting in the build-up of these contaminants in near-shore sediments, to levels representing a risk to marine communities. There may be a need, in future, to treat some of the more significant urban stormwater discharges.

More generally, a number of cities and towns are experiencing problems with sewage contamination of stormwater. This derives either from the historical legacy of a combined sewage/stormwater system or the high incidence of inflow and infiltration of stormwater into ageing, damaged, sewers. After storms, sewers or manholes overflow, contaminating stormwater discharges, with attendant public health risks. Some Councils (e.g. Auckland, Wellington, Gisborne, Nelson) have spent a lot of money endeavouring to address this problem.

6.11.3 The Extent of Uptake of "Integrated" Approaches to the Management of Water Resource and Associated Infrastructure

So-called "integrated" approaches to the management of the urban water cycle have attracted interest in recent times, particularly in water-short countries such as Australia.⁵⁴

In essence, the approach involves a move away from "linear" approaches (dwelling → pipe → treatment plant → pipe → disposal area) to the engineering of water systems that enable the re-use of wastewater, the onsite capture and use of rainwater, the on-site removal of contaminants from stormwater and retardation of the rate of stormwater runoff. The underlying premise is that the linear system results in inefficient use of resources and a variety of adverse ecological effects, for example those associated with conversion of a natural stream into an hydraulically efficient drainage channel.

The use of Sustainable Urban Drainage (SUD) technologies, which is becoming increasingly common in the UK,⁵⁵ is an aspect of the integrated approach.

The Parliamentary Commissioner for the Environment's reports Murky Water and Ageing Pipes and Beyond Ageing Pipes provide useful background information.

The issue relates directly to sustainable development objective 6 concerning the provision of integrated and complementary infrastructure facilities where it is practical and reliable to do so. It also relates to objectives 2 and 3 concerning the avoidance of adverse effects and the efficiency of resource use.

Chapman et al (2003) comment that:

The contours of an emerging integrated approach to managing the urban water cycle are gradually becoming visible. Rainwater harvesting and re-use of grey water might reduce the demand for potable water and the amount of wastewater discharged from individual properties. Temporarily stored stormwater and recycled wastewater from local (e.g. suburban level) treatment units might become sources for selected local water uses. Expenditure on expensive buried pipelines might fall dramatically. Urban design and land use might be more resistant to the inevitable extremes of rainfall and runoff.

but

A great distance still separates us from this vision …

Responses to our surveys and our limited discussions with representatives of regional councils would tend to confirm the latter comment. There are a handful of larger local authorities - Christchurch City, Waitakere City, North Shore City and Tauranga - who are "pioneering" aspects of the integrated approach, including innovative urban design and drainage techniques. However, most local authorities appear to be wedded to traditional approaches. Several Territorial Authorities commented that integrated approaches such as local treatment plants (for each suburb) and dual pipe systems (for return of recycled water to households) are not economic to develop in New Zealand and even simple technologies such as rainwater tanks are often not economically attractive.

¹³Self supply by Metrowater at Three Kings, wastewater treatment at Drury by United Water International, wastewater treatment at Beachlands/Maraetai by Manukau Water and the service agreement between Hutt, Upper Hutt and Hutt Valley Wastewater Services for the bulk disposal of wastewater not depicted above. Similarly, trade waste functions are not depicted above. There are varying degrees of responsibility for stormwater.

¹⁴Some of the arrangements are indirect. For example, Papakura District Council has franchised out its water services to United Water International.

¹⁵Register of Community Drinking-Water Supplies in New Zealand, 2003 Edition.

¹⁶Some of the arrangements are indirect e.g. Papakura District Council has franchised its water services to United Water International.

¹⁷New Zealand Official Yearbook 2002. This figure includes a few very large water users including pulp and paper factories, dairy factories, and meat and food processing plants.

¹⁸Milford Sound is on the western side of the Southern Alps (a mountain range in the South Island) while Alexandra is on the eastern side.

¹⁹New Zealand Official Yearbook 2002.

²⁰Source: PricewaterhouseCoopers

²¹Whilst Wellington Regional Council can abstract 76,833Ml/year, it has the advanced full treatment capacity to treat 104,025Ml/year.

²²Source: PricewaterhouseCoopers surveys of TLAs

²³Register of Community Drinking-Water Supplies in New Zealand, 2003 Edition, Ministry of Health.

²⁴Metrowater Water Asset Management Plan 2002.

²⁵That said, the lack of chlorination (and the consequent potential risk of exposure of supply to bacterial contamination) is viewed as a significant public health risk by some commentators.

²⁶We are advised that one of the options is to construct a pipeline from the Clutha or Waitaki rivers.

²⁷An application to take water from the Otaki River and pipe it south to the growth nodes at Waikanae and Paraparaumu was declined by commissioners, largely on the basis of Māori cultural objections, and was not appealed to the Environment Court by Council.

²⁸Metrowater Wastewater Asset Management Plan 2002.

²⁹Source: Wanganui Water

³⁰Policy Framework for the Development of Large Scale Water Enhancement Projects in New Zealand Overview and Commentary, Prepared for MAF Policy by Brown, Copeland and Co Ltd. December 2002.

³¹Extract from Report to Parliament - Sale of Irrigation Schemes Financial Summary, MAF Policy, Ministry of Agriculture and Forestry. March 2000

³²Tarras-Ardgour is known as Lindis

³³Economic and Social Assessment of Community Irrigation Projects, prepared for MAF Policy by Agribusiness Group

³⁴Information provided by the Ministry of Agriculture and Forestry.

³⁵Policy Framework for the Development of Large Scale Water Enhancement Projects in New Zealand Overview and Commentary. Brown, Copeland and Co. Ltd, December 2002, prepared for MAF.

³⁶The agricultural take includes individual takes as well as substantial takes for community irrigation schemes.

³⁷Lincoln Environmental (2000). Information on Water Allocation in New Zealand.

³⁸The impact on dairying can be gauged by referenced to Southland which currently has about 400,000 cows. Every cow has a "demand" of approximately 170 litres/day for drinking and washdown. Some farms have 2-3,000 cows, effectively exerting a water demand equivalent to a small town. In addition approximately 1 litre of water is used in the processing of every litre of milk; one Southland dairy factory uses approximately 11 Million litres/day.
Grapes generally require less than other crops such as apples and vegetables but each grapevine requires 6-12 litres of water per plant per day during the summer and a similar amount of water may be used for frost protection. It is the scale of development that accounts for the large increase in demand. In Marlborough the area planted in grapevines has increased at a rate of approximately 20% per year in recent years, the total area now approximately 7,000ha which in itself gives rise to concerns about sustainability due to the susceptibility of monocultures to disease.

³⁹Over allocation does not necessarily translate to over-use or environmental damage, as users do not concurrently draw their full allocations.

⁴⁰Even established dairy farms (as opposed to new ones arising from conversion) increase the demand for water as a result of the drive to increase production (more cows and extension of the production period via pasture irrigation).

⁴¹This includes a few very large water users, including pulp and paper factories, and meat and food processing plants.

⁴²These include effects on in-stream uses or values, soil structure, nutrient leaching (high nitrate levels in groundwater), effects on water supplies, cultural effects and socio-economic effects on local communities. Such effects are influenced by land-use.

⁴³Refer section 5 of the RMA (Purpose)

⁴⁴For a discussion of these methods, see Milne and Mooar (2002)

⁴⁵Either as a rule (with the force of regulation) or as a guideline. Plans sometimes also specify minimum groundwater levels or pressures below which abstraction must cease.

⁴⁶The Ministry for the Environment has issued some guidance on this matter. Refer Ministry for the Environment (1998) Flow Guidelines for Instream Values. Volumes A and B.

⁴⁷Milne P and Mooar J (2002) Water Allocation and Sustainability: A Review of Statutory Provisions, Case Law, Practice, Issues and Options. Prepared for the Ministry of Agriculture and Forestry.

⁴⁸Fleeting Farms Ltd vs Marlborough District Council.

⁴⁹For example, refer article "Project Aqua Reveals Flaws in Regional Planning" by Peter Skelton, former Environment Court Judge, in National Business Review, September 19, 2003.

⁵⁰Marlborough Ridge Ltd v Marlborough District Council (1998) NZRMA 73

⁵¹Biosolids are sewage sludges or sewage sludges mixed with other materials that have been treated and/or stabilised to the extent that they are able to be safely and beneficially applied to land. They have significant fertilising and soil conditioning properties as a result of the nutrients and organic materials they contain but they also contain contaminants (metals, organic compounds) which represent a potential threat to soil health (natural capital) if applied at inappropriate rates.

⁵²Some coastal receiving environments (e.g. estuaries) are more sensitive than others. The key issues are the volume of water and speed of currents at the point of discharge, which determines the degree of dilution and dispersal available for contaminants. Obviously, shallow semi-enclosed inlets or estuaries are more "sensitive" than open coastal water and therefore less desirable places for the location of discharges.

⁵³These standards are set so as to ensure maintenance of receiving water standards after reasonable mixing.

⁵⁴Sydney water has experimented with "dispersed" (local) treatment systems and dual reticulation systems

⁵⁵Berry CW (2002) Sustainable Urban Drainage - UK Experience and Practical Application in New Zealand. New Zealand Water & Wastes Association 44th Annual Conference, Christchurch.